Don’t give up on the power of governments

A recent survey by the World Economic Forum’s Network of Global Agenda Councils rated government lower than either business or media in its ability to respond to global challenges. On one level, this is understandable, given the plethora of challenges that governments face and the lack of long-term solutions to many problems that demand one. But, on another level, the attempt to rate government alongside business and the media is fundamentally misguided: no sector operates at the scale of responsibility, accountability, and expectation that governments do.

Business decides for itself where to invest and grow. Media indulge themselves in a fast-moving news cycle. Government enjoys neither luxury. It cannot simply pack up and move on when it faces a loss or is bored with a story. Government must stay put – and must often clean up the messes left behind by those who do not. On a good day, it may even get to make improvements.

The problem for governments, more often than not, is that in attempting to respond to and reconcile often conflicting individual, family, and national needs, their ability to deliver results efficiently and effectively has declined. As a result, trust in government has plummeted.

Just before the WEF’s Summit on the Global Agenda in Abu Dhabi last month, I spent a week in India. Most of the people with whom I spoke complained endlessly about government shortcomings. Government at both the federal and state levels was invariably regarded as slow, indecisive, corrupt, unimaginative, and shortsighted – in general, worthless.

It is easy for business to want government just to get out of the way, and for the media to point fingers and sensationalize events without much depth of analysis – or even, sometimes, grasp of reality. True, India may not be the best advertisement for democracy in some respects, given how hard it often seems there to make long-term decisions and implement them without being buffeted – and frequently derailed – by volatile public opinion and hard-nosed vested interests.

But the alternative – rule not by law but by dictatorship – is a far nastier prospect. And there are not many problems in India’s governance that state funding of politics could not solve. After all, when serving a vast democracy requires non-stop electioneering, and politicians are thus dependent on financial donations, governance is bound to go awry.

Governments’ ability to respond to global challenges is a more general problem. Globalization – the breaking down of national boundaries and the integration of economies across continents – has resulted in burgeoning demands on governments at the same time that their ability to provide answers has been reduced. In other words, demand for government is exceeding supply.

Globalization has made many people feel more insecure and in need of government support to cope with the pressures on their livelihoods and quality of life. But most of the policy responses needed to meet people’s demand for greater security are beyond the scope and reach of national governments, especially when these governments are trying to cope on their own.

That is why, long ago, European countries saw the sense in pooling their weight and reach through the European Union. Imperfect as the EU is, it still represents the best response to globalization yet seen among any extended group of countries. Governments working together are better than governments working separately – or, worse, against one another.

We live in an increasingly multipolar world, in which major emerging economies and their populous societies are transforming the international landscape. But, at the same time, multilateral frameworks are in decline, undermining the ability to bring sense and coherence to this world.

Consider the international trading system and its centerpiece, the World Trade Organization. Since the demise of the Doha Round, the WTO’s standing as a multilateral negotiating forum has declined sharply, salvaged in part by the recent agreement in Bali. It will be essential, after Bali, to reflect seriously on the next phase for the WTO and its role in the international trading system. The major international financial institutions – the International Monetary Fund, the World Bank, the European Bank for Reconstruction and Development, and the regional development banks – are having to work hard to make themselves fit for the twenty-first century. The authority of the United Nations has frayed.

Until we reverse the trend of declining multilateralism, governments’ ability to respond to global challenges will not improve. Business can moan and the media can carp, but the answer to many of the world’s great problems is more – or at least better – government, not less. A better supply of government meeting the flow of demands.

Ronald Reagan famously insisted that, “government is not the solution to our problem; government is the problem.” Today we know better: If government is not part of the solution, our problems will only get bigger.

Read more blogs on governance.

The opinions expressed here are those of the author, not necessarily those of the World Economic Forum. Published in collaboration with Project Syndicate.

Author: Peter Mandelson, a former EU Commissioner for Trade and former British government minister, is Chair of the World Economic Forum’s Global Agenda Council on the Future of Government.

Image: The plenary room of the European Parliament in Strasbourg REUTERS/Vincent Kessler