Monday, May 25, 2015

199. Local initiatives and the elected mayor[i]

Banks are moored in system tragedy, in a web of mutual dependencies, shared thought and habits that it is difficult to change from the inside. That is due, in part, also elsewhere in business, to managers sitting on each other’s supervisory boards, allowing others the games they play themselves, and confirming each other in a world view that is distancing itself from society. They have the nerve to claim increases of remuneration for work that they see as excellent but in fact has driven society into calamity.

Governments are hardly able to intervene and change the system, because they are themselves too close, too involved in it, in revolving-door employment between government and banks, in market ideology, in needing banks for the system to work, and in keeping banks from taking their jobs abroad.

If a system cannot change itself from within, sooner or later people will no longer tolerate it and will seek recourse in new forms outside the system. We see that happening now.

Fed up with the big banks, people are turning away. They seek recourse in crowd-funding or direct contacts between local providers of capital and entrepreneurs. Average profit may be smaller there than in larger markets, since capital providers are fishing in a smaller pond, but in compensation of that risk is also lower due to personal relationships and local reputation systems.

This fits in a broader pattern of decentralization to local initiatives and responsibilities, in health care, for example. Some governments stimulate it, according to a renewed interest in local communities, self-help, and ‘the Big Society’, though there are suspicions that this is a ploy for reducing expenditure rather than improving society.

This development leads to differences between localities in access to services and subsequently also to well-being and prosperity. That is already invoking protest. Yet a new movement seems taking place that will step across. We are on our way to a new diversity where equality of access arises locally but no longer nationally.

Another question is whether this development may not lead to local clientism, where local bobo’s gather too much power and influence. It may also add momentum to the encroachment of criminals on local government.

There is an increasing tendency to favour an elected mayor instead of a state appointed one. In the Netherlands a law is before parliament to give room for it. That seems in line with the trend towards local initiative and responsibility. However, an elected mayor might stimulate local cronyism, and perhaps it is better not to go for it. An above-local, national task remains to monitor and prevent local conditions of cronyism, and appointment of mayors may be part of that.

[i] This item is based on an article that I published with Gert Jan Kats in the Dutch newspaper Reformatorisch Dagblad, on 2 May 2015.