Sunday, April 15, 2012

Are Today’s Global Political Structures Optimising Business Growth?

Are Governments, and thus politicians, out of touch with what is required in today’s global society to enhance their own countries growth and business success? Are the very foundations, on which many government principles are based, simply out of date for our current time and thus in need of a ‘good’ overhaul?

The governance in the United States and in China, for example, is considered to have completely different structures and processes. On the one hand, the United States is a liberal democracy with an array of extremely complex institutional relationships, whose multiple veto points make decision making difficult but also provide a great deal of accountability. Further, the delegation of many functions to sub-national governments and to market-type mechanisms has increased this inherent complexity. On the other hand, China has very limited democratic institutions, but the dominant Communist Party might provide greater capacity for making decisions, and also greater policy integration and coherence across a large society, despite continuing change. (p. Zhao and Peters, 2009, S122).

Yongfei Zhao and Guy Peters, (2009) mention that “although these two regimes appear quite different, they share at least one major governance problem. In both cases, there is substantial separation between the policymaking and implementation systems. In the terms of the now familiar language of New Public Management, there is a separation between “steering” and “rowing.” Much of the New Public Management logic and other types of reforms separate these two functions, but in the process, coordination and control may be lost. In both societies, this separation can present significant accountability problems associated with poor performance and corruption. In the United States, these problems arise from delegation to both sub-national governments and non-state providers, while in China, these issues arise from the low capacity of local governments,” (p.S122).

It’s worth remembering, for example, that “the framers of the U.S. Constitution created, by design, a complex system of governance in which it would be much easier to prevent action than to pass laws or produce any other type of public action. At the federal level, the separation of powers among the three branches of government, as well as additional institutional divisions within the legislature, requires consensus among a large number of actors if anything is to happen. Although its political dynamics are different from the corporatist, coalition governments that served as the basis of the original analysis of consensual democracies, American government is clearly a consensual system. The result is often gridlock in the policy-making system, with several components of government unable to reach effective decisions,” (p.S122).

The styles and problems of governance and public administration in the United States and China are distinctly different, but the nature of the differences converge on one point—the accountability of government to other levels of government, to non-governmental actors, and to citizens. The historical, cultural, and social values, as well as the constant government reform efforts, only diversify the appearance of the accountability problem. Regardless of the fuzzy public and non-public boundaries or the ambiguous formal and informal political conflict, the heart of governance lies in the establishment of an accountable and capable government, (Zhao and Peters, 2009, p.S126).

This problem goes far beyond the borders of the US and China and could be said to exist in all countries that exist today, whether considered first world or not, democratic or not. In fact one reason that the ‘emerging economies’ are emerging is that their government infrastructure is more ‘flexible’ to making change. For example, South Africa introduced a credit act – which controls how money is leant by banks – long before the credit crisis (and not after like many ‘first world’ countries).

Yongfei Zhao and Guy Peters (2009), state that “the numerous divisions within American government, which were designed to enhance accountability through checks and balances, have become dysfunctional for that purpose. Political divisions, and the increased politicization of the system, now tend to make evasion of responsibility easier. That loss of control is evident not just in the devolved components of the system but also in numerous instances of ineffective oversight. Again, it was once thought that creating a more responsible party system was the answer to our political problems, but instead that change has only exacerbated the underlying problems of division,” (p.S127).

They also state that “the essence of governance in China, or the key to solving the local accountability problem, therefore, lies in structural change of Chinese guanxi networks. Accountability and responsibility for public officials are important not just for ethical reasons, but also for governance. Perhaps the most crucial element of popular control over policy is the ability to use the information from monitoring and evaluating programs to shape future policy. That capacity seems especially weak in China now, with the connection between local governments and the centre attenuated and few instruments existing for the enforcement of local accountability,” (p.S127).

Many political systems are being run on ‘very old’ foundations – where in the current democratic world it appears to be ‘wealth’ rather than ‘ideology’ that defines selection into the upper-echelons of power. Is it any wonder that many countries citizens feel that their governments are out of touch with what the people think and want – when these countries are being run by people, more often than not, who have never had to do a hard days work in their lives.

It will take a new breed of people coming into our political structures to make the changes that are necessary to improve political cohesiveness and optimise decision making. But what is clear is that economic growth will suffer until these changes take place and where politicians ‘fight’ for their countries (and hence business and employment), rather than just fighting for a ‘second term.’


Zhao, Y. and Peters, B.G. (2009). The State of the State: Comparing Governance in China and the United States. Public Administration Review; Supplement 1, Vol. 69, p.S122-S128.

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