The Economics of Enough_ How to Run the Economy as if the Future Matters - Diane Coyle [84]
Diversity of another kind has been a source of tension, and that is the legally mandated diversity in the workplace and public institutions. Laws passed throughout the developed world since the pathbreaking civil rights legislation in the United States have increasingly required both public and private sector employers and civic institutions to ensure members of a range of social groups are not disadvantaged. The ebb and flow of the heated debate over affirmative action and the “political correctness” wars are testament to how divisive these laws are in fact. Again, liberal-minded people would prefer not to acknowledge that there is real opposition to mandatory diversity of this kind, but it certainly exists. Thomas Frank argues that the left’s failure to take cultural concerns of a large group of Americans seriously led them to repeated electoral defeats, at least until Barack Obama’s election as president in November 2008.35 The weight this should be given in explaining the pattern of election results is debatable, given the range of other factors at play. But it’s certainly the case that opinion on social diversity of this kind is quite polarized. In all Western societies, the center of gravity of popular opinion has definitely moved toward the tolerant since the 1970s, but there are wide differences of view.
GOVERNANCE
Trust is essential for an economy to prosper. The new technologies have made the advanced economies even more dependent on trust, and high social capital. At work and in their daily contacts in the towns and cities in which most of us live, most people are engaged in more contacts that require them to trust a wider range of others than ever before. These will often be people outside their own company, even outside their own country. These structural shifts in the economy have contributed to a big increase in prosperity during the past few decades, thanks to the impact of ICTs on productivity. This includes the global reorganization of production, which has spread economic relationships over thousands of miles. The economic consequences of the new technologies have also brought about greater social tensions, cultural fears, a pervasive sense of anxiety and uncertainty. This is the “paradox of prosperity”: that economic growth has come about through social disruptions, which are dramatic, given the radical and “general purpose” nature of the new technologies. These disruptions range from the inadequacies of social arrangements such as pensions and tax systems to the radical reorganization of the way businesses operate.
The financial crisis, and the consequent implosion in value in global financial markets in 2008, demonstrate this fragility. Repairing the current situation will be difficult. Andrew Haldane, a senior Bank of England official, has pointed out it is nothing like enough to restore market confidence. “A clean balance sheet might instil confidence, but it need not repair trust. Because it is a moral judgment, repairing trust can be a slow and painstaking business.”36 The sense that the institutions and arrangements for running society are failing is absolutely pervasive. We have been depleting social capital.37 To ensure their continued success and social harmony, the leading economies will need appropriate institutions and governance.
There is certainly a vague awareness that governance—like the concept of social capital itself—is a more important issue than used to be the case. For example, it crops up frequently in discussion of the failure of poor countries to develop. The need for “good governance” has become a mantra among the aid-donor community. Poor economies have no chance of growth, according to