Progress and protection: the agenda for good governance in disruptive times

Alongside globalisation, the technological revolution is changing the world we knew. As a character in a recent cartoon by El Roto in Spanish newspaper El País said: “I don’t know where I’m going but if I stop to think about it, they’ll beat me to it.”

Never before in the history of humanity have such profound scientific advances and socioeconomic transformations been made at so great a speed.

The mutations extend into every sphere of human activity and every economic sector, affecting the behaviour of individuals, organisations and social groups. Inevitably, they are also going to have an impact on the role of the State, its institutions and its ways of working. 

When talking about our times, let’s make one thing clear: the world has never been so prosperous or peaceful, nor so capable of making incredible advances and making them available to the people.

Two recent books, by Steven Pinker and Hans Rosling, reveal evidence of improvements in the overwhelming majority of human development indicators, ranging from life expectancy to security, through poverty reduction, peace and democracy.

On top of these foundations for progress, the exponential acceleration of technological change also opens up avenues for prosperity and well-being unimaginable until very recently. For today’s public systems, leading the innovation necessary to tread those paths is an unavoidable task. 

Leading innovation in today's public systems is an unavoidable task

But technological disruption also has a dark side. It creates these immense opportunities but at the cost of great uncertainty; it occurs in the context of a major environmental emergency, inherited from the deterioration accumulated during centuries of industrialisation; and it brings to the surface new risks, costs, problems and groups of losers who demand the attention of the public authorities.

The areas of such striking vulnerability occupy a large space in recent public debate. Without purporting to be exhaustive, we summarise in the following paragraphs some of the areas that are most attributable to the technological changes of recent years.

• Supported by the instantaneity of digital interactions globally and by advances in fintech, financial capital flows are circumventing the regulations and are being made opaque to monitoring institutions. According to the European Systemic Risk Board, in 2018 the so-called “shadow banking system” already represented 40% of the European Union’s financial system. The Great Recession revealed the dangers of this lack of public supervision of financial transactions.

The technological revolution has created a strong tendency towards business concentration

• The technological revolution, backed by globalisation, has created a strong tendency towards business concentration. The new technology conglomerates exploit network externalities to create monopolies invested with gigantic market power. The threats to free competition are greater than at any other period in history and benefit from the weakness of global governance institutions and supranational regulatory powers.
• The exponential development of artificial intelligence and robotics threaten to leave large groups of workers unemployed around the world. The OCDE calculates that 9% of jobs in its member States are at high risk of being automated and 25% will see their tasks radically change.
   

• Usage of the enormous quantity of data made available by technology opens the door to what the World Economic Forum calls, in its latest Global risks report, “technological vulnerabilities”: risks associated with loss of privacy, gaps in security, cyberattacks, online identity theft and massive data breaches.
• The “platform revolution”, as Geoffrey Parker terms it, has come to deregulate market processes and blow apart the industrial organisation of entire sectors of activity (such as the urban mobility sector, for example), creating the need to redesign regulatory bases and manage the costly processes of transitioning towards competition, which will be necessary to minimise social conflicts. 
• Inequality is at risk of worsening as a consequence of technological disruption. It’s never been a better time for the most qualified workers – write Brynjolfsson and McAffee in The second machine age – but it’s never been worse for everyone else. Authors like Branko Milanovic have highlighted the risks of this cognitive gap becoming resistant to mechanisms of redistribution through the fiscal system, which are used traditionally by governments to correct it.

Inequality is at risk of worsening as a consequence of technological disruption

• The enormous increase in life expectancy, triggered by scientific and technical progress, is coupled with the drop in the birth-rate that accompanies development, thus creating demographic trends that threaten the sustainability of social welfare systems. Population ageing, alongside other factors, sends health expenditure sky-high and reduces the capacity of healthcare systems to maintain service provision.
• The first recipient of the Nobel Prize in Economics, Jan Tinbergen, explained inequality as the result of the race between technology and education. The technological tsunami deepens the imbalances in this basic fuel for the “social lift”. It increases the risk of conflict between those professional profiles sought after at any given time by the economy and businesses, and their capacity to be produced by educational institutions with traditions of more stable environments. These conflicts add to the crisis in education systems, which has spread to many countries and can be seen in comparative indicators. 
• Large cities, whose growth and expansion will be a global phenomenon this century, are hotbeds of innovation and central nodes of the global economic networks. At the same time, they are victims of negative phenomena associated with change, such as the high cost of access to housing for young people, the expulsion of residents from urban centres, congestion impeding mobility, the emergence of degraded areas, illegal immigration, the informal economy, and the deterioration of the urban space and peaceful coexistence owing to the pressure of mass tourism, and so on.

This incomplete list of collective threats and challenges has a common denominator. They are all complex issues that are a consequence of economic, social and technological progress, for which scientific and technical knowledge has not produced registered and available answers. They cannot be solved by implementing previously known public policies, contingency plans, regulations and procedures.

The solutions have yet to be created, and the process for creating them is affected by numerous areas of uncertainty, dilemmas, conflicts of interest, clashes of traditions and disputes relating to values. Only experimentation and evidence can facilitate this transformation pathway. Building governance models that make this path viable constitutes a significant, difficult but unavoidable challenge.

The United Nations 2030 Agenda illustrates this paradoxical social reality, which forces societies to face up to the challenges of progress and protection simultaneously and requires them to draw up complex social innovation processes for that purpose.

The objective is twofold: on the one hand, to take advantage of the enormous opportunities available for growth and prosperity; and, on the other, to protect citizens from the threats arising from these same change scenarios and to try to convert the future into something more predictable and governable. To enter determinedly into the field of innovation and play both for the defence and the attack, that is the challenge that, match after match, public governance of the exponential era will have to face.

Article originally published in Spanish in Agenda Pública.