CHAPTER 12

TRANSITION

From Business as Usual to the Sustainable State

This chapter will portray some of the issues countries will need to deal with as they work toward becoming sustainable states. This is not meant to be a fixed recipe that all states should follow, but rather some ideas that functioning states aware of sustainability challenges and committed to sustainability goals should consider. I refer to them in this chapter as sustainability “pillars,” which must be critical elements of the economic policy framework, such that they lay the foundations for building a moderate and shared prosperity. But, most important, large developing nations—the front line of our collective global challenge—will need to move away from many misguided and blatantly wrong approaches.

This discussion of transitions will not deal with the world’s more advanced economies, whether they are large (e.g., the US and Japan) or small (e.g., Singapore and Hong Kong). This is not to deny their need to act or their place in reshaping their economies to attain some level of sustainability. These economies will need to become more sustainable, one hopes becoming strong, sustainable states. However, that shift will be different for advanced economies, primarily because of the nature of their governments and the expectations of their populations accustomed to a “good life.”

These countries have promised, and most have delivered, a certain standard of living for their people for over a generation, if not more. This standard of living is clearly impossible to sustain in a resource-constrained future, yet changing it would mean that the government is “breaking a promise.” This affects political stability. Many of these economies are already seeing rising tensions as younger generations realize that they are unlikely to achieve the same standard of living as that of their parents and grandparents (which perhaps explains the growing popularity of populist movements, good and bad, among the young). And this is even before advanced economies have undertaken any kind of reckoning about what standards of living are truly sustainable (in line with their global moralizing on these issues to the developing world).

To complicate matters, some larger advanced economies have wedded their economic heft to geopolitical power and, oftentimes, their own self-image. Limiting that economic heft thus has a security and cultural dimension that complicates matters. It adds another set of vested interests—not just companies and economic elites that benefit from the free-market model but also security interests that see these economic factors as a path to geopolitical strength, and cultural groups that see them as integral to the national identity.

This does not mean that change is impossible. In fact, for the good of the planet, we must hope that these advanced economies can change their populations’ expectations. However, progress will inevitably be slow. Advanced economies will need to deconstruct their institutions, push back against vested interests, change the political discourse, and manage their populations’ expectations. They will need to compromise, which will slow them down even further. The truth is that mature democracies do not do this quickly.

This chapter will also not talk about the “failed state,” such as Somalia, Venezuela, Libya, or any state that does not have the fundamental institutions of governance. At this point, these states have much more fundamental issues than worrying about sustainability and resource management.

Instead, the chapter will focus on the following three types of state.

The first type is the large poor country, such as China, India, Nigeria, Pakistan, and Brazil. These are the countries that will drive resource consumption over the coming decades. As their populations grow and get richer over time, they will start to consume more and therefore use more resources. We are already seeing how China’s development is impacting the consumption of primary commodities around the world; the rise of India, Indonesia, Nigeria, and others will do the same.

But these countries also have the most resources to solve problems if they can foster the political will. Their large populations and economies give them the capacity to solve large problems. Solutions that would be extremely difficult for a smaller country to institute would be much easier for an economy the size of India’s. Achieving scale—which would be vital for some of the state-backed investments in infrastructure described in chapter 8—would also be easier for a larger economy than for a smaller one.

Then there are the smaller middle-income countries, such as Malaysia, Thailand, South Africa, and even Iran. These countries have populations that are doing reasonably well, especially compared to other countries in the developing world. Their populations have achieved the basic rights of life and are therefore focused on achieving a higher level of prosperity. However, these countries cannot and should not seek a development model that strives to provide a Western standard of living, due to resource constraints.

These countries also have issues with vested interests. As these countries have undergone some level of development, an economic and political elite has been created, who will defend the privileges they have earned or been granted and will resist attempts to curb overconsumption. These interests will need to be managed or even overcome if these middle-income countries are to move onto a sustainable path of development.

The final set of countries comprises smaller poor countries, such as Laos, Cambodia, Sri Lanka, Jamaica, Lesotho, and Zambia. These countries can be quite poor and may have fewer economic and natural resources than their larger counterparts. They do, however, have the means and potential to achieve a more sustainable development path. They at least have a functioning state, yet it can be tougher for them to solve social problems. They will be restricted in the level of investment and “power” they can offer.

However, smaller countries may also have more flexibility than larger countries. As countries like China and India grow, their economic size will bring along many of the geopolitical concerns that have plagued larger advanced economies. These larger countries will run the risk of getting distracted by their new status as great powers—much as the currently advanced economies did when they were growing.

What joins all these countries together is that they have not yet completed—and, in some cases, not even started—their journey toward fully replicating the Western economic model. This means they can change to a more sustainable version of the state more easily than can Western countries. They do not need to worry about contradicting vested interests, as they are not yet rich enough to have enough of them to make a difference. They do not need to worry about how to sell a more moderate version of prosperity, because it would still be better than what their people have now.

This is similar to the idea of “leapfrogging” common in discussions about technological development, where a less developed country skips over the middle stages of technology to adopt the latest and greatest, such as skipping over landlines and broadband to go straight to mobile phones and cellular data. Countries can leap from a poor and unsustainable economy to a moderately prosperous and sustainable economy, skipping the free-market, unsustainable, and unequal stage in between. Developing countries do not have the legacy issues within the unsustainable economy, which have often been hardwired into a difficult-to-change political model.

Think about how much work it would take for the US to return to the more activist version of government it had before the 1980s (which itself would not be enough to be truly sustainable). Each new program, new government institution, and new regulation would be fought tooth and nail by lobbyists, vested interests, and those concerned with preserving a free-market small-government ideology. The inevitable compromises involved would yield changes smaller than hoped for. The only way large changes could be made rapidly would be if they were to occur during a time of great crisis (along the lines of the Great Depression)—something we should hope would never come.

Developing countries, starting from a lower base, will not have this problem.

The first and most fundamental task for governments is to frame a clear political philosophy about what a sustainable state and society would look like, particular to their time and context. This philosophy, with well-defined sustainability “pillars” (as described in the next section), should drive policy and decision-making. President Xi’s attempt to define a more environmentally friendly vision for China’s future development is an example of what I am referring to. Beijing has decided that it must adopt a more sustainable outlook and is changing how it governs and regulates to suit that new objective. As this book goes to print, Beijing has announced a radical restructuring of its Environmental Ministry with far-reaching implications for embedding its sustainability goals as key sectors of the economy.

This is the difference between policy and politics. Politics is a discussion about philosophy, values, and concepts—setting out a long-term vision for society. One should be conscious of what is actually possible or feasible, but such a philosophy should be bold. Policy, or the actual decisions by the government, follows from that; it seeks the best way to achieve that objective.

However, some leaders choose to let policy drive their decisions. They see governance as statistics to be maximized, whether that is in terms of foreign investment, economic growth, or other economic metrics. Their vision of the world, insofar as they have one, is derived from what policies are possible within the status quo.

For example, many countries have altered their governing and economic philosophies according to the whims of foreign investors and donors. Investors demand certain changes to policies and priorities to further their interests, and governments oblige, apparently convinced that they have no choice in the matter. This is the dreaded “race to the bottom” that many antiglobalization activists fear.

But a stronger state will set its own agenda and accept donor aid and investment if—and only if—they align with the state’s long-term objectives. This is at the same time a test of whether aid is genuine or tied to other agendas. But to do all this, these countries need that most critical ingredient: capacity in basic policymaking, or what I have referred to as competence.

This is not to say that the political philosophy should not be aligned with realities on the ground. States emerging from violent conflict, such as Cambodia and Rwanda, will need a governing philosophy that recognizes the massive amount of work that needs to be done to repair the damage. It can be easy to decry the authoritarian actions of someone like Cambodian president Hun Sen or Rwandan president Paul Kagame in their attempts to rebuild their countries after violent conflict. But it can be hard to think what alternative was possible at the time they came to power.

Democracies, too, present their own political realities, in that the governing philosophy needs to be able to withstand electoral scrutiny. It should be tailored to preserve important democratic principles and concepts, yet clearly outline the hard trade-offs, the consequences of certain policies, and the price of inaction.

The creation of this philosophy is central to the political stability of societies in the twenty-first century. The lack of such a philosophy could lead to growing inequality: not just income or wealth inequality, but also inequality in terms of consumption and access to resources. Longstanding inequality has pernicious effects on stability for any kind of society, democratic or nondemocratic, rich or poor.

Underneath this political philosophy are several pillars that should guide government activity and act as standards against which to judge the efforts of the sustainable state. These are not the big and flashy “projects” that are designed to grab public and international attention yet have little long-term effect. Instead, these are broad-based initiatives designed to directly improve living conditions across a whole population.

The first pillar concerns land. States in large developing countries should focus on their large rural population, ensuring that these people are stable and well fed. States should not recklessly encourage urban migration in some mad rush to “modernize.” They should support a viable food production system that is stable and locally owned, farmed, and managed, one that in turn provides enough surplus to feed an urban population. Although the government should undertake efforts to directly provide basic needs to a rural population, a vibrant agricultural sector will also provide farmers with more opportunities to earn an income and thus improve their own economic position, thereby becoming self-sufficient within the context of a moderately prosperous society.

An immediate step is land reform and redistribution: breaking up land owned by agribusinesses and large farms, which are too big to support sustainability, and distributing them among small households. This is not calling for an ill-conceived notion about nationalizing land. The Economist—not normally a supporter of these kinds of interventions—compared countries that pursued land reform and countries that did not. Maoist China saw its grain output jump by 70 percent in the decade after World War II; Japan and Taiwan also saw rice and sugar yields increase after their own reforms. Southeast Asian countries, which largely did not implement land reform (or, in the case of the Philippines, implemented it badly) have seen persistent inequality between cities and the countryside as “the state favours agribusiness and plantations over small farmers.”1

The second pillar is education. Giving people important skills and training is clearly necessary for both urban and rural development. But too often education is focused on the very top of the income scale: CEOs, doctors, lawyers, and tech programmers, as opposed to the whole range of careers and skills needed for any country and especially large developing nations. Education is not just the world-class university but also the agricultural centers that train thousands of farmers on the latest farming and supply-chain management techniques, and the institutes that create a whole class of skilled professionals.

What is missing is the huge middle ground between a basic school education and the college degree focused on the top end of the income scale. This is more than just vocational training, which often focuses on providing workers with the skills to work in factories or low-end service jobs. There also needs to be training for skilled professionals: carpenters, electricians, plumbers, technicians, and the like. This requires a change in our culture and how it understands education.

The third pillar is mobility. People and goods need to be able to travel from one place to another with a certain level of ease and speed, whether that is within a single community (i.e., public transportation within a city) or across the whole country (i.e., a rail network connecting towns and secondary cities).

Infrastructure is typically invested in so as to foster economic growth, as opposed to promoting sustainable wealth creation and distribution. Investment tends to focus on those places that already have a great deal of economic activity, which widens regional inequality. We should instead see investments in mobility as a mechanism for economic empowerment and a way to redistribute wealth across a country. Wealth generated in one area of the country can be spread across a wider area through investments in mobility, which would in turn unlock more paths to economic development in worse-off areas.

In the city, investments in mobility will focus on good public transportation and must be accompanied by restrictions on private cars. There are some simple and straightforward controls cities can place on cars, such as limits on private vehicle registrations. Cities can also invest in cheap public transportation, such as buses or electric trolleys.

More broadly, states should invest in a network that connects secondary towns, and develop these regional economic hubs as part of a wider economy that includes the immediate hinterland. This would help distribute economic activity away from major metropolitan areas. This may even lead to a more sustainable balance between different urban areas: citizens will no longer need to live in the major metropolitan area to be where “things happen,” as they can easily travel back and forth.

The fourth pillar is health care. Most important is starting with disease and infection prevention. This means improving sanitation and the quality of water, food, nutrition, and shelter, as well as cleaning up and reducing pollution.

The issue facing investments in health care is similar to the problem facing investments in education. Heath care investments usually focus on the high-income end of the scale. This leads to a focus on doctors, surgeons, hospitals, and cutting-edge medical and pharmaceutical technology.

For example, India’s education system and investments in higher-end health care institutions mean that the country can compete on high-end medical treatment (i.e., surgeries) on a quality comparable to developed countries. On its own, this is a remarkable achievement, and one that India can legitimately be proud of. However, India’s reputation as a center for medical tourism sits oddly with the poor quality of public health throughout most of the country.

It is far more useful to focus on less flashy public health initiatives. Some of these interventions are low cost and can be installed, managed, and monitored by local communities if they are given the right training. However, without a public health system to provide these interventions systematically, it can be hard to improve health on a regional or national scale. Creating a team of trained public health workers—who require less training and resources than doctors or nurses—can provide that community-based health care across an entire country.

For example, Cuba has long been credited with creating a high-quality health care system that vastly exceeds what its economic resources would suggest. This proves it can be done when a government is competent and committed to social welfare and protecting public good. Cuba’s cradle-to-grave approach focuses on prevention, which has helped the country achieve high health standards on par with the developed world. The health care system can focus on simple and straightforward interventions, such as providing free eyeglasses and contact lenses to people with impaired vision.

The fifth pillar is housing. This is especially important in urban areas of the developing world, where the combination of a growing population and government neglect can lead to serious housing unaffordability crises. Governments must treat providing low-cost housing as a top priority.

Public housing can also be a vehicle through which to develop a more sustainable lifestyle, both on the individual and the community levels. Public homes could be designed to rely less on artificial cooling and heating, thus reducing energy use in hot summers and cold winters. They might be integrated with public transportation systems, thus reducing the need for a private car.

On the communal level, public housing can be a vehicle for urban planning. Rather than creating a sprawling suburbia, relying on cars, big-box retail stores, and massive backyards, the state can create dense clusters of public housing, surrounded by green space. This can help control the spread of urbanization and suburbanization.

Governments in the developing world should also develop innovative social financing programs to fund the construction of these homes. Interestingly enough, there is no global effort to find direct solutions to this, as market solutions (with some NGO activity) are seen as the only way forward. Governments should be willing to borrow and spend money to provide universal access to shelter; such a project would be a much more worthwhile investment than other proposed infrastructure projects. In fact, lifting people out of drudgery will free the poor to engage in more economic activity on a more secure basis.

The sixth pillar comprises energy and the environment—two things that, in our hot future, are closely connected. The government needs to ensure that everyone has equal access to some minimum level of energy (though not necessarily beyond that). But it must do so in a way that does not threaten common resources and a population’s access to them.

This will likely include some focus on renewables, similar to what China has done in its aggressive push toward solar energy. But the government should also tackle the underpricing and subsidies that currently distort energy markets. States must ensure that people—typically urban free riders—pay the true cost of their energy usage. Any measures must balance sustainability objectives. For example, the state could implement a system of electronic road pricing and increased petrol taxes thereby reducing urban congestion and improving air quality.

From there, the state can look to resource and environmental management, with the eventual goal of creating a system that properly prices consumption.

Environmental management would include the creation of “no-go zones” supporting biodiversity and preserving flora and fauna. It would also include ameliorating pollution, reducing its harms, and controlling its emission. Finally, it would mean managing the rural-urban divide to ensure a more sustainable balance between city and countryside, through smarter urban planning, investment in good national public transportation, and rural development.

Any of these steps would require an expansion of the state and changes to how it enforces rules. Thus states should also work to build competence in their governing institutions. This is admittedly a much longer process than the other steps—after all, it took Singapore decades to build the efficient city-state we see today. But competent institutions will carry the decisions of the sustainable state to future generations as leaders change. States should look to policies that build the four elements of institutional competence discussed in chapter 7: administrative expertise, public policymaking, leadership, and meritocracy.

What about other actors in society? How do they fit into this system, and how can they aid this transition?

Businesses, for their part, have the data that helps a government map out where exactly resources are underpriced. An examination of a business’s supply chain would present the points where costs are being externalized. Businesses can also be good partners in determining what specific things a community could use to develop, especially when it comes to devising the kinds of infrastructure a location may need to improve the vibrancy of the local economy.

Civil society will play a role as well. Civil society groups provide a mechanism to help communicate ideas and conditions to the government. They help bolster accountability by ensuring that local needs and problems are not neglected and by working with governments to find solutions.

This is different from how the West sees NGOs. Western observers tend to see NGOs either as activist organizations that try to openly pressure the government to change or as alternatives to state action if the government is unwilling or unable to help.

Activism has its uses, especially in democratic contexts. But activism sometimes positions the state as an enemy that can never be trusted and that will only work with the NGO under duress. This can lead to an aggressive attitude toward the government, which, understandably, will not endear the NGO’s views to those in authority.

Just as prevalent is the view that NGO work can be a good replacement for state activity. Several developing countries use NGO activity as justification for ignoring a problem, as they assume the problem on the ground is “handled.” But civil society groups just do not have the resources to solve problems on a national or sometimes even a regional scale over an extended period.

Most NGOs would admit that they are too small to solve any particular social issue on their own. Yet many are also wary of working with state governments, especially in the developing world. A closer relationship between NGOs and the state could instead allow solutions to be nationalized and bolstered with public support.

This chapter is not trying to lay out a path forward for any specific country. Each country faces its own set of economic, environmental, and political conditions, so the specifics of each country’s transition to a sustainable state will be different. Every country needs to create an overarching political philosophy, but this philosophy, and the pillars beneath it, will be different as circumstances change.

As a large country with a state-driven economy, China will take a different path than India, a raucous democracy, which in turn will be on a different journey than Cambodia—a much smaller, much less developed country.

However, I hope this chapter has laid out some general principles that could be adapted to numerous different kinds of state.