THE CALL FOR DECENTRALIZATION AND SMALL SCALE DEVELOPMENT  IS GETTING LOUDER

Picture: Inyange Industries, Kigali, Rwanda, Milk factory

The internet: besides a blessing, also a curse

Conspiracy theories are timeless. They become more visible through social media. The COVID19 crisis has given it another whip. The whole virus is dismissed as being staged it as a government-led hoax to give the elite more power, to let the pharmaceutical industry earn more money, to give pedophiles free rein, etc. Convinced people can no longer be recovered: they irrevocably go along nonsense that continues to spread. One can only wonder why so many go along with these fabrications that have sprung from the opportunistic brains of evil spirits.[1]

Technological progress has had its largest impact on communication. All over the world, people have smartphones, and therefore access to information. In some countries, such as in China, Russia, Saudi Arabia or Turkey, that information is still strictly restricted. There people can only read what the government allows them to be read. The West, on the other hand, raves about the legendary “freedom of speech”. This gives everyone the right to express their opinion and to disseminate it. Even if it is demotivating, annoying, poisonous, primeval, out of the blue, etc. Most undemocratic regimes in other parts of the world do not have the necessary technological knowledge to block information from third countries. It should be remembered that Facebook had 2.7 billion active users in the world in the second quarter of 2020[2] and Google has more than 1 billion visitors per month[3] and processes 6.9 billion searches daily or about 2.5 trillion searches per year.

And it should be said: the number of “fake news” messages and trolls who actively post subversive messages on the internet is increasing exponentially. Statistics in the US speak of 36% daily troll posts in blogs and on chat boards, 15% in daily entertainment articles and 38% on social media such as Facebook or Twitter. A study by the Facebook group calculated that in the first quarter of 2019 it had to remove 2.2 billion (!) fake profiles that were largely created to influence the EU elections. [4] In addition, there is the state-sponsored internet propaganda. [5] This concerns the government's use of paid internet propagandists with the intention of influencing the public opinion, undermining dissident communities or changing the perception of what the dominant view is. In doing so, the sponsors of a message or organization (e.g., politics, advertising, religious or public relations) are masked to make it appear that it originates from and is supported by grassroots participants. [6]  The Wikipedia article on the subject cites 22 countries in Asia, 1 in Africa, 5 in Eastern Europe and 2 in Latin America that commit these practices.

The internet therefore stands for globalization of influence. On the other hand, the education of people worldwide is increasing and middle classes are emerging. Are they not a counterweight against all this communicated junk? Obviously not: something much deeper is going on. The two fundamental laws of nature, the law of inertia and the law of least effort, are at play here. There are many people who feel abandoned by their government and the society in which they live. The train they are on keeps on chasing, they would like to get off but then they end up in the desert. And they dream of the flowers and the bees they supposedly knew in their youth. Unfortunately, the number of people without prospects is increasing and the political elite is not paying attention neither listening to it. Values ​​and a way of life cannot be thrown overboard from one year to the next with impunity. If one does that too brusquely, one initiates processes of displacement, which involve a lot of resentment. For most Western Europeans, farming is only one, two or three generations behind them. Yet the customs that accompanied it have been completely lost. Many now experience a lack. Politicians are now abusing that and presenting it as a struggle to recuperate the unease politically.

In his recent book “Het Boek Daniël”, the Belgian author Chris De Stoop tells the story of his uncle Daniel, [7] a lone farmer from Steenput in Hainaut, Belgium. Daniel ran his parents' farm, alone and lonely, and was robbed and murdered by loitering youths who could make no sense of their lives. Europe made neo-liberal choices in the 20th century, switching from family farming to agricultural industry. The European Mansholt plan, which wanted to make farming more "rational" and more profitable by focusing on agro-industrialization, has resulted in this uprooting. Because at the same time as the bankruptcy of the farming families, [8]  the offshoring of the industry also started. So the descendants had to choose the service sector, encouraged by Europe. Until these jobs were again eligible for offshoring. Globalization and large scale have in 2 generations uprooted and dehumanized a large part of the population. That also had its consequences in the US, where the mines, metal factories and car factories in the Midwest have disappeared and people have lost their honor and their faith in the American dream. They have become Trump's followers, although any outsider finds that this choice will never and has not yet helped them out of the ditch.

The crisis that Europe has been going through for 10 years, Brexit and Trumpism are all the result of this. Were these wrong choices? Everyone is convinced: one cannot rewrite history. New economic entities such as India and China have emerged. In the rest of the world, it has created middle classes. But it is clear that no one in those places shows any form of solidarity with a moribund America or Europe. If Europeans have to take a turn, they have to do it themselves, building on their own strength, and preferably in solidarity across the continent.

The COVID19 crisis is clearly forming a catharsis. It is an impetus for the European countries and for Europe to pull out all the stops and take the lead. Apart from the influence of trolls of all kinds.

The benefits of globalization questioned.

One of the dominant characteristics of the Western world is democratic decision-making. This is fragile at all times and is again under pressure. Nor is it evident that we live in a democratic system. The American professor David Stasavage recently unraveled in his book “The Decline and Rise of Democracy: A Global History from Antiquity to Today” [9] the mechanisms behind the emergence of democracies. His conclusion is that early democracy flourished where rulers knew little about what people grew on the land and had few ways to find out. This meant that they underestimated taxable products - and therefore missed out on income - or overestimated - and thus provoked non-compliance. So it was better to ask people how much they were growing and listen to their demands in return. That pattern was typical where populations were small and the central state was weak, distant or non-existent.

Consultation was impractical for large populations. Instead, rulers sent officials to see how much was being grown and, soon, how many young men could be drafted into armies. Bureaucracies arose. With their help, the autocratic rulers imposed their will on the local authorities. Once established, central bureaucracies were difficult to dismantle. They liked modernity and new technologies. Early democracy, on the other hand, was remarkably - though not deadly - vulnerable to the rise of modern states and rapid economic development. It disappeared accordingly in many places, while in others it survived. [10] That dichotomy between central and local authorities still exists. Countries such as Germany, Austria and Switzerland have decentralized governance because they have historically emerged from the merging of local governments. Italy has had a similar decentralized history and thus also has highly developed regions and provinces. The Netherlands, which originated from the “United Provinces”, has also found a good balance between national decision-making and regional responsibilities. In the current corona crisis, the 25 security regions in which the country is divided are very useful. France, Spain, the U.K. and Russia, on the other hand, have always been centrally ruled by kings who called upon strong generals and a dominant government apparatus.

The treatment of the COVID19 virus and the decision-making around mitigating the pandemia  has accelerated the demand for decentralization. Even the United Kingdom, where local governments have little authority and regions introduced by Tony Blair and his Labor Party have been abolished, the decision-making is different between England, Wales, Northern Ireland and Scotland. And this has clearly also been borne by the population. Even the Welsh Parliament, which usually took decisions in parallel with England, claims its right of decision-making.

Another traditionally very centralist country, France, is also moving towards decentralization. While the previous Prime Minister Philippe was at the forefront of the fight against the virus, the new Prime Minister Castex is keeping more distance. Decisions are made by local governments, such as mayors and prefects. After all, examples of this local approach in the regions of Brittany and Mayenne were successful. [11]

In the Netherlands, the decision of the national government for the management of the second wave of the COVID19 pandemic leads to a strange discussion. The government is committed to a regional approach to the virus, but mayors see more in national control, in the hope that people will then better adhere to the measures. It is the mayors who make the regional policy, in consultation with their colleagues in the security region. But they appear to be hesitant, perhaps afraid of a lack of support for local measures among residents. [12]

Support for a small scale must indeed be created: people are not used to being confronted with divergent rules within their own country. And yet they have always been there: traffic regulations, speed limits are set per municipality. The method of waste collection is decided per municipality. Whether or not a municipality provides social housing is determined by the municipal council. The decision to opt for sustainable energy is often stimulated at municipal level. But saying that catering companies or conference centers in your city will be locked, while the tap at cafes in the rest of the country remains open, that is very sensitive in view of local elections.

The call for a small scale approach is also voiced by various action groups. Anti-globalists radically oppose any form of globalization, it is seen as a threat to the local culture and economy. In particular, companies are accused of pursuing profit maximization at the expense of labour safety conditions and standards, standards for hiring and compensation of workers, principles for environmental conservation and the integrity of the national legislative authority, independence and sovereignty. [13] However, many anti-globalization activists are not against globalization as such and call for forms of global integration that offer better democratic representation, the promotion of human rights, fair trade and sustainable development and prefer to call themselves “alterglobalists”.

Extinction Rebellion (XR) is an international social movement that demands measures against climate change and opposes the loss of biodiversity. The latter problem actually requires a local decision-making and approach. But the organization tries to score nationally and internationally and thus neglects an obvious step towards decentralization. [14]

The “gilets jaunes” movement in France (with copycats in southern Belgium) is a social movement that has its origins in questioning fiscal policy as well as a sense of degradation of part of the population and neglect of a part of the territories far from the major metropolises. [15] A study published in November 2017 by the Centre de recherche pour l'étude et l'observation des conditions de vie (Research Center for the Study and Observation of Living Conditions) highlights the sense of abandonment by the government of certain populations in France. Three out of ten people think they live in a deserted area and have a sense of desolation that is both geographic and social. Issues related to employment, transport and access to health care are central. This perception is stronger in areas outside major urban areas. [16]  The latter contrasts sharply with the Scandinavian approach, in which people's choice to live in sparsely populated areas is not punished but, on the contrary, is supported by the creation of facilities and employment. The specific approach to the COVID19 crisis in Sweden, where there has been no strict lockdown, and where Sweden is among the best students in the class, has everything to do with the fact that a significant part of the 10 million Swedes live in small villages where there is hardly anything to do. The major sources of contamination in the spring of 2020 were the three major cities anyway, with Stockholm as the outlier. Of the 5,865 dead, 2,400 were in the capital. [17]

French intellectual David Djaïz is a senior official in the French Inspectorate of Finance. He considers that the principle of a nation is not about identity, but about a social contract, about solidarity and social justice. He also assumes that welfare states are strongly linked to the national level. When it comes to safety and security, the nation states will still lead for a long time despite a European supranational level and international organizations such as WTO, WHO etc. People, according to polls, still believe very strongly in the nation state. It took hundreds of years to make them so solid, to build social protection. According to Djaïz, the era of neoliberal globalization is coming to an end. The system locks up. The total freedom in terms of capital and goods unbalances the social contract in many places. He advocates a more austere economy that still leads to social progress. The gap between people and the entire architecture of superstructures, international institutions and treaties needs to be closed. Djaïz: “At a local level, this is still quite easy. There you can involve people much more intensively in the construction of a school or the design of the public domain. But things are also possible at a national level. There you have to counteract the negative effects of hyper-globalization. You can do this by better controlling capital flows, but also by redistributing wealth much better than we have done so far. And we also need to address the deep divide that exists between a number of major cities such as Paris or London and the hinterland. That gap is unsustainable. Heavy investments must be made in these disadvantaged areas. Because that is also explosive. ” [18]

Regional intelligently funded development projects make the difference

A striking article appeared in The Economist on 7/30/2020. [19] It was an outright indictment of the wide disparities that exist in the development of regions in the UK. “Many rich countries have poor regions. America has the rural South and the Mexican border area; Germany has the former East Germany; Italy has the lower part of the boot. But Great Britain is unique. North of a line from the mouth of the Severn to the Wash, and south of Hadrian's Wall, is an area as poor in terms of purchasing power parity as the US state of Alabama or the former East Germany. The regions in between - the East and West Midlands, North West, Yorkshire and the Humber, North East, Wales and Northern Ireland - comprise 47% of the UK population. Whereas only 20% of Germans live in the former GDR, and only 15% if you exclude Berlin. ”

The analysis of the initiatives that have been taken to overcome this backlog over the years is crucial: one can often learn more from mistakes than from successes. Since the 1970s, successive British governments have launched local and regional regeneration schemes at the rate of about one per year. However, the net effect of all those city subsidies, local strategic partnerships, local business growth initiatives, urban region pilots, local business partnerships, regional growth funds and the rest was remarkably insufficient. Regions are lagging behind not only because of bad transportation, bad schools, or bad leadership, but for all those reasons together and more. In the first place, too little talent is often developed in poor places due to the quality of affordable education. Another reason for the poor performance of many UK cities is that they are no bigger. The many urban restrictions mean that people from the surrounding countryside cannot afford to settle in the cities because of too expensive real estate. Some metropolises are so difficult to traverse or drive around that they do not benefit much from their concentration of businesses and people. In 2017-18, 28% of public expenditure on transport - and 46% of capital expenditure on railways - went to London. The capital has the largest corporate agency and the best transportation agency in the U.K. The capital's only real English rival is Manchester, which has been smartly run since the 1990s. The abolition of the regional development societies created under Tony Blair's Labor governments have also failed to help ensure a fair distribution of prosperity between the various British regions.

Scotland is a successful exception. “If you look back, there was no real difference between Scotland and the rest of the UK until the 1950s and 1960s,” says Graeme Roy of the Fraser of Allander Institute, a think tank. But Scotland was represented by the powerful Scottish Office, which lobbied for its interests in Westminster. When local authorities in England lost powers, Scotland acquired them. Thanks to a generous formula for government spending and the opening of the North Sea oil fields, the area became the richest part of Britain outside of South East England.

Another nice private initiative in the context of the regional approach is that of the Desjardin Group in Canada. Desjardins Group is the largest cooperative financial group in Canada and the sixth largest in the world. They have a particularly strong presence in the French-speaking provinces of Canada. As Québec geared up to reopen companies after the lockdown in early May 2020, Desjardins rolled out a strategy to get the economy back on track. To help companies and civil society organizations to remain positive during the restart, Desjardins has decided to support various initiatives. The Group's GoodSpark Fund, which has a budget of CDN $ 150 million, is used for initiatives to boost social and economic activity in Québec and Ontario and will continue to run until the end of 2024. Financial support goes to community initiatives that matter most such as employment, economic vitality, education and the environment. The Momentum Fund aims to help local businesses accelerate growth and create quality jobs - two key drivers of regional economic development. Companies can apply under a wide variety of categories, including digital transformation, ergonomics and physical distance, psychological support, business model transformation, innovation, business succession, international market development, and investment in talent and energy-efficient equipment. Furthermore, the Group organizes an innovation competition, encourages consumers to buy locally, and supports a 12-week learning path “S'équiper pour rebondir” (Preparing your company to return). [20]

SMEs as an excellent means of realizing the new small-scale

SMEs play a key role in the European industrial tissue. They provide two out of three jobs and are central to the success of a new EU industrial approach. However, they are also important in a more equitable distribution of employment across a country. On 11 March 2020, the European Commission presented a specific strategy for SMEs to cut red tape and help the many SMEs in Europe to do business in the internal market and beyond, access to finance and take a leading path in digital and green transitions. [21]  The Commission will support national and local authorities in their efforts to correctly apply European law and internal market rules. [22]

It is a classic recipe for crises: if the economy comes to a standstill, the government can restart the engine by letting the money roll and putting companies to work with public contracts - think of infrastructure works, waste processing, developing a app or providing face masks. Public procurement now accounts for about 15 percent of the European Union's GDP. And with the corona pandemic, which has caused an unprecedented contraction in the economy, the European Commission also sees public procurement as "crucial" in the economic recovery. The designation of SMEs for these contracts is an important objective for the EU: the European target is that 45 percent of all European tenders are allocated to SMEs. [23]  In the Netherlands, for example, SMEs are the winner in two out of three public tenders. This is also the case in Finland, Sweden, Ireland and the Baltic states. In Belgium, Spain, France, Italy, Portugal and Romania, less than 45% of public tenders are awarded to SMEs. [24]

The shift from "scale economy" to "scope economy" (niche economy) requires a policy package that is targeted and specific to the specific socio-economic environment of countries. Building on the relatively limited conventional perception of the role of SMEs in the economy, the evolving global agenda of "sustainable development" puts it at the center of debates. The role of SMEs in the economy is nowadays perceived as two-sided. On the one hand, they offer the relevant sectoral links and on the other hand a solution to exploit the potential of the "job seekers" to become "job creators". Entrepreneurship and the development of SMEs are essentially labor market problems. However, the evolving global production structure offers a new role and relevance to them. The targets of "Industry 4.0" [25]offers both new opportunities and threats to SMEs. As a result, both the market and the workplace have been redefined. [26]

Closing remarks

The COVID-19 crisis has accelerated movements that emerged in the last decennium. Globalization is being questioned. China's place as the world's factory is under discussion. The supply problems caused by the pandemic have also made big companies realize that putting all eggs in the same basket can cause a halt in supply. But there is more to it: European companies are asking themselves more and more questions about flexibility and coordination to manage a globally operating multinational. The quality of the products that come from the world's factory also is often unsatisfactory. [27]  Moreover, the logistical nightmare is overshadowed by the perspective that air and sea transport will no longer be exempt from CO2 taxes. On top of it, public opinion is increasingly turning against the "disposal culture" - cheap disposable products-, which formed the monopoly of Far East production.

When we add to this the desire for innovation and rapidly varying new products, we end up with a production and logistics chain that should be much shorter. This shorter chain can also be realized by rapidly advancing digitization and robotization, as well as by disconnecting the administration from a specific location. Working from home will clearly become a new normal. Companies will have to adapt to this pattern of sporadic attendance, where the office is a hub, not a second home. [28]  This requires smaller buildings and therefore a drastic cost reduction.