The World Is Not “Flat” – ICT Created Global Connectivity, But Regulatory Restrictions And Red Tape Reveal That The Old Mind Set Focused On Barriers Still Prevails – We Are Not That Smart Yet

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By Paolo von Schirach

October 30, 2012

WASHINGTON – Contrary to what you have been told, the “World is not Flat”; at least not yet as flat as it could get. The expression “Flat World” implies a vast web of constructive, self-sustaining horizontal connections, within countries and especially among countries. Because of ICT, super fast and now super cheap fiber optic connections, we can have hours of conversations free of charge with our friends in Shanghai or in Johannesburg. We can set up new business relationships, create new ventures all over the world, almost at no cost. This is of course amazing and altogether good.

No global mind set

That said, we still have to create the mind set, the shared values and the shared language that will allow us to take full advantage of all this inexpensive connectivity. While some of this exists, the evidence is that there is a long, long way to go, not just internationally; but even within countries before we reallyget to a “Flat World”. The point is that the tools may be there, but the mind set is not, across boundaries and even within countries.

No service oriented public administration

For example, in the immediate aftermath of Hurricane Sandy, president Obama stated that he directed all federal agencies to act fast in their relief efforts. Given the severity of the situation, he said, federal bureaucrats should not invoke rules, regulations or procedures to stand in the way of aid delivery to those in need. The Government must cut through the red tape and get things done.

I have no qualms with what the President stated. Delivering help should be the paramount concern. However, this decision to cut through the bureaucratic red tape in this instance invites a major question. Why acting swiftly is warranted only in an emergency and not all the time? By stating that this time we shall make an exception, President Obama implicitly recognized that most of the time red tape hinders effective government action. If it is so, why doesn’t this problem that for sure costs a lot in terms of delays and wasted resources get fixed? America is the home of some of the best information technology companies in the world. We do not lack resources. So, why doesn’t this become a top priority?

Trade is complicated

Farther afield, a recent WSJ news story explains how the Los Angeles Port organizes workshops aimed at teaching people how to become exporters. Again, this also runs against the assumption that being an exporter these days must be easy. You have a product, you identify foreign buyers via an internet search, get in touch with them, find agreement on prices and quantities and ship your stuff to them.

Well, not so. If you want to sell to Russians you have to learn and then follow all sorts of specific and horribly complicated norms aimed at satisfying not your customers, but Russian customs authorities. You make mistakes filling the forms the way they want them and your shipment does not get approved. No approval, no business. Assuming that you already have a customer, what is the point of public authorities creating all these additional barriers?

Voluntary compliance not credible?

Look, in international commerce, there should be certain standards observed by all. But there should be few of them and they should be enforced by all nations that want to trade. For instance, it is obvious that no country wants to import unsafe animal or agriculture products. Hence safety controls. But it would be relatively simple to create a world standard (for example) for slaughterhouse safety and make sure that all such facilities among countries trading with one another meet that standard. The national authorities would issue the certification, and this should suffice to satisfy the authorities of the importing country.

But we are not there. There are issues about agreeing what the standards should be, and issues of trust. If a slaughterhouse in country that does not meet the standards X gets a certification because of a bribe to a government official, then their products may be unsafe. Since not all countries adhere to the same standards, we do not trust one another (in some cases with cause) and so the “World is not Flat”.

Self-defeating welfare programs

Last example. The WSJ reports that welfare recipients in Minnesota have to keep an exactingly accurate log that records all their activities and interactions aimed at finding work in order to retain their eligibility for their welfare check. Paradoxically, doing one’s best to stay in compliance is so complicated that it becomes itself a “job”. It is so complex and time consuming that welfare recipients require counseling from the welfare authorities in order to learn how to stay in compliance with welfare rules. Because all this, welfare recipients, instead of looking for work, worry about keeping their log in good order, so that they can get more welfare. This defies the goal of welfare as a safety net that will provide temporarty assistance.

Mind set focused on procedures, not outcomes

There you have it. The US President says that “this time”, because we are dealing with a hurricane emergency, it is alright to forget about red tape. But this means that all the other times thinking about ways in which government should provide services in a simple and user friendly fashion is not a priority. And why is good service delivery not the top item on the to do list? Because the main concern in the minds of public officials is not to deliver the best services but to stay out of trouble. Many rules and strict compliance with them supposedly lets the bureaucrat off the hook. In case something bad happens, he/she can claim to have acted “by the book”. At the state level, same story. Welfare programs are far less effective than they could be because they are also wrapped in red tape.

And globally free trade is a noble aspiration, not a reality. Trade exists, and it is easier today to execute transactions than it used to be. But arcane regulations and arbitrary restrictions still dominate in many countries; and so trade is only for the hardened pro, not for the small scale would-be international businessman.

No shared values complicate transactions

The internet and super fast fiber optic cables are great; but making the “World” truly “Flat” will require profound changes in human psychology leading to the creation of shared values. Technology may have given us the tools, but we cannot use them fully, because we do not trust one another enough to really open up all systems.

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