Returning Community Attention

Economists say that measuring a person's well - being is the quantity and variety of goods he or she can consume. Consumer opportunities are enhanced by granting firms the freedom they need to benefit from new technologies, labour force diversity, scale economies and furniture. Consumption is the goal; production is the means of achieving it. Markets, instead of communities, are unit and the object of analysis.

No one can deny that this consumer and market-based economy vision have produced much fruit. The vast amount of goods available in mega-dawns or downs of Apple in every major city in the world have been unimaginable a generation ago.

But obviously something hasn't worked already. Economic and social divisions within our societies have provoked a wide counterattack from the United States, Italy, and Germany to developing countries like the Philippines and Brazil. This political turmoil suggests that economists' priorities may not have been very accurate.

Two books, one expected to be released from Raguram Ryan and another published this month by Oren Cass, review our world view economically and argue that we should put our local communities in center. Sustainable families, good jobs, strong schools and safe public spaces, as well as pride in local cultures and history these are the main elements of prosperous societies. Neither global markets nor nations can properly supply them, and sometimes markets and states prevent them.

The authors come from different views. Ryan is an economist at the University of Chicago and former Governor of the Reserve Bank in India. Cass is the centre right of the Manhattan Institute for Political Research and was the director of domestic policy for Republican Mitt Romney's presidential campaign. An economist from Chicago or a moderate republic is not expected to necessarily deal with markets and hyperglobalisation with scepticism. But both are concerned by what they see and by the effects on communities.

Ryan calls the community the third pillar of prosperity as important as the other two pillars of state and market. Like the uncentralised state power, it writes, unmanaged globalisation can destroy local communities. Cass is steadfast that US trade and immigration policy should focus on American workers first. This means making sure that labour markets in local communities are healthy and there are abundant jobs and well-deserved salaries. The two authors stress commercial profits and reject the protectionism of American President Doland Trump. But they also agree that we may have gone too far in hyperglobalization and have not paid enough attention to costs in communities.

When a factory closes because a company has decided to provide a job with an outside bidder, it loses more than hundreds (or thousands) of jobs away. The impact is multiplied through reduced spending on local goods and services, which means workers and employers in the local economy feel hit. Government tax revenues are also introduced, so there is less money to spend on education and public goods. Crime, family destruction, addiction and other social vices follow.

The average response of economists is to call for “greater job market flexibility”: workers must leave the area in depression and seek jobs elsewhere. But as Cass reminds us, the geographical movement should be counterweighted by “the ability to stay”. Even during the time of the major departure, some of the population stands behind and needs jobs and solid communities.

Economists can recommend compensation for losers from economic change, through social transfers and other benefits. Leaving aside such transfers, it is doubtful if they are solutions. Unemployment can hinder the individual and community welfare even if consumption levels are supported through state-made money.

Recently, only through the creation and expansion of well-paid jobs can local communities become vital. Cass's proposal is to encourage employment through subsidies. Ryan emphasises the role of local leaders who can mobilise community assets, generate social engagement on the part of local residents, and create a new image of the entire context more supportive of state policies and managed globalisation.

Other economists have amended local target production programmes, partnerships between local employers and universities. Others have recommended local spending, such as training programmes for small and medium enterprises.

We still have no guarantee of which works best and a large amount of policy implementation is needed to make progress. But the urgency of the move is highlighted by the fact that technological trends threaten to exacerbate the communities' current problems. New digital technologies tend to show economies the scale and impacts of the network, which can produce focus instead of location of production. Instead of distributing profits, they create markets where the winner takes them all. Globalising production networks adds to such efforts.

How we balance these forces with the needs of communities will form not only our economic future, but also our social and political environment. As Cass and Ryan show, it is a problem economists can no longer ignore. /Project Syndicate/ BIRN/