Sunday, October 18, 2015

Mohamed A. El-Erian: Government's Self Disruption Challenge

In a new article on Project Syndicate, Mohamed A. El-Erian talks about how the gridlock that exists in the system is blocking disruptive change. He notes that if the gridlock persists within governments, disrupters will "leave them and their citizens behind." Below are some quotes from the article.


"One of the most difficult challenges facing Western governments today is to enable and channel the transformative – and, for individuals and companies, self-empowering – forces of technological innovation. They will not succeed unless they become more open to creative destruction, allowing not only tools and procedures, but also mindsets, to be revamped and upgraded. The longer it takes them to meet this challenge, the bigger the lost opportunities for current and future generations.

Self-empowering technological innovation is all around us, affecting a growing number of people, sectors, and activities worldwide. Through an ever-increasing number of platforms, it is now easier than ever for households and corporations to access and engage in an expanding range of activities – from urban transportation to accommodation, entertainment, and media. Even the regulation-reinforced, fortress-like walls that have traditionally surrounded finance and medicine are being eroded.

This historic transformation will continue to gain momentum as it expands in both scale and scope. But its benefits will not be fully realized unless governments take steps to empower the forces of change, ensure that the massive positive externalities are internalized, and minimize the negative impacts. Unfortunately, this is proving extremely difficult for many advanced-country governments, partly because the failure to recover fully from the recent crisis and recession has undermined their credibility and functioning.

. . . . . 

How economies function is changing, as relative power shifts from established, centralized forces toward those that respond to the unprecedented empowerment of individuals. If governments are to overcome the challenges they face and maximize the benefits of this shift for their societies, they need to be a lot more open to self-disruption. Otherwise, the transformative forces will leave them and their citizens behind."

My added comments:

Mr. El-Erian says what we have been saying here for some time. The gridlock in place everywhere in the financial and political systems has slowed change to a snail's pace. Instead of the world moving towards more global cooperation, the opposite is happening. Things are breaking down into a more de-centralized system with various competing special interests basically stalemating each other. While this impedes policy making at a global level, it does give the individual more of a voice. Disruptive individuals operating outside the constraints of the gridlocked system may have an opportunity to help change the world for the better while those inside the system fight to preserve their power and the status quo.

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