Moving Beyond ‘Survival Mode’ – Balkan’s Core Challenge

The hugely popular computer game Minecraft has two modes – survival and creative. In ‘survival’ mode the player must collect resources, build structures, battle mobs and manage hunger. In ‘creative’ mode, the player enjoys good health and peace. In taking full advantage of this hunger-free situation, the player can create large constructions more easily.

It seems to me that the Balkans is still stuck in ‘survival’ mode, and it has been so for the last 1500 plus years. Since the days of the Byzantine and Ottoman empires, Balkan people have related to the predominantly autocratic power structures in three main ways, which also represent the three cornerstones of the ‘survival’ mode:

3 ways survival system

Brown-nose the system

All of the Balkans was under the authoritarian and centralistic rule of the Ottoman Empire, and the Byzantine Empire before that. As new nation-states most of the countries explored monarchy, albeit for a short period, with some hints of infant democracy. Most of the Balkan states were pulled into or participating actively in two internal wars and two world wars. Foreign military forces occupied their lands. In the post World War II era, the Balkan countries became either socialist or communist. Up until the fall of the Berlin Wall the predominant form of government in the Balkans was dictatorial, led by one person, be it an Emperor, Sultan, Tsar or a Politburo Secretary.

To stay alive in such as system, people showed blind obedience to the ruler and his armory of political power. To move ahead in such as system, a person had to go beyond quite obedience and show vocal support of the ruler, system and ideology. A person’s power and wealth were dependent on the closeness to the ruler. This was the age of palace intrigues and backroom deals, a constant fight for the protection and blessing of the ruler. Tributes, in the form of material goods, soldiers and blind commitment to the prevailing ideology, were paid to the ruler to secure one’s position at the Court or in the Party. In return, the ruler created space for the lackeys in which they could do very much what they pleased at the cost of the local population.

Cheat the system

While the ‘game’ of winning the blessing of the ruler was limited to a very small minority, the large majority of people in the Balkans could only dream of such a good fortune to fall upon them. For the ordinary man and woman life was hard, most often played out as a subsistence farmer on a small plot of land. Every man was on his own, and the rulers did their best to keep people apart, applying the ‘divide a rule’ method for building mistrust among people and blind obedience to the ruler. Horizontal cooperation among farmers, an otherwise favored method to reach higher yields, was not encouraged by the ruler. Economies of scale and better management of the agricultural process would release some ordinary people from the daily chores of survival, giving them the opportunity to think about life, science and worst of all politics. Keeping people hungry, tired and ignorant is always the best way to uphold a draconian state.

Unable to organize themselves into viable political forces strong enough to challenge the Emperor, Sultan, Tsar or Politburo, ordinary man turned his attention inwards, putting himself and family first. With no means available to change the system as a whole, Balkan man set out to make the most of what was in front of him. To fight off the constant harassment of officialdom, demanding tax, conscription and obedience, the ordinary man adopted a million creative ways to cheat the powerful and the system. Agricultural production was hidden in secret storage spaces in the mountains far away from the Ottoman tax collectors, a habit that continued under the Tsars’ rule. During communism, people played lip service to the atheist gospel of Marx and Lenin, while sneaking off to church on Sunday mornings. “The state cheats us that they pay us, and we cheat the state that we work” is probably the most telling proverb of the communist era. As the systems before it, the communist system was dysfunctional and deeply hypocritical, as George Orwell’s master-piece ‘Animal Farm’ so vividly describes. Cheating the system had by now become a ‘way of life’, a habit and a norm. And as we all know, “old habits die hard”.

During the times of autocratic rule, Balkan man could not rely on the official system to supply him with anything else but the most basic needs of subsistence and protection. And even then the supply was highly arbitrary. To stay alive, ordinary man had to look after himself and he took what he could. With no equality under the law, only the supreme ruler and his henchmen had the authority to judge if a man had taken too much. When caught with the hand in the cookie jar, the ordinary man were most likely to attempt to ‘brown-nose the system’ to get out of the jam.

Hate the system

Throughout the authoritarian rule of the Balkans, people learned to hate the system. Ordinary man saw nothing but hardship being served by the Emperor, Sultan, Tsar or Politburo. If he was very fortunate and witty he could brown-nose his way to a powerful position, but again, for the overwhelming majority time was spent cheating the system merely to survive. As a result of the fundamental divisions in society, between the have’s and have not’s, between the ruling elite and ordinary men with no rights, people thought of the world in terms of ‘us’ and ‘they’. ‘They’ were the enemy, no matter their constitutional status or nationality. ‘They’ represent a system of unlimited and arbitrary application of political power. And the badness of ‘they’ gave ordinary man the moral justification to cheat the system. Unfortunately, the mistrust between the rulers (officials representing state institutions and public administration) and people linger on in the Balkans even in the more democratic setting of the present.

Conclusion

In order to move forward in our development, we must first accept that it was the application of a combination of context specific tools that helped us survive 1500 years of authoritarian regimes in the Balkans. From the constant strive to survive a set of specific norms and values emerged, which justified and upheld these individual survival methods. Unfortunately, it is the same norms and values that reinforce an authoritarian mode of government. Consequently, we must recognize that some of our norms and values are not naturally supportive of the democratic and free market systems.

We need to change within ourselves first in order for our collective system to change! The other way around is not culturally feasible, as the last 25 years of social, political and economic transformation based on international ideas and blue-print solutions has shown. Some of our norms, values and habits are stuck in the ‘survival’ mode of the past, which effectively hinders the emergence of a more ‘creative’ mode in society.

Today, the new political elites in most Balkan countries are more or less deliberately perverting the new societal ideas of democracy, civil liberties, equality, justice, free speech and competition. Deliberately or not, they are effectively hindering the development of a more civil, informed, competitive and equal societal system to emerge, capable of delivering real improvements in the well-being of the majority of citizens. For the political elites this new world of pluralism, openness to share different worldviews and free speech threatens the traditional mode of government – “By the few, for the few”. When in power, the newly elected officials simply do not know any other way of executing power than the authoritarian way.

To execute power like an Emperor, Sultan, Tsar or Politburo Secretary is the historical norm. The political culture that upholds authoritarianism is still alive and kicking in the Balkans. In post-1989 Balkans, there is a tendency among the electorates to lift up and elect anybody with the characteristics of an enlightened Despot! A super-human leader who single handedly creates a strong and wealthy state, in which citizens can go on doing what we do best – brown-nose, cheat and hate the system for their individual and short-term gain. This is a far cry from the informed, vocal and engaged citizenry required to uphold a successful democratic political system and a functioning capitalist economic system for that matter.

After 1500 years of looking upwards for societal change, it is very difficult for people to realize that democracy must be built bottom-up, needs continuous nourishment and requires active citizens in order to function properly. There is a democracy deficit in the Balkans, which the political elites are quick to misuse to their own advantage. This is one reason why, despite their declared commitment to democracy and free market systems, the Balkan countries remain incapable of delivering real improvement in the well-being of the large majority of the population. The inability to switch from ‘survival’ to ‘creative’ mode is locking the Balkans in a vicious circle of authoritarianism, ignorance and poverty. As a consequence, people’s desire to leave the Balkans remains high, especially among the young, educated and good.

The historical and cultural contexts of the Balkans makes building viable, democratic nation-states with competitive private sectors and participatory citizenry so much more challenging. Since 1989, the drive to support to the Balkans in the process of social, economic and political transformation is led by foreign institutions and organisations, such as the World Bank, IMF, UN, EU and multiple other bilateral and multilateral donor agencies and Non-Government Organisations. The EU has opened the door to membership to all Balkan countries when they can fulfill the Copenhagen criteria:

  • political: stability of institutions guaranteeing democracy, the rule of law, human rights and respect for and protection of minorities;
  • economic: existence of a functioning market economy and the capacity to cope with competitive pressure and market forces within the Union;
  • acceptance of the Community acquis: ability to take on the obligations of membership, including adherence to the aims of political, economic and monetary union. (Europa.eu)

Since democracy and free market competition is historically alien to the Balkans, introducing them is an enormous task and responsibility for the international sponsors. Taking into account the never-ending struggle to run fair elections, uphold a professional political dialogue, and keeping the executive and judicial powers away from each other, meeting the political criteria appears a long way off. The Balkan countries’ whooping trade deficits show, beyond any doubt, that none of them are ready to meet the economic part of the Copenhagen criteria.

There is a tendency among the relatively inexperienced and poor domestic political elites and citizens to view the international representatives as a new class of rulers. The internationals hold the key to future and fortune, and they have the financial resources that these countries desperately need to transform. All the Balkan countries have to do is to dance along to the tune of the new powers. It follows that the ‘new rulers’ receive the same treatment as all other rulers before them – they are brown-nosed, cheated and hated. Flattered by the attention and blinded by power, there is a strong tendency among bureaucrats within the international institutions to ‘go native’, become prisoners to the worldviews of the few and establish lucrative networks with the local business-political elite.

Rather than promoting the virtues of democracy, civility, transparency, justice and free markets as the corner-stones of a system capable of improving people’s lives, the international civil servants, like the long line of native rulers before them, surround themselves with sycophants, whose only mission it is to distort and pervert the transformation process to their own advantage. It’s a classic case of “do what I say, don’t do what I do” and even the smallest child can see through that hypocrisy.

To successfully support the struggle of transformation in the Balkans, international institutions and organisations must stand firm in their beliefs and commitment to the values, norms and habits that uphold democracy, civility and free markets, and they must act in accordance with these beliefs and principles. They cannot not allow themselves to be brown-nosed and cheated, and disliked as a result of association with the domestic ‘they’.

If the mission to change the Balkans away from a history of ignorance, war, despotism and poverty fails, it’s because the world’s proponents of democracy, liberty, self-determination, civil rights and free competition did a lousy job in convincing the domestic elites and populations how the whole system actually works (not only its individual parts) and where the satisfaction is in pursuing an inclusive development mission, which focuses on the entire population, rather than on the lucky few at the top of the societal food-chain.

Posted in Uncategorized | Leave a comment

Stakeholder engagement is key to achieving ‘good change’ in international development projects

The Association of Project Management (APM) defines stakeholders as ”the organisations or the people who have an interest or role in the project, programme or portfolio, or are impacted by it” (APM, 2012, p.243). In international development projects supporting private sector development, the key stakeholders include the funding donor agency, state institutions (responsible ministries and agencies) and private enterprises. Stakeholders play a key role in defining a project’s “vision of a better society (‘well-being for all’)” and in influencing the direction of the development process (Chambers cited in Thomas, 2000, p. 23).

I would argue that the predictive project management approach, as the preferred management choice in donor agency projects, influences stakeholder classification. In order to accommodate powerful donor agencies’ preference for control and predictability, stakeholders who share the same inclinations, such as local state institutions get elevated and treated as primary rather than secondary stakeholders.

stakeholder classification 1

In Private Sector Development (PSD) projects, this means that state institutions become ‘end-users’ (Dix et al cited in Open University, 2014, p. 21). As primary stakeholders, the state institutions influence the project’s focus, away from company level interventions to elaboration of policies, legislation, strategies and institution-building. In turn, the role of enterprises in project governance is significantly reduced, which has a negative impact on project outcomes. Project communication moves away from enterprises towards state institutions and donor agencies, and communication often becomes reporting.

From this mix-up of stakeholders it follows that stakeholders may review project outcomes very differently. While some stakeholders see predictable ‘outcomes’, others see the wrong things being delivered. Where some see planned targets met, others see no real improvements in the situation.

Involving a wide variety of stakeholders in project design, implementation and evaluation means nursing a partnership for development where local stakeholders’ are engaged, their capacities and sense of local ownership are strengthened. In such a scenario we are no longer just to giving aid, but “doing things with people not for them” (Robinson, Hewitt and Harriss, 2000, p. 12). Unfortunately, in my project management experience, we are not only doing it for them, we are often doing it for the wrong people.

In my opinion, donor funded PSD projects are low on complexity, novelty and technology due to low and distorted stakeholder participation. Broader stakeholder participation would require the project manager to relate to multiple worldviews and engage in a situation, which local stakeholders may characterize as complex and uncertain. Such as situation is conducive to neither blueprint solutions nor the predictive project management approach. Yet donor agencies continuously frame the situation as stable and predictable in order to fit their own standardised methods and plans, rather than making the project management approach more agile to better suit the complex situation.

By engaging local stakeholders in a systemic inquiry, exploring and making sense of the situation together, identifying common interests and defining project interventions that are ‘systematically desirable and culturally feasible’, the project manager may find context-based answers to the ‘what’ and ‘how’ questions in development (Ison, 2010, p. 248).

Unfortunately, the predictive project management approach does not call for an on-going process of stakeholder-driven inquiry. The project targets are pre-determined and ‘locked in’ the log frame. Also, the donor’s project life cycle is often too short for time-consuming stakeholder participation.

In analysing the inter-relationships among stakeholders, I focus on four elements – Classification, Governance, Communication and Evaluation.

1. Analysis, identification and classification

In PSD projects there are three key stakeholders – enterprises, state institutions and donor agency. Stakeholders have their own interests, and their relative power dictate to what extent they can materialise these interests. I use the Mendelow’s matrix to map the power-interest dynamics:

power & interest

(Adaptation of Mendelow’s matrix, The Open University, 2014, p.23)

The donor is the project sponsor and the project’s most powerful stakeholder. The state institutions draw their power from the authority to approve project outputs. The interests of both are limited to project outcomes. The enterprises have a high interest in projects as their inputs may contribute to improvements in company performance, outputs and profits.

Without any demanding ‘key players’, the project manager only needs to keep enterprises informed about activities, and state institutions/donors satisfied with project progress. Again, the power and interest dynamics support the predictive project management approach. For real improvements to occur, state institutions and enterprises must become ‘key players’, must assume a higher degree of project ownership and responsibility and better influence the project goals.

2. Project governance

The APM defines ways how good governance is demonstrated, including ““ensuring that stakeholders are engaged at a level that reflects their importance to the organisation and in a way that fosters trust” (The Open University, 2014, p.16). Placing the enterprises outside of the project governance body has the opposite effect. The enterprises are disengaged from the project organization, their importance as drivers of change is not respected and the general distrust between public institutions and enterprises is reinforced.

PSC graph 1

(Adapted from ISO 21500 in The Open University, 2014, p. 20)

In line with ISO 21500 the role of the Project Steering Committee (PSC) is to contribute “to the project by providing senior level guidance to the project” (The Open University, 2014, p.21). In PSD projects, this will only occur when enterprises are on the PSC, supplying the project manager with up-to-date market and enterprise information, upon which demand-driven interventions are designed. In turn, project impact on PSD will increase.

3. Communication

Communication means exchange of information. However, in my experience, donor and state institutions influence communication, transforming information exchange with enterprises into one-way dissemination.

This approach to communication fits well with the predictive project management’s emphasis on control and reporting, rather than on open dialogue among stakeholders. In my experience, enterprises are mainly passive receivers of project news. This would dramatically change if the enterprises where ‘key players’ in the project. Then, project managers would need to, in line with PMI directives, develop and implement a detailed stakeholder communication plan, to address directly the “needs and requirements” of each stakeholder to manage and control communication (The Open University, 2014, p. 29).

4. Evaluation of project outcomes

APM states that “quality management is a discipline for ensuring that outputs, benefits and the processes by which they are delivered, meet stakeholder requirements”. The project quality plan calls for the project manager to “agree with the project sponsor and other stakeholders” on objectives of the quality plan (The Open University, 2014, p. 68). This means that donors and state institutions should invite the enterprises to define the quality standards in a PSD project. However, in my experience the quality management system is designed to ensure that the outputs, benefits and delivery processes meet the requirements of donors and state institutions and not necessarily the enterprises.

In relation to the Post-Project Review (PPR), McLeod et al highlight that understanding stakeholders’ views can “yield rewards for the organisation in improved contribution to organisational knowledge” (cited in The Open University, 2014, p. 48). Among the three stakeholders, private enterprises see learning differently. Failures are accepted as something natural and are channelled through an internal learning process, creating an empirical base for improvements.

Donor agencies and state institutions do not act in a competitive market, which in turn shapes their worldviews and understanding of the causes of social change (Hyatt and Kaplan, 2006, p. 170). Moreover, public organisations’ fear of their failures being exposed to the outside world locks them “out of learning”, incapable of reflecting on own mistakes (Pinder, 2007, p. 12). The donors, through the predictive project management approach, impose a performance measurement system on project management that focuses on accountability, rather than on learning and performance improvements (Hailey and Sorgenfrei, 2004, p. 4).

Conclusion

In analysing my project management experience, I conclude that the main source of the chronic failure to deliver more competitive local companies, economic growth and employment (‘good change’) is a mutually reinforcing cycle of prioritizing the ‘wrong’ stakeholders, who in turn defend the predictive project management approach because it favours them and limits the influence of other stakeholders (i.e. enterprises in PSD).

Conclusion graph 3_2

The predictive project management approach is “linear-rational, plan-driven” and predictable, turning monitoring and control into a simple comparison between project expectations and achievements (The Open University, 2014, p. 9). This approach is typically found in engineering projects where framing a situation is fairly one-dimensional and technical. Still, donor agencies insist on applying the same management approach in PSD projects in local socio-economic contexts, which are inherently more complex and uncertain.

Rather than modifying the project management approach to be more adaptive, “change-driven” and responsive to multiple local stakeholders’ worldviews, the donor agencies and supportive local state institutions use their power to influence the classification of stakeholders (The Open University, 2014, p. 9). In turn, they use their influence to tailor project governance, communication and evaluation to reinforce their own power and to suit the predictive project management approach, which they themselves benefit from.

Recommendations

My core recommendation is for similar PSD projects in the future to be more agile. Until now, the predictive project management approach is simply not delivering on donor agencies’ promise of ‘good change’. A more adaptive approach allows project managers to be more flexible in the design of project interventions, rather than sticking to old blueprint solutions. The agile approach emphasis ‘consultation’ with stakeholders throughout the project cycle (planning, implementation, monitoring), which indicates that stakeholders’ worldviews and opinions are important and possess opportunities. Finally, the agile approach highlights the importance of ‘rapid iterations’, repeating a process, as a means of achieving real improvements in the situation (The Open University, 2014, p. 15).

Adaptive approach’s advantages (The Open University, 2014, p.16) In my project management experience
Turn unpredictability of requirements into a positive opportunity. Accepting complexity and uncertainty in the situation opens up for development solutions anchored in local contexts.
Recognise and manage changing needs of sponsors or customers by working closely with them. This means a more inclusive project governance structure, in which customers, i.e. enterprises are members of the PSC.
Reduce bureaucracy by planning in smaller stages, as requirements are determined. By conducting regular consultations with stakeholders their needs are picked up earlier, and corrective actions taken faster.
Improve the chances of success for particular types of project. Freeing private sector from predictive management approach’s plans and controls means it can deliver tangible improvements.

The desired end result to be achieved by integrating components of the agile project management approach is to deliver real improvements in the situation of project’s end-users (primary stakeholders), meaning improvements in enterprises’ performance resulting in higher turn-over and employment (‘good change’).

However attractive the benefits of a more agile project management approach may seem, it constitutes a direct challenge to the proponents of the predictive project management approach. To argue for a more adaptive approach is to argue for a fundamental shift in power away from external donor agencies towards more local ownership and responsibility in the development process. There is a balance to be struck here between ensuring that taxpayers’ money is spent wisely (good governance, transparency) and giving local stakeholders the authority to shape project design and implementation in ways they believe will generate ‘good change’.

Posted in Uncategorized | Leave a comment

Meet ‘the’ most important person in the Balkans

Is it a hero from ancient times? A local strongman? A seasoned politician? No, no, think again, who is that every person in the Balkans really worry about? Answer: The neighbour.

Yes, only the neighbor has the power to make people think twice about how they go about their daily lives in the Balkans. “Don’t do this, don’t do that, what will the neighbours say!” If your car is not spotless clean, your mother–in-law will tell you to park around the corner, “what will the neighbours say!” If the children are too loud on the playground, again an adult will insert, “quite children, what will the neighbours say!” And when, God forbid, somebody gets angry and yells in the apartment, somebody will surely intervene and advise, “be quite, what will the neighbours say!”

What mystical powers does the neighbor hold, that so effectively releases corrective actions among people, powers that the law enforcement agencies can only dream of? People in the Balkans have little faith in the law, and in particular in the equal enforcement of the law. Or as the Bulgarians put it, “the law is a door on an open field, who goes through it? People’s low trust in the legal system is a result of hundreds of years of applying another type of law in the Balkans – the Law of the Jungle, where society’s strongest always enjoy a ‘get out of jail’ card, while the prisons get filled with petty crime offenders.

No, the soft power of the neighbor originates from somewhere else. Perhaps it is the ‘shame’ factor. It may be the risk of becoming ‘the talk’ of the neighbourhood café that make people change their behavior. But this is also where the reaction gets paradoxical. In general, people love to sit around and dish out negative gossip about the same neighbours whose very thoughts gives them anxiety.

In general, the voluntary inter-action among neighbours is low. We hesitate to pay for the maintenance of the common stairs, even the elevator, in some odd hope that somebody else will do it. Who? The state? We even let the children play in a dirty outdoor playground, rather than making the attempt to organize the parents of the same children to clean it up. Why? Better do nothing, than fail and loose face! Loose face, in front of whom? The neighbours!

In other words, in practice, we don’t really care about our neighbours, let alone cooperate with them for a common good, but at the same time, in theory, we fear and loath them. That’s one vicious cycle, which does not make any sense at all.

Perhaps the fear of the neighbor arrived with communism, back then when one half of the population spied on the other half. Back then fear was justified, bad things happened to those that dared to speak the ‘wrong’ things. But the time of the Gulags is 25 years old now. Nonetheless, people continue to mistrust and fear each other. Why? Not to speak freely, not to let the guard down has become a cultural norm, a survival mechanism. However, this low level of inter-personal trust make the emergence of a viable civil society difficult. A healthy and vibrant civil society depends on voluntary collaboration among people and free speech. In line with political culture theories (Putnam), a strong, vibrant and responsive democratic political system requires the existence of an equally strong, motivate and influential civil society. Without it, political power quickly gets centralised and an authoritarian political regime emerges. Sounds familiar?

So, one direct way we can all contribute to a more viable civil society and more responsive state in the Balkans is to make peace with ours neighbor, invite them for coffee, talk and find common interests and aspirations (such as a clean backyard playground), and find ways of working together to achieve them.

Posted in Uncategorized | Leave a comment

The Chicken or the Egg

According the EU statistics, the Bulgarians are the most unhappy in Europe. Who can blame them? GDP per capita in 2011 stood at €5.200, about one fifth of the EU average, and light years after the world’s happiest country, Denmark, with a GDP/capita at €43.200. It’s a long way to Tipperary, as the song goes, and for transitional countries like Bulgaria to catch up with more innovative, productive and efficient ‘old’ (North-West) Europe is made so much more difficult by the fact that their own society and state appears to be in complete disarray at the moment.

After having stood in three different queues for three long hours, in the open sun measuring 35 degrees in the shadow to register my car (no shelter, nowhere to sit, nowhere to buy a bottle of water) and having been verbally abused by a civil servant for asking too many questions about how to fill in their non-comprehendible forms. And after having received a notice from the tax department in August, dated February, calling for me to pay a tax I already paid in April, there is this big question itching in the back of my head. Just like the success of a private company depend on its capability to maximize its internal resources and seize upon external opportunities to succeed in its business mission, isn’t it just the same for nation-states? If a state and society is not capable of transforming its internal resources (human, natural, infrastructure, etc.) into a model capable of delivering good schooling, health-care and the pursuit of happiness for its citizens, is it not failing in ‘its’ mission”? Of course it is! But while private enterprises go bust if they under-perform, nation-states can linger on, and on…

So are some states condemned to eternal failure in a world of fierce competition, relentless innovation and globalisation? Probably, if the nation-state doesn’t change the way it run its ‘business’, which for most countries in the Balkans will require them to adopt of some relatively new habits, norms and values. After 7 years as full Member of the European Union, what ‘European’ values have Bulgaria adopted? Not many.

No, the question on everybody’s mind in Bulgaria this summer (at least I hope so) is this – “After 25 years of experiments with democracy and the free market, is this is the best we can do?” Any taxi driver in Sofia will tell you the constraints to societal and economic development in the country, deeply embedded in a lethal mix of incompetence, greed, corruption, nepotism, brain-drain and a complete loss of civilized values (or in simple terms, the capacity and willingness to care for more than myself and my immediate family).

Let’s return to the car registration example. Today, public administration consists of civil servants who are neither ‘civil’ nor do they ‘serve’ the general public. Public administration represents the democratic system on a daily basis for the citizens, yet this is where democracy breaks down on the spot. In other, more mature societies, you as a citizen, get the feeling that the civil servants work ‘for’ you and the state institutions are organized to suit ‘you’, and not them. Car registration in most ‘old’ EU countries is now done electronically. No need to leave your home or work place, none of ‘your’ time is lost.

In Bulgaria, and most other countries in this part of the world, the public sector is no less than the extended arm of local, regional and nation government. Public administration is a job creation scheme for relatives and the political party faithful. As a consequence, nobody is hired based on competence or motivation. The staff member’s loyalty is not to the organization and performance is not measured towards a transparent job description, but by how well the staff member serves the patron who put him/her there. It’s a machine of corruption and blatant misuse of state funds. It’s the number one reason why people in Bulgaria are unhappy and why young people are leaving the country. The system is unfair and promotes misuse. Yet nobody seems to care, let alone do anything about it. Why? Money and power reinforce each other in a vicious circle, which destroys values such as dignity, transparency, respect, hard-work, trust, etc. Which democratic society can exist without these core values? None.

This summer, in the town of Veliko Turnovo, the head of the vehicle registration service (public agency) was arrested for taking out a “hands-off fee” from every company registering a commercial vehicle. This was a pure racketeering scheme, according to which only those vehicle owners who had paid the ‘fee’ would be let alone by the controlling organs. This is just one example, go ahead and ask the taxi driver about the other thousands and thousands of schemes to steal from the state, to steal from the citizens, to steal from our children. If you add it all up, you have a pattern of thinking or a cultural behaviour, and where you have a system you will have the values and norms to uphold such a system. But it’s a system based on short-term thinking and greed, built to serve the strong at the cost of the weak in society. In states where the law of the jungle prevails over the law among equals, there is no future.

By always looking inwards for new sources of income, rather than outwards, the system is inherently conservative and cannibalistic. It is a system incapable of creating new wealth. The system feeds off the small productive population (the few people that actually work) and private sector (the few enterprises that actually produce and sell services that the market wants), like a parasite. The ever expanding state and public sector keep their faces above water only by increasing taxes and regulations on the productive sector, and taking new credits to cover ever appearing new holes in the budget and feed themselves and their patrons, leading to mountains of debt for the next generation to pay back. (hence, we steal from our children as well)

On the other hand, an outward looking state and society is in tune with the realities of the world we live in, now based on the free flow and globalization of goods, ideas, funds and people. It’s a challenging and ever changing world we live in. To survive, let alone prosper, nation-states must invest wisely in its human resource and supportive infrastructure, work hard, be creative and innovative, seek consensus on the big questions, show tolerance and discipline, and make the public sector more effective and customer-oriented. For some countries, such as Bulgaria, where real poverty is just around the corner for a large portion of the population, where people have lost all faith in politicians and civil servants, where the talented youth are either leaving or thinking of leaving the country, the original question remains – what comes first, “the chicken or the egg?” Does the state and its extended arm of public administration change first, or society change first and put pressure on the state to alter its ways?

In my book, it is the task role of the state to ‘blink first’. Two main things need to happen for people’s lives in Bulgaria to improve. First, the state should be reduced by half in size, meaning everybody from the politicians to the civil servants at the local car registration agency, The performance of the remaining 50% should be measured towards detailed job descriptions. Their salaries should be increased, for them to make a decent living on the salary alone, and in order to fence off pressure to engage in old corrupt practices. As a public servant once told me: “Our salaries are low, BUT our profits are high”. This norm has to go in order for the new Bulgaria to emerge.

Second, bad behaviour must be punished. This means the judicial system must divorce itself from the executive branch of government, come clean and start sentencing corrupt officials, everybody from ministers to civil servants caught abusing power and misusing public funds, to extensive jail terms. As the joke goes – “In Bulgaria the bad guys don’t call their lawyers, they call their prosecutors!” Or as the more recent joke goes – “In Italy the maffia is in the State, while in Bulgaria the State is in the maffia!”.

Not until bad behaviour is punished will the abuser change his/her habits, this we all know from raising children. Not until the bad guys are penalised, will we know what the state recognizes as ‘right’ and ‘wrong’. Not until the political and business elite live by the same standards and laws as the rest of society will new modern and democratic norms and values find fertile ground in Bulgaria. State institutions and the civil servants will start to show some humility and humanity. People will then begin to appreciate and trust the state institutions again. It will be a slow and cumbersome process, full of trial and errors, but it is a path of deliberate change that has to be completed in order to make Bulgaria, state and society alike, fit for the 21st Century. So, go chicken, go!

Posted in Uncategorized | Leave a comment

Responsibility goes beyond private ownership

The sales of home cleaning products, such as Domestos and Mr Proper, are going through the roof in the Balkans. Shoes are left at the front door, and cloths are changed not to bring outside dirt into the home. Family members and/or external cleaners take great care to keep the home spotless clean. Norms, values and cultural habits are in place to uphold this tidy behaviour.

Now, when the persons leave home, the norms, values and habits change completely. Suddenly its culturally acceptable to leave the garbage bag in the elevator, leave the picnic trash in the glorious, green fields of the mountains and toss the ice cream wrap next to the bin in the city park. Somebody else is supposed to remove the bag from the elevator, clean the environment and pick up the wrap. But who? Mother, neighbor, state or park cleaner? Who, and why not you?

Let everyone sweep in front of his own door, and the whole world will be clean”, Johann Wolfgang von Goethe once wrote. Goethe was referring to how our individual actions affect the larger whole, or society. Our individual behaviors shape the collective norms, values and habits in society. If we, as individuals, set out to systematically avoid playing by the rules (norms, laws), it cannot come as a surprise that others do the same, which in turn lead to the state and society not functioning adequately to satisfy even the most basic needs of the majority.

The simple truth is that we ‘value’ our home because we own it. We don’t ‘value’ the common space in our apartment block (the elevator), state or environment because we don’t perceive ourselves as ‘owners’. The state is somebody else so somebody else is responsible for making it function. But the state is us, its institution contain people, like us (a friend, a neighbor, a relative) and not robots.

We find it difficult to apply the same sense of ownership, responsibility and care for ‘things’, which are not under our private ownership. Now if we are incapable of feeling responsible for ‘material things’ outside of our home, are we capable of caring for ‘people’ who are not family? Probably not. This goes a long way in explaining why political parties in the Balkans are ran more like profit-seeking family businesses, than policy-driven entities with altruistic purposes. It also explains why it has been so difficult for modern Balkan states to make the right policy decisions required to reduce poverty among the majority, while at the same time doing exceptionally well in making a very, very small minority of society very, very rich.

It all starts at home, but we need to carry the same strong sense of responsibility and ownership in the public sphere. This is part of our responsibilities as citizens in a democratic society, and our contribution to the building of a sense of statehood. Only then can a process of  ‘real’ improvements in people’s lives begin.

So they next time the person in front of you almost hits you throwing the trash out the car window, take a stand, show responsibility, and with time our children will inherent a better place to live.

Posted in Uncategorized | Tagged , , , , | Leave a comment

The unintended consequences of the 3CIS case

In the private sector everybody knows that the customer is King! It is the customer that brings in the money to your business by purchasing your products or services. Indirectly, it is the customers that generate the jobs and your profit. Without customers, there is no income revenue, no employment, no profit, no taxes paid to the state, and consequently no business. That is why Customer Service is a serious matter in the private sector.

Studies show (Marketing 101 actually) that a happy customer will tell 2-3 other persons about your company’s products and/or services. A dissatisfied customer, on the other hand, will complain to at least 8 persons! That’s why the restaurant owner will never let you leave unsatisfied. As an owner of a private company, he knows that ‘mistakes’ happen, but he also knows that with the right ‘Customer Care policy’ the potential damage to his business can be turned into something positive. By offering you a free dessert or an apéritif, he may transform you from a Negative plus 8 to a Positive plus 2!

For the restaurant owner, it is a short-term cost (free dessert/aperitif), but with a long-term gain in mind (increasing influx of paying customers). The restaurant owner, as a private company operator with salaries to pay and family to feed, cannot afford losing customers as a result of poor customer service. He has responsibilities towards more people than himself, and he acts accordingly. If he doesn’t respect the customers, well then the market will punish him, and he will be out of business.

Now assume that one waitress in the restaurant does not do her job properly. She is rude to customers and views them more as cash milk cows. Her individual behaviour is causing customers to leave the restaurant unhappy, which causes direct headaches for other members of the restaurant team. Suddenly, the person responsible for promotion finds himself fighting against negative market perception of the restaurant. The usual sales techniques and incentives are inadequate to reverse the trend.  Long-term customers move away from the restaurant, while new customers are deterred to visit.

Now imagine that the restaurant is state-owned. Same staff, including the nasty waitress, who keeps being  hostile to customers. However, the new owner does not share the same pride in the restaurant and sense of responsibility as the previous owner. Rather, he encourages the waitress to ‘play with the menu’. So while the menu shows a beef steak with a sauce, in reality the customers get chicken file and no sauce. At times, she even over-charges customers, no matter that prices are set out in the menu. Again, the reaction from the consumers is negative, they move on. The restaurant is now, again, in risk of going bankrupt.

Luckily there is help at hand. An international Chef is called in to assess the situation in the restaurants, market and overall environment. The Chef then prepares the ‘ideal menu’, in line with the latest international gourmet cuisine trends and guidelines. He even teaches the waitress how to present the menu to the customers. Unfortunately, the international menu flops because the famous Chef did not taken into consideration the eating habits and food preferences of the local population.

So, who will eat at the restaurant now, with a rude waitress and a poorly composed menu? The restaurant market is large and fast moving in the neighbourhood. Customers have a genuine choice where to spend their money.

The restaurant owner could start a process of positive change by strengthening the capacity of individual workers (human resource development) and the capacity to performance as a team (management), by treating customers as special guests and not like milk-cows (good governance), and by not letting anybody leave the ‘restaurant’ un-happy! (customer-orientation)

Posted in Uncategorized | Tagged , | Leave a comment

Destroy the middle-class, and you will destroy democracy

David Madland describes the middle-class in the following way: Being middle class in a middle-class society—where most people have adequate financial resources and stability, but not enough to allow for a life of leisure—fosters attitudes and behaviors that are essential to building a healthy capitalist system. Middle-class parents raise their children to value work and education because they understand their children will be dependent upon work, not capital, for most of their income. They convey to their children the principle that if you work hard within the system and follow the rules, you will get ahead. They pass down the patience necessary for children to pursue an education, career, or entrepreneurial activity, and they have the economic means to sustain that patience and plan for the long term.” (David Madland, Issue #20, Spring 2011, www.democracyjournal.org)

Well, the faith in the virtues of hard work and belief in the system appears to be eroding all around the World these days. The ultimate price of this erosion may not be the fall of capitalism but of democracy. The status of the middle-class is an indicator of society’s socio-cultural support for the principles of democracy. For years now, the middle class has been shrinking in the West. In fact, the financial rescue packages in the US, launched in the wake of the financial crisis of 2008, has been middle-class destructive, with the poor people paying the price in two specific ways, according to Mike Shedlock: (1) Excessively low interest rates on deposits, which makes saving unattractive, and (2) the Federal Reserve’s actions to drive up inflation at a time when real wages do not rise correspondingly. (http://globaleconomicanalysis.blogspot.com)

The American historian Francis Fukuyama explains how “Marxists didn’t get their communist utopia because mature capitalism generated middle-class societies, not working-class ones.“ However, Fukuyama now raises the uncomfortable question – what happens to the middle-class if the rapid development of technologies and globalization “makes it impossible for more than a minority of citizens in an advanced society to achieve middle-class status.” In the words of sociologist Barrington Moore, “No bourgeois, no democracy.”Fukuyama points to statistics showing that the “median incomes in the United States have been stagnating in real terms since the 1970s.” (Francis Fukuyama in Foreign Affairs, January/February 2012 issue)

Over the last 40 years, a very large number of manufacturing jobs in the West have been outsourced to countries with lower wages (costs), jobs that have not been universally replaced, pushing large groups of society into unemployment, benefit dependencies and relative poverty. Recent statistics from the US Bureau of Labor Statistics shows that the top 10 occupations in the US, measured in number of workers, are retail salespersons, cashiers, cooks and waiters, office clerks, nurses, customer service representatives, logistics personnel, secretaries, janitors and cleaners. Most of these service jobs are paid almost 50% of the US median income. To keep up with raising prices, many people with low paid jobs will have to hold two jobs to make ends meet. This is not the base of a new emerging middle-class. This is cementing the existence of a lower class, and one that is just barely keeping its head above water.

In the euro-zone countries (17 European countries using the euro currency) the situation is even worse. There is a constant loss of mid-pay jobs, mainly as a result of companies closing down, cutbacks in government spending (slimming the state bureaucracy) and globalization (outsourcing work). In total, 7.6 million mid-pay jobs have been lost since 2008, while 4.3 million low-pay jobs were created during approximately the same time period. Maarten Goos, an economist at the University of Leuven in Belgium, warns that Europe could double its middle-class job losses. The ‘emptying’ of the middle-class is far from over.

“Both America and Europe have shrinking middles. The real-terms incomes of many people on low and middle incomes have barely risen over the past 30 years. It is perhaps easier to see the downward spiral of the American middle classes as we gaze on the ‘ruin porn’ of Detroit. Simply put, their share of the income pie has dropped, while that of the top 7% grows.” (Suzanne Moore, The Guardian, 28 August 2013) While the middle-class is shrinking the inequalities in society are growing, even in traditionally egalitarian countries, such as Germany and Sweden. According an OECD report from 2011, “the highest 10% of earners have been leaving the middle earners behind more rapidly than the lowest earners have been drifting away from the middle”. Furthermore, “capital income, or income derived from wealth not work, has been a particularly notable source of rising inequality”. (http://www.huffingtonpost.com/2011/05/03/income-inequality-oecd-report-rising_n_857057.html)

The health, strength and size of the middle-class is closely linked to two of the pillars of a well-performing nations state – economic growth and good governance. If there is no middle-class to consume the supplied products and services, the entire economy will suffer. Until now, the accumulated purchasing power and habits of the very small elites in Western societies and the growing lower classes are not enough to compensate for the dwindling middle-class. David Madland highlights a number of additional societal benefits of a confident middle-class, such as it being “a prerequisite for robust entrepreneurship and innovation, a source of trust that makes business transactions more efficient, a bulwark against credit booms and busts, and a progenitor of virtuous, forward-looking behaviors, such as valuing education.” (David Madland, December 7, 2011 on www.americanprogress.org)

The middle-class expects transparency and professionalism from the public sector. As taxpayers, the middle class advocates ‘good governance’ by the state. Better governance is a pre-requisite to economic growth. It is no surprise that the Nordic countries, famous for relatively high taxes, yet well performing state structures, are also among the most competitive economies in the world. An increasingly unequal society, where a small political-business elite dominates the formation of public action, mainly to serve their own short-term interests, is destroying the middle-class. The elite shows little understanding of the linkages between an affluent middle-class and democracy. Or perhaps they do understand, but while they are not willing to sacrifice their selfish notion of capitalism, they are all too happy to let democracy go, as long as they find themselves on top of whatever political system that emerges.

Along these lines, David Madland highlights that while the British economist John Maynard Keynes is famous for his work on stimulating demand to pull an economy out of recession, he is less known for his vigorous support of the middle class. In fact, Keynes “recognized the importance of the middle class in creating sufficient demand to stimulate growth. He argued that extremely unequal distributions of income depress demand and thus reduce growth.” This goes some way of explaining why the world’s many financial rescue packages since 2008 have failed, the funds were absorbed by banks and stock markets, and never really filtered down to the people.

Madland continues, in defense of the middle-class, by stressing that a “strong middle class leads to higher levels of trust. When a society is largely middle class, strangers are more willing to try to work with one another in business and in life, and people are more likely to be optimistic and believe that they can control their circumstances. In addition, people feel they share a similar fate and form stronger social bonds.” In transition countries, the lack of trust and social capital in society is a major constraint on development. Even private companies are incapable of growing in size due mainly to lack of trust among owners, managers and staff.

Furthermore, according to Madland, a “strong middle class…fosters better governance by helping ensure government is well-run, increasing citizen participation, minimizing factional fighting, and promoting policies for the benefit of all of society rather than special interests. In contrast, economic inequality and a weak middle class make the political system imbalanced and depress the political participation of the non-wealthy, reducing voting, discussion, and interest in public policy.” In which category of governance does your country belong?

However, the values of trust, good governance and respect for hard work are currently under threat from what David Callahan calls the “Cheating Culture”. The middle-class environment, characterised by certain behaviors, achievements, and attitudes, which in turn promote economic growth, can be “undone by extreme levels of economic inequality.” The rise in “white-collar crime and ethical misconduct among employees…in the business world has been fueled by rising economic inequality, which has broken down social norms and made cheating more rewarding. (David Madland, Issue #20, Spring 2011, www.democracyjournal.org)

Was this the message of Martin Scorcese’s “The Wolf of Wall Street”, that ‘cheating’ is to be perceived as the modern, socially acceptable path to riches, and that riches is the new nirvana, full stop. But the ‘cheating culture’ goes beyond the financial world. What about the Greek and Italian voters, have they not been ‘cheated’ out of their democratic right to select their political leaders in recent years?

Francis Fukuyama presents a gloomy picture for the future of the middle-class in the West, when stating that “ the bursting of the housing bubble in 2008–9 was nothing more than a cruel reversion to the mean. Americans may today benefit from cheap cell phones, inexpensive clothing, and Facebook, but they increasingly cannot afford their own homes, or health insurance, or comfortable pensions when they retire. (Francis Fukuyama in Foreign Affairs, January/February 2012 issue)

So, with unemployment, poverty and social exclusion on the rise across Europe and the US, and with a political system seemingly incapable of responding to the crisis and the demands for change among the citizens, is there a future for democracy? Or are we on a slippery slope towards more authoritarian political systems, which may be better equipped for crisis management and making the necessary ‘tough decisions’, than the democratic system’s endless checks and balances, review processes and public dialogue, and where the key actors are worried about being re-elected?

Looking ahead, the challenge for ‘Old Europe’ and the US (the West) is to re-build the middle-class, as a means of saving the democratic principles upholding our societies that made us wealthy in the first place. The challenge among transitional countries is stop the ‘brain-drain’ and to create a middle-class, that is confident, financially independent and active enough to fight off the authoritarian political culture and oligarchical business models, which currently suffocate all efforts of collective and systemic development.

Posted in Uncategorized | Tagged , , , , , | Leave a comment