If I could choose just one national model for Portugal’s 2020-2030 Economic Recovery Plan, I would choose to build our confidence.
It may sound like an esoteric answer. But it’s not.
The “next day” or the “next generations”? Comments on Portugal’s economic recovery plan 2020-2030
Economist Robert Putnam published the book “Making Democracy Work” in 1993, in which he discusses the relationship between a society’s culture and its economic performance. Putnam studies the difference in wealth between northern and southern Italy. He concludes that it is partly explained by the concept of social capital, which can be defined as the degree of intensity of community life. This intensity was higher in Lombardy and much lower in the Mezzogiorno. This author noted in the north of Italy a greater associative participation in sports clubs, in neighborhood associations, in leisure, cultural or civic groups. He also found, compared to his compatriots in the south, that Italians in the north voted more in elections, used more formal credit mechanisms and read more newspapers.
His influential work has since been deepened by other economists, who sought to better understand what influences a community’s level of social capital. They came to the conclusion that the degree of citizens’ trust in each other, and each in their institutions, is crucial. The gains from greater confidence are intuitive. It generates more work in networks, cooperatives or associations. Larger and more competitive companies are emerging. More transversal scientific investigations are being carried out. And there is more scrutiny by everyone in public activity. Trust is the glue of more participatory communities, which in turn tend to elect politicians with more inclusive and less extractive agendas.
And in Portugal, how is our confidence and our social capital?
We could be a lot better.
Manifesto for a fair and sustainable economic recovery in Portugal
Data from the World Values Survey confirms that our levels of social trust are lower than the average for most developed countries (as measured directly by the positive or negative reaction to the statement “we can trust most people”) . Some of Robert Putnam’s pointers also point to the same thing. We have few community and local associations – for example, in Germany it is rare that citizens do not participate in any association! Our companies have a small average size, as our entrepreneurs prefer control, wary of sharing resources and power. Our weaker confidence is also reflected in increasing voter abstention and currently low levels of party and union membership. The emergence of anti-system parties with xenophobic and racist ideologies is also a worrying sign of the mistrust of some in institutions that belong to all.
There are historical roots to our weak collective confidence. We have lived through centuries of vertical and less inclusive communities and institutions. And we’re one of the most unequal countries in the OECD, with economists like Wilkinson and Picket showing a correlation between economic inequality and social mistrust.
But all is not bad. Even so, there has been a slow, gradual and positive evolution of our social capital over the past decades. Our civil society is now more educated, demanding and organized. There is a press which is free and which votes. We found industries with companies organizing themselves into networks in their internationalization. Local participatory budgets have emerged and have multiplied. The Simplex program has also made a positive and sometimes neglected contribution: in many administrative acts, the principle of trust in citizens has prevailed until proven guilty.
However, it is not advisable to give up. We must seek to further strengthen our social capital to extract the desired fruits of our individual and collective well-being. And Portugal’s economic recovery plan is a great opportunity for that.
Consumer and business confidence with “brutal cuts” in April
In preparing and presenting the plan, we must ensure that it is discussed publicly in all municipalities in the country, in public and participatory forums. This open debate, free from our strategic priorities, can also take place in secondary education and universities.
We can directly entrust the municipalities with the responsibility of deciding a significant part of the expected public investment, whenever this is in line with the adopted strategic plans. And increase the financing of local investments whenever they are decided with the participation of the community.
And why don’t we eliminate all funding increases for SMEs and micro-enterprises? Of course, these companies must continue to be financed, they are essential for our economy. But increasing the small dimension is an absurdity that signals the lack of cooperation and commercial scale as a virtue. On the contrary, there should be more projects submitted in partnership by several companies. And apply exactly the same principle to projects of local governments and non-profit associations (see the good example of EEA grants).
We can also create direct funding lines for the creation or strengthening of local associations, as in Germany. Excluding entities in the areas of social security and health, which are already funded by other means. It can be difficult to measure the economic impact of providing financial support to neighborhood book clubs, Algarve Water Dog Friends Groups, advocates of local produce or organizers of bridge tournaments. But it is precisely this association that strengthens the bonds of community trust, improving local economies in the long term. In addition to contributing to the reduction of the loneliness that afflicts too many Portuguese.
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Finally, we must adopt a logic of radical transparency in monitoring the implementation of the Plan. Creation of a public portal, made for the ordinary citizen, with complete and up-to-date information on aggregated investment data, as well as on each project. What was approved, how it was approved, why it was approved, how the implementation is going and who are all of its beneficiaries.
There are certainly many other ideas that can help build our confidence. They will appear whenever we consider this financial envelope not as a right, but as a shared duty. If that happens, in 2030 we will certainly live in a more cohesive and mature country. Since 2020, we will be more responsible for our future.
The author writes according to the new spelling agreement