Creative ideas on migration will open the doors to growth -Business Day SA-

“South Africa is the destination of many workers from the rest of Africa and from the rest of the world. We know that about 7% of SA’s workforce is foreign. More than 38% of workers in gold mines are non-South African citizens and more than 22% of mine workers in all sectors hail from Botswana, Lesotho, Swaziland and Mozambique.

Data are sketchy and grossly underestimate the phenomenon. Many migrants are employed in informal positions, with precarious jobs, both in terms of safety and social security. Most undocumented migrant workers are poorly captured by official statistics. By all means, migrant workers are a fundamental factor in SA’s economic development. But how supportive and reliable is the present administrative and legislative framework?

What we need is a simple and clear framework to allow citizens of neighbouring countries to seek work and business opportunities in SA. We may even want to consider experimenting with free movement, for instance, within the Southern African Customs Union. In the European Union (EU), where free movement is a reality, most people have not relocated to other countries. As they benefit from clear arrangements that allow them to return regularly to their home country, they need not relocate permanently.”

In his regular column on Business Day, Lorenzo Fioramonti discusses how South Africa could transform its position of African immigration hub into an economic opportunity.

Read the full article on Business Day

Partnership to Explore New Funding Sources for Innovators

leddaThe European Social Innovation Research website features the LEDDA partnership this week.

This first-of-its-kind partnership is envisioned as a global, diverse set of academic, civil society, government, business, and philanthropy groups focused on ushering a new, parallel economic system through the development and pilot trial phases.

says Georg Mildenberger in his article.

“The economic system, called the Local Economic Direct Democracy Association (LEDDA) framework, or synonymously, LEDDA economic direct democracy, represents a rethinking of economic purpose and money. Among other things, it uses money as a democratic voting tool, and distributes voting power by increasing and equalizing incomes. This is a local economic system designed to complement and compete with existing systems within local (city or regional) economies.

A LEDDA itself is a membership-based, community benefit association open to residents, businesses, schools, nonprofits, local governments, public services, and others that choose to participate. Each LEDDA governs its own local framework through an online direct democracy process, and all LEDDAs are networked together within a global association.

The LEDDA framework is comprehensive, including as elements a novel local electronic currency, intellectual property pool, financial system, online direct democracy governance system, socially responsible business model, and buy local program. According to Boik, who outlines the framework in his 2014 book Economic Direct Democracy: A Framework to End Poverty and Maximize Well-Being, “the framework diversifies, strengthens, and infuses a local economy with democracy, and in so doing empowers residents to address local and global issues of interest.”

One key characteristic is that the LEDDA framework employs new motivations for economic decision-making. Rather than focusing attention on strict self-interest (by rewarding individuals who strive for higher corporate profits and investor returns), it focuses attention on cooperation, via a process of maximizing community well-being. A LEDDA assesses and forecasts social, economic, and environmental well-being using modern data collection and computer modeling tools. It uses the results to guide decision-making, especially in the LEDDA financial system, called the Crowd-Based Financial System (CBFS)”.

Know more about the CBFS and read the full article on the SIR website

“Competing with Capitalism to Maximize Well-Being” LEDDA framework on Thruth Out

What would you do to reinvent capitalism, to make it less destructive and more focused on what people really need?
It’s not that the benefits of capitalism are undesirable – jumbo jets and smart phones are sheer wonders – it’s that the collateral damage is growing untenable. Democracy and the commons are being sold off to the highest bidders.

GovInn Director Lorenzo Fioramonti and John Boik, creator of the Principled Societies Project present on TruthOut the Local Economic Direct Democracy (LEDDA) framework.

A LEDDA, Local Economic Direct Democracy Association
, is a membership-based, community benefit association open to residents, businesses, schools, nonprofits, local governments, public services, and others that choose to participate. The LEDDA framework is the local economic system – comprised of software, policies, standards, and procedures – that a new LEDDA implements. Once live, the membership can alter the local framework as desired.

In effect, the framework offers a secondary level of organization on top of an existing local economy.

Each LEDDA governs its own local framework through an online process of direct democracy, and all LEDDAs are networked together within a global association, which is also governed through online direct democracy. Thus the focus is both local and global.

The LEDDA framework integrates and builds on numerous initiatives already existing in cities and regions around the world, including buy local, local currency, open source, crowdfunding, socially responsible business, open data, smart cities, and participatory democracy. It contains its own monetary system, which issues a local electronic currency, called the token. And it has its own financial system, called the Crowd-Based Financial System (CBFS), which resembles crowdfunding and participatory budgeting. The framework is sophisticated, and there are many more elements.

The LEDDA framework is synonymous with LEDDA economic direct democracy, an economic system that offers all participants roughly equal and direct opportunity to influence their local economy. The framework infuses a local economy with democracy, in part by using money as a voting tool and by increasing and equalizing family incomes.

A computer simulation model has been published that illustrates the process. Inflation-adjusted mean family income more than doubles during the twenty-eight-year simulation period. As incomes rise, they become more equal. By the end of the simulation, every member family receives a pre-tax, take-home income equivalent to about $107,000, just above the 90th percentile of baseline income. Even very wealthy families would see a small direct gain.

By the end of the simulation, the LEDDA, located in an averaged-size US county, channels the equivalent of more than $2 billion dollars annually toward local businesses, schools, public services, and nonprofit organizations. Tax revenues for the county markedly rise. With such abundant resources, and democratic control over funding decisions, a community could remake its economy into one that best suits its needs.

The LEDDA framework is still theoretical, and the partnership is just forming. Over time, we hope to provide answers to the host of questions that such an approach naturally raises. In this, we invite your participation.

Imagine a democracy-infused economic system that maximizes well-being. The long-run social and environmental returns might be valued in the trillions, thousands of times greater than the costs of development and pilot trials. Isn’t it worth the effort?

Read the full article on TruthOut

Business by numbers can dull creativity of workforce -BusinessDay-

Fioramonti’s article this week focuses on the dangers on relying on simplified figures such as GDP to assess the development and the wealth of a country and make business decisions.

“When businesses base investment decisions on indicators such as the gross domestic product (GDP) they miss the forest for the trees. GDP is a very myopic measure of economic performance, which counts profits but excludes costs. Moreover, it flattens society and the market, thus giving the impression that growth affects all businesses (and people) in the same manner. In fact, there can be good and bad, equal and unequal, sustainable and unsustainable GDP growth.

“The “Africa rising” debate animating the investment community these days is a case in point, insofar as it does not pay attention to issues of sustainability and distribution, which are likely to hamper the performance of these “rising” economies. “

“Even good numbers can be misleading: indeed, numbers, by design, (over)simplify reality. In a numbers-driven world, only what can be measured counts. A metric-dependent business is more likely to forfeit long-term goals, which are harder to quantify, for short-term returns.”

Read it all on BusinessDay

gdproblem
“Our mis-leading indicators”: book review featuring “Gross Domestic Problem”

gdproblemThe book review website Public Books features GovInn director Lorenzo Fioramonti‘s “Gross Domestic Problem” in its article on GDP “Our mis-leading indicators”.

“GDP became the yardstick for measuring progress and still often serves as a proxy for overall national well-being. Policymakers think of national economic life in terms of GDP: raising GDP is a primary policy goal and people across the world look to GDP growth rates to assess how well their leaders are guiding economic policy choices. Yet today GDP is under fire from a variety of sources. Why?”

Gross Domestic Problem is reviewed along with Diane Coyle’s “GDP: A Brief but Affectionate History” and Zachary Karabell’s “Leading Indicators: A Short History of the Numbers That Rule Our World”. In his in-depth analysis Stephen Macekura, postdoctoral fellow at the John Sloan Dickey Center for International Understanding at Dartmouth College (US), says of Fioramonti’s book:

“Fioramonti presents the most scathing critique. He criticizes the deeply held faith that raising GDP can solve all political and social problems—what he calls the “dogma of infinite GDP growth.” For him, the reliance on GDP derives from a technocratic worldview that glorifies experts, corrodes communal values, and devalues the natural world. In addition to inveighing against this worldview throughout his book, he highlights contemporary social movements that are challenging both the use of GDP and mainstream society more broadly. He explains the “transition” and “de-growth” movements, which seek to downscale production and consumption, encourage participatory decision-making, decentralize power towards the community level, redistribute resources along more equitable lines, and lower humankind’s ecological footprint. Similarly, he recounts the efforts of communities that use their own currencies and banking systems to break free of the larger financial power structures (states, multinational corporations) that dominate economic transactions worldwide. In general, he sees technocracy and its GDP “dogma” as powerful centralizing and anti-democratic forces, and he celebrates grassroots, local movements that show “alternative ways of life are not just possible but also desirable.” His prescriptions are thus cultural and political; no merely technical fixes will suffice.”

Read the full article on Public Books

Does it really matter to snub Mugabe? by Christopher Nshimbi

GovInn research Fellow Christopher Changwe Nshimbi comments on the absence of Zimbabwe at the recent US-Africa summit. What are the responsibility of the Africa Union and of SADC towards the citizens of Zimbabwe? 

AU and SADC should have ensured free and fair elections in Zimbabwe 2013. However, the AU has inherent weaknesses regarding intervening in domestic stalemates as in Zimbabwe and Cote d’Ivoire. SADC should strengthen rules regarding elections, citizens’ rights in electoral processes and SADC’s enforcement role. Moreover, SADC and the AU should revise their approaches to state sovereignty.

Do you agree? Read it all on the Nordic Africa Institute Forum website NAIForumLogo_TEST

“Time to liberate ourselves from a misleading statistic” by Lorenzo Fioramonti

 

South Africa is on an economic roller coaster. After the five-month strike in the platinum mines and turmoil in the metal sector, our country is still grappling with a credit downgrade and gloomy forecasts for economic growth.

 

Pundits warn that if the gross domestic product (GDP) does not pick up in the coming months, a recession will be inevitable, with disastrous consequences for all of us. Our eyes are all on this magic number. But what is GDP? Is GDP really helping us measure the state of our economy? Or is it a misleading indicator that contributes to wrong policy decisions, especially at a time of growing unrest and dissatisfaction with the transformation of the economy?

Read the full article on South African economy and the inadequacies of GDP, on Business Day, South Africa’s leading business newspaper.