My first thoughts on sustainability

My memories are vibrant with the bedtime stories of my grandmother, who sacrificed her life supporting a large family of thirteen, sometimes giving up on food, or on clothes or on living space, or even on privacy, but her stories never touched these aspects; on the contrary she passed on to her grandchildren the very secret of what today’s world calls ‘sustainability’.

My grandmother did not come from such a humble background as her husband, but she embraced the modest living as every woman in India does, with somewhat of an endurance that stretches the conscience towards accepting an end as a step towards fulfillment of a greater purpose, that is embodied in life.

My grandmother always ate the last, when all the family had the last vestige of make-shift nourishment; she relished the last bits by sweeping every remnant, which itself was scarce, but the denouement was devoid of waste. Her act was exactly what John Rawls indicated in his ‘Theory of Justice’ as the only way to demonstrate a true division that is ‘just’ as well.

Illness was more common than the presence of health in those surroundings where lack of nourishment and abundance of water-borne diseases treaded the livelihood. But my grandmother herself was never ill as she was the permanent nurse cum doctor of the entire neighborhood. Perhaps she derived her strength from the service that she rendered to humanity, without title, without even expecting any return in any form.

She knew that for her seven sons to stand any chance in life, she had to sacrifice all her ornaments, but she never knew that it would last only for her first son’s expenses for taking up a career as a mariner. But that did not deter her from saving every penny as she always had enough for giving in every celebration including her grand daughters’ weddings, which were not so far and few either.

She remembered every novel of Sharat Chandra or Bankim Chandra by heart, as she passed on the stories to her grandchildren, never missing out on the details where a great character or a conflict was confronting the life’s true battle, where honesty and sacrifice was in full bloom, and never in trade.

That sustainability is devoid of the instincts of trade, and that in understanding it one must go back to one’s roots as human beings, in the practices of mutual aid, that facilitated life to thrive in an environment where survival was far more difficult than now, leaves a sobering thought that more could be derived from our embrace of humility in sharing what the earth provides in a just and equitable manner. I dedicate this essay to my grandmother, a small token of love for guiding us to where we have reached so far as a humble family.

The Swiss View

One would see a great deal of convergence of the rural and urban setting, wherever one travels in Switzerland; the reason lies in the ‘Canton’ structure of governance, the institutions that tie people together in the way societies are to be governed or mutual aid is to be facilitated. The social structure holds the key to the beliefs that the general body of people synthesize as no other formal structure could have brought them so close to exchanging and sharing and sacrificing for each other.

In the olden times when there were enemies trying to cross the Alps, the men-folk went to the borders of the mountains, while the women guarded the homes, grew potatoes and cared for the children and the cattle, not distinguishing one for the other; the deep care for the cattle still runs in the same rigor and vigor. Life is in moderation here, whether be it in food, or in clothes or in living space.

With snows covering the ground for more months it depended on human industry to toil hard to grow whatever crops one could in the shorter span that remained for the arable land and its cattle; even the grass for the cattle had to be preserved for most part of the year, otherwise the cattle would have died for want of food. So food had to be rationed, for human beings and cattle alike, for each to live and share from the common ground.

The same rules still abound in every nook and corner of Switzerland.

A.      There has to be shared responsibility that cannot come if there is no sacrifice for some; sacrifice is equally disproportionate as wealth is

Every village is endowed with a small community center, better known as a Gemainder, which means ‘common folk’, and even the richest one is called the same way, although it could have billionaires in it. The Gemainders are pretty much the local government that administers every part of the ‘common good’. There is a vast difference in understanding the contours of what ‘common good’ entails, if one tries to compare it with that of what is prevalent in other parts of the world. Here in Switzerland, common good is in the way one must live in a social binding, everyone must take responsibility of the surroundings, its cleanliness, in the preservation of the habitat and in the continuing education of the children in the same footing.

The process starts with the primary education which is absolutely compulsory, and the schools are present in each neighborhood that would not need the children to walk any great distance so that they could come home for the lunch, if desired. The primary courses would have discourses on theology and religion, on responsibilities in life and on fair play. Games and camping is encouraged a lot that takes one to the village setting and farming, where life of the farm has new inputs for the impressionable minds of the young students.

The farm land and its cultivation is the biggest learning opportunity, every bit of it is based on sustainability. The primary focus is on eliminating all forms of wastes by using as much of the materials possible through recycling. There are disincentives working for the cause as well as more wastes make it more expensive to dispose off. The ability to do two or more crops in the six month period that farming is reduced to in a year, makes the Swiss one of the most efficient farmers of the world. Per acre productivity and man power productivity is one the highest in the world. It also comes from engaging in practices like using bio-fuel, as less pesticide as possible and using the most productive tractors as possible. Food processing centers are mostly as close as possible to the farm land that brings in further cost reductions. Transportation is efficient as the Swiss have one of the best infrastructure system in the world and thanks to the broad band penetration the access to information is a class apart; price is evenly matched, there are no intermediaries involved.

The success of farming can be measured by two things, whether the farmer gets his dues at the end, and whether it leaves enough for the next harvest. I think both in terms of price and in terms of an efficient market mechanism that operates, the Swiss have more than eliminated the ill effects of intermediation which generates leakage that is disproportionate to the effort put in by the constituents. In most societies the value-add by the farmer stands in sharp contrast to that of the wholesale distributer or the retailer. In Switzerland this is in fine balance through a process that runs efficiently and losses are minimized as access to information, low transaction costs and a well run infrastructure comes in the way of creating asymmetric pay-offs tilted towards the others who are not engaged in direct farming or vice versa.

But this comes from an approach of mutual aid and collaborating on a cause than in the commonly known system of survival of the fittest or in the syndrome which is known as ‘winner takes all’. The society here makes a grand bargain, that for the better denouement for all, it is prudent to have more than one winner in every transaction. It is not by any artificial means that the price relative to the value add benefits the farmer and not the consumer or the whole-seller. It is through an inter-dependent mechanism that the price is orchestrated by a market pull that sets limits sometimes and here I find the semblance of the ‘Gemainder’s hand’, which is more invisible than the more common examples that we are familiar with in the Economics text books.

Supply and demand if left to the market mechanism would have led consumers to demand lower price and producers to move to neighboring countries where cheaper options would have been aplenty. Profit itself if left as the only driver would have moved the farmers to explore other markets than the ones they are so used to serving, thus creating movements of labor as well. This is controlled, again with an invisible hand of the Gemainder, as any movement is seen with greater intensity than it would have otherwise ordained had it been left to the vagaries of the market alone.

Here I want to draw the connection between sustainability and the market mechanism. The Swiss societies are still in their infancy in terms of their operational flexibility, if I may say so when it comes to any change to their operating structure, although some movements have started to happen in those areas where expertise and labor is in short supply. But the protective nature of the local self-governance has ensured that there is more to be derived from operating within a framework of mutual inter-dependence than in the competitive nature of agrarian societies that other Western societies have seen. Therefore farmers have not grown by buying each other out and displacing each other through competition; farm lands are moderately big, not very big, which shows that farmers are not in the genre of ‘too big to fail’ category that have to be finally bailed out or subsidized by the government eventually as most of the other Western countries.

 B.      Dislocations cause hindrance and must be limited; incentives must be so designed that dislocations can be minimized

Societies the world over have struggled with providing enough employment in the farm sector and not succeeding in their endeavor they fell in the trap of creating a migration of labor that destroyed the urban equanimity. The dislocation of labor from farm to the non-farm and then from non-farm into services finally landed many of the urban societies gasping under the severe pressures of high unemployment that affected the quality of life of the urban societies, while not doing much good for the rural household as well as repatriation of money was so low that it never benefitted their families living in the villages. The societies who have done well are those who have managed this process better than the others.

This has however been successful in Switzerland because employment could be provided outside the farm at a pace that exactly matches the need. Non-farm payroll have been carefully increased in line with the generation of labor inputs, either in apprenticeship of skilled workmen category or in technical grades. The average wage in these sectors where high enough to attract the migration of labor from the farm. This process is the most vital process that ensures that labor supply is in fine balance to protect the interests of both farm and non-farm sectors; many societies have learnt it the hard way that providing the right employment in the farm sector can only be achieved by providing on equal opportunity footing in non-farm payroll adequate flow of labor and the wage rate in this sector is the center piece of adjustment that bridges the farm and non-farm prosperity of peoples.

But how can the Gemainders provide this incentive for the right payroll numbers in farm and non-farm? I think the answer lies in their careful scrutiny of the numbers and the movement of peoples. There was a time when a barber could not just move from Bern to Zurich in search of employment or for setting up a shop. These movements were looked at with caution between the Gemainders, as more movements created the dislocation that was never incentivized. In fact in Switzerland, the biggest success lies in the containment of the movements of people from the farm and to the non-farm sectors and from non-farm sectors to the service sectors. While it is never possible to curtail movements where talent is in short supply in any particular field, the productivity of labor on the other hand had always ensured that such movement could be limited to the need.

This is the fundamental reason why labor demands the highest relative price in those sections of work character which are predominantly manual or semi-manual in nature, quite a sharp contrast to the other societies, where in absence of alternate employment these categories did not attract high wages. A house domestic help, which is in short supply could command anything between Swiss Francs 30 to 40 per hour, which only shows the two things, one that alternate modes of employment is available and therefore this category has labor in short supply and secondly that lower ceiling of wage is pegged at a number which is relatively high compared to other Western countries. This second reason makes it all the more clear that the society as a whole accepts that for living in a fair way the lowest rungs must get the minimum luxuries in life for which such a relatively high lower ceiling is an absolute must. This is also an example of what a Gemainder as its core philosophy can bring in as a fundamental change in the way distribution of wealth could be orchestrated. It does not mean that this can be achieved by a tax regime alone, as we all know that the Swiss tax rates are amongst the lowest in the world. Perhaps the answer lies in the fact that if productivity could be continually improved and if the quality of services could be constantly maintained at a high level, then with controlled dosage of migration, we could create a lasting equity in the societies that govern themselves.

Dislocation is disincentivized almost similar to some of the extreme forms prevalent in China, as no one can move from one place to the other before securing a job contract. The government does not put an incentive by creating a cheaper living space than the one where one is currently living. The tax rate of that place matches the salary and pay and the price for housing is related to that. The government does not incentivize housing to attract any untoward movement. Let me deal with this in greater detail in the section later on.

 C.      Growth causes disproportionate equity, it must be seen that the harmony of the environment is not sacrificed for growth. Housing should never be subsidized as it is one of the single biggest factors that destroy the equilibrium in societies.

In many societies which have struggled with unemployment, growth had taken the better of other forms of employment drivers. So the rationale had run as follows:

–          Unemployment can only be tackled with growth, which means more consumption, or with more investments, that would create more jobs.

–          If more jobs have to be created, it does not matter if it creates movement of people as jobs can only be created under certain conditions, which presupposes that either subsidies have to be given or incentives have to be doled out to create investments.

The Swiss on the other hand have looked at this with a different point of view. If a particular place creates a better prospect and makes a subsidy decision, it makes the other place equally less attractive. So when a place A attracts people to either investments or employment, it equally makes the place B where there is absence of such subsidy equally unattractive. So while we incentivize the movement of people to the place A, we make the place B equally unattractive for people to stay. This dislocation although it creates growth in Place A, makes the place B deserted from such prospects.

We see this much in evidence in many countries where for some reason in the past certain incentives were provided by the federal structure, which were not questioned by the central government, and it created a large dislocation of peoples. It created large cities and polluted these places, while there were many vacancies created in the semi-urban areas that were remote to these places. For trade it was a sacrifice made between efficiency of the infrastructure and the easy allure that access to markets or proximity to ports provided.

The Swiss never provided such incentives, this is the reason why the entire country looks like one single extended town, the dispersion or concentration is somewhat similar as one moves from one place to the other.

This is the fundamental reason for the high quality of life of the Swiss.

Housing, which is incentivized for the many petty reasons in many of the countries, is never done so as the Swiss believe that cheap housing could actually destroy the density of population in one place, which in turn would destroy the equanimity of a place and its environment. There are no outlandish tax breaks that one can get from investments in housing, or there is no easy way out of lower equity participation in mortgage housing projects. The standard equity is twenty percent and learning from the housing bubble of the nineties the Swiss keep a watchful eye on house prices, which have since then never appreciated much.

The regulatory environment and the watchful oversight of the appraiser ensure that the financial industry, the real estate and the intermediaries do not have a lopsided incentive system where benefits could be hijacked towards a certain direction, which is why the bubbles could not be created. But the real driver is the belief that growth in housing is not the driver of prosperity, there are other ways that prosperity could be created. In Switzerland individual ownership of housing is never a great number and never a great indicator either of prosperity.

The same pervades to the question of individual ownership of vehicles as a sign of prosperity. It is astonishing fact that Switzerland has the lower number of vehicle ownership although it ranks amongst the highest in the per capita income. The Swiss have a belief that public transportation is a much better system of transportation, given the quality one could enjoy. The whole society has benefitted in this belief and has created one of the best mass transportation systems in the world, it could not have been successful if the consumers of this service had not derived value from it and also if they had not a firm belief in it.

D.      Responsibility of the habitat and environment is everyone’s own, every disincentive must be carefully designed so that everyone is either penalized for not taking up that responsibility or is guided towards understanding the need for such actions that protect the environment.

I have seen many societies running campaigns on social contributions rather than focusing on the individual and his responsibility for the environment. It is not the government’s job, not the civic authority’s job or the municipality’s job to take ownership of the environment. It is the individual’s responsibility. There is no point in creating a pool of resources to clean the place while the individual has extreme freedom to make it unclean. It is the belief in the quality assurance system than in the quality control system, where one can create defects while the job of the control system is to detect faults. No. the faults cannot be created first of all and the society must ensure that there is a punishment system that will ensure how the rules are to be observed.

It is not in the designing of the free-lunches that many societies have that the Swiss had been allured, rather they have eliminated all free lunches when it comes to the protection of the environment. And this can only be done through a rigor which runs with the highest form of law enforcement agencies. But let me take some of the mundane examples first.

Very few country treats water as a great resource that must be protected. It is not that the Swiss are not endowed with water, as they have abundance of water thanks to the great glaciers that are a constant source. But the Swiss know that there are times when this source could play truant and they have therefore made water one of the taxing points, which is not free for the households, and here there is double taxation, which means the households have to pay twice once for buying the water and the second for producing the waste water. So every household has to ensure that water is consumed as less as possible. So taxation is not bad, it actually drives the right behavior and it does not come as a free lunch.

Household waste is not free, so that as much waste as possible would be entertained by the society. One has to pay for the plastic bag of waste and therefore it is a disincentive for creating more of that. Every waste is categorized, so that it could be put in the right bins that could be recycled and reused.

There is a lot of hue and cry about the recycling of wastes in many countries. The Swiss have made this part of their lives, so there is nothing to be gained by advertizing this as a special feature of one’s industry. Per capita waste is so low that on an average every household rarely has more than one small bag full of the waste stuff in the whole week, remarkable considering that many countries produce as much waste as four to six times this number. This is the power of disincentivizing a certain type of behavior and this extends to missing the right segregation of the waste as well.

I have seen car parking spaces quite in abundance as a measure of prosperity of a place, by that account the best cities in Switzerland are known for the want of the same; there is a general belief that more cars would destroy the environment that the lakes create and its habitat.

In a place where cold and snow takes six to seven months to subside it is important that certain species need to be protected, like the birds, or the foxes or deer living in the forests. Even the frogs or some such small creatures are not spared from this feeling of companionship. Every house takes care to keep the bird food cage filled up with some eatables and keep a blind eye when they see a fox around in the locality in the extreme weather conditions. These are individual responsibilities, not collective; the collective responsibility lies in deciding on what the individuals have to do in the execution of such responsibilities.

I have seen some of the extreme examples of lowering energy wastage in this country. In summer when the sun light is available till eight in the evening, the roads lights start to get lit up that late, the morning light on the other hand when it starts at six, the road lighting is put out from that time on. The household lights follow the same routine. The highways are never lit up, but there are enough reflectors to ensure lighting from the vehicle lights.

The best example of house heating system can only be found in Switzerland who invented the floor heating system, which is the most efficient. The villages still have the fire-place and they depend on the wood from the forests, but they ensure that the forests can grow and there are enough guidelines to check their depletion.

E.       Small things make big changes while big things can only create an aura of hypocrisy.

It surprised me how the Swiss could appear so humble, while standing so tall when it came to sustainability. They have relatively one of the highest savings rate in the developed world, which to my mind is an indicator of sustainability. It is from the savings of every individual in the country that the investments for the future must be orchestrated, there are no free lunches that one generation can rely on the future to take care of the burden set aside. The rich stay in houses that are never outlandishly big, and there is no way that they can be identified as rich, such is the living ambiance. They take the same trams or the buses, they live in the same locality and they shop from the same store as an ordinary individual. The rich never flaunt in public, what they can in private, and here I think Adam Smith was wrong to surmise in his Theory of Moral sentiments, that human beings want to flaunt their riches and hide their poverty, if it were true than the Switzerland would have been a different place.

Adhering to societal norms is a way of life and there is zero tolerance for any deviation. Abiding by rules is in the life blood, and therefore the leakage that many societies have in the way of arrogating what does not belong, is nipped at the bud. Infringement or missing to follow a rule does not have too many chances, most deviations are limited to three times that it is allowed, of course with a hefty price tag for each one growing exponentially.

This is actually a pointer that the fundamental feeling is that for the collective benefit of all, the individual must sacrifice part of his space, whether be it on the road, or in the locality or even in the community of the villages. Every small thing counts, while the big things are missing like the proclamations, or the mission statements.

I have summarized once again the five reasons for the Swiss system to succeed:

1.       There has to be shared responsibility that cannot come if there is no sacrifice for some; sacrifice is equally disproportionate as wealth is

2.       Dislocations cause hindrance and must be limited; incentives must be so designed that dislocations can be minimized

3.       Growth causes disproportionate equity, it must be seen that the harmony of the environment is not sacrificed for growth. Housing should never be subsidized as it is one of the single biggest factors that destroy the equilibrium in societies.

4.       Responsibility of the habitat and environment is everyone’s own, every disincentive must be carefully designed so that everyone is either penalized for not taking up that responsibility or is guided towards understanding the need for such actions that protect the environment.

5.       Small things make big changes while big things can only create an aura of hypocrisy.

The significance of sustainability is to be seen in the context of this earth having a limited resource endowment, whether it is for inputs like minerals or fossil fuels, or even natural endowments like the forest or the resources like water. When the limitations have a bearing on the present as well on the future, the salvation lies not in trading but in the realization that we have a shared responsibility and every person in the individual capacity must rise up to the challenge.

It is clear that the world would perhaps never have everyone enjoying everything the way an advanced nation enjoys; there are not enough trees to turn into newspapers if the whole world aspired to read newspapers as some advanced nations chose to make a reading habit. There is never going to be enough food left if the world chose the American breakfast as a model to be emulated.

But these aspirations must drive us towards creating a shared sacrifice when one aspires to emulate the other. There are only incentives that can guide a certain behavior that benefits more than one side. These incentives have to be created by all who embrace the laws of sustainability, like the Swiss have done.

There are no victors in this end game, nor are there any vanquished; sustainability is beyond trade.

When I saw hordes of old people filling up the entire trains in the month of September in every rail station of Switzerland, I knew it was the pensioners leaving for the yearly vacation. These old people deserve a great vacation; I salute them because they sacrificed a part of their well being when they were young, now it is the time for the society to pay it back to them with dignity. Very few countries can afford to send their entire older population on a month long vacation. That’s sustainability.

Procyon Mukherjee

Zurich, 14th April, 2011

Nuances On Sustainability: Learning The Swiss Way
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