Sunday, July 13, 2014

Subsidiarity? Some Subsidiaries Provide Clues

Sometimes it is said that everything about our lives serves some purpose, and in my case, quite a few employment opportunities felt relevant. Not that I ever held any particularly important position in what is admittedly a long list of jobs! Just the same - a wide range of work responsibilities over the decades, has allowed a glimpse into structures which rely on plenty of algorithms for resource dispersal. Looking back, I'm still surprised at the work which also provided "windows to the world" outside or occasionally below, both literally and figuratively.

One company I have wanted to write about for some time, eloquently expressed the independent nature of subsidiary status in relation to corporate structure. The founder of the corporation provided what turned out to be a graceful simplicity, between production perimeters and their representation. This contributed to mutual respect at all levels which added to the strength of the organization. Whenever we saw product on display in corporate office, it was what suppliers (hence their subsidiaries) already had on offer, as opposed to what organizations in some capacities would otherwise specify. Perhaps the examination of various subsidiary formations could provide valuable clues, regarding viable concepts of decentralization for community endeavor.

A recent article by Reihan Salam provided the contextual backdrop which I had sought for this post. He considers what the country might look like, were it run by the Tea Party:
Deep divisions notwithstanding, there are a number of principles that unite the movement. The most important is a devotion to subsidiarity, which holds that power should rest as closely to ordinary people as possible. many in "maker" circles truly believe that? Who - and what - is able to gain acceptance as "ordinary", and why? After all, the answers to these questions matter - right down to the nth degree - for how product is ultimately defined. Reihan goes on to explain how a belief in subsidiarity leads Tea Party conservatives to favor voluntary cooperation among free individuals over local government, local government over state government and so forth.

All of which sounds promising of course, but what about those complex "ties that bind" when mutual gains (for some or a few) can be achieved somewhere along the line? In other words, what makes the most closely held ideal of this group, so difficult to achieve? When Arnold Kling highlighted Reihan's post, a commenter noted, "The internet is striving mightily to come up with an alternative, but all roads lead to Rome."

But why should centralization be the "inevitable" result, even as populations struggle to distance themselves from its ramifications? Could certain separations in business formation provide needed clarity for reasoning at local levels? Granted, some "separations" exist mostly in name only and would not provide much help - it's important to know the difference. Let's consider how subsidiaries are defined and how they also relate to subsidiarity. From Wikipedia, "Subsidiaries are separate, distinct legal entities for the purposes of taxation, regulation and liability." Again, from the same, for subsidiarity:
Subsidiarity is an organizing principle of decentralisation, stating that a matter ought to be handled by the smallest, lowest, or least centralized authority capable of addressing the matter effectively.
Subsidiaries can be a useful reference point for subsidiarity in context, because they make it possible to see whether the principle works and to what degree. In the example of my workplace, subsidiaries functioned quite independently of corporate office, particularly in regard to their relationships with suppliers. Of course in practical terms, that meant less streamlining of my (not yet computerized) job tasks. Accounts receivables for subsidiaries and suppliers were uniquely configured according to a wide range of contractual agreements. Even though that meant more time consuming work tasks at my desk, I probably took as much pride in those independent arrangements as anyone in my workplace.

However, something far more significant stood out, regarding the arrangement which the founder of the organization had created: something which matters very much to me in the present. The overarching purpose of the corporate headquarters I was fortunate to be a part of, was to serve as a vital connecting point. Its own responsibilities in aggregate were made simpler, in that it promoted the interests of both subsidiaries and suppliers so they could be equally successful.

That - in a nutshell - is the vision I wish the U.S. government could follow through on for its own citizens. There are so many connecting points for human aspiration which need to be made, which have yet to even be considered. Production reform - more than anything - is about bringing the everyday citizen back into the reality of economic life. It is about economic inclusion and loosening the strictures of product formation from their stranglehold, so that citizens need not give up on their own aspirations. Nowhere has the destruction of potential connecting points been more severe than in healthcare and education, both of which have slowly severed the sum of the whole from its many parts - even though each part depends on the whole. That is what was alluded to, by the commenter who spoke of the roads which still lead to Rome.

What if those "ties that bind" across hierarchical lines - and which have consequently severed production formation - were set free? After all, mutual "gains" have mostly scuttled mutual respect and made life far more complex than necessary. Remaining hierarchies would not only have a chance to simplify their goal sets, but their remaining roles could become far more effective. Perhaps I'm a hopeless dreamer, but I dream of governments which are willing to highlight the strengths which their citizens and communities can bring to the table. Rather than obstructing product formation (collaboration with special interests), governments could instead work to promote citizens and product formation. In other words, governments would work to make certain that infrastructure channels of all kinds - for citizens and product of all kinds - remain open.

None of this is to imply that hierarchical methods have not been beneficial to the whole, in the past - particularly in time frames when they have played substantial roles in the economic structures which contributed to the progress of recent centuries. Some hierarchies represent starting points for new beginnings which may take centuries to mature. However it is fair to say that present day hierarchies have matured to such a degree, that further gains now tend to be sought in ways which turn out to be zero sum, instead of applicable to populations as a whole.

For the U.S. real gain could come from handing the production reins to citizens and their communities, who now have enough knowledge use potential to carry on work which was often initiated by the state and private industry. Doing so would also create new forms of economic growth which can no longer be generated effectively from a national standpoint. Decentralization in economic activity is certainly needed in order to realize further progress. However, its potential applications need to be well understood, before they can be effectively applied at local levels.

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