Let’s look at plan B

We’ve never been particularly big believers in the notion of service-based economies. You might have noticed over the past four years that the editors of Monocle are keener on able-bodied nations, companies and individuals who know how to roll up their sleeves and get on with things. While the concept of knowledge and service-based economies might tick many a box, they’re no longer as fashionable as they were when economic and development ministries ­embraced the idea of two decades ago.

The notion that states large and small would be able to get by on sectors devoted solely to processing paper, writing software and drawing up contracts now looks slightly laughable. There’s a simple reason why Germany still powers ahead; it makes things. It also has a strong, diverse industrial base that’s not solely anchored by VW, Siemens and MAN but by the Mittelstand (small to mid-size private businesses) that make the fasteners, valves and precision parts to support these companies.

In the recently released Mission for Finland Country Brand Report (see ­Monocle issue 39 and listen to edition 82 of the Monocle Weekly), the Foreign Ministry commissioned Demos Helsinki to not only draw up a vision for the country circa 2030 but also script a set of marching orders for every corner of society. The document makes fascinating reading as it doesn’t see the future of Finland as just a teched-up nation but a place that does things with its hands, hearts and minds.

It’s just the type of document that leaders in Dublin need as Ireland stares down a poorly maintained, badly lit and scraggly country road. The island might have had the world come to its rescue but it’s in urgent need of a mission that goes beyond offering low corporate tax in the hope that Facebook might add a few more desks to its Dublin office. To point them in the right direction we profile a series of entrepreneurial doers and makers in our report on page 69. They could also do with chatting to the people from Demos Helsinki and see if the think-tank might be able to turn around a slimmed-down mission for Ireland Inc to embrace.

Last autumn a leak from within the Kremlin revealed that Russian leaders were toying with a particularly Soviet ­solution to hopelessness in the Russian hinterland. The plan declared “no future” for Russia’s far-flung mid-sized towns, and went so far as to propose that they be effectively abandoned with their residents pushed into the country’s largest metropolises.

The question of how to handle perpetual decline looms as well in the United States, a healthy country with a competent government, where still large cities and at least one entire region – the Rust Belt and industrial Midwest – seem almost permanently doomed.

No one in Washington has as powerful a pen to singlehandedly redraw the national map as his or her peers in Moscow. But even without central planning, the United States has still taken a similar tack. The process is roundabout, less direct and fatalistic than a formal declaration that places have failed. In a country with a growing population and a historically infinite sense of its potential, no leader would ever declare a place failed. (Most US officials won’t even call Afghanistan a failed state.)

But if you wanted to give up on American cities, you would do it more or less as the country’s political system ­already does. You would take decreasing federal revenues as a cue to cut state aid, and then watch as helpless state capitals eliminate the money that goes to counties and cities to pay teachers, police officers, bus drivers and nurses. At that point the gravity of the free market exerts its pull: employers set up shop elsewhere, and everyone who has the choice to move does. Those who remain are, tragically, often those who are in most need of the core services no longer available.

Such geographical realignment, American-style, is likely to only continue in the new decade, with growing federal budget deficits forcing trickle-down austerity on local leaders. (A stimulus bill passed in 2009, and another boost of tax cuts and unemployment benefits, offered a modest short-term fix for city halls but do not change the arithmetic over a longer term.) The forced obsolescence of government imposes a new geography of ambition, creating cities where the social compact has broken down and is replaced by a do-it-yourself urbanism for the hardy.

This is becoming true in the well- reported case of Detroit, which is finding a new identity as a land-rich-cash-poor city. For entrepreneurs willing to fend for themselves in a government’s absence, the barriers to entry – for starting up an urban farm, unproven restaurant concept, or artistic collective – are as low as they could ever be. (The Burton Theater, an independent art-house theatre near Detroit’s downtown, was recently opened for only $6,000.) Falling property prices have created a free-market version of homesteading, the 19th-century project of awarding undeveloped government land to frontier settlers.

This can create enough activity that big businesses, in search of their own bargains, want to follow. Blue Cross Blue Shield of Michigan announced in December that it would transfer thousands of employees from suburban offices into downtown Detroit. But a basic level of city services remains necessary for such larger-scale economic development. One of the big lures a cash-poor city hall could offer to Blue Cross was free annual passes for employees on the downtown mass-transit system, whose populist name seems right for a time when governments are forced to step aside: the Detroit People Mover.

Latin America is the unlikely success story of a divided world. However, inequality, exclusion and dogmatism remain a problem. Take Colombia: after the enthusiasm and openness generated by grassroots movements in the 1990s, by 2010 a new era of conservative dogma had left the country diplomatically isolated and extremely unequal. Venezuela is more equal than Colombia. Brazil is less equal but it’s doing more than its neighbour to solve its problems.

Colombia needs a dose of its neighbours’ medicine: combine conditional cash-transfer programmes in areas such as health and education with a reform of its tax system, making it less dependent on consumption and more on income. Use the “mining bonanza” windfall to invest in education. Limit financial speculation. Continue down the path of Latin American integration. Appeal to Brazil, Chile, Ecuador and Venezuela for help initiating a serious peace process, and become part of the block that will rule the world by the end of the century.