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Lessons on Governing from the World’s Extreme Economies

A new book's exploration of how places that have been battered by powerful forces have succeeded or failed has much to teach us about our own communities.

A Syrian refugee camp, one example of an extreme economy.
The best and worst moments in public life center around the same reality — that each of our communities is like a tree clinging to a cliff in a storm. Some days, the good days, we can inch our tree's roots deeper or provide shelter to a small animal or insect that would otherwise be swept away. We survive and make things a little better against difficult odds.

The bad days are when the storms, driven by the forces of culture, global economics, conflict and unexpected disruptions such as pandemics, relentlessly strip our tree — our community — of its protective bark and leaves, no matter how hard we struggle to protect ourselves. We finish the day battered by forces too big and too harsh to fight.

These days, even when not facing an emergency like the coronavirus outbreak, it feels as though the storms are getting stronger and more relentless, and that there are more bad days than good. It was against this backdrop that I read Richard Davies' remarkable new book, Extreme Economies: What Life at the World's Margins Can Teach Us About Our Own Future. This is a book about what happens when the tree is finally ripped from the cliffside and crashes into the turbulent sea. It's about how life ends or is renewed after the extreme — a reality that we all are now facing with the coronavirus pandemic.

Davies, an economist by training with the soul of a travel writer and the knowledge of a university professor, explores societies around the globe that operate in the extreme — an Indonesian village destroyed by a tsunami, Syrian refugee camps, Louisiana's Angola prison, Kinshasa's kleptocracy and Estonia's all-in commitment to digital government, just to name a few.

What can a first-world suburb learn from Angola's prison economy? A lot, Davies argues. In section one of the book, he demonstrates that economies, especially informal ones, are more resilient and creative than we realize. Prisoners, refugees and destroyed communities have developed markets, trading systems and currency despite having no access to most goods, services or money. It's vital that we, as policymakers, understand and respect the role of these informal economies as an essential component of a community's resilience.


Section two of the book looks at extreme failures in Congo, Panama and Scotland. The stories are bleak and made more dispiriting by Davies' demonstration of how close these places were once to success. Rich with resources, economic opportunity and strategies to win in the global marketplace, they made big bets that were ill-advised or badly timed, and they have paid a high economic and psychological price for generations. The details of how Congo, supremely blessed by natural resources, let itself be ravaged economically by grifters, both homegrown and from around the world, is heartbreaking. Panama and Glasgow provide a lesson in caution for policymakers who mandate a single approach — tree planting and antiquated shipbuilding, respectively — instead of allowing room for people, companies and global economics to respond nimbly to opportunities and threats.

In the final section, Davies explores how communities have attempted to navigate the three macro drivers of the future: aging societies, disruptive technology and rampant inequality. He looks at places in Chile, Estonia and Japan that have been impacted early by the trends that we are all destined to negotiate. The successes and failures in responding to these macro-trends for these communities (nor for the rest of us) are not clear. Luck and foresight played a role in the successes, such as Estonia's with e-government, but those aren't easily replicated. An ill-timed downturn, a bad leader, a natural disaster and all of these places could just as easily be in the section of failed communities.

Extreme Economies might be one of the most entertaining efforts to enliven the dismal science of economics. We are invited into places most of us will never see — dangerous places where people, despite their suffering, find ways to adapt and survive. The places that do it best, Davies argues, are where social capital and smart policies give people freedom to make their own choices, while constraining the worst impulses of greed and exploitation.

Davies risked his life and traveled more than 100,000 miles to write this book. We would all do well to find the people living in desperation, at risk or unusually well in our local communities and see what we can learn from our own extremes.

Governing's opinion columns reflect the views of their authors and not necessarily those of Governing editors or management.

A Santa Cruz County, Calif., supervisor and former mayor of the city of Santa Cruz
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