It is a well known trope that actions have consequences, that benefits usually come with specific costs, that nothing in life is free, et cetera and so forth. So we set out with our cost-benefit analyses, scenario planning and so-called “war-gaming” of every possible outcome we can imagine before announcing an executive decision, implementing public policy or mounting an electoral campaign. Yet, somehow, we still manage to overlook or even ignore the human cost as well as the consequences to human life and our social fabric arising from executive decisions, public policies and even campaign narratives.

Far too often we see public policies fail, we read about executive decisions being launched into gear whilst the executive brain appears to still be in neutral, or we observe electoral campaigns that seek to divide instead of unite. All because of a failure to consider the human aspect, specifically the cost and consequences to human beings and society at large, in the calculus of the “Grand Strategy”.

Is it hubris? Could a person be so arrogant as to think that it is just not possible for their fantastic formula to fail, that their genius supersedes 99.99% of all living creatures, that they are the apex of all known intelligent life? It could be that the person is just suffering from “Metal Dude Syndrome”.

A person I respect very much once said to me: “Never ask a poor person for investment advice, and never ask a rich person what the poor need”. The message that we should always seek advice from appropriate sources is clear. What is less obvious, and which I continue to believe was the more important lesson that my mentor wanted to impart, is that we must always seek to collaborate outside of our own comfort zone. It is just not good enough for like-minded people with similar backgrounds or post-graduate degrees to sit in a circle contemplating a “Grand Strategy for the wider Society”.

Behavioural scientists would point out the risk of “groupthink” in such an approach; as a strategist I would offer the observation that such a collaboration is missing necessary input from key participants. I would illustrate that last observation with some specific examples, in sequence:

1. Quarterly surveys by World Economics indicate that Afghanistan, Zimbabwe and Nigeria are the top three nations of the world with the largest shadow economies. The daily experience of people who live in those countries would thus be very informative for anyone seeking to understand the effects on national economies and society at large from overwhelming levels of economic activities happening outside of official systems, or what is colloquially referred to as the “black market” or the “informal economy”.
2. Boston Consulting Group recently published an analysis of the global shadow economy, drawing upon various case studies and data from around the world. The main concern arising from the prominence of a shadow economy in any country is that it directly contributes to criminal activities that result in losses to public finances, the exploitation of human beings and economic distortions that would lead to a trust deficit in governance institutions and accompanying social problems.
3. There are also observations and other anecdotal evidence that the Covid-19 pandemic and inflationary pressures on prices of essential goods in the post-pandemic era has driven more people into undertaking informal activities in the shadow economy for the sake of supporting their families, pay bills or even make rent. This growth continues as recent levels of inflation persist, especially in countries where compliance systems or governance institutions are less sophisticated.

To try and solve the problems arising from the recent growth spurt experienced by the shadow economy in many countries, policymakers and those who make decisions must take into account all inputs from all levels of society and consider the cost or consequences on human life for any decision or policy that might be launched. Formulating policies that only focus on public finances without considering how the everyday lives of the general public would be affected merely drives even greater numbers of participants into the shadow economy. Conversely, trying to solve every issue faced by every person in that country may well drain public resources to the point of bankruptcy.

The balance that is needed to achieve a positive outcome for as many people as possible would thus have to begin much like the Hippocratic Oath: first, do no harm. Any cost-benefit analysis or scenario planning for executive decisions and public policies must always begin with the question “What will be the cost of this idea on the lives of human beings?”. It is a fundamental question that suits all decisions and policies, whether they be on diplomacy, taxation, healthcare, immigration or even the development of new technology. In order to achieve that balanced approach, the necessary inputs would thus have to come from all levels of society. After all, what is the point of solving high levels of national debt, if the policy merely transfers that debt onto individuals and households? All that will achieve is to drive even more people into the shadow economy, creating a doom loop of poor public policies and even poorer voters.

To leaders facing various difficult issues, I would offer this formula: leaders who do not look after the nation’s people are leaders who will not last very long. Uniting all levels of society, from the wealthiest elites to the lowliest economic demographic, in a collaborative effort for the common good is what leaders need to do, in order to do the right thing.

Together we make Tomorrow better than Yesterday.