Subsidiarity: Musings on social structures, technology, and economics around water
NON MIHI NON TIBI, SED NOBIS
(NEITHER MINE NOR YOURS, BUT OURS)
What we do requires a lot of philosophy. Philosophy is derived from two Greek words: Philos meaning to “love” and Sophia meaning “wisdom”. Put together “Philosophia” means the “love of wisdom”. Wisdom itself means, “the ability to make sensible decisions and give good judgement because of the experience and knowledge that somebody has”. I love philosophy because it puts thoughts to work. Philosophy is not at war with Faith, it is a cornerstone to faith. The word Wisdom was a pseudonym for God for the Hebrews and Solomon dedicated his life and the books of Ecclesiastes and Proverbs to it. Ignore Philosophy and your faith will have no grounding and soon common sense things about nature and reality will get blown off course. So today, we’re going to talk a little Philosophy regarding social systems and economics that interests our work at Water4.
Subsidiarity or Localism : Role of community, business, government. Insights from Nassim Taleb, Tocqueville, and Ostrom:
“Subsidiarity: you leave to HIGHER collective structures things that cannot be done by the individual, under constraints of liberty. We need government where we can't sue (systemic harm: viruses, GMOs, invasions). Government is the systemic risk manager.” Nassim Taleb
In other words, those who are closest to the problem are generally best equipped to solve it. Problems that come from powers outside the realm of the body of people, like warring nations, require larger structures of authority, but issues that families, communities, and states could solve SHOULD be left to those groups to make independent decisions about.
Nassim Taleb continues: “The "tragedy of the commons," as exposed by economists, is as follows: the commons being a collective property, say, a forest or fishing waters or your local public park.
Collectively, farmers as a community prefer to avoid overgrazing, and fishermen overfishing- -the entire resource becomes thus degraded. But every single individual farmer would personally gain from his own overgrazing or overfishing under, of course, the condition that others don't.
And that is what plagues socialism: people's individual interests do not quite work well under collectivism. But it is a critical mistake to think that people can function only under a private property system.
What Nobel Laureate Ellen Ostrom found, through empirical research, is that there exists a certain community size below which people act as collectivists, protecting the commons, as if the entire unit became rational. Such a commons cannot be too large. It is like a club. Groups behave differently at a different scale. This explains why the municipal is different from the national. It also explains how tribes operate: you are part of a specific group that is larger than the narrow you, but narrower than humanity in general.
Critically, people share some things but not others within a specified group. And there is a protocol for dealing with the outside. Arab pastoral tribes have firm rules of hospitality toward non-hostile strangers who don't threaten their commons, but get violent when the stranger is a
threat. The skin-in-the-game definition of a commons: a space in which you are treated by others the way you treat them, where everyone exercises the Silver Rule. The "public good" is something abstract, taken out of a textbook.”
“With my family, I’m a communist. With my close friends, I’m a socialist. At the state level of politics, I’m a Democrat. At higher levels, I’m a Republican, and at the federal levels, I’m a Libertarian.” Nassim Taleb Skin in the Game
An open well shared by a sub region of a village is not a hand pump shared by a whole village is not a handpump and it is certainly not a piped water system. Organizations that fail to understand what I’m about to share will fail to deliver what they aim.
When we first started observing life in Africa we rightly observed that rural Africans were collectivist who lived out of and through their family structures. These family structures shared resources like land and water. The shared resources tied family members interests together and in a low resource environment this ensured individuals thought about their group and not just themselves as they made decisions. This kept social cohesion and it also paid into a security net that is often needed in a vulnerable and chaotic world.
These shared resources, however, had little to no maintenance cost of maintenance action related to them. Fields were not composted, open wells were easy to clean back out with shovels when the bottoms silted up, hoes and knives lasted long periods and were inexpensive to repair. What changed in this situation was the influx of modern technology and with it high resource requirements for purchase and intentional requirements for maintenance with high cost penalties for ignoring them.
One does not calculate the costs (time, logistics, social interactions, relational equity, unequal usage/equal costs, maintenance, etc.) when GIVEN something. You can’t. Being given has no cost, without cost you don’t scrutinize or engage reasoning. You just take it. And you don’t care what happens after because, after all, you didn’t have to pay for it.
I think we all recognize this as a problem in the Water Charity space. Development organizations gave things away; things broke; things were abandoned; people went back to their original practices. So we created these big trainings to add information (reason) to our practice of handouts. But, organizing a group and providing INFORMATION does not result in UNDERSTANDING.
It is in the act of purchasing, of putting “skin in the game,” that one connects the information with understanding. Skin in the game, or risk, engages thought in the same way that one can gain information about a lion’s danger from a book but does not understand that information until you see that lion stretch and yawn across the short fence at the zoo or better yet out the window of your mini-van in the Serengeti.
During my five years living abroad, I used to do WaSH (water, sanitation, health and hygiene) trainings in rural villages in Togo, West Africa. I would drive out on a motorcycle with felt-paper charts, copy paper with images, and would spend several days, several times a year, in each village working with community members to discuss resource management and priorities. We used sticks and objects lying around to map the village in the dirt to understand how they understood it from a Birds Eye view, connected linkages between actions and disease with paper illustrations, discussions, and sticks.
The entire time, however, those I was interacting with knew that these trainings led to something. I made no promise, but experientially, when a Westerner comes and spends time in your village/community, resources show up. How much? That is to be intuited based on the appearance of the Westerner’s linkage to resources.
Why is this important? What I learned through practice was that you cannot trust the intuition of others regarding the utility of a resource until you ask for “skin in the game.” Do you want this thing for free? SURE! Will it fix your problems? SURE! Ok, will you pay for it then? “Wait.. what does it do again?”
I was an unusual Westerner in that I had very little access to material resources but tremendous access to ingenuity, physical strength and endurance, and the willingness to spend 2-3 weeks at a time camping in their community to solve practical problems. This included the manual drilling of water wells in which I played the role of key-stone laborer due to my physical size and strength at 6’3” and 280 lbs of habituated “farm boy” endurance. To do this, however, I required an upfront payment of $300 for the materials required to drill the well (pipes & cement) plus the hauling of sand from nearby rivers, hauled water for drilling daily, 5-10 physical laborers and the provision of food for myself and this team. This cost, among rural communities in the population of 100s, necessitated a form of calculus in communities that quickly began to work out the list I provided above: time, logistics, social interactions, relational equity, unequal usage/equal costs, maintenance, etc compared to required resources. Immediately, those that were going to pay the most wanted it closer to their homes; those who were going to use the most but had the least resources lined up to be laborers for their contribution. They wanted to know more about the drilling system. More about the pump. More about me. A system of economics around the laws of scarcity took place.
Ultimately, my experiment mostly failed. Why? Although the upfront payment changed the game in getting wells put in the right places in villages, increasing ownership and a vision for their utility, people could still not foresee the longterm costs and actions needed for maintenance for the pump itself. Handpumps are relatively simple technology, but also require a level of expertise that isn’t possessed by the layman. I was an experienced mechanic, builder, and all around handyman but it still took practice, training, and cycles of failure to master the installation and repair of pumps. Villages who got a well simply did not have the benefit of INFORMATION plus EXPERIENCE in enough cycles to be trained both in the means of repair and the appropriate expectations of costs of repairs.
We can all remember this effect after getting our first car. Perhaps you paid for it outright, had it subsidized or given to you by your parents (a parallel to the water well), but I imagine all of us were shocked at the cost of the first set of tires, replacement of brakes, drive axles, and even oil changes. You can be forewarned but it is still a shock after you’ve struggled to pay for the fuel and insurance to find the high costs of maintenance lurking around the corner. Now imagine if that car was shared, unequally across your subdivision, and those costs arrived… Who would pay how much and what would you do if someone said they couldn’t pay but had and continued using the vehicle? To use it, you have to get up early to work around schedules, there’s lines to wait in, and when it’s broken you have to default back to your prior, now abandoned means that creates shocks of inconvenience and possibly risk of harm. And who will pay for it when they’ve had to go back to using the bus and paying for that service as well? The uncertainty is more of a problem than the proposed solution…
The same was true of handpumps. A shared car works for a household, or perhaps a few, but it does not work across a village. The resource allocation equation becomes too complicated. Therefore, when the charity-given pump breaks, it is abandoned. The only instances where we saw the system working was when the primary resource provider could physically lock the pump and control its usage, banning people who pumped it abusively, and limiting usage. These people, however, often collected fees for usage (i.e. maintenance) that if not managed properly (often the case), created great strife when the pump lay broken for months and further payment was coerced for maintenance that had been viewed as prepaid.
(Where there was the rare great local leader it worked and where an NGO or other actor with subsidized salaries and vehicles comes by monthly to verify that the committee is working, that the fees are collected etc. I’ve seen it work too. But I laugh when they call this “community management” as they are the one’s in fact managing the community.)
Regarding the bus portion of the above analogy, consistent and reliable beats inconvenance and water quality. People want stability in systems that they live under so they know what to do each day as they face each day and its labor. Would you risk paying to repair something that had failed faster and more expensively than you had imagined? Or would you prefer to go back to the watering hole, a known yet undesirable, so you could focus on the overwhelming tasks of parenting a large family, farming, social life, and the like? If the salad shop is closed at random, out of food, or doesn’t deliver after you’ve grub-hubbed, how long would you keep trying to eat healthy?
So what’s the solution? Traditionally one individual in a community would take on the risk of maintenance and buy an object or create a service for personal gain. They would then charge a premium for the risk of their capital they put up front in order to weather the unknown risks. If lucrative, it solves problems at a great scale and if lucrative, it will be copied by others looking for a cut of the same. Competition equals price leveling and through these two steps the customer benefits from the initial increase in convenance or productivity and then a decreased cost and choice alternatives through the function of market competition. Rather than a shared car, in this analogy, one person would take on the risk/debt of buying the first car in the village and then hire it out for service. She would then think about the maintenance that was forthcoming as the operation of that vehicle both solved problems of transport for her village but also generated ongoing revenue to serve the debt and pay her wages. Thus the cost-calculus is far simplified in that one user is exploiting it for their own interest in a way that is linked to the interest of all other users.
Solving this equation for water is complex… You need A LOT of upfront capital and there is A LOT of risk but is a solution that stands to save A LOT of lives. So how do we do it in way that leverages subsidiarity or localism? At Water4 we tried communities managing water systems… that didn’t work. We tried going up a level or localism to independently owned local businesses managing them… That didn’t work either. Plenty of people have been dumping hundreds of millions into government or parastatal water management. That hasn’t worked… So what else is there to try?
Well, historically, nearly all problem solving innovation has come out of the private sector and even water household ownership and household payment for piped water evolved that way. (See The Prosperity Paradox by Ejoma and Christenson). You would install pay for use public wells and private connections. The revenue from private connections incentivizing more private connections until ouila-saturation. Let that go on for a generation or two and with thriving economies off the back of water and sanitation, populations increase, small towns become big ones, and then government can afford to invest in infrastructure management or regulate private operations to ensure that community grows as a tax base for the nation.
We are solving this problem at Water4 in this way. We are de-risking the business installing and operating the piped water networks with charitable capital and using the skills housed within our network of professionals to de-risk the operations. We wholly own 5 ventures to ensure the donated capital is used the right way; collected revenues are poured back into water sytems, and that people are getting the safe water they deserve.
We are getting safe public points, connecting homes for a partial fee, and allowing the people to have convenient, reliable access to safe water to found happy lives upon. We have spent 5 years finding out what people will pay for with our NUMA water systems. It is what they will pay for that shows what problems are or are not being solved. We are also taking on all the sticky/risky parts of maintenance that cause so many shared and private water points to fail. What does it cost to own and operate water infrastructure at scale? No one really knows out over 20 years but we have a pretty good idea and cost model, picked our technology and model with that operations cost and practices in mind, etc.
We have optimal subsidiarity (localism) in that we require “skin in the game” for home connections, which triggers the intuition to ask for a solution that solves their problems; we play the role of the risk-taker who brings the cost-prohibitive solution of piped water; and we employ 700+ local people to interact with and serve our customers because we believe they are closer to the problem and understand many aspects of it better than we would. The problem is too big for local but too localized/rural for government. That’s why business is the perfect solution.
Want to know more? Enjoy our Virtuous Profit Video Series here: https://water4.org/vp
References:
Nassim Nicholas Taleb is a Lebanese-American essayist, scholar, and former financial trader, known for his work in the fields of risk, probability, and uncertainty. He is best recognized for his book "The Black Swan," in which he discusses the impact of highly improbable events, or "black swans," on financial markets and broader society. Taleb's work often challenges traditional statistical models and emphasizes the need for robustness and anti-fragility, the idea that systems should not just withstand shocks but thrive from them. He has also explored topics such as the fragility of systems, the limitations of prediction, and the importance of embracing uncertainty and randomness in decision-making. Taleb's thought-provoking ideas have had a significant influence on risk management, finance, and philosophy.
“I am not against modernity; I am for its Improvement. The modern liberal system makes mistakes, yes. But when I criticize it, I don’t aim at destroy it, but at improving it. And it is a good system because it is self-correcting. I criticize naive Western interventions because I think about their consequences…” The problem posed by a benign system like ours is its transparency, which causes perceptional distortions: Tocqueville understood that equality seems all the stronger when it is reduced; similarly, a system seems all the more dysfunctional when it is transparent. Hence my attacks on someone like Edward Snowden and his acolytes, who exploit this paradox to attack the West for the benefit of Russian plotters. Nassim Taleb
Alexis de Tocqueville was a French thinker and historian who lived from 1805 to 1859. He's famous for two key works: "Democracy in America" (published in 1835 and 1840) and "The Old Regime and the Revolution" (released in 1856). In these books, he studied how people lived and interacted in Western societies, focusing on their relationships with the government and the market. "Democracy in America" is especially important because it made significant contributions to sociology and political science, thanks to Tocqueville's observations during his travels in the United States.
Tocqueville also had a political career in France during two critical periods: the July Monarchy (1830-1848) and the Second Republic (1849-1851), which followed the 1848 Revolution. However, his political involvement ended in 1851 after Louis Napoléon Bonaparte's coup. Afterward, he wrote "The Old Regime and the Revolution," where he argued that the French Revolution played a crucial role in modernizing and centralizing the French state. He believed that the Revolution's problems stemmed from the inexperience of the deputies who held strong but abstract Enlightenment ideals.
DeTocqueville did not invent the concept of individualism but rather reshaped its meaning, perceiving it as a "calm and thoughtful sentiment that inclines each citizen to distance themselves from the collective and seek solace within the sphere of family and friends. Within this chosen social circle, they willingly leave the larger society to fend for itself." While Tocqueville regarded egotism and selfishness as undesirable traits, he viewed individualism not as a deficiency of sentiment but as a mindset that could yield both positive outcomes, such as collaborative efforts, and negative consequences, such as isolation. He believed that a better understanding could remedy the adverse effects of individualism.
When individualism took on a constructive role and motivated people to collaborate for common goals, often described as "self-interest properly understood," it served as a counterbalance to the potential tyranny of the majority. This allowed individuals to "take charge of their own lives" without requiring extensive government intervention.
Elinor Ostrom is an influential political economist and Nobel laureate, is best known for her work on governance and the management of common-pool resources. While her work primarily focuses on collective action and self-governance, it can be related to the concepts of collectivism and individualism as well. She contributed to these fields by arriving at the following conclusions through empirical data:
1. Collectivism: Ostrom's research challenges the traditional notion that common-pool resources (such as forests, fisheries, and irrigation systems) are inevitably subject to the "tragedy of the commons," where individuals acting in their self-interest deplete these resources. She demonstrated that under certain conditions, communities can successfully self-organize to collectively manage and sustain these resources. In this sense, her work supports a form of collectivism where groups of individuals work together to achieve common goals and manage shared resources effectively.
2. Individualism: Ostrom's work also acknowledges the importance of individual actors and their ability to make rational choices within collective contexts. She emphasized that individuals often have local knowledge and a vested interest in the well-being of their communities. Her research promotes a kind of individualism that recognizes the agency of individuals to participate in collective decision-making and self-governance. This perspective aligns with the idea that individuals can contribute to collective efforts without relying solely on centralized government control.
Ostrom's theories on governance and the management of common-pool resources offer a nuanced perspective that combines elements of both collectivism and individualism. She highlights the potential for successful self-organization and cooperation among individuals within communities while recognizing the importance of individual actors and their rational choices in achieving collective goals. Her work has had a significant impact on our understanding of how societies can address complex resource management challenges.