Governments' job is not to solve problems

I often kid myself that nothing surprises me any longer. And yet...

At a recent event I was chatting to a successful business leader who also set up a highly successful philanthropic foundation. We were talking about public policy when he said "I have no faith in governments. They are unable to solve problems."

There is really no reason why such a statement should have surprised me. After all, it represents a feeling that is widespread among many, including many successful business people. Yet, in the moment, I was surprised.

So here goes: it is not governments' job to solve problems.

That statement may surprise some and may need explanation.

First of all seeing the world as a series of 'problems' to which there are 'solutions' is common in business and, maybe, in our personal lives. But the problem-solution paradigm is not appropriate when looking at government interventions. Though it may very occasionally be appropriate for some marginal items, the issues that governments face are immensely complex and not subject to 'a solution'. Some challenges can be ameliorated (from some perspectives - as we will see later) but they cannot be magically 'solved' - and certainly not by government alone.

Rather than 'solving problems', Government's job is to create the conditions under which we might be better able to solve our own problems. Take climate change. Governments cannot 'solve' the problem. They can create incentives in the hope of stimulating appropriate behaviours and investments; to encourage a direction of travel. But, in the end, it is business - as well as the rest of us - that have to build alternative energy systems, cut carbon emissions and do all the million other things necessary to mitigate and adapt.

A number of political scientists have repeatedly expressed the view that the role of political leaders is agenda-setting and inspiring public discourse: "The President's role is not to solve problems but rather to inspire us to start thinking about them."

Further, from whose perspective is government supposed to define 'problems' and who should they privilege in finding 'solutions'? What some see a problem will not be seen as such by others who may actually see it in a positive light (say, immigration). Any 'solution' to issues that governments choose to deal with will privilege some but will also inevitably disadvantage others - which is why it's not a 'solution' at all but rather a direction of travel that some will applaud and others will castigate.

That is the challenge of politics - decisions have to be taken when every citizen is demanding something different. Pretending that there are 'solutions' is naive at best.

Let's take one other example. The UK government is, quite reasonably, trying to stimulate significant investment in the UK to drive economic growth. It can make some of those investments itself through fiscal policy. Yet, that involves higher levels of taxation that many dislike.

One other source of investment is pension funds. UK pension fund investment is heavily skewed away from investing in their own domestic economy. The government - and many others - have defined this as 'a problem'. The pensions investment industry does not see it as such since they see their role as maximising financial returns in line with their stated objectives - and that is what they claim they are doing. So, is it a problem or isn't it? Depends who you ask.

If we were to accept it as being a problem, is there a 'solution' that is in government's hands? There isn't. Government can encourage. It could mandate a certain level of UK investment or tweak tax incentives to push in that direction - all of which will raise howls of protest from many quarters. Many will argue that such 'solutions' create more problems than they solve - primarily by potentially decreasing financial returns from pension investments. On top of it all, whatever incentives or limitations government sets, nothing will happen unless pension funds buy into them, comply, and do not mobilise to find ways around them.

None of this is to say that what government does is unimportant. Governments do set direction of travel. They do devise public policy that creates incentives that push in certain directions. They set the framework around what kind of society we want to live in. These are vitally important functions that matter immensely. They do drive behaviours - good and bad. But what they are not are levers in some giant machine that will predictably do what it is intended to do when a lever is pulled or a button is pushed.

Governments are dealing with issues and challenges that are infinitely more complex than the 'problems' that businesses have to deal with or that we have to deal with in our everyday lives. Challenges that are not subject to the simplistic 'problem-solution' way of thinking. Their most important job is to inspire us to move in a certain broad direction and to try to set a public policy framework that encourages enough of us to work towards shared goals.

If only life were as straightforward as the chap I was chatting with at that event would seemingly like to believe.