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Can We Have Subsidiarity Without the Regulation?Can We Have Subsidiarity Without the Regulation?

Can We Have Subsidiarity Without the Regulation?

Yet how does this all work? What prevents confusion from reigning? Two things: government regulation and the power of culture. The mirror of the devolution of responsibilities to business, government, educational, and social partners is a huge and rather onerous system of regulations. . . . . . . .

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Topics: Business, Vocation, Economics, Innovation
Can We Have Subsidiarity Without the Regulation? March 14, 2014  |  By Michael Van Pelt
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Germany is a skilled-trades producing machine. But behind this machine is a web of institutions executing different, and distributed, responsibilities so smoothly that it's easy to imagine why the Germans produce Porsches. Their success is fuelled by their passion to have the most globally competitive companies in the world. Companies have huge training facilities. Educational institutions and companies manage a dual training system of the theoretical and the practical. Students spend three days on the job and two days in school. The Chambers of Commerce, Chambers of Crafts, the labour unions and employer associations, the companies themselves, and the vocational schools all assume different roles in crafting a workforce and an economy that have been highly successful. The idea of a complex web of institutions with unique roles, each contributing to the common good in ways suited to their own purpose—what Christian social thinkers call subsidiarity—is alive and well in the German economy.

Yet how does this all work? What prevents confusion from reigning? Two things: government regulation and the power of culture. The mirror of the devolution of responsibilities to business, government, educational, and social partners is a huge and rather onerous system of regulations.

It is interesting to hear business leaders in Germany think and talk about the health of the market or sector alongside the interest of the company. Companies are seen as part of the body of a market community. I wonder how the quarterly shareholder reports of publicly owned companies perceive this broader business obligation.

Can you produce this distribution of responsibilities without what appears to me to be a massive amount of regulation over those same institutions? German state regulation requires: mandatory membership in the Chamber of Commerce, detailed rules for apprenticeship training, rather rigid definitions of the trades and more. Germany has such a powerful cultural force to support this focus on a skilled work force. But how much are these cultural characteristics related to the regulatory regime? Are they two sides of the same coin? Can you have a less regulated system, bear the free rider problem and rely on cultural forces and habits to produce the next work force? It's not clear.

Finally, can the German system produce the young entrepreneurs of the future? Can new forms of innovation thrive? Could you emulate "MIT start up enterprises" in this system? Will the Germans be nimble enough for the fast changes of the future?

Canada needs a skilled labour force to meet the demands of our industries and to work in Canada's New Industrial Revolution. But how will we achieve it? It may be that we will need to challenge industry and their associational leadership to commit long term to more expansive and generational long term planning. It may require CEOs to tell their shareholders—you and me—to sit tight and let us build great companies. Certainly there will be some regulation involved, however figuring how to create buy-in to a long-term broader vision is a live, challenging question.

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