Politics, Business & Culture in the Americas

Do’s and Don’ts for Policymakers In the Midst of an Economic Crisis

Nine tips from a former Brazilian president.

1.) Seize the moment

Systemic crises are moments of dislocation and uncertainty. But they also have a strong transformational dimension. Unusual circumstances tend to create rare opportunities. When there is a recognition that more of the same will not do, alternative ideas and possibilities emerge as workable options. A system in crisis either regresses and disintegrates or reorganizes and rebuilds at a higher level of complexity. We are at this crossroads.

2.) Talk straight

A major component of the current crisis is the lack of trust and transparency. Confidence can only be rebuilt on the basis of truth. Citizens today make up their minds based on life experiences and perceptions. If their knowledge and experience bears no relation to the message of politicians and policymakers, the outcome is disbelief and distrust. Ordinary people can face hard truths and bear sacrifices if they sense that leaders speak truthfully and have a grip on the situation and that the burden of the solution will be fairly shared by all.

3.) Harness the power of civic engagement

People and societies are more resourceful today than ever before. In times of adversity, they can draw upon resources that they were not aware of in times of prosperity. Discontinuity is a challenge to the collective imagination, but engaging new sectors can pave the way for the emergence of new forms of collaborative reinvention.

4.) Do not struggle with facts

Nothing is more demoralizing for a leader than to be disproved by reality. Do not promise what cannot be achieved. Do not set timetables that are unrealistic. Trust people’s capacity to understand complex situations, to be creative and experiment with innovative solutions. Reach out to the best that each can bring to the table. Build a strong coalition for change that continuously nurtures the sense of common purpose and keeps people’s eyes focused on the goal to be achieved.

5.) Stay the course

One of the key lessons I learned about crisis management, especially when the Brazilian economy was experiencing wild exchange-rate fluctuations, is that in the midst of the storm the leader has to keep calm and sustain the hope that the situation will ultimately improve. It’s up to the leader in these difficult circumstances to keep his team’s morale high. At the height of the crisis each collaborator tends to follow a different path and to see the person next to him or her as an adversary, with the risk of all losing heart. Consistency, boldly and pragmatically sustained, is a crucial component for successfully dealing with a crisis situation.

6.) Lead the way

In today’s world, political leadership is never gained once and for all. It must be constantly nurtured and renewed. It is no longer possible for a leader to impose without negotiating, to decide without listening, to govern without explaining and persuading. Votes in an election, even dozens of millions of them, are not enough. The day after an electoral victory, one has to start almost from scratch. Leaders either inspire and mobilize around a vision of the future or they lose power. The responsibility of a democratic leader is to grasp the challenges, break new ground and show the way forward. Communication by the leadership is essential to ensure support. Even though taking into account, as Machiavelli pointed out, that those who are bound to lose from a change of policy will react much more quickly and strongly than those that benefit from it.

7.) Rely on new actors

All of the major critical global issues facing us today—from the economic crisis and global warming to fighting terrorism, organized crime, nuclear proliferation, epidemics and absolute poverty—cut across frontiers and are beyond the capacity of any one state. All of these challenges can only be met through collaboration and innovation on a massive scale. These threats affect people’s lives everywhere and must be dealt with by states and a plurality of non-state actors: NGOs, local authorities, the private sector, scientists, spiritual leaders, media, and public opinion.

8.) Soft is stronger

In the same way globalization did not herald the end of history, as some feared and others anticipated, the current systemic crisis will not mean the end of globalization. It will probably lead to a multilayered geopolitical landscape driven by a stronger interplay between politics, economics and culture. The age of American unilateralism has come to an end. The U.S. alone cannot deal with any global problem, but nothing can be done without the U.S. We are entering into a new era when soft power may well prove stronger and more reliable than hard power. In an increasing multipolar and multicultural world, power itself is shifting from the North to the East and the South, from hierarchical structures to flexible networks and platforms of collaboration.

9.) Look beyond the crisis

People today are bewildered and afraid. Fear has replaced greed. It is time to replace fear with hope. Trust and transparency between leaders and citizens is an essential precondition for rebuilding shattered institutions, both at the national and global levels. This is the way forward. The reckless pursuit of profit has brought us to a dead end. Financial laissez-faire has imploded. The days of risk-taking and high living are over. Real needs and the public good are bound to take precedence over outright consumerism. Either willingly or unwillingly, we may well be forced to go back to the age-old virtues of hard work and saving, transparency and trust as the foundation of economy and prosperity. In reaction to out-of-control borrowing and spending, it is high time to revisit the notion that innovation, productivity and competitiveness are the pathways to wealth and job creation. The future is not a point in time waiting for us to get there. It depends on and is shaped by the decisions that we make today.

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Any opinions expressed in this piece do not necessarily reflect those of Americas Quarterly or its publishers.
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