Class 9: Resisting the Rules - Vested Interests and Identities Flashcards
Vested Interests
Actors with an interest in preserving existing institutions
Resistance raises the economic/political cost of
policy implementation
o Protests
o Sabotage
o Lobbying
o Bribery/corruption
o Veto power
Easier to resist when the losses are concentrated on a specific group
losers a small group of people
Why can’t we always compensate losers for their losses?
- Compensation may not be credible
o The newly-rich=newly-powerful can just take everything in the future
o Democracy and social welfare systems might help make compensation credible - Compensation may not be equivalent Would you accept money to give up your career?
Overcoming Resistance to Development from Losers
Why Do Losers Resist Development?
Powerful losers benefit from the old system and have resources to organize against reforms.
Inequality: The rich, who benefit from the current system, often oppose change to protect their wealth and power.
How to Stop Losers from Resisting Development?
Insulate the State from Political Pressures:
Autonomy/Discipline: Maintain state independence to carry out reforms (e.g., developmental state).
Authoritarian Repression: In extreme cases, use authoritarian measures to enforce change.
Historical Shocks: Events like the Korean War or Rwandan genocide led to significant shifts in development policies.
Compensating Losers:
Growth and Redistribution: If development leads to economic growth, redistribute the gains to ensure that everyone benefits, even those initially losing out.
Policy Feedback
Policies and institutional reforms change future politics
Winners often support continued reform:
o Motive to extend their gains
o Means from the newly-acquired resources
Why do diffuse winners struggle to push for more reform?
Large number of small stake holders (e.g., many citizens/consumers).
Difficulties in communication and organizing.
While concentrated winners (e.g., capital investors, rent-seekers) may gain from partial reforms and block further reforms due to new opportunities created by incomplete reforms (e.g., privatization without competition regulators), partial reforms often lead to monopolies, uneven subsidies, and weak regulation.
Overcoming Resistance from Partial Reform Winners
Insulating the state from the political pressures
of winners
o Autonomy/discipline (the developmental state)
o Authoritarian repression
Strengthening losers!
o More democracy/competition
Tax the winners!
How does ethnic diversity affect investment in public goods?
Ethnic diversity reduces cooperation across identities due to:
Differences in preferences.
Lack of information about others.
Difficulty in using social sanctions to enforce informal institutions.
Diverse regions often receive less investment in public goods, e.g., Western Kenya sees less funding per pupil, and parts of Indonesia suffer more deforestation.
This effect is limited to politically-relevant ethnic groups.
Politicians exploit ethnic divisions to form majorities, e.g., Chewa people cooperate in Zambia but oppose each other in Malawi.
How can we twist ‘identities’ to promote development?
Constructivism suggests identities are not fixed, but shaped by social interactions and political manipulation.
Inclusive identities can be promoted by:
Overlaying ethnic identities with civic identities (e.g., subnational identities in India).
States with a stronger subnational identity tend to provide better public goods.
Nation-building efforts (e.g., Tanzania):
Promoted inter-ethnic cooperation through a common language (Swahili) and a national curriculum.
Replaced traditional tribal structures with village councils.
Example: Tanzania provides more public goods in diverse communities compared to Kenya, due to better ethnic cooperation.
