L9 - resisting the rules (vested interests and identities) Flashcards
review - why are development projects still failing?
3
The rules are ignored
- good governance is too demanding
- form prioritized over function: isomorphic mimicry
- not enforcing wins votes: forbearance
the rules are imported (Aid)
- coordination challenges and corruption
- dependency and a lack of political ownership/accountability
- donations skewed by self-interest, geopolitics and domestic politics
the rules are broken
- distortions: short-termism, electoral cycles, concrete bias
- clientelism
- corruption, though perhaps a symptom as much as a cause
now: the rules are being resisted
- powerful losers resist
- powerful winners resist
- identities resist
powerful losers resist
institutional reform and dev policies = designed to grow the pie
BUT change creates losers (at least in the short run):
- large landowners lose access to cheap labour under extractive institutions (serfdom)
- ‘creative destruction’ of old industries - textiles, coal mines, drivers
*e.g. luddites in UK destroyed new technology
creative destruction = old industries need to disappear to allow for new ones to emerge - enforcement instead of forbearance
- monopoly rents or corruption
- losses can also be relative (e.g. teachers, traditional village chiefs, men) = even when development is better for everyone, if some benefit more than others will be jealous = redistributive fight
*e.g. teachers: used to be only few teachers per village = lot of social status
losses may be POLITICAL, not economic
- dictators may not care if the middle class gets rich
- but they may care if they start to demand democracy and threaten revolution
- if you have big economic power, you lose political power, resulting in you losing the ability to get it back (by using political influence)
- e.g. South Korea democratic revolution
losers are often POWERFUL: they benefited from the ‘old’ system
- concentrated wealth allows them to organize against reform
INEQUALITY can harm development when the rich oppose change and have the resources to block it
-> losers undermine, lobby against, destroy development (new tech)
definition: vested interests
= actors with an interest in preserving existing institutions
RESISTANCE raises the economic/political cost of policy implementation
- protests
- sabotage
- lobbying
- bribery/corruption
- veto power
easier to resist when the losses are CONCENTRATED on a specific group
- small group of powerful people are losing out a lot = they can organize easily, have incentive
- winners from development (average citizens) all don’t have huge gains so no incentive to lobby, protest etc. (collectively huge gain, but each gain only little bit)
- concentrated wealth allows them to organize against reform
INEQUALITY can harm development when the rich oppose change and have the resources to block it
overcoming resistance from losers
INSULATING THE STATE from the political pressures of losers
- autonomy/discipline (the developmental state)
- authoritarian repression
HISTORICAL SHOCKS:
e.g. Korean War, Rwandan genocide
COMPENSATING LOSERS
- if development ‘grows the pie’, then the gains can be distributed to everyone
why can’t we always compensate losers for their losses?
- compensation may not be credible
- the newly-rich=newly-powerful can just take everything in the future
- democracy and social welfare system might help make compensation credible - compensation may not be EQUIVALENT
- would you accept money to give up your career?
powerful winners resist
- who are the winners?
- workers benefit from investments in physical capital -> higher productivity -> higher salaries
- households benefitting from cheaper food (more productive agriculture)
- children benefitting from better teaching (human capital)
- consumers benefitting from smartphones (new technologies)
definition: policy feedback
= policies and institutional reforms change future politics
- new policies change politics: new political power, new groups new leverage on politics
winners often support continued reform:
- motive to extend their gains
- means from the newly-acquired resources
e.g. across Africa, women who possess a mobile phone are more supportive of women becoming politicians (but phones don’t change men’s attitudes)
“winners benefit and are more likely to support further change” = complementary development changes
policy feedback: concentrated vs diffuse winners
BUT DIFFUSE winners struggle to achieve COLLECTIVE ACTION to push for more reform
- lots of citizens/consumers with a small stake
- and difficulties in communicating and organizing
CONCENTRATED winners (capital investors, rent-seekers) gain from PARTIAL REFORM
- opportunities created by the TRANSITION from old to new institutions
- e.g. privatization without an effective competition regulator -> monopoly -> high profits
- e.g. liberalizing consumer prices but not exchange rates
- development policies are gradual, take time
SO: partial reform creates new rents
- monopolies, uneven subsidies
- lack of regulation, weak police/judiciary
winners from policy 2 resist policy 1: using their winnings to resist further reform
- policy 1 may be competition manipulator
Eastern Europe ‘intermediate reforms’
countries in Eastern Europe that carried out ‘intermediate’ reforms seem to have suffered the greatest increases in inequality, and opposition to further reform
- e.g. Inequality doubled in Russia
overcoming resistance from partial reform winners
- insulate the state from political pressures of winners
- autonomy/discipline (the developmental state)
- authoritarian repression
- protect bureaucrats from lobbying/influence from winners (e.g. Japan succesful, Mexico bureaucracy not much autonomy -> not insulated from political winners) - strengthening losers: more democracy/competition
- tax the winners (so states can claim some of the profits)
who are the winners and who are the losers?
= subject to political debate/manipulation = politically constructed groups
resistance to vaccination
- personal and community benefits
- but strongly correlated with trust in government
MISinformation creates ‘a seed of doubt’
- about gov intentions
- about who is a winner
misinformation is often DISinformation circulated by elites opposed to reform
- disinformation: intentional, convincing people they are winners or losers
identities resist
behavior is not just about eco and political interests, it is also about identity (sense of belonging to a group with shared beliefs and practices)
modernization theory: from traditional ‘ethnic’ identities to modern secular ‘post-materialist’ identities
- ethnic identities are strong at the start of dev
- and THREATENED BY DEVELOPMENT
eg. Triqui in Mexico protesting against displacement as a group (while only a part of the group was affected)
identities are diverse and multiple
lots of groups able to mobilize and resist if there’s policy they don’t like (if a few are harmed, the group may resist)
-> makes change difficult
ethnic diversity and investment in public goods
ethnic diversity reduces investment in public goods:
- challenge of cooperation across identities (willing to sit at the same table)
- differences in preferences
- lack of info about others
- ! harder to use social sanctioning to enforce informal institutions: e.g. in some countries you stand on the right and walk on the left, in others the other way around = complicated
eg.
- diverse parts of Western Kenya receive less money per school pupil
- diverse parts of Indonesia suffer greater deforestation
BUT applies only to ‘politically-relevant’ ethnic groups: ethnic groups are divided by politicians trying to form majorities
- e.g. the Chewa and Tumbukas cooperate in Zambia but oppose each other in Malawi: in Zambia there are more other groups
- ethnic divisions only a problem if it is politicized
ethnic discrimination reduces investment in public goods
= biased against the less powerful ethnic groups
discrimination by dominant identities:
- as pure discrimination: e.g. segregation South-Africa
- as political strategy to mobilize allies
- as a side-effect of being more socially connected among themselves
discrimination of benefitting co-ethnic friends in politics -> hurts other groups
diversity vs discrimination hypotheses
hard to distinguish the hypotheses in places like the USA: diversity and discrimination are correlated (cities are more diverse and have fewer dominant whites)
correlation diversity and less investment public goods, but also with discrimination -> which is it?
we need a place where the powerful group is small and dispersed (diversity separate from discrimination)
- e.g. Upper castes in India
diversity = villages with more diversity get just as many public goods
discrimination = villages with more upper castes DO get more public goods (more hours of electricity e.g.)
how can we twist ‘identities’ to help development?
constructivism: identities are not fixed but created by social interaction and political manipulation
- we can shape identity through politics (civic identities)
- if people of the same identity trust each other and are more willing to invest together, we need more INCLUSIVE identities
- identities can be good for development, for informal institutions, it helps us achieve things, get people to behave in certain ways
overlaying ethnic identities with civic identities (higher level, umbrella identities)
-> constructivism: identities are not fixed but created by social interactions and political manipulation
e.g. subnational identities in India: states with stronger subnational identity are better at providing public goods (civic inclusive identity vs ethnic exclusive)
e.g. in Tanzania, ‘nation-building’ has promoted inter-ethnic cooperation
- a common language (Swahili)
- national identity in the school curriculum
- village councils replace tribes
- Tanzania provides more public goods rather than Kenya in diverse communities
- diversity correlated with higher development
-> problem is discrimination, rather than diversity
= we can use policies to create inclusive identities
definition: constructivism
Identities are not fixed but created by social interactions and political manipulation
- identity is manipulated and manipulable
conclusions
powerful losers resist
- vested interests in the old econ
- with the resources to resist change
- compensation for losers must be credible
powerful winners resist
- diffuse winners have little power to sustain development
- concentrated winners try to preserve partial reform for rents
identities resist
- ethnic diversity impedes cooperation over investments
- if ethnic groups are politically mobilized
- or is it ethnic discrimination?
- constructing more inclusive identities can help
(important to get development: take into account policy feedback)
