Lecture 9: Resistance - Vested Interests and Identities Flashcards
How does development create losers?
Institutional changes and development policies are designed to grow the pie, but they also redistribute opportunities and lead to creative destruction of old industries as well as traditional hierarches. This leads to short-term and relative losses for some
Definition: Vested interests
Actors with an interest in preserving existing institutions
How can resistance prevent development?
It raises the economic and political cost of policy implementation, often successfully
How does both strong and weak institutions allocate rents?
Strong institutions can allocate rents such as monopolies, and weak institutions can allocate rents like clientelism and corruption -> losers defend both these types of rent
Why are losers from development often powerful?
Because they benefitted from the old system and has concentrated wealth into their own hands -> they have means and motive to block development
If losses from development are not economic, they can be
Political, e.g. not wanting to empower people to demand democracy and threaten revolution
3 ways to overcome resistance from losers
- Insulating the state from the political pressures of losers (autonomy of bureaucracy, repression, authoritarianism/dominant parties)
- Strengthening winners (e.g. put them in government ministries to fight the losers)
- Compensating losers (but can turn corrupt)
2 reasons why compensating the losers of development might not work
- Compensation may not be credible (hard to make promises about the future; the newly powerful can do whatever they want in the future)
- Compensation may not be equivalent (e.g. careers come with identity and status, not just money)
Definition: policy feedback
Policies and institutional reforms change future politics
How does institutional reforms create new winners?
New people get benefits from development policies (e.g. farmers with secure property rights, students with more valuable diplomas), who now have a motive to protect their new gains and the means to do so
How do winners have the means to protect their new gains?
Their newly-acquired resources + new collective identities to organize politically with (e.g. pensioners, veterans)
How can we take advantage of policy feedback to promote development?
We can create policies that reduce poverty which create policy feedback that raises the political pressure for future poverty reduction - we can create interests groups that will be empowered by these policies to keep fighting for poverty reduction in the future
Example of how the Bolsa Familia created policy feedback
Program created people with a strong vested interest in continuing the program, and it gives them the financial means to do it as well + a collective identity to organize
This led to political parties now competing to extend the program and a rejection of clientelism
But what can go wrong with using policy feedback to promote development
Winners may prefer partial reform because they gain new resources and are scared that new reform will lead to loss of these - e.g. they benefit from the partialness of the reforms
Example of people who benefit from the partialness of the reform
Russian oligarchs during the privatization in 1990s - privatization allowed them to buy and get rich, but did not want further policies like monitoring and regulating agencies to make sure they set the right price
