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Ignorant Politicians? Why It Is difficult to Implement Policies and What International Organizations Can Do About It

May 31, 2012

The World Bank has recently released a report about Lebanon which spells out what policies the country should implement to unlock its potential and achieve long term growth. The recipes proposed – investment in infrastructure, improved efficiency in public spending, increased competition and enforcement of property rights – resonate any standard reform packages recommended to countries around the world by institutions such as the WB and IMF. From this perspective, the report tows the line of the Washington Consensus laundry lists tradition. Yet, this report is different: it tells you what policies the country should implement but it also tell you that these policies won’t be implemented or the least they are very unlikely to be. If you are wondering why, the answer has to do with the who is expected to put them into practice. Put it simply, the people who should implement them – the ruling political class – does not want to implement them. Why?

For a long period institutions such the WB and IMF assumed that politicians did not know what were good policies: if one explains to them what the best policies are, they would put them into practice, so the reasoning went. This report recognizes that it was not that politicians did not know what policies were to be implemented; they simply do not have the will to do so.  These policies in fact run counter to the interests of the very political elites who ruled the country.

Lebanon’s political landscape is premised on the dominance of powerful interest groups of key economic sectors such as banking and real estate. These groups, defined on the basis of the religious community they belong to, also hold political power and restrict any measures that can reduce their economic monopolies. They are the gatekeepers to economic opportunities and they allocate favors to the members of their communities. The end result is a confessional clientelism. Given this institutional setting it is unlikely that policies such as increased competition will be implemented because they can open up access to economic opportunities  to a wider sections of the society .

So if policies are the result of the political institutions a country has and if these institutions restrict rather than open the access to other groups, policies are bound to perpetuate the status quo. In this way powerful interest groups dominate the political and therefore the economic landscape. So what can international organizations do about it? Well, very little. The WB, however, has some ideas.

Firstly, start with reforms which are perceived as less harmful by the political elites such as increased public investment and more efficient public spending. Secondly, ensure that these changes foster the participation of other sections of society. Once more people get involved in new and innovative economic sectors they are more inclined and empowered to demand reforms which defend everybody’s interests. Thirdly, when it comes to reforms that reduce the political rents of some of the political groups make clear that if they stand to lose something in the short term they are likely to win much more in the long term as the size the pie expands.

These propositions, which are in line with what Acemoglu and Robinson define the process of empowerment in their new book Why Nations Fail, have one key goal: enfranchise a broader section of the society into the decision making process (Acemoglu has an idea on how this can happen in Egypt). By empowering a broad cross-section of the society the share of power held by the narrow political clique can be gradually eroded and policies such as enforced property rights become more acceptable and feasible. Such process of empowerment requires a long time and it cannot be engineered or foisted upon from the outside. Yet, the empowerment of new groups can serve as useful road map for any external actor interested in making the society more equal.

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