What Have We Learned About Institutional Change?

institutional changeA number of noteworthy reports on institutional change, development, and foreign aid have been published recently. There is much agreement between them, suggesting that we have reached a tipping point in knowledge in this area. I will briefly summarize the results here and provide links for those who want to explore the subject further. Continue reading

Social Covenants: The Missing Ingredient in State Building Efforts

Loya Jirga

Political theorists have for the most part focused on the state when thinking about how to make countries work better for their populations. This has naturally led to a concern with state-society relations, how governments are chosen and run, and institutions. There is wide consensus that social contracts play the central role in state building.

This thinking has heavily influenced how the international community approaches fragile states, post-conflict situations, and transitions as well as development in general. As the OECD/DAC explained in Concepts and Dilemmas of State Building in Fragile Situations:

Fragility arises primarily from weaknesses in the dynamic political process through which citizens’ expectations of the state and state expectations of citizens are reconciled and brought into equilibrium with the state’s capacity to deliver services. Reaching equilibrium in this negotiation over the social contract is the critical if not sole determinant of resilience, and disequilibrium the determinant of fragility. [page 7]

This focus on the state shapes responses to crises in places such as the Democratic Republic of the Congo, Libya, Syria, and Afghanistan, compelling the international community to prioritize the establishment of a transitional regime and fast track elections under the belief that this is the sole way to create legitimacy no matter the circumstances or the context.

But many of these countries have deeply-entrenched problems that a focus on the state cannot solve. Different religious, ethnic, and clan groups do not work together well, and see any competition for power as a zero sum game for exclusive control of the state. Government is weakly institutionalized, and unable to act as an independent, equitable arbitrator between different interests. Judges and officials are beholden to personal relationships, power politics, or money (and sometimes all three). In such places, winners of elections rarely see it as their duty to serve all their people, and often define their rights as whatever they can get away with—negating whatever social contract the process was supposed to establish. Continue reading

Discordant Development – Can Progress Increase Instability?

Discordant development, imbalanced development, unequal development

Samuel Huntington argued in his 1968 classic Political Order in Changing Societies that rapid development could be highly destabilizing:

Social and economic change—urbanization, increase in literacy and education, industrialization, mass media expansion—extend political consciousness, multiply political demands, broaden political participation. These changes undermine traditional sources of political authority and traditional political institutions; they enormously complicate the problems of creating new bases of political association and new political institutions combining legitimacy and effectiveness. The rates of social mobilization and the expansion of political organization are high; the rates of political organization and institutionalization are low. The result is political instability and disorder. The primary problem of politics is the lag in the development of political institutions behind social and economic change.

Richard Joseph, a Senior Fellow at the Brookings Institution and a Professor at Northwestern University, discusses a similar point in a recent article on Africa. In it, he introduces the very useful phrase “discordant development,” defining it as:

More than just “unequal development,” but rather how deepening inequalities and rapid progress juxtaposed with group distress can generate uncertainty and violent conflict.

This is a common problem in fragile states. One area moves forward while another area does not — or worse. And because countries are weakly unified, such development is highly discordant, increasing instability by how it increases the exclusion — and feelings of exclusion — of certain groups. Continue reading

Separated at birth: Lehman Brothers, nukes

Great post from Nils Gilman on Small Precautions:

In 2006 RAND staged a wargame to think through the implications of a nuclear terorr incident. They created a specific scenario – a tactical nuclear device being detonated by a terrorist organization in the Long Beach harbor – and then staged a role-play to determine how key stakeholders would react and work together. The experience must have been incredible, because even the write-up is riveting. When I revisited this text today, however, what struck me with particular force was RAND’s assessment (this is in 2006, remember) of what the longer-term economic implications of such an event would be:

“The attack is likely to have dramatic economic consequences well beyond the Los Angeles area:  

  • Many loans and mortgages in Southern California might default. 
  • Some of the nation’s largest insurance companies might go bankrupt. 
  • Investors in some of the largest financial markets might be unable to meet contract obligations for futures and derivatives. 

“While exact outcomes are difficult to predict, these hypothetical consequences suggest alarming vulnerabilities. Restoring normalcy to economic relations would be daunting, as would meeting the sweeping demands to compensate all of the losses.”

As some of you will no doubt observe, all of these consequences in fact did come to pass just two years after this report was issued – as a result of the Lehman Brothers default, the consequent collapse of AIG, and the cascade effects which are still creating malign reverberations throughout the global economy, above all in the Eurozone.

Usually when people say that something would be “like a nuclear bomb going off” they are exaggerating; but in the case of the Lehman default, it is accurate.

The unbelievable, incomprehensible, off-the-charts stupidity of imprisoning scientists for being wrong

Did this really just happen?

Six Italian scientists and an ex-government official have been sentenced to six years in prison over the 2009 deadly earthquake in L’Aquila. A regional court found them guilty of multiple manslaughter. Prosecutors said the defendants gave a falsely reassuring statement before the quake, while the defence maintained there was no way to predict major quakes.

That is so obviously, totally and unbelievably stupid that I am for once lost for words. So I shall content myself with linking (again) to the literature on what makes for high-reliability organisations. Over to Karl Weick and Kathleen Sutcliffe in their classic book on the subject, Managing the Unexpected :

The best high reliability organisations increase their knowledge base by encouraging and rewarding error reporting, even going so far as to reward those who have committed them … researchers Martin Laundau and Donald Chisholm provide [the example of] a seaman on the nuclear carrier Carl Vinson who reported the loss of a tool on the deck. All aircraft aloft were redirected to land bases until the tool was found, and the seaman was commended for his action – recognizing a potential danger – the next day at a formal ceremony.

That is how you create a transparent organisational culture that displays what Weick and Sutcliffe call ”a preoccupation with failure”, that recognises that uncertainty and accidents are inherent parts of the real world, and that aims to learn from them when they happen.

If on the other hand your reaction to uncertainty and accidents is instead to imprison people for them, then you’re not only an idiot; you’re also contributing towards more of both. Judge Marco Billi, ladies and gentlemen. What an imbecile.

Do We Understand the Difference Between Fragile States and Transition Countries?

Fragile States Transition Countries Differences

The term “fragile states” is much abused.

Policymakers, development researchers, politicians, and the media seem to think that every country experiencing a period of instability or bothered by certain governance problems is “fragile.” As a result, they group a wide range of countries experiencing vastly different types of problems together—creating a mass of confusion in the process.

Such thinking means that the term as currently used has very little value as an analytical tool. Instead it has become a catchall phrase to explain any situation that seems “fragile” even if the fragility is likely to be ephemeral. It also means that states that are structurally fragile but that have none of the most obvious symptoms of fragility (such as Syria before 2011) do not get considered as one. Continue reading

Britain and Europe after the veto

What a day. Five observations:

  1. My initial reaction this morning: On a sinking Titanic, the UK is lobbying to avoid further damage to the iceberg.  If David Cameron was motivated mostly by his wish to suck up to the City (and to his backbenchers), then he deserves all that fate can throw at him. He has transformed eventual British exit from the EU from Eurosceptic fantasy to the new conventional wisdom in just 12 hours. Quite a feat.
  2. But maybe… his government has decided that the euro is now doomed and has made a rational decision to swim as far from the vortex as possible. Many believe that a disorderly break up of the single currency has become more likely than not. That would probably cost the UK 10% of GDP and make British default a near certainty. But if that’s what’s going to happen, then we better knuckle down to being as resilient to the shock as possible.
  3. The British veto makes euro failure more, not less, likely. In theory, agreement between a core group is easier than having all 27 countries in the room, but the legal complications of conjuring a new set of institutions from thin air are daunting. Also, expect the core to shrink as the summit’s aspirations are chewed up by domestic politics. Each defection will provide a potential trigger for wider breakdown – probably when a group of the strong decide all hope is lost, and make a collective rush to the lifeboats. By being the first to desert the ship, Cameron has made it much easier for other European leaders to follow.
  4. Contingency planning must now go much deeper. Behind the scenes, governments are playing out failure scenarios, and most big businesses have some kind of post-euro plan in place. Much of the thinking is still pretty rudimentary, however. The eurozone countries can’t risk letting markets see them flinch and have to put a brave face on their prospects, but the UK no longer needs to have such scruples. What exactly would we do if the euro goes down? What would be thrown overboard? What, and who, would be saved? How can the government organise effective collective action as the catastrophe hits?
  5. Nick Clegg is dead, politically. That was already true, but I can’t imagine even Miriam González Durántez now plans to support her husband at the next election. Paradoxically, accepting his terminal status could give Clegg new freedom of action. Instead of continuing to play the role of coalition gimp, he should offer leadership to those keen to explore what comes after the storm. Politicians with proper jobs – Cameron, Osborne, even Cable – are going to be overwhelmed by events throughout this parliament, even in the best case where Europe struggles back onto its feet. Clegg, though, has an opportunity to focus energy on the longer term. He’ll still lead the Lib Dems to electoral Armageddon, but catalysing a vision for renewal might make posterity a little kinder to the poor man.