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Opinions of Saturday, 13 May 2006

Columnist: Amegashie, J. Atsu

Anti-social behavior of Ghanaians? A Rejoinder

In his feature article of May 6, 2006, titled ?Anti-social behavior of Ghanaians?an attitude or systems problem?? Dr. John Kwakye, argued that Ghana?s problem is a systems problem (i.e., institutions) but not an attitudinal problem. In this piece, I shall argue that both factors (i.e., the systems and attitudes) are important. Indeed, Dr. Kwakye alluded to the attitudinal problem in his conclusion when he observed that ?It would take the right systems to get them to conform as they do elsewhere outside Ghana. It also pays for public officials to show the way, to live by example. Demonstrating more concern for peoples? welfare also often goes a long way in getting them to give of their best and in building support and respect for laws and regulations.?

Like Dr. Kwakye?s piece, the buzzword these days is institutions (i.e., systems). Most development experts, including World Bank and IMF economists like Dr. Kwakye, believe that growth can be achieved by putting in place the ?right? systems or institutions. For example, will democratic institutions necessarily produce economic prosperity and eliminate poverty? The experience of countries like Ghana, Nigeria, India, Argentina, Ukraine, etc suggests that this question does not lend itself to an unequivocal answer. In what follows, one could think of institutions as culture.

An April 2006 article by Mois?Na? editor in chief of Foreign Policy quotes Fran?s Bourguignon, the chief economist at the World Bank as saying ?We do not really know what causes economic growth ? We do have a good sense of what are the main obstacles to growth and what are the conditions without which an economy cannot grow. But we are far less sure about what are the other ingredients needed to create and sustain growth.?

It is important to note that we cannot design an institution or system that perfectly monitors everyone. We will necessarily run into the infinite regress problem of ?who monitors the monitor?? For example, who monitors supreme court judges appointed for life? And if they were not appointed for life, that would also have its own shortcomings because they will not be independent of the executive branch of government. So somehow, we may have to appoint supreme court judges for life, hope that they do the right thing, and not be driven by special interests.

Similarly, we cannot design a system that completely monitors the president of a country to deliver good economic results, even in a democracy. Consider a world in which (1) voters may lack information, (2) political parties may have strongholds over certain electoral regions much akin to brand loyalty in oligopoly or monopolistic competition (3) politicians may come from a very low quality pool akin to competition among similar firms with very high unit costs. For example, the two leading political parties in a country may both be bad with marginal differences between them (4) voters may have non-monetary/non-economic preferences (tribalism, abortion, homosexuality, ideology, etc) and (5) voter turnout may be low because each voter believes that his vote will not make a difference or has become cynical of politics. Given one or several of these conditions, an incumbent political party with a bad economic record could still be victorious in the next election. Therefore, democratic institutions need not enhance economic growth nor discipline an incumbent leader to deliver very good economic outcomes.

Given that we cannot design a system that monitors everybody because we necessarily run into the infinite-regress problem of ?who monitors the monitor??, a critical mass of people with integrity is necessary. The complementary roles of institutions and the quality of leaders was noted by the great American political scientist, Vladimer Orlando Key when he remarked that

"The nature of the workings of government depends ultimately on the men who run it. The men we elect to office and the circumstances we create that affect their work determine the nature of popular government." V.O. Key (1956) In the Federal Papers, LVII, a similar point is made by James Madison, the fourth president of the USA and primary author of the consitution, when he wrote that

"The aim of every political Constitution, is or ought to be, first to obtain for rulers men who possess most wisdom to discern, most virtue to pursue, the common good of society; and in the next place, to take the most effectual precautions for keeping them virtuous whilst they continue to hold their public trust."

Imagine that we have a bunch of good people (leaders) who will do the right thing, no matter what. These people do not need punishment, checks and balances, etc to do the right thing. Think of them as people who are sufficiently committed to the common or public good. These people have a high moral cost of acting against the public interest. If we have a critical mass of these good who are willing to stay in the country, then the institutions run by them will work very well. Let us refer to an institution that is conducive to economic prosperity as prosperity-enhancing. Note that the institution may be conducive to prosperity but need not actually produce prosperity. To produce prosperity, we need a critical mass of people with the right mindset (good leaders). Therefore, good leaders (right mindset) plus prosperity-enhancing institutions will produce prosperity. For want of a better term, let us call this growth institutions.

Over time, children are born into these well-functioning and growth institutions (society). They observe these growth institutions and some of them imbibe the good values inherent in them (i.e., the growth institutions). These values may be the respect for the rule of law, property rights, and contracts, obeying the police, driving carefully, waiting your turn in a queue, accommodating divergent views, demanding accountability from government, paying your taxes, despising bribery, corruption, and nepotism, developing a curious mind (my favorite), etc. So the good values inherent in the growth institutions might socialize some people and affect their mindset. In the process, the system produces some people with a high moral cost of acting against the public interest. But there will also be others who grew up in these institutions (society) but have a low moral cost of acting moral cost of acting against the public interest. For these people, it is the threat of punishment that will deter them from wrong doing. Now there will be two types of people whose actions are observationally equivalent but are, however, driven by different motivations. There are those who obey the good laws of the land because they have a high moral cost of being social deviants which stems, in part, from observing the good values inherent in growth institutions as kids. Then there is another group with a low moral cost but nevertheless obeys the law, because of the threat of punishment. Almost everyone may appear to be on auto-pilot as far as good citizenship is concerned but the same actions are driven by different considerations.

Clearly, growing up in good, well-functioning, and growth institutions can affect the mindset of people in a way that sustains these institutions.

Growing

up in dysfunctional and anti prosperity-enhancing institutions can also have a similar effect on people?s mindset. We are the products of what we see and are taught at home and in school as children and adults. It is important to note that a given culture may have its own definition of good values. There need not be a consistent and universal definition of good values. In this piece, we use good values to denote behavior that produces growth institutions.

The preceding discussion implies that the transition from one institution to another can be very difficult since the people were originally influenced by and have a mind set that is consistent with the old institution. Their mind set may not be consistent with the new institution. For example, how can you expect 50-year olds who have witnessed and practised dictatorships all their lives to suddenly embrace democratic ideals and principles, even if you put such institutions in place? And this dictatorship was observed and practised by these 50-year olds not only at the national level but also in their domestic households, where ideas were not freely debated and orders by parents were not supposed to be explained, let alone, questioned. Hopefully, the younger ones are more likely to embrace such democratic principles or any principles stemming from new institutions. However, the likelihood of this happening is much higher if they observe well-functioning and prosperity-enhancing institutions. But this might take a long time, given that the new institution is currently being run by the people with the old mindset. Therefore, the new institution might take a long time to produce prosperity, although in principle, it ought to do so.

We have argued that we require a critical mass of people with a high moral cost of acting against the public interest as a necessary condition to produce growth institutions. The mathematician and 2005 Nobel laureate, Robert J. Aumann, showed that growth institutions can be achieved, even if everyone has a very low moral cost of acting against the common good. However, the conditions under which this result is possible are very stringent and therefore are unlikely to be met in the real world. In particular, everyone must be sufficiently patient and have a very long planning horizon. The result also hinges on everyone else simultaneously choosing a punishment strategy, if one person engages in an anti-prosperity behavior. This kind of coordinated behavior is impossible in a country with millions of people.

While the analysis suggests that institutions do affect the mindsets of people and the mindsets of people do affect the performance of institutions, it does not and cannot explain the initial endowment or evolution of institutions. It also does not explain why some growth institutions produce extreme inequalities in the distribution of income.

Dr. Kwakye notes that ?I do not believe Ghanaians are a different breed of people than you can find else when it comes to social behavior.? On this point, he follows that the standard approach by asserting that all human beings are equally able. I agree with this assertion. However, once we are in a bad social equilibrium, the values and practices that initially led to that bad equilibrium could now produce a sufficiently high proportion of people (through childhood) who reinforce these beliefs, attitudes, and values. So there is now a bi-directional causality from institutions (systems) to the quality of leaders and from leaders to the quality of institutions. The ability of the leaders or Ghanaians neednot be different from the leaders or citizens of other nations but there could be differences in attitudes.

To conclude, we note that institutions are as good as the people who run them and people are as good as the institutions within which they operate. And do not be surprised if a country has prosperity-enhancing institutions without producing growth. The missing part of this jigsaw puzzle is the critical mass of people with the right mind set. We cannot design institutions that monitor everyone. Who monitors the ultimate monitor? It is their own conscience, values, and commitment to the common good that monitors them. Of course, they might have other values that are culturally acceptable and are not necessarily inferior to the values of other cultures. That is fine, so long as we understand that not every set of values yields growth institutions.

I agree with Dr. Kwakye that it ?? pays for public officials to show the way, to live by example. Demonstrating more concern for peoples? welfare also often goes a long way in getting them to give of their best and in building support and respect for laws and regulations.?

*The author, J. Atsu Amegashie, teaches economics at the University of Guelph, Canada.

Views expressed by the author(s) do not necessarily reflect those of GhanaHomePage.