Daily Tao – Poor Economics – 7

However, there was an interesting coda to Reinikka and Svensson’s story. When their results were released in Uganda, there was something of an uproar, with the result that the Ministry of Finance started giving the main national newspapers (and their local-language editions) month-by-month information about how much money had been sent to the districts for the schools. By 2001, when Reinikka and Svensson repeated their school survey, they found the schools were getting, on average, 80 percent of the discretionary money that they were entitled to. About half of the headmasters of schools that had received less than they were supposed to had initiated a formal complaint, and eventually most of them received their money. There were no reports of reprisals against them, or against the newspapers that had run the story. It seems that the district officials had been happy to embezzle the money when no one was watching but stopped when that became more difficult. A generalized theft of government funds was possible, it seems, mainly because no one had bothered to worry about it. The Ugandan headmasters suggest an exciting possibility: If rural school headmasters could fight corruption, perhaps it is not necessary to wait for the overthrow of the government or the profound transformation of society before better policies can be implemented. Careful thinking and rigorous evaluations can help us design systems to keep corruption and inefficiency in check. We are not “lowering our ambitions”: Incremental progress and the accumulation of these small changes, we believe, can sometimes end in a quiet revolution.

It can be easy to look at the many faults in existing political systems and think that we need an “overhaul” or a “revolution”. However, revolution might not necessarily make things better, but worst.

In this book, 1 interesting takeaway is that the authors noted that even in the poorest of economics, simple implementation of checks and balances and evaluations can help reduce inefficiency and corruption. What is needed is a keen and willing mind to study and negotiate through the many factors that cause things to “not work” in the first place. Sometimes, bad policies were good policies at 1 stage of time, and that changing circumstances has caused these policies to not work out. Constant study of these factors and coming up with solutions is necessary over time.

Perfect shouldn’t be the enemy of the good. Incremental progress can sometimes lead to systemtic change over time. Studies of complex systems also indicate this. We shouldn’t be overly disheartened by  bad situations and be ready to make incremental progress, 1 at a time.

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