Thursday, June 13, 2024


Dhaka Tribune


Salience: The law of political incentives

Let the politicians stay busy with the new and shiny, and just let the private sector deal with the maintenance

Update : 26 May 2024, 04:22 PM

Sometimes there are reasons to have things done by the private sector. Like, for say, governments are simply not good at maintenance. This speaks to the worry in this newspaper about how Bangladesh's infrastructure is not being maintained. Potholes, cracked pavements, rotting footbridges, we can see them all around us. Sure, entirely true that Bangladesh is growing fast, that new things are being built at high speed. But the things we built only a few years ago aren't being maintained. Why?

Because politics isn't good at maintenance.

This does require us to go back to the real basics. The first and vital lesson of economics is that incentives matter. People do things for reasons and clearly it helps to grasp the reasons that motivate people. No, it's not all money. Money can be part of it, of course, but power, glory, and the beauty of a baby's smile, all also come into it. Humans do all sorts of things for all sorts of reasons. So, if we want something to be done, we need to grasp the reason that people do that thing -- then encourage them by providing that desired incentive so that the thing gets done.

We now need to be a little cynical -- I prefer to call this being realist. Why do politicians do things? So that they can continue to be politicians. Regaining office at the next election -- retaining office perhaps -- is the prime motivation for every action by every politician. That's the incentive for political action.

To continue with the realism. What aids the re-election of a politician? A ceremony for the red-ribbon opening of the new footbridge over the crowded road with pictures in the paper and all that? Or the day by day repair of a few small holes here and there in existing footbridges? Or, if we move up from local politics to national: The opening of an entire new metro system, or the maintenance of the current one? 

No, this isn't to say that new footbridges, or new metros, are not needed -- Bangladesh is growing fast, new infrastructure is needed and it's good that it arrives. But the political incentive is always to be building the new, not repairing the extant. That's just the way the system works.

In my native Britain, my older colleagues at the Adam Smith Institute noted this back a few decades ago. It was one of the major motivations for their insistence on privatizing the railways, the water, the electricity companies. It wasn't to make money for the capitalists, it wasn't -- well, it wasn’t only -- because we think capitalism and markets are more efficient. It's because we all could actually see that the boring but essential work of maintenance wasn't being done under a politically led incentive system.

Politics, that is, will only do what achieves salience. And that boring work of filling in the potholes, painting the footbridges so they don't rust, making sure the drains are kept clear (and that they too are constantly re-cemented and so on) are not matters of salience. Well, not until something collapses at which point politics springs back into action.

It's also true that on things like the roads and the pavements and so on there's not really a full solution available. We can do things to make repairs better, and be done faster. But transforming politics into making sure that it's done at all is not really something anyone's ever quite managed.

The best we as a think tank have come up with is that, where it's possible to put an activity into the private sector then do so because that's where the incentives to do the maintenance are. Or, even more accurately, take it out of politics because that's where the incentives are against maintenance and in favour of new projects instead. But even that's only a partial solution.

A politician seeking re-election will always prefer to be opening a new project rather than spend that same cash on the invisible maintenance of the existing infrastructure. Sadly, that's just something we've got to deal with rather than something that has an absolute solution.


 Tim Worstall is a senior fellow at the Adam Smith Institute in London.

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