QualityQuality ofof Government:Government:

WhatWhat youyou getget –– WhatWhat itit isis -- HowHow toto getget itit

Bo Rothstein The Quality of Government Institute Department of Political Science TheThe QualityQuality ofof GovernmentGovernment InstituteInstitute (QoG)(QoG)

 StartedStarted inin 20042004 (minor(minor grantgrant toto buildbuild database)database)  MajorMajor fundingfunding fromfrom JanuaryJanuary 20072007 (Bank(Bank ofof SwedenSweden Foundation)Foundation) andand 20092009 (Wallenberg(Wallenberg Foundation)Foundation)  AboutAbout 2525 researchersresearchers ++ 66 assistantsassistants  AA problemproblem drivendriven resarchresarch programprogram  TwoTwo openopen accessaccess majormajor crosscross --countrycountry databankdatabank  AboutAbout 100100 reports,reports, articles,articles, etc.etc.  JustJust GoogleGoogle ””QoGQoG ”” IntellectualIntellectual backgroundbackground

 InstitutionalInstitutional economicseconomics  DevelopmentDevelopment studiesstudies  DemocratizationDemocratization studiesstudies  WorldWorld BankBank ResearchResearch InstituteInstitute  SocialSocial capitalcapital researchresearch  TI,TI, EBRD,EBRD, CouncilCouncil ofof Europe,Europe, AfricanAfrican UnionUnion  AnAn internationalinternational antianti --corruption/goodcorruption/good governancegovernance regime?regime? TheThe IssueIssue ofof WaterWater

 WHO:WHO: AboutAbout 12.00012.000 peoplepeople diedie everyevery dayday duedue toto lacklack ofof accessaccess toto cleanclean waterwater  TwoTwo thirdsthirds areare childrenchildren  NotNot aa problemproblem ofof lacklack ofof naturalnatural waterwater  NotNot aa lacklack ofof technicaltechnical solutionssolutions oror equippmentequippment  BasicallyBasically aa problemproblem causedcaused byby ……..  …… CORRUPTIONCORRUPTION TheThe firstfirst failedfailed hope:hope: MarketizationMarketization  "The encounter between neo-classical economics and developing societies served to reveal the institutional underpinnings of market economies. A clearly delineated system of property rights, a regulatory apparatus curbing the worst forms of fraud, anti-competitive behavior and moral hazard, a moderately cohesive society exhibiting trust and social cooperation, social and political institutions that mitigate risk and manage social conflicts, the rule of law and clean government--these are social arrangements that economists usually take for granted , but which are conspicuous by their absence in poor countries.”  Dani Rodrik (1999). TheThe secondsecond failedfailed hope:hope: DemocracyDemocracy

 ThereThere isis aa specterspecter hauntinghaunting democracydemocracy inin thethe worldworld today.today. ItIt isis badbad governancegovernance …….. GovernanceGovernance thatthat isis drencheddrenched inin corruption,corruption, patronage,patronage, favoritism,favoritism, andand abuseabuse ofof power.power. ……WhereWhere powerpower confersconfers virtuallyvirtually uncheckedunchecked opportunitiesopportunities forfor personal,personal, factional,factional, andand partyparty enrichment,enrichment, itit isis difficultdifficult ifif notnot impossibleimpossible toto sustainsustain democraticdemocratic rulesrules ofof thethe game.game. TheThe democraticdemocratic spiritspirit ofof electionselections drownsdrowns inin votevote --buying,buying, rigging,rigging, violence,violence, oror allall threethree ……....  Diamond,Diamond, Larry.Larry. 2007.2007. "A"A QuarterQuarter --CenturyCentury ofof PromotingPromoting Democracy."Democracy." JournalJournal ofof DemocracyDemocracy 18:11818:118 --120.120. QoGQoG –– whatwhat youyou get?get?

 EconomicEconomic prosperityprosperity  LifeLife satisfactionsatisfaction  LowLow InfantInfant mortalitymortality  ReducedReduced PovertyPoverty  AccessAccess toto safesafe waterwater  HealthHealth carecare  PeacePeace  PoliticalPolitical legitimacylegitimacy

GDP per capita and QoG

2 Denmark Finland Netherlands

Germany Ireland United Kingdom

1.5 France

Malta Belgium Portugal Cyprus Spain Estonia 1 Slovenia Czech Republic Hungary Poland Latvia Slovakia Italy

.5 Greece

Pearsson = .85 Bulgaria Romania 0

40 60 80 100 120 140

GDP per capita in Purchasing Power Standards (PPS) (EU-27 = 100) Social Capital and QoG

.7 Denmark

Sweden Netherlands .6 Pearsson = .72 Finland .5 .4 Spain Ireland Germany Italy Austria

.3 Belgium United Kingdom Bulgaria Lithuania Greece Czech Republic Luxembourg Hungary Estonia Poland Malta France .2 Slovenia Latvia Slovakia Portugal Romania .1

0 .5 1 1.5 2 QoG Index QoGQoG andand SocialSocial TrustTrust

Corruption by Generalized Trust [Imputed]

10 FIN ICE NZ DEN SNG SWZ SWE NOR AUS UK HOL ASTLUX CAN WGR 8

CHL BEL USA IRE FRA SPN MLT JPN

POR ISR URU

6 SLO EST BOT TAI CYP TUN MAL CRI HUN ITA SAF LIT SKR ELS CZK GRE BUL 4 BRZ SLV LAT COL PAN PRU POL GHA SRICRO MEX THA BLR TUR EGYARM BOS ROM SEN DOMIRN MAC NIC RUS SER IND PHL ARG UGA

TI Corruption Perceptions Index 2004 Index Perceptions Corruption TI VNZ MOL HON KEN PAK GUA UKR

2 GEO INS AZR NIG BNG 0 .2 .4 .6 Most People Can Be Trusted [Imputed] r2 = .440 N = 84

QoGQoG atat thethe regionalregional levellevel inin EUEU SocialSocial PolicyPolicy andand QoGQoG

Sweden 40 Norway Denmark Netherlands 35

Belgium Finland

30 France Germany Austria Switzerland New Zealand 25 Canada Ireland Italy Benefit GenerosityIndex 20 UK Australia United States Japan 15 .7 .8 .9 1 Quality of Government (ICRG) CorruptionCorruption andand thethe economiceconomic crisiscrisis  Papandreou:Papandreou: AtAt thethe heart,heart, ourour economiceconomic crisiscrisis hashas notnot comecome fromfrom outsideoutside butbut isis causedcaused byby ourour ownown internalinternal corruptioncorruption

 DanielDaniel Kaufmann:Kaufmann: “If anybody thought that the governance and corruption challenge was a monopoly of the developing world… that notion has been disposed completely”. IsIs democracydemocracy overrated?overrated?

 OnOn almostalmost allall measuresmeasures ofof socialsocial outcomes,outcomes, QoGQoG variablesvariables clearlyclearly oror massivelymassively outperformoutperform measuresmeasures ofof democracy.democracy.  TheThe impactimpact ofof democracydemocracy onon developmentdevelopment andand povertypoverty reductionreduction isis negliablenegliable  ThisThis includesincludes propensitypropensity forfor violentviolent conflictsconflicts WhatWhat ExplainsExplains PoliticalPolitical Legitimacy?Legitimacy?  "General governance (a composite of the rule of law, control of corruption and government effectiveness) clearly has a large, even overarching, importance in global citizen evaluation of the legitimacy of states."  "it is notable that democratic rights, while certainly qualifying as one of the most important causes of legitimacy, turn out to be roughly on par with welfare gains, and both of these are far less important than good governance. This clashes with standard liberal treatments of legitimacy that give overall priority to democratic rights ” (Bruce Gilley 2006) MyMy favoritefavorite bumberbumber sticker:sticker: TheThe ArtistotelianArtistotelian LegacyLegacy

 WhatWhat typetype ofof governmentgovernment ””createscreates ”” virtousvirtous behaviorbehavior  WhyWhy dodo differentdifferent societiessocieties havehave differentdifferent typestypes ofof governmentgovernment qualitiesqualities ReflectionsReflections onon thethe discipline?discipline?

 WhyWhy soso littlelittle researchresearch onon corruption/QoG?corruption/QoG?  WhyWhy soso muchmuch interestinterest onon politicspolitics andand dependentdependent variablesvariables andand notnot socialsocial outcomes?outcomes?  WhereWhere isis publicpublic administrationadministration inin allall this?this?  HowHow toto handlehandle thatthat representativerepresentative democracydemocracy maymay bebe quitequite overrated?overrated? QoG:QoG: WhatWhat itit is?is?  QualityQuality ofof GovernmentGovernment (good(good governence)governence) isis importantimportant but,but,  yetyet nono clearclear definitiondefinition ofof whatwhat itit isis  DefinitionsDefinitions areare eithereither  tootoo broad,broad,  tootoo narrownarrow  functionalistfunctionalist  oror simplysimply wrongwrong  oror normativelynormatively problematicproblematic TooToo broadbroad definitionsdefinitions ofof QoG:QoG:

 KaufmannKaufmann etet al.al. 2004:2004: ““thethe traditionstraditions andand institutionsinstitutions byby whichwhich authorityauthority inin aa countrycountry isis exercisedexercised ””

 ““(1)(1) thethe processprocess byby whichwhich governmentgovernment areare selected,selected, monitoredmonitored andand replaced,replaced, (2)(2) thethe capacitycapacity ofof thethe governmentgovernment toto effectivelyeffectively formulateformulate andand implementimplement soundsound policies,policies, andand (3)(3) thethe respectrespect ofof citizenscitizens andand thethe statestate forfor thethe institutionsinstitutions thatthat governgovern economiceconomic andand socialsocial interactionsinteractions amongamong themthem ”” (Kaufmann,(Kaufmann, Kraay,Kraay, andand MastruzziMastruzzi 2004,2004, 3)3) ProblemsProblems

 IfIf QoGQoG isis everything,everything, thanthan maybemaybe itit isis nothingnothing  IfIf QoGQoG isis justjust ””goodgood democracydemocracy ””,, thenthen whywhy dodo youyou needneed anotheranother conceptconcept  QoGQoG cancan notnot bebe justjust DemocracyDemocracy becausebecause thethe curvecurve betweenbetween DD && QoGQoG isis JJ --shapedshaped  SingaporeSingapore vsvs JamaicaJamaica  ””SoundSound policiespolicies ””:: DoDo wewe reallyreally know?know?  andand thethe PlatoPlato --LeninistLeninist ProblemProblem UnderspecifiedUnderspecified definitionsdefinitions ofof QoGQoG

 Absence of corruption, but  Corruption in itself difficult to define  The ”laundry list ” problem  Corruption as a violation of what in public opinion is accepted – but public opinion varies a lot  Corruption as violation of the public interest – again a lot of variation in what is in considered the public interest  Corruption as a abuse of public office for private gain  But what should count as ”abuse ”.  These definitions lack a normative baseline. TooToo narrownarrow definitionsdefinitions ofof QoGQoG

 ManyMany governmentgovernment activitiesactivities thatthat areare usuallyusually notnot consideredconsidered corruptcorrupt cancan bebe seenseen asas causingcausing lowlow QoGQoG  ForFor example:example: VariousVarious formsforms ofof discrimination,discrimination, clientilism,clientilism, corporatism,corporatism, exchangeexchange networks,networks, systemsystem ofof patronage,patronage, patrimonialism,patrimonialism, etc.etc. FunctionalistFunctionalist definitionsdefinitions ofof QoG:QoG:

 LaLa PortaPorta etet al.al. (1999,(1999, 223):223): ““goodgood governancegovernance ”” == ““goodgood --forfor --economiceconomic --developmentdevelopment ””  TheThe EconomistEconomist ((JuneJune 4th,4th, 20052005 ))::  ““WhatWhat isis requiredrequired forfor growth?growth? −− GoodGood governance.governance.  AndAnd whatwhat countscounts asas goodgood governance?governance? −−ThatThat whichwhich promotespromotes growth.growth.””  ButBut thenthen whatwhat promitespromites growth?growth?  -- GoodGood governancegovernance  AndAnd soso onon…….. DefinitionsDefinitions thatthat areare simplysimply stupidstupid and/orand/or wrongwrong  MostMost economists:economists: SmallSmall governmentgovernment == HighHigh QoGQoG  AlbertoAlberto Alesina:Alesina: ”a” large government increases corruption and rent-seeking”  Gary Becker: ”To Root out Corruption, Boot Out Big Government”  But what about the Scandinavian countries?  High corruption equals small governments  Big Government is Good Government! TheThe datadata ……..

 ““Finally,Finally, wewe havehave consistentlyconsistently foundfound thatthat thethe betterbetter performingperforming governmentsgovernments areare largerlarger andand collectcollect higherhigher taxes.taxes. PoorlyPoorly performingperforming governments,governments, inin contrast,contrast, areare smallersmaller andand collectcollect fewerfewer taxestaxes ”” (LaPorta(LaPorta etet alal 1999)1999) howeverhowever …………

 ““thisthis resultresult doesdoes notnot ofof coursecourse implyimply thatthat itit isis often,often, oror ever,ever, sociallysocially desirabledesirable toto expandexpand aa governmentgovernment ofof aa givengiven quality,quality, butbut itit tellstells usus thatthat identifyingidentifying bigbig governmentgovernment withwith badbad governmentgovernment cancan bebe highlyhighly misleadingmisleading ”” (ibid.)(ibid.) RequirementsRequirements ofof definitiondefinition ofof QoGQoG

 UniversalismUniversalism  PrecisionPrecision  NonNon --functionalistfunctionalist  ConnectedConnected toto democraticdemocratic theorytheory  ResonateResonate withwith (at(at leastleast somesome worksworks in)in) modernmodern politicalpolitical philosophyphilosophy  ResonateResonate withwith centralcentral empiricalempirical findingsfindings QoGQoG == ImpartialityImpartiality

 WhenWhen implementingimplementing lawslaws andand policies,policies, governmentgovernment officialsofficials shallshall notnot taketake anythinganything aboutabout thethe citizen/casecitizen/case intointo considerationconsideration thatthat isis notnot beforehandbeforehand stipulatedstipulated inin thethe policypolicy oror thethe lawlaw  QoGQoG isis aboutabout thethe exerciseexerciseofof power,power, notnot thethe accessaccess toto powerpower  BrianBrian BarryBarry ’’ss mistakemistake ImpartialityImpartiality asas thethe BasicBasic NormNorm

 InputInput side:side: PoliticalPolitical EqualityEquality (Robert(Robert Dahl)Dahl)  OutputOutput side:side: ImpartialityImpartiality (Rothstein(Rothstein && Teorell)Teorell)  BASICBASIC NORMNORM == InIn bothboth cases,cases, wewe shouldshould expectexpect considerableconsiderable variationvariation inin thethe specificspecific institutionalinstitutional configurationconfiguration  WhyWhy onlyonly oneone norm?norm?  TheThe ””laundrylaundry listlist ”” problemproblem ThereThere areare twotwo ideasideas aboutabout whatwhat isis consideredconsidered acceptableacceptable inin aa democracydemocracy

 InputInput sideside (the(the accessaccess toto politicalpolitical power):power): PartialityPartiality  OutputOutput sideside (the(the exerciseexercise ofof politicalpolitical power):power): ImpartialityImpartiality MichaelMichael WalzerWalzer ’’ss theorytheory aboutabout differentdifferent typestypes ofof normsnorms inin differentdifferent socialsocial spheresspheres

 GreatGreat ideaidea butbut ……..  …….. historicalhistorical andand particularisticparticularistic  ……..indefinite..indefinite numbernumber ofof spheresspheres  ……..the..the theorytheory isis notnot generalgeneral enoughenough  ……..we..we needneed aa ””globalglobal ”” theorytheory ofof QoGQoG DimensionsDimensions ofof interestinterest andand societalsocietal spheresspheres TypeType ofof InterestInterest OtherOther --RegardingRegarding SelfSelf --RegardingRegarding

““AllAll ”” TheThe StateState TheThe MarketMarket

ScopeScope ofof InterestInterest

““FewFew ”” TheThe Family/Family/ TheThe InterestInterest ClanClan GroupGroup AltnerativeAltnerative definitionsdefinitions ofof QoGQoG

 TransparencyTransparency  AccountabilityAccountability  EfficiencyEfficiency  RuleRule ofof lawlaw ImpartialityImpartiality asas anan idealideal

 EveryEvery knownknown democracydemocracy todaytoday isis lightlight yearsyears awayaway fromfrom politicalpolitical equalityequality asas anan idealideal  MostMost westernwestern typetype ofof statesstates areare probablyprobably closercloser toto thethe idealideal ofof impartialityimpartiality inin thethe exerciseexercise ofof powerpower thanthan toto realizingrealizing politicalpolitical equalityequality inin thethe accessaccess toto powerpower ImpartialityImpartiality …….. andand itsits criticscritics  PublicPublic choicechoice andand MarxismMarxism  PublicPublic administrationadministration  NewNew PublicPublic ManagementManagement  MultiMulti --culturalists,culturalists, postpost --colonialistscolonialists andand (some)(some) feministsfeminists  Conclusion:Conclusion: ImpartialityImpartiality isis notnot connectedconnected toto certaincertain individualsindividuals butbut toto aa certaincertain societalsocietal spheresphere QoGQoG asas ImpartialityImpartiality -- examplesexamples

 NotNot thethe samesame asas thethe rulerule ofof lawlaw  NotNot confinedconfined toto WeberianWeberian rulerule --followingfollowing  CoversCovers corruptioncorruption butbut alsoalso discrimination,discrimination, patrimonialism,patrimonialism, corporatism,corporatism, clientilism,clientilism, etc.etc.  AsAs DahlsianDahlsian oror RawlsianRawlsian ””politicalpolitical equalityequality democracydemocracy ””,, QoGQoG asas impartialityimpartiality isis neutral.neutral. ItIt isis notnot connectedconnected toto aa neoneo --liberalliberal oror neoneo -- leftistleftist conceptionconception ofof whatwhat isis goodgood politicspolitics AgainstAgainst PostPost --ColonialColonial RelativismRelativism

 FrantzFrantz Fanon:Fanon: TheThe WretchedWretched onon EarthEarth (1961)(1961) –– onon thethe situationsituation inin liberatedliberated WestWest AfricanAfrican Countries:Countries:  “Scandals are numerous, ministers grow rich, their wives doll themselves up, the members of parliament feather their nests and there is not a soul down to the simple policemen or the customs officer who does not join in the great procession of corruption “ QoG:QoG: HowHow toto getget it?it? TheThe policypolicy problemproblem  ImpartialImpartial institutionsinstitutions hashas nono clearclear supportsupport group(s).group(s).  ImpartialityImpartiality isis aa kindkind ofof ””credible,credible, commitmentcommitment ”” basedbased onon trusttrust  ImpartialImpartial institutionsinstitutions areare ””publicpublic goodsgoods ””  WeWe dodo notnot knowknow howhow suchsuch institutionsinstitutions cancan bebe establishedestablished inin largelarge --nn settingssettings WhatWhat dodo wewe know?know?

 GreifGreif inin HandbookHandbook ofof InstitutionalInstitutional EconomicsEconomics 2005:2005: EfficientEfficient institutionsinstitutions ”operate” in a few advanced contemporary countries and only in recent times. We know surprisingly little, however, regarding the institutional development that led to these modern successes”  Or: HISTORY IS NOT EFFICIENT! TwoTwo typestypes ofof institutionsinstitutions

 RedistributiveRedistributive institutionsinstitutions (resources(resources fromfrom AA toto B).B). ExplainedExplained byby powerpower resourcesresources  EfficientEfficient institutionsinstitutions (increases(increases generalgeneral wellwell --farefare forfor all).all). ExplainedExplained asas solutionssolutions toto problemsproblems ofof collectivecollective action/socialaction/social trapstraps (Tsebelis: Nested Games. 1990) InstitutionsInstitutions inin twotwo dimensionsdimensions

FormalFormal inst.inst. InformalInformal inst.inst.

EfficientEfficient inst.inst. Rule of law Social capital Impartial civil Generalized trust service

RedistributiveRedistributive Social policy Familism inst.inst. Labour laws Corruption Inheritance tax Nepotism Corruption:Corruption: TheThe NatureNature ofof thethe ProblemProblem  TheThe ““principalprincipal --agentagent theorytheory ””  ““WhatWhat ’’ss inin itit forfor meme ””  Incentives,Incentives, incentives,incentives, incentivesincentives

 TheThe ““collectivecollective action/socialaction/social trapstraps ”” theorytheory  ReciprocityReciprocity andand tippingtipping pointspoints  ““WhatWhat cancan bebe expectedexpected ofof thethe othersothers ””  SocialSocial norms,norms, politicalpolitical culture,culture, socialsocial trusttrust CorruptionCorruption asas aa CollectiveCollective ActionAction -- SocialSocial TrapsTraps ProblemProblem  Everyone knows that if all act honestly all will win  But – if people cannot trust that “almost everyone else ” act honestly it is meaningless to be honest to because the end is contingent on honest cooperation by almost everyone  Thus, dishonest behavior may be rational when people do not trust that others will also be honest.  Conclusion: Efficient cooperation for establishing efficent institutions only come about if people trust that most other people will also choose to be honest .  Lacking this trust, the social trap is for real. That is, we end up in a state of affairs that is worse for everyone, even though everyone realizes that they would profit acting honestly JohnJohn RawlsRawls onon efficientefficient institutionsinstitutions

 “For although men know that they share a common sense of justice and that each wants to adhere to existing arrangements, they may nevertheless lack full confidence in one another. They may suspect that some are not doing their part, and so they may be tempted not to do theirs. The general awareness of these temptations may eventually cause the scheme to break down. The suspicion that others are not honoring their duties and obligations is increased by the fact that, in absence of the authoritative interpretation and enforcement of the rules, it is particularly easy to find excuses for breaking them ” (Rawls, 1971, p. 240) ConclusionsConclusions

 TheThe centralcentral factorsfactors behindbehind mostmost socialsocial illsills inin thethe contemporarycontemporary worldworld isis lowlow QoGQoG  LowLow QoGQoG isis notnot thethe exception,exception, itit isis highhigh QoGQoG thatthat isis thethe exceptionexception  Thus,Thus, thethe centralcentral objectobject ofof studystudy inin politicalpolitical sciencescience (the(the STATE)STATE) isis thethe mainmain thingthing forfor improvingimproving socialsocial wellwell --beingbeing  Unfortunately,Unfortunately, democracydemocracy isis overratedoverrated  ButBut cancan thethe politicalpolitical scientistsscientists raiseraise toto thisthis challenge?challenge? ThanksThanks forfor listening!listening!

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