Uncomfortable thoughts on governance (Can we ever say it is good or bad?)

My brief few posts on debt and governance have helped me illustrate (to me, at least) that it is really hard to say that governance is good or bad.

As I understand it, governance is about the way governments exercise authority given to them by citizens.

I looked at debt because governments are authorized to raise debt on behalf of citizens. My first blog post on the topic noted that developed countries have higher debt/gdp ratios than developing countries. I implied that this seemed like a bad thing. Mostly because thirty years ago high debt burdens were a major reason developing countries landed in trouble, were termed 'bad governance' examples, and ended up beholden to multilateral and bilateral lenders.

But is debt always bad, and are countries that run up higher debt burdens than others badly governed. The ever-smart Philipp Krause thinks not, as reflected in today's Beyond Budgets blog post (What Does Debt Mean for Governance?). Philipp writes, "Matt wonders whether this worsening of rich countries’ debt position says something about their governance. If debt/GDP was a governance indicator, what would it tell us? Matt seems to lean towards thinking it’s not a good thing. I think it could just possibly be a great thing." (the emphasis here is mine).

Philipp's post is worth a read (as is the Beyond Budgets blog) and I think you will see some meeting of minds in his argument and my posts from yesterday and the day before. I would argue quite emphatically that we cannot say that higher debt means bad governance. Or that low debt means good governance.

What these indicators mean for a specific country depends on the country, its pressures, opportunities, etc. And most importantly, what the citizens authorize the government to do. If governments are on a short chain because citizens remember financial calamity with fear then high debt is probably an indicator of bad governance. If the country is coming out of crisis and there is demand for government to lead economic recovery and the government can raise debt cheaply, then surely high debt is not bad governance. (I can't bring myself to say, with Philipp, that debt is great...).

The contextual relativity of this discussion might bother some people who are looking for indicators that are certain and specific, and can imply judgment in a single figure... But I think that governance is a relative and contextual thing, and that any governance discussion needs to face up to uncomfortable  thoughts. Let me suggest, for instance, that we can rarely say that many of our staples of good governance are good or bad:

• If meritocratic hiring is always a good thing, why do we see most governments across the world reserving posts for political hires (and why do we see meritocratic hiring reforms conditional on other things...see Christian Schuster's interesting paper Civil Service Reforms are Thorny). Could it be that the right political appointee is the right civil servant in some positions? and is 'merit' such an objective concept after all?
• If transparency is always a good thing, why do many of the world's better governments value secrecy in some areas? Why do the World Bank and IMF keep negotiations secret until they are concluded in many instances? Could it be that transparency and opacity are just tools or conditions under which different things happen? Could it be that some high transparency countries are just being transparent about stuff that doesn't matter? So the act of being transparent is neither good nor bad.
• Does a business friendly government always mean a better government? many current indicators say it does. But sometimes we want government to be a regulator of business and sometimes a facilitator. So, regulations are neither good nor bad either.

I think we could make a list like this for just about every indicator of governance, and argue that labels like 'good' and 'bad' are oversimplified, misplaced and potentially damaging to the overall narrative on governance.

High debt is neither good nor bad. High levels of merit-based hiring is also not good or bad. High levels of transparency may not be good or bad either. 

Uncomfortable thought about governance for the day: The idea of good governance may not make sense.

Comments

[Mehmet Akif Demircioglu]

Thank you for the post, Prof. Andrews. It seems that the meaning of governance and the measurement of governance are very dynamic. In addition, all countries have different cultures, history, trust, economic development, etc that there is no one best way to measure governance. For instance, one country may emphasize strong fiscal conditions as a good governance (like rational factors) and others may emphasize democratic participation for a good governance (like normative factors). Therefore, I agree with you that "The idea of good governance may not make sense." I, however, would like to change your sentence a little bit: The idea of good governance today may not make sense tomorrow and even good governance has different interpretations.

In addition, your post has reminded me means and ends chains. I think governance is a "mean" (but an important one!) and it cannot be an "end" itself. The "end" in this context may be a "democratic governance." Thus, when I look your examples, I can comment them as following: First, "political hiring" is a "mean" as well as "meritocratic hiring." So, both of them can be used for governments although some governments may prefer one or another in order to execute their policies. Second, transparency is also "mean" that if public has any benefit to learn the content of these secret negotiations, they can learn. But, I do not think learning the inside agencies in all their operations may be useful to public. Third, "regulation" is also another "means" or "tools". As long a regulation may increase the people's benefit, protection, and promotion, these tools can be used. Some regulations may be good but some not. These decisions should also be dynamic.

I know my examples are very simple here, but I have been thinking about "democratic governance" for a while, which may make sense here. And I agree your sentence that "...governance is a relative and contextual thing, and that any governance discussion needs to face up to uncomfortable thoughts."

Sincerely,

Mehmet Akif Demircioglu

[Philipp Krause]

Thanks Matt for the very kind plug for beyond budgets and the post on debt. I've added a few comments on the debt question over there (http://www.beyondbudgets.org/blog/2013/1/25/what-does-debt-mean-for-governance.html#comments)

But two related thoughts on the bigger issue of governance indicators.

First, they are certainly very context specific, but that doesn't mean they're meaningless. To say that in most countries, many positions are probably better filled according to merit than by political appointees is not saying merit-based appointments don't matter. It's just very heavily caveated.

And second. We're methodologically tempted to assume that governance indicators are interval-scale, but their relationship to the mythical "actual" governance obviously isn't. Does a budget balance improvement mean the same when you're moving from -5% to +5%, as opposed to from +10% to +20%? I doubt it.

I don't think this discussion has run its course just yet...

[Doug Hadden]

Matt,

At least the discussion isn't about 'best governance' (as in 'best practices'). Good for you for questioning assumptions that have cultural biases.

Governance is a multi-faceted environment that operates within a changing network with different cultures and values. Chaos theory may be a better way to look at it.

It is very difficult to separate outcomes from dogma where theory defines what one looks for. Debt is one example. Country growth is another. High growth among countries with high government economic intervention is often seen as bad growth

And, there is significant backlash in developing countries around the notion that democracy leads to growth. As there is on definitions of democracy. (i.e. How are term limits 'democratic' ?)

Even if there was agreement on a governance outcome such as debt, we have a measurement problem. Governments have different accounting methods from cash to accrual. The net present value of entitlements often not calculated. Books are often cooked (i.e. Greece). PPPs and other debt funding mechanisms are often off budget. (And PPPs considered a good practice by many and are encouraged by IFIs.) Then there is GDP and whether that is an objective & up-to-date measurement.

[matt andrews]

Hi Doug. I laughed at the connection between good governance and best practice because the route many prescribe to good governance goes straight through best practice. My goal here is to see if we can use the data that exists out there to create stories about the governance situations in countries. I agree that there are limits to creating comparable measures because of measurement issues and because of comparative problems with core concepts. But I do think we can put data together in ways that allow government decision makers to think more critically about the situations they find themselves in. All this said, it is tragically depressing how little data we have in developing countries and how poor that data is. If we want to do anything about governance as international agents I think better data is a good place to start (not data for academics...data for decision-makers).