In Policy Reform, Wisdom, not Boldness is the Principal Thing
It might be true that, as Goethe stated, “Boldness has magic’. But in policy reform, boldness has limits. In short, we can confidently say that in matters of policy reform, wisdom is the principal thing. Wisdom is the capacity to penetrate the nature of things, to gain insight into the complexities of reality and not be charmed by the splendor of appearance. Wisdom pays attention to complexity and variation and proceeds from the point of view of inquiry not of conclusion. The lack of wisdom and the surfeit of boldness is a dangerous combination in policy reform.
The Tinubu administration is suffering from this inordinate combination. The government revels in taking bold policies. Its supporters and promoters regale how the president on day one acted boldly by abruptly yanking of petrol subsidy with a gleeful intonation of ‘subsidy is gone’. Today, his opponents are shouting in chorus ‘Subsidy is gone. Long live subsidy’. Today, it is reported that the government pays about N1 trillion to subsidize the same petrol whose subsidy Gladiator Tinubu boldly yanked off. His energy advisor argues that the President has the authority to pay petrol subsidy. No one reasonably argues that a president who is also the minister of petroleum lacks the authority to subsidize petrol in a presidential system of government. What wise people doubts is whether it was wise to end subsidy in the manner President Tinubu did. Tinubu’s men said boldness has magic. But wisdom always has the last laugh.
Admittedly, there is an allure about boldness in policy reform, especially in developing economies. First, it fits the narrative of neoliberal orthodoxy. According to this orthodoxy, the reason these economies are still underdeveloped is because they have shied away from the fundamentals of a market economy. Public choice theory tells us that public officials who superintend these economies are self-serving. The government is entrenched in rent-seeking. It needs an outside warrior to crash through and uproot bad policies. From this perspective of the transition from economic failure to success, the required virtue is not wisdom but boldness.
Another reason why boldness is recommended in the folklore of policy reform is the overcommitment of policy reformers to implanting in their countries institutions of market orthodoxy from other parts of the world. If there is one recipe for development, then what matters is not context but courage to implant. A leading African political economist, Thandika Mkandawire, calls it “institutional monocropping”. This breeds ‘monotasking’. Just do the same thing they have done elsewhere notwithstanding the difference of social or geopolitical contexts. So, if the work of reformers is to disregard the constraints of cultural and social differences and implant the same institutions of a market orthodoxy, what you need are bold leaders, the more reckless the better.
This advisory has been the staple of development policy for a while. The story is that good leadership of policy reform requires bold actions, actions that are based on the mythologized power of the market to correct all perfections. To make shock-therapy work, they created enemies who must be vanquished to ensure successful transplantation. Of course, that enemy in the Nigerian context will likely be the organized labor movement. Witness President Tinubu’s railing against labour leaders as politicians who want to contest political power with him in 2027. Noami Klein captured the reformer’s ghoulish mindset in her book, The Shock Doctrine: The Rise of Disaster Capitalism. She chronicles how the Chicago Boys in Latin America and their disciples elsewhere in the world, animated by the gospel of ‘There is No Alternative’, crashed through all contexts and left disaster as economic reform.
We do not need to go far to see the spirit of hubris in reforms. Nigeria’s ‘bold’ reform in the electricity sector shows some aspect of ‘boldness has magic’ mindset. We hastily privatized when we had not set up the room for great performance. Perhaps, if we had diligently carried out requisite commercial and regulatory reforms and sequenced the transition by first building capacity in distribution and transmission, a delayed and sequenced privatization may have worked better. Less than a year after our rushed privatization, one of the investors dropped one of the distribution companies. 11 years after, about four distribution companies have become bankrupt and repossessed by financiers. The policy is obviously a failure. Privatization may not be a bad policy. But its implementation was guided more by boldness than wisdom. Wisdom is profitable in policy reform. The problem is that wisdom requires humility to pay attention to context. Sadly, humility is not one of the things they teach in policy school.
Context matters. If President Tinubu had sequenced the removal of fuel subsidy and managed a float of the currency in a manner that wisely responds to the vagaries of economic tides, we would not be in the situation we are today where efforts to shore up the naira from an avoidable freefall could lead to stag-inflation. If President Tinubu was not too gung-ho about abruptly ending the subsidy and deliberatively searched for mitigations before announcing the policy, perhaps he would not be in such a quandary where government is flipflopping on mitigation policies.