Bureaucrats are not stakeholders

Economic Times, 4 June 2013

Democracy is the art of having a civilised conversation between diverse stakeholders, in searching for the larger good while hearing all views. In this, the job of public servants is to implement the outcome of the political process that makes decisions about refashioning government. The staff of government and public bodies are not stakeholders. Too often, the interests of officials lies in the wrong direction.

When you paint a house, you will consult family members on what colours are preferred. A democratic process of consultation takes place, where all views are heard, and a consensus is forged about the colours for each room. The contractor who paints the house is not a stakeholder in that discussion. His job is to implement the decision once it is made. The family is the principal and the contractor is the agent.

A similar perspective applies in thinking about government. Lawmakers make decisions about how much tax revenue to collect from the economy, and how best to spend it. Stakeholders, i.e. voters, interact with lawmakers, which leads to legislation. Legislation is a contract between lawmakers and the executive. Certain powers are given to the executive, in order to pursue certain objectives, subject to certain accountability mechanisms.

The officials who man various arms of government are the means; they are the instrument through which State policy is implemented. They are not stakeholders. In fact, if we hear the views of officials, we will often get wrong ideas in policy. Decades of experience, worldwide, teaches us that government agencies have an incentive to be lazy or corrupt. Officials are likely to favour having arbitrary power, opportunities for corruption, reduced accountability, and less work. The contractor who paints your house wants to do the least possible work, and get paid as much as possible for it, possibly by stealing from you.

Hence, whether highways are built by PWD or by NHAI is not a decision which officials in PWD should have a say in. Officials in the PWD are likely to resent their loss of turf. A better-performing NHAI makes PWD look bad and might force reforms of PWD. Incumbent officials will protest against clarifying objectives, strengthening accountability and reducing arbitrary power. The policy discussion about how best to organise road construction should treat employees of PWD or NHAI as impediments and not stakeholders.

In the private sector, we know that across each doubling of the revenues of a company, a comprehensive re-organisation of the firm is generally required. A similar analogy is useful with government. Across each doubling of GDP, comprehensive fresh thinking is required about the organisation chart of government. The defining challenge of the Indian State lies in achieving State capacity, in achieving management structures through which the State can be effective, where the wishes of lawmakers are translated into ground reality with a high efficiency of resource utilisation. For this to happen, large scale reorganisation of government is required.

These reforms seldom require sacking workers. The staff at PWD can be redeployed at NHAI or elsewhere. An official with skills in building highways will build highways -- whether in PWD or NHAI, with no adverse impact upon pay and privileges. Officials might be inconvenienced through a change of employer. We should be comfortable imposing such inconvenience upon officials; after all public servants exist to serve the public.

Officials are most keen on subtle abuses of power, which are not immediately apparent. Power and the abuse of power lies in full knowledge of processes, and in the long term process of subverting processes so as to damage accountability and enable abuse. Hence, officials often do not like re-organisation, even though pay and privileges are intact, and the resistance to change is the greatest from old agencies (where accountability has been fully undermined). It is for precisely this reason that reorganisation of government, with fundamental change in objectives and accountability, is essential.

In India, officials manning government agencies are a big source of status-quo bias. Officials fiercely defend turf, and prevent change. This has given us stagnation in public administration. In order to make progress, we must delegitimise this process of defending the status quo. Public consultation should take place with all stakeholders about all new legislation, but officials of existing agencies should not have a say in decisions about the organisation chart of government and public bodies.

Bureaucrats are not stakeholders. When a decision is being made on the merger of Indian Airlines and Air India, there are many legitimate considerations which should be weighed. The convenience of the employees of the two organisations is not one of them. When designing the block diagram of government, of the agencies and their objectives, the democratic discourse involves listening to the views of all stakeholders -- but not the officials of existing agencies.

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