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Friday, 28 November 2008

Satonomics, 2nd Edition

The Leader of the Opposition has a very good knack for identifying where the incentives of individuals conflict with the public good. Here is another excellent example :

"...My advice to government is to scrap the NCC for the time being and save K400 billion, because NCC won't produce the Constitution tomorrow. And since there is so much money involved, it can go up to 2020, because the people who are there would like by the time they come out they are billionaires..."

He applied a similar argument in our 1st edition. The problems are similar, though the NCC situation appears to lack a neat solution! In paying NCC members money to do what is effectively a patriotic act, you are hoping to incentivise effort. However, as Sata correctly observes, doing so can have the perverse incentive of prolonging the NCC process. The more the delegates deliberate the more they get paid! We are basically paying people to talk for as long as they like! [A full discussion on the size of NCC allowances here].

A possible solution is to create a definite end to the NCC process. Unfortunately this "solution" prematurely assumes the NCC deliberations don't break down and get restarted again (or rather you can accurate foresee a "reasonable" time frame for concluding negotiations) - so effectively you could end up with a series of finite continuous games.

The other problem with definite timetables is that it requires someone credible to pre-commit to an end date. As we have seen George Kunda has hinted on it being ready by 2010, but the statement was heavily caveated with pronouncements on how complicated the process is, and how no one can say for certain when it can end. This is the "reasonable" time frame argument in another form, though in truth what Kunda is hinting at, is really getting at is another problem - the political cost of setting the timeframe may be too great. In theory government can set the timetable and even threaten to close down shop, but that would be too risky. If it pulled the plug on the NCC, civil society would condemn government with huge political costs. In short GRZ has become a prisoner of the NCC process! It can only watch and "hope" the NCC moves swiftly. The other problem is that government also faces its own incentive not to conclude the NCC process. Many of the proposals being banded about clearly would impact negatively on the MMD prospects (e.g. 50% + 1). It is probably correct to say that it may not be entirely in the MMD's interest to conclude the NCC proceedings, if the outcome would damage their prospects in any way in 2011, or would significantly redistribute power from a seating government.

Ironically, the "white knights" who may have saved the NCC process from dragging on forever, is the very people who are not taking part! An effective solution would require that those who take part in the NCC (and incure the financial benefits from doing so) also significantly bear the costs of prolonging the process . Many participants of course would claim that they qualify under that criterion, but I am convinced that by and large, only Pf would be able to reconcile the incentives for getting paid on the NCC and delivering the constitution in a timely and affordable manner. The Pf are desperate for a new constitution that would ensure fair play, more than any grouping at the moment in or out of the NCC. If the Pf were to take part in the NCC, it would face two diametrically opposed incentives : continue to get paid to sit on the NCC for as long as Zambia can afford or each a conclusion swiftly to enable a constitution in time for new elections or God forbid, another unforeseen bye-election. It is likely that the incentive to deliver the constitution quickly would outweigh their financial return. Incidentally, under that scenario it may not even be necessary to pay Pf delegates - since the incentive to conclude the process quickly would be enough incentive to work hard at the NCC. But as things stand, Pf is outside the process, and for that reason its no surprise that this process will continue to drag on forever because the incentives of those within the NCC are too weak to quicken the process. To put it starkly, a new constitution will not make New Generation Party (or other small parties taking part in the NCC) win a seat at the next election. So can you really expect them to bother getting a new constitution speedily, when they can get the huge financial return from delay?

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