“National Priorities, Nepal, Narendra Modi”; “Kenneth Arrow’s Condition I” and “Why Nations Fail”

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The past week has been packed with 3 events in Nepal that test our fundamentals as a nation which are as the following (chronologically):

  1. Landslide in Jure and subsequent flood in Sunkoshi River (Saturday, 2 am)
  2. The visit of Indian Prime minister Narendra Modi (Sunday, 10:50 am)
  3. The death of Dinesh Adhikari, alias – Chari (Wednesday, around 6 pm)

As Former President of the Philippines quotes, crisis is the crucible that forges a nation’s destiny. That huge a destiny shaping event might not have been in case for Nepal this week, but a lot can be said from these three events about the path we are heading to, our social mindset and the flaws of our prioritization.

Chronologically, it’s really interesting how our parliament was tested on the prioritization between relief efforts in Sunkoshi and the visit of Narendra Modi.  There were a few prominent issues like the fact that Chief Secretary Mr. Leelamani Paudel, cancelled his trip to the landslide affected area and unfortunately, even the media overlooked this issue.

The book Why Nations Fail (James A. Robinson and Daron Acemoğlu, 2012) quotes a very valid argument:

 “The idea that rich Western countries should provide large amounts of “developmental aid” in order to solve the problem of poverty in sub-Saharan Africa, the Caribbean, Central America, and South Asia is based on an incorrect understanding of what causes poverty. Countries such as Afghanistan are poor because of their extractive institutions — which result in lack of property rights, law and order, or well functioning legal systems and the stifling dominance of national and, more often local elites over political and economic life. The same institutional problems mean that foreign aid will be ineffective, as it will be plundered and it is unlikely to be delivered where it is supposed to go. In the worst-case scenario, it will prop up the regimes that are at the very root of the problems of those societies.”

So, does our government also function as an extractive institution? And does this render in a larger picture that, the USD 1 billion given as soft loan by the Indian Prime-Minister will prove to be “ineffective”? The answers to these questions can be found in last element of the previous chronology- the killing of ‘the Don’ Dinesh Adhikari, alias- Chari.

CA

Parliament in Session

The very question of our political parties being based on the mafia culture and our politicians doing their dirty work with the help of goons has been floating in our mainstream media for a very long time. But when the news of CPN-UML leaders (Gangalal Tuladhar, Rajendra Pandey and Bhumi Tripathi) presenting themselves in the official residence of the Minister of Home Affairs to advocate the death of Mafia Chari came, the answer to these questions surface themselves.

This point is economically valid because it gives color to the social preferences we have. In any other nation, be it India or the USA, has any political leader gone to the government and advocated for the extortionists’ (on the run) human rights?

Arrow’s impossibility theorem has this famous condition I – the Irrelevance of the Irrelevant or “independence from irrelevant alternatives”. Indeed, this proves that no system in the world is ever perfect.  But it seems, in majority of systems working efficiently, this condition is well covered – the irrelevant alternatives are rendered irrelevant. Unfortunately again, in Nepal, it’s the exact opposite –  they are relevant. Arguing the human rights of Chari when other major issues are at stake in the parliament is an irrelevant alternative – if this is given weight than the bias towards this agenda is promoted and the relevant alternatives like the relief to Sunkoshi victims are pushed aside.

This creates a beautiful link between the extractive institutions and irrelevance. Simply, extractive institutions are irrelevant to the functioning of a nation. Prioritizing extracting institutions hinders growth, and the turn of events during this week proves that we are making this exact mistake. As rightly quoted before, the dominance of national and local elites over political and economic life is exactly what is emerging out of these issues – which again offers a huge political backing to the youthful population, consequently dragging them  into burning a college library to ashes and the likes.

We have to get our priorities right, and we have to declare the irrelevant issues irrelevant once and for all.

Serene Khatiwada

About Serene Khatiwada

Serene Khatiwada is a Research Intern at Samriddhi, The Prosperity Foundation. He did his Economics Honors from Hansraj College, University of Delhi.