By TP Saran
In a recent interview in this paper, reference was made to the intention of the government, spelt out by the Acting President, about the separation of the planning from the routine functions of the Finance Ministry, MOFED.
This is to be welcomed, such a separation being needed for the many reasons that have been elaborated upon in this paper several times over the past couple of years. It may be a Planning Commission that reports directly to the PMO or an Institute of Public Policy and Development Planning, but there is a clear, felt need for such an autonomous body composed of people of the highest caliber to lead it and to co-opt equally farsighted and competent persons on a regular basis to consider all matters of critical national importance that cross party lines and partisan belonging.
Such an entity would obviate the need for such others as the National Strategic Transformation Commission, as it would be established by law as a permanent body, and recruitment would be done by a transparent and objective process rather than by nomination as is presently the case, and that always leaves the PMO exposed to criticisms of bias on political, communal or ethnic grounds. Further, this would prevent centralization and concentration at the PMO, which surely cannot be expected to take on in minute details all the complex matters that need to be attended to in the country. But certainly the oversight role of the PMO can and should be reinforced.
In this context, an open letter to the Permanent Secretary, Ministry of Public Infrastructure in this paper last week, submitted by the General Secretary of the Association des Consommateurs de l’Ile Maurice, Jayen Chellum is relevant. He submitted an article which highlighted a tool, Reference Class Forecasting (RCF), which he described as a novel forecasting approach based on a concept developed by a psychologist, Dr D Kahnemann, 2002 Nobel Prize winner for economy. Supported by research carried out worldwide, among others at Oxford University, RCF has apparently already been adopted by the OECD countries, the American Planning Association and other economies in order to avoid pitfalls in major infrastructural project forecasting.
As the article points out, inappropriately analysed, large infrastructure projects lead not only to cost overruns, as we have been seeing with several local projects, but also result in several collateral dangers which Jayen Chellum lists. These include higher or new taxes, higher costs of utilities, privatization proposals and sales of State assets, freezing of new job creation even in essential public sector domains such as health, laying off or redeployment of employees, and squeezing of welfare benefits.
It is interesting that this new tool gets inspiration from the work of a psychologist, because economists have come to realize that their premise that human beings behave rationally in making their choices is flawed. Hence the development in recent years of the field of behavioural economics and, more recently, neuroeconomics. Several teams are conducting research based on established methodologies to try and figure out why people behave as they do when it comes to making choices, and whether it is possible to influence them by subtle ‘nudging’ or by appropriate legislation and other measures that incentivize rather than punish.
People have prejudices and biases, and who better than a psychologist to know that? Hence the work of Dr Kahnemann, who identifies the different kinds of biases (technical, psychological, political-economic) to which are subjected current approaches in decisions about large infrastructural projects, but these no doubt apply to even other decisions across the board. The important point about this work is that it is objective and it focuses on categories of causes and not people, although at the end of the day it is people who make these decisions. Still, the approach identifies in a scientific manner the biases and does not personalize, which is perhaps the reason it has been widely adopted.
That article merits the serious and urgent attention and consideration of the authorities, which is why we have reiterated some of the points made; on the other hand, we also feel that they concern all citizens whose money it is that the government uses to fund all projects. As late President Ronald Reagan of America said, the moment you pay taxes you become a stakeholder in the country’s affairs and that includes whatever government does – with people’s money. Because he also said that it is not government but people who create economic growth.
Another point that is worth underlining is that it is not only technicians who should be involved in planning and forecasting: the very fact that it is a psychologist whose ideas have been used proves the point that the planning and forecasting process is a multidisciplinary affair. Because the Ministry of Public Infrastructure is more an implementing body rather than a decision making one, decisions being made at central government level, that article needs to be directed at all those concerned with decisions at that level. And before decisions are made, a proper analysis needs to be carried out by an entity of multidisciplinary nature. In the past we had made suggestions to this effect, and we feel they are still relevant:
‘There are so many competing local, regional and global forces and interests that it is no longer possible for any single person to understand all the complexities and to make sense of them before taking the crucial decisions for the country. Developed and many developing countries have Departments or Schools of Public Policy based in universities, or similar think-tanks which carry out research and extensive studies that provide the data inputs necessary for a comprehensive planning process. And economists or accountants/financial analysts are only a few of the categories of experts who carry out this important work on behalf of the country. Equally important are professionals drawn from such fields as sociology, political economy, program evaluation, policy analysis, and public management. There are also development experts, land use and environmental specialists and, it goes without saying, professionals from other fields who are regularly consulted or co-opted so as to strengthen the team and enrich the thinking process.
‘Given that competing interest groups are constantly trying to influence policy makers in their favour, and that individuals and groups often attempt to shape public policy through education, advocacy or mobilization of such interest groups, it would certainly be in the public interest and highly commendable for the government to show transparency by directing such pressures towards an independent body. Its job would be to analyse any project proposal in all its dimensions, interacting with whatever government department it deems is appropriate, have inputs from the private sector too as necessary, prioritize, factor in funding options, and present scenarios to the authorities – which may be the PMO – for their final decision in full knowledge of what the decision entails. No one will be able to point a finger at the authorities.’
A high-level, robust entity of excellence that may also eventually serve the region, that is what this country needs in the form of an Institute of Public Policy and Development Planning. The RFC of Dr Kahnemann would be one of the several tools that such an Institute would use. We sincerely hope that the government’s intention, as expressed by the Acting President, becomes a reality very soon, for that would be in the country’s interest.
* Published in print edition on 22 June 2012