The limits to reform as an accounting of activities

 This post will urge a note of caution on the trend of treating reform as a purely transactional accounting exercise instead of one which also requires the creation and internalisation of an account about the reform. I’ll borrow Lant Pritchett’s framework of distinguishing between accounting and account-based accountability. 

Consider two common examples that we encounter in our daily lives.

Gym memberships are among the commonest new year resolutions. The problem is that the initial enthusiasm ebbs quickly, and in just a couple of months, two-thirds of the enthusiasts drop out. People resolve the anxiety of being unfit by performing the procedure of “joining a gym”, without internalising the discipline that makes a gym useful. The goal of a healthy body was replaced by its most visible symbol.

Fire drills in office complexes are a periodic rite. People walk to the stairs, treating it either as a mild annoyance or a welcome break from work, and return after a few minutes. The drill is logged, and the compliance box is ticked. But ask anyone a few days later on where the nearest fire exit is, or what they should do if the corridor is smoke-filled, and few would have any idea. They went through the drill without internalising it, but merely as part of a record entry exercise and not to form a prepared mind. 

Much the same applies to many public policy reforms. Take examples like Ease of Doing Business, deregulation, independent certification and accreditation, and formalisation of the economy, to name just a few. 

EoDB is reduced to a set of tick-the-box automation or rule liberalisation, without imbuing the spirit of making it easy for firms to conduct their business. Deregulation is reduced to a process of procedural actions, without administrators actually imbuing the spirit of what constitutes good regulation (or deregulation). Third-party certification is similarly reduced to the form of compliance with a checklist of items, without regard for the realisation of the desired outcomes. Formalisation of the economy is pursued as a relentless effort to bring all economic transactions under the ambit of existing laws, never mind that it adds layers of costs that make the activity itself unviable. 

In each case, there are perverse outcomes. In EoDB, the procedural requirements are met without leaving businesses significantly better off in dealing with government bureaucracies. A spring cleaning of existing restrictive regulations does little to prevent the accumulation of new restrictive regulations. Third-party certifications lead to isomorphic mimicry, a form of compliance without its substance. And formality shrinks economic activity or drives it further underground. 

In all these cases, the bureaucracy reduces such reforms into a logistical exercise without regard to the human engagement aspects (internalisation of the spirit of the reform, or the account) and their impact on implementation quality. The important point is that a fairly complex issue gets reduced to a procedural/legal fix without the agents involved appreciating the spirit of why they are doing these fixes. There’s an accounting of the reform, without an internalisation of the account behind the reform. 

These distortions are more likely when these reforms are implemented on a mission-mode approach within tight timelines. The bureaucracies have no option but to commoditise the reform and its implementation. The instrumental nature of the design and implementation of the reform, coupled with the forced pursuit of targets and over-optimistic timelines, shrinks the space for internalisation of the account. 

Now, I am not suggesting that countries should stop pursuing the approaches they are following on these reforms. Nationwide implementations of such reforms invariably demand some form of commoditisation. But, focus on the accounting of the reform should not crowd out the need for internalisation of the account. Accordingly, the commoditised implementation should be complemented with measures to sensitise and instil the account of the reform among officials and stakeholders. This sensitisation should start at the top and should cascade downwards. The space and time required for this purpose must be made available.