Managing Voter Expectations

Author: M Khudadad Chattha

A friend and I have a regular habit of discussing public policy in Pakistan. We are no experts on many policy topics, but we share our opinions on government policies with utmost confidence. That, of course, does not mean that we are right.

Naturally, Asad Umar’s resignation was a hot topic for us this recently. Why did he resign? Where did he fail? Did he undertake wrong policies? Since I understood the world of finance and economics and my friend did not, I was curious to know what he thought. He responded with exactly what I expect from anyone who isn’t familiar with economics: devaluations are bad and hence Asad Umar must have erred. If only economic analysis was that simple.

To help clarify, the exchange rate for any currency is either completely determined by demand and supply in the international market or is artificially over or under valued by governments using a range of instruments. A country can keep its currency artificially overvalued, but this comes at two costs. First, the country would need to use its foreign exchange reserves. Second, the domestic export sector would lose its competitiveness in international markets because exports become artificially more expensive for foreign consumers. Most economists agree that such costs do not justify over valuing the currency and hence should not be borne.

The Pakistani Government clearly thought otherwise during the last few years where the State Bank kept the Rupee close to 100 for every dollar. Since this policy was clearly unsustainable, someone had to come in and take the unpopular step of devaluing the rupee. This is exactly what the State Bank and Asad Umar did in first few months. Good economics. Bad politics.

We should certainly expect our politicians to avoid making unrealistic promises to get votes. But we should also avoid treating our non-expert opinions as facts so that the political system is better able to take decisions that are in the long-term interest of our country

This is just one example where the technical solution to the problem clashes with popular perception. Harsh measures that are in the long-term interest of the country are easy to criticize because citizens bear the costs immediately and reap the rewards far into the future. Such criticism resonates with people who bear the brunt of these policies. Naturally, it gives politicians in the opposition the perfect opportunity to get brownie points in terms of likeability. Most politicians have done this at some point in their careers.

This is exactly why, beyond a willingness to take bold decisions, policymakers need to shape the popular narrative of the policy. The moment this narrative is shaped by the twitter accounts of brownie point politicians, you as the policymaker should be worried. Completely agnostic to the technical correctness of the decisions made by Asad Umar, one thing is clear: it was the politics and the popular narrative of his decisions that played a key role in the drama that led up to the cabinet reshuffle.

The most important aspect of shaping the narrative is to manage the expectations of citizens. If these expectations are unrealistically high, it is inevitable that even great results will be perceived as failures. Unfortunately, in the world of politics, unrealistic promises are the norm because such tactics can get votes. While voters are often sophisticated enough not to take these promises seriously, this might not always hold true for new political players who haven’t ruined their credibility yet. Such promises, if taken seriously by voters, can make it exceptionally difficult for the government to control the narrative. We have all seen what happens when the narrative spirals out of control even when correct policies are implemented. Resignations are demanded, hard decisions are postponed, voters become disillusioned and some politicians enjoy their brownie points. It is hard to argue that the country wins in this scenario.

I end this piece on a personal note. In a world where we are all encouraged to have our own voice on every policy, it is important to be humble in our opinions. While my friend and I freely share our opinions with each other, we should recognize the instances where we are not experts on the topic. The confidence with which we lay out our policy prescriptions should be tempered by a respect for knowledge. We should certainly expect our politicians to avoid making unrealistic promises to get votes. But we should also avoid treating our non-expert opinions as facts so that the political system is better able to take decisions that are in the long-term interest of our country.

The author is a PhD candidate at the University of Oxford and is a graduate of the Harvard Kennedy School of Government. He has also worked as a civil servant in Pakistan and tweets @KhudadadChattha (twitter.com/khudadadchattha)

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