It might be true that, as Goethe stated, “Boldness has magic’. But in policy reform, boldness has limits. In short, we can confidently say that in matters of policy reform, wisdom is the principal thing. Wisdom is the capacity to penetrate the nature of things, to gain insight into the complexities of reality and not be charmed by the splendor of appearance. Wisdom pays attention to complexity and variation and proceeds from the point of view of inquiry not of conclusion. The lack of wisdom and the surfeit of boldness is a dangerous combination in policy reform.
The Tinubu administration is suffering from this inordinate combination. The government revels in taking bold policies. Its supporters and promoters regale how the president on day one acted boldly by abruptly yanking of petrol subsidy with a gleeful intonation of ‘subsidy is gone’. Today, his opponents are shouting in chorus ‘Subsidy is gone. Long live subsidy’. Today, it is reported that the government pays about N1 trillion to subsidize the same petrol whose subsidy Gladiator Tinubu boldly yanked off. His energy advisor argues that the President has the authority to pay petrol subsidy. No one reasonably argues that a president who is also the minister of petroleum lacks the authority to subsidize petrol in a presidential system of government. What wise people doubts is whether it was wise to end subsidy in the manner President Tinubu did. Tinubu’s men said boldness has magic. But wisdom always has the last laugh.
Admittedly, there is an allure about boldness in policy reform, especially in developing economies. First, it fits the narrative of neoliberal orthodoxy. According to this orthodoxy, the reason these economies are still underdeveloped is because they have shied away from the fundamentals of a market economy. Public choice theory tells us that public officials who superintend these economies are self-serving. The government is entrenched in rent-seeking. It needs an outside warrior to crash through and uproot bad policies. From this perspective of the transition from economic failure to success, the required virtue is not wisdom but boldness.
Another reason why boldness is recommended in the folklore of policy reform is the overcommitment of policy reformers to implanting in their countries institutions of market orthodoxy from other parts of the world. If there is one recipe for development, then what matters is not context but courage to implant. A leading African political economist, Thandika Mkandawire, calls it “institutional monocropping”. This breeds ‘monotasking’. Just do the same thing they have done elsewhere notwithstanding the difference of social or geopolitical contexts. So, if the work of reformers is to disregard the constraints of cultural and social differences and implant the same institutions of a market orthodoxy, what you need are bold leaders, the more reckless the better.
This advisory has been the staple of development policy for a while. The story is that good leadership of policy reform requires bold actions, actions that are based on the mythologized power of the market to correct all perfections. To make shock-therapy work, they created enemies who must be vanquished to ensure successful transplantation. Of course, that enemy in the Nigerian context will likely be the organized labor movement. Witness President Tinubu’s railing against labour leaders as politicians who want to contest political power with him in 2027. Noami Klein captured the reformer’s ghoulish mindset in her book, The Shock Doctrine: The Rise of Disaster Capitalism. She chronicles how the Chicago Boys in Latin America and their disciples elsewhere in the world, animated by the gospel of ‘There is No Alternative’, crashed through all contexts and left disaster as economic reform.
We do not need to go far to see the spirit of hubris in reforms. Nigeria’s ‘bold’ reform in the electricity sector shows some aspect of ‘boldness has magic’ mindset. We hastily privatized when we had not set up the room for great performance. Perhaps, if we had diligently carried out requisite commercial and regulatory reforms and sequenced the transition by first building capacity in distribution and transmission, a delayed and sequenced privatization may have worked better. Less than a year after our rushed privatization, one of the investors dropped one of the distribution companies. 11 years after, about four distribution companies have become bankrupt and repossessed by financiers. The policy is obviously a failure. Privatization may not be a bad policy. But its implementation was guided more by boldness than wisdom. Wisdom is profitable in policy reform. The problem is that wisdom requires humility to pay attention to context. Sadly, humility is not one of the things they teach in policy school.
Context matters. If President Tinubu had sequenced the removal of fuel subsidy and managed a float of the currency in a manner that wisely responds to the vagaries of economic tides, we would not be in the situation we are today where efforts to shore up the naira from an avoidable freefall could lead to stag-inflation. If President Tinubu was not too gung-ho about abruptly ending the subsidy and deliberatively searched for mitigations before announcing the policy, perhaps he would not be in such a quandary where government is flipflopping on mitigation policies.
The real lesson is that we do not need to accept the logic that policy reform requires more boldness and less wisdom. We should stop looking for bold instead of wise policies. Context matters, and because they are always unintended consequences, effective policy reform requires wisdom defined by caution and incrementalism. Caution is necessary because ideology or theoretical models do not capture the realities of any economy. Effective policy leadership requires more attention to the peculiar facts of a given society at a given period. As the legendary Chinese reformer, Premier Deng Xiaoping put it, we should know truth through facts. That is pragmatism.
President Tinubu has been forced by unsavory outcomes to walk back from some of his bold policies. For all intent he has walked back from total removal of petrol subsidy and subjection of petrol pricing to full control of the market price. Recently, he announced and walked back from Expatriate Employment Levy after it drew backlash from experts and business leaders. These false steps suggest that there may be a problem of temperament at the presidential villa. It was reported that the announcement of the immediate and complete removal of petrol subsidy was not part of the official inaugural speech by the president. Somehow the president smuggled it into his address. One explanation of this oddity is that the president wanted to prove tough by announcing and pulling through a policy that devastated President Jonathan and which his predecessor ducked throughout his eight years.
Similar temperament afflicted the management of ECOWAS’s response to the military coups in Niger and Mali. The president gave a bold and scorching speech about the imperatives of democracy and announced clampdown against the militarists in power in Mali, Niger, and Burkina Faso. He ordered that they must revert to democracy immediately. No negotiation. Without due consideration, he declared a war against these states and almost mobilized military invasion of the three countries. After military rulers in the three countries called ECOWAS’s bluff and announced their exit from ECOWAS, President Tinubu walks back and reengages diplomacy. Boldness gave way to caution and contextuality.
This is not just happenstance. It has become the signature style of the Tinubu administration. It is quick to act and slow to deliberate. It falls too easily to the seduction of boldness and courage. Many attribute this vulnerability to the challenge of legitimacy the administration suffered at the beginning. So, it wants to look good to the influential Washington-based institutions and some foreign powers, especially in the light of the bad press the president received during the presidential election petition. How best to look good than taking tough decisions that portray it as a reforming government. As always, it is about boldness, not about wisdom.
The call for caution and consideration in reform policy is more than the appeal of pragmatism. It is about wisdom. It is about acknowledging complexities and nuances and respecting facticity. In an interesting work on why grand reform plans usually fail, Yale sociologist, James Scot, in his classic book, Seeing Like a State, argues that most grand reform fail because of failure to pay attention to what he calls ‘metis’, contextual knowledge. Oftentimes, reforms fail because reformers miss out on what is obvious. The capacity to mis out what is obvious results from preoccupation with the grand and the spectacular and a tendency to be griped by ideology rather than the reality.
One can argue that the difference between the successful economies of East Asia, whether China or South Korea, is this mentality. These countries teach enduring lessons about how to reform. First, they rebuffed ‘institutional monocropping’ even as they accepted the universalism of general principles of economics. They know, as Wofgang Stolper, Nigeria’s first Director of Planning argued in 1970, that “The starting point of all policies, economic or otherwise, is a given ethnic, political, cultural, and economic situation”. It is focusing on the concrete reality of a given society at a given time that determines success in reforms. China rejected ‘shock therapy’ in its transition to a prosperous economy because its policy reformers had hardnosed focus on the realities of the Chinese soceity, not on an imaginary principles of a free market economy. The notion of ‘Capitalism with Chinese Characteristics’ reflects the wisdom of paying attention to context.
Even in the economics of innovation, what we see with successful cases of Israel, Ireland, Taiwan of even South Korea is that a national innovation system is constructed to align with peculiar factor endowments and a country’s comparative advantage in tradable goods, not based on any universal principle of innovation. Unsuccessful countries in the innovation economy parrot market-based ideas not aligned to historical realities. It is evident that leading reform is a managerial art rather than a theoretical science. Once it is about management, the central virtue is wisdom not boldness.
President Tinubu has a difficult economy to manage. President Buhari has left a legacy of gross mismanagement that would challenge the most clear-headed strategist. To have a clear chance of success, the Tinubu administration should readjust its basic ideas and temperament about reform. It is seductive to be hailed as a bold reformer. But boldness often leads to tragic oversight and imposes an illusory romance with textbook solutions.
Good policies are only good to the extent their articulation captures the real situations of society. Good policies are good because they are derivatives of accurate diagnosis and deep deliberation. It is important to focus on the concrete realities of everyday life in policy reform. There is an ongoing call for radical revision of the discipline of economics and economic policymaking. The decades of failure of development economics have foisted on economists a realization of the need for less hubris and more caution. As Harvard Dani Rodrik recently put it in IMF’s March 2024 Finance & Development Magazine, “The most pressing economic problems of our times require pragmatic remedies closely tailored to contexts”.
The chief virtue of pragmatists is wisdom drive by humility, not boldness. President Tinubu and his policy aides should disembark from this wagon of boldness. Wisdom is the principal thing.