How ‘powerful’ should the government be and how does the present state of governance in Nepal fare? The first part of this question is as old as human civilisation with early Greek philosophers including Socrates and Plato (over 400 BC) debating the merits of democracy (‘rule by the people’) versus aristocracy (‘rule by the best’). While democracy has claimed the verdict as the most preferred form of government in today’s complex socio-political system, Plato’s idea of ‘philosopher kings’ who possess and practice wisdom and reason will never lose its relevance.

Thinkers of political economy have long argued the merits of a small government that protects and promotes private interests versus relatively large governments powerful enough to counter institutions exercising their undue economic might. More than the merits of democracy versus aristocracy, the focus here is on the institutions that serve the people with most aristocratic governments seeking to develop a system revolving around a leader’s personal strength, charisma or style. The power of governments is not about the process by which they are formed, however. Just like how democratically elected governments can be very weak in developing institutions, aristocratic governments can also institutionalise the system.

Legal framework

The question then is whether the government has the ability to manage and tax economic activities and institutions with far-reaching implications for the success of a country. Taking a comparative view of the history of nations, Daron Acemoglu and James Robinson’s Why Nations Fail interprets this issue of the government’s power in the institutional sense concluding that the combination of economic and political institutions, more than anything else, explains the differences in the level of development. This in essence is to conclude that the stronger the institutions, the better off the society or country will be in its development performance over the longer term.

This power of government encompasses the ability to create a platform in which different economic and social units (individuals or institutions) operate. These units necessitate a fully developed legal system to protect private property and a fully functional apparatus with proper policy instruments to enforce contracts. Transactions are free and fair when everyone is treated equally against the law and when a fully functional legal recourse remains to settle any outstanding disputes. This also requires regulations and tax structures that are fair and equitable. But more important than the appropriate legal framework is the ability to enforce all existing laws objectively and impartially.

There are many ways to operationalise the power of government, with stark differences between small but mighty governments and large but corrupt and weak governments. One widely used measure is the size of the government itself as larger governments tend to be more active in controlling lives and economic activities. Larger governments also mobilise private resources for public gain through reallocation and

redistribution.

Answering the second question posed at the outset requires some context. At the core, the size and power of the government relates to the developmental stage of a country’s political and economic institutions. The institutional framework of most developing countries tends to be evolving. Electoral politics are unsophisticated, with political parties or candidates unable to provide specific and theoretically consistent policy positions, and the relatively uneducated electorate confused over the professed policy differences. With strong agricultural roots, their economies are dominated by select economic powerhouses such as landlords, investors or groups.

An increasingly laissez faire experimentation in education and healthcare has led to private spending in these sectors dwarfing public spending. Nepal’s government spending remains well below 19 percent of the Gross Domestic Product. For a government attempting to ramp up its infrastructure and social spending, this exhibits a meagre capacity to tax and spend. The fact that over two-thirds of this expenditure is allocated for development activities, for which most of the funding comes in the form of grants or loans, further suggests that the capacity and reach of Nepal’s government is marginal at best.

Over 81 percent of the economic activities in Nepal occurs in the private sector. Private citizens and actors are much more resourceful and powerful than the government in every meaningful way. The fact that this $21 billion economy has produced billionaires indicates the power and wealth of some of its citizens as this wealth is generated from inside more than from outside. The government has failed to develop institutions that can counter the power wielded by select elites. The fact that government officials are frequently bribed into decisions that allow enormous gains to private actors suggests that the institutions and institutional protections are either nonexistent or ineffective. Despite all the ‘democratic’ exercises like elections, the aristocratic culture viewing ‘those in power as the law’ still dominates the practice. Nowhere is this more evident than in awarding contracts, deciding government acquisition and providing public service.

Lack of mechanism

It’s not that Nepal lacks legal frameworks to safeguard people’s rights and contracts. What it lacks is an effective political and bureaucratic mechanism by which all forms of governmental obligations can be fulfilled. Until such a mechanism is created and operationalised, the state of the country will be characterized by a weak and ‘poor’ government amid powerful and ‘rich’ people.

Some examples of this are people living in mansions and high-rise buildings filled with all forms of global comforts and imported goods right next to dilapidated houses and neighbourhoods; people driving expensive cars on roads barely passable and almost unrepairable; government officials amassing wealth that they know they should be ashamed of and yet the culture idealises their wealth-amassing skills; elected officials unable to bring high-profile criminals to justice for fear that it will backfire or divulge their own crimes; officials adhering to utmost professionalism unable to act without fear of retribution; and lack of faith in government and constant public outcry over its inconsistent and unethical behaviour.

Wagle is a professor and director of the School of Public Affairs and Administration at Western Michigan University, Michigan, US