July 30, 2009
Convincing Elites to Allow Reform:
Foundation Holds Forum on New Institutional Economics
Against the backdrop of a turbulent history of property rights issues,
the Friedrich Naumann Foundation for Liberty (FNF) partnered with
the Philippine Economic
(PES) and the
University of the Philippines School of Economics
hosted two sets of forums with New Institutional economists John
Nye and Noel Maurer. The first forum was held on 30 July 2009 at
Makati City for policy makers while the second one was held the
following day at the UPSE auditorium in Quezon City for students
and the public.
The forum sought to address the question frustrating many reforms
in the country: “Will elites permit it?” John Nye,
professor at George Mason University,
started out the discussion by stating that poverty is
the default position. The wealth of some nations is a
recent development. The real issue is how countries can rise out
of destitution, and why it is particularly difficult to do so.
Professor Noel Maurer
One condition that usually brings this about is unanticipated
such as the way the mobile
phone changed the telecommunication structure. Another is when
some elites co-opt power from others
. This was the case
during the British industrial revolution when the power of the
provincial elites was transferred to the city. Not only did this
introduce a new power structure in the city, but it ushered in
the rise of a strong middle class.
However, the usual case, Nye explained is to provide
elites with incentives to permit reform. Lasting change
can only be achieved through a society’s internal
transformation. He cautioned against revolutions. Most
of the time, they only replace one dominant interest coalition
Resdent Representative Siegfried Herzog
Noel Maurer, associate professor at Harvard
, discussed one such time in Philippine history
when the dominant interests found it beneficial to allow reforms
in the country. In the early 20th century, conservative elites
wanted to keep the Philippines after defeating Spain, but ran
into strong popular opposition. They changed the U.S. Congress’
opinion about retaining the Philippines by convincing the American
public that U.S rule would be beneficial to Filipinos. One way
they did that was to allow Filipinos access to property. It was
believed that this would rapidly improve their material conditions.
The colonial administration under Gov. Taft
three acts that overturned the previous Spanish structure
and established a stable property rights system.
this largely failed. Only relatively few Filipinos registered
their land under the new system, possibly because it was too
or they did not see the need
Nevertheless it seems clear that with proper incentives,
elites sometimes do permit reform. Resistance is minimized
when change comes from within the existing structures. However,
allowing that change is only the beginning.
Implementing change on a gradual but sustained
basis is a process that continues to be a challenge to politics.
“This forum was important as it shifted the focus of the
land reform debate away from simple legislation,” said FNF
Resident Representative Siegfried Herzog. “It centered on
how we as a whole can move our society towards reform, towards
better institutional structures,” he added. “It also
shows the dilemma of democracies. Gradual reform of institutions
is the best way forward, but people tend to vote for
leaders who make grand promises about sweeping reforms or about
generous handouts. Gradual institutional reform sounds boring
and unattractive to most voters.”
to John Nye's complete talk.
to watch John Nye's video.
to Noel Maurer's complete talk.
to watch Noel Maurer's video.