Satis Devkota is an associate professor of economics and management at the University of Minnesota Morris. He holds a PhD in economics from Wayne State University, Detroit, Michigan, US. He closely follows Nepal’s politics, economy and international politics. Devkota talks to Kamal Dev Bhattarai focusing on the Nov 20 elections.  What is your take on Nepal’s growing culture of alliance politics? In a democratic society, people are free to create their political parties and contest in elections, which are free of coercion and fair to all contestants. However, forming a political alliance among a group of political parties with diverse political ideologies—political-economic philosophies—blunts the purity of our democracy. Such an alliance is unnatural, and a reflection of the incompetency or insecurity of political parties engaged in forming such an alliance. In general, a political alliance is a group of political parties that are formally united and working together if they have common aims. Looking at the past 30 years of political history in Nepal, you can find only a couple of political alliances that make perfect sense. 

Could you explain the culture of past alliances? 

First, the NC-Left front alliance that was formed in 1990 together fought against the autocratic Panchayat regime to establish the Westminster model of parliamentary democracy in Nepal. The shared objective was achieved, and the country’s multi-party democracy was reinstated after 30 years. Second, after King Gyanendra dissolved the parliament and seized power in Feb 2005, a seven-party alliance was formed that fought against the king’s direct rule with the intent to restore parliament and multiparty democracy. In the face of broad opposition, the king restored the previous parliament in April 2006. Again, the shared objective of forming the political alliance was met. Besides, let’s evaluate the provisions to form the government in the current constitution of Nepal. A coalition government could be an alternative if a single party cannot achieve the majority in parliament. So, forming a political alliance to form a coalition government is constitutional, and that might lead to political stability if our political parties are prudent and understand political ethics, and respect the values of politics. Unfortunately, our leaders and political parties are not on that boat.  Forming a political alliance in the general election for the house of the representative and provincial election between the two major forces (socialist and capitalist) with the wider difference in ideology, political philosophy, and political-economic agendas is against the ethos of democracy and completely unnatural. It is entirely guided by a single objective: to size down the strength of CPN (UML) in parliament and the provincial positions and to stop KP Oli from being the prime minister again. Such an alliance is unacceptable in a flourishing democracy.  The political leaders are guided by their egos rather than their social responsibilities.  Will the Nov 20 elections ensure political stability? No. The recent public choice literature discusses various political features which crucially influence government behavior, and drive a wedge between what governments actually do and what they are advised to do by economists. Typically, when there is a coalition government led by a political alliance between the political parties with opposing ideologies, political power is dispersed, either across different wings of the government, or amongst political parties in a coalition, or across parties that alternate in power through the medium of elections. The desire to concentrate or hold on to power can result in political instability and inefficient economic policies.  For instance, lobbying by various interest groups, together with the ruling party’s wish to remain in power, often results in policy distortions being exchanged for electoral support. Generally, politicians are interested solely in maximizing their probability of surviving in office, so the resulting character of government is pretty much unstable and very far away from the benevolence assumed by more traditional normative theories of government behavior. In addition, political parties are almost exclusively concerned with furthering the interests of their own support groups. Thus, the conclusions that follow from this discussion are very much different from the conclusion that can be reached if there is a stable government.  During electioneering, all political parties commit to bringing the wave of development, but it is limited only to the slogan, what are the major hindrances to Nepal’s development? Political parties, their leaders, and policymakers lack a clear understanding of the determinants of growth and development in Nepal. Even though they know the common determinants, they may not internalize how each of those determinants affects growth and development, what strategies promote inclusive growth and sustainable development, and if that growth and development strategy leads to achieving the objective of a welfare state in the long run. Besides, political parties and policymakers do not have clear pictures of the intermediate and final outcomes of the long-run growth process. That creates confusion and policy dilemmas, which leads to misleading outcomes.  Actually, policymakers have to look at the proximate and fundamental factors that affect the growth and development of a country. Capital accumulation and productivity growth are the proximate determinants of growth. In contrast, luck, geography, culture, and institutions are fundamental determinants of the growth and development of any country in the world, and Nepal is not exception. Understanding this fact and internalizing the channel through which each of those factors affect our growth and development is fundamental in the first place. That knowledge helps policymakers form evidence-based policies to achieve high growth, alleviate poverty, reduce inequalities, and promote all-faced development in the country. That says there is not just a single hindrance to growth and development in current Nepal. How does a coalition government affect good governance and service delivery? As I have mentioned earlier, a coalition government led by a political alliance of parties with opposing political views leads to political instability and forms an unstable government. That can be a cause of economic distortions. Unstable coalitions or governments that are not likely to remain in power for an extended period of time are liable to introduce policy distortions for at least two reasons.  First, such governments obviously have very short time horizons that have important implications for economic policy in general and budgetary policy in particular. If political power alternates rapidly and randomly between competing political parties or groups of parties, then each government will follow myopic policies since it assigns a low probability of being relocated. Hard policy options whose benefits flow after a long gestation lag are unlikely to be adopted by such a government. Instead, it may spend indiscriminately in order to satisfy the short-term needs of its support groups. This will result in a legacy of high debt to its successor. Although this may constrain the actions of the next government, the current government does not care about the priorities of the next government. The second route through which the rapid turnover of governments may induce policy distortions is relevant in the case of coalition governments. The shorter the expected duration of such governments, the more difficult it will be for the ruling coalition members to agree on policies.  Of course, the more heterogeneous the parties in the ruling coalition, the greater the lack of cooperation will be. Each party in the ruling coalition may then try to promote populist policies in order to exploit its own narrow interests. The most likely casualties of all this will be fiscal discipline, good governance, and service delivery.