Emerging Market Strategies

William Gamble

Reasons and Solutions for US problems in Afghanistant and Iraq

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This entry was posted on 6/24/2009 7:06 PM and is filed under uncategorized.

However I have been studying this problem since I wrote a paper about the Mau Mau uprising in Kenya in 1972 and I have seen exactly the same problem all over the world. I know exactly what the problem is and I have an excellent idea how to solve it.

 

The difference between several tribes and a country is a legal infrastructure. There are two ways to create this. You can use ruthless force or give the population an incentive to buy into to the legal system. In Afghanistan you do not have overwhelming force and you can’t be as ruthless as the Taliban. So you are going to have to get the tribes to buy in.

 

The major obstacle is what a game theorist would call relationship capital in a relationship based system. (See professor Dixit, Lawlessness and Economics, 2004). A relationship based system, sort of a prelaw system, unlike a rule based system, is based only on trust. In these countries, trust is fostered by networks of family, clan, religion, party affiliation mostly in that order. These relationships have what is called relationship capital. In other words your relationships have enormous value for both economic and preservation reasons.

 

To actually change this system you have to replace relationship system with a rule based system. This process is exceptionally difficult but might be accomplished gradually. As the experience in Iraq showed, the first rule is to function with what exists. The ‘Sons of Iraq’ was created with the help of the local leaders, because they saw it to their advantage.

 

One way to increase the probability that the local leaders see the advantage is to ‘nudge’ them. (see the book Nudge). You have to use behavioral economics to get the local leaders to make choices that are appropriate to your overall strategy.

 

Once you get the local leaders to opt in, because they see it in their best interests to do so, you have to enlarge the process by showing leaders of different tribes that they gain mutual benefit by cooperating on projects together. The process is the same whether you are dealing with blacks and white in the US or Tajiks and Pashtuns in Afghanistan.

 

Law can play a very important role in this. In the 12th century, Henry II offered circuit judges in competition with local manorial courts. The people preferred the circuit judges because the results were better and fairer. Federal diversity jurisdiction has the same effect in the US. If you want Afghanis to trust the law more than their relationships, you have to offer them law that works. It has to be fast, fair, simple and cheap.

 

The easiest place to start is with commercial law. The World Bank in their doing business report has identified numerous areas like bankruptcy and corporate formation that make the economy more efficient. Usually you can start with these areas because they affect a small number of people and are not politically or culturally sensitive.

 

The next important step is contract enforcement. Protecting private property rights especially in contract enforcement gives people a powerful economic incentive to use law rather than relationships. It is also an area where you need cooperation across ethnic, racial or religious lines. People don’t have to like each other to do business. Once the economic incentives are in place, then the probability of people using the law will increase. Using small incremental methods like this will eventually build a state.

 

US policy has failed because the locals in most of Afghanistan and especially in the Pashtun areas have no incentives to cooperate and plenty of disincentives not to. On the contrary. The US has framed the issue as us (Christian, westerners, Kabul elites, Tajiks) against them (Muslims, Asians, locals, Pashtuns). Ideas and law are like everything else. You have to market them. Show the benefits of your product, a stable central government and intertribal cooperation, and the problems with your competitors, an unstable anarchy.

 

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