All this takes place exactly as another peaceful and democratic transfer of power is about to take place.  The epicenter is a mere 70 miles or so from the major coastal city of Valparaiso, the seat of Parliament, where the Presidents in Chile pass the baton.  President Michelle Bachelet leaves with 84% popularity, and President Sebastian Piñera takes the oath of office, with high expectations and enormous reconstruction and social challenges ahead.  He is the first democratically elected right-of-center President in the past 50 years in Chile.

Meanwhile, the peaceful proceedings of this transition in power continue apace, and exactly according to schedule, whether the earth is shaking or not.  Visiting heads of state and dignitaries, many of whom are not used to earthquakes, appear to be much more rattled (and pale) than local citizens and officials.

Notable people and institutions.

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[*Postcript:  Late in the day of Thursday, March 11th, the original magnitude of the large tremor that took place minutes before the transfer of power was revised downwards from 7.2 to 6.9.  Either way, its strength rivaled the Haiti earthquake.  It was followed by 3 large aftershocks shortly thereafter.  Apparently one person died, of a heart attack. For a worldwide seismic monitor map, depicting a the strength of earhquakes, click here.  For a photo gallery on the Chile earthquakes, here]

[In Spanish / En Castellano, traducido mecanicamente por computadora, aqui]

Traducción del artículo “Natural Disasters, National Diligence: The Chilean Earthquake in Perspective”, por D. Kaufmann y J. Tessada,  publicado en la página web de The Brookings Institution, el 5 de Marzo de 2010 (link).  El artículo en inglés también se encuentra en este espacio blog (here)…

El terremoto que afectó a Chile en la madrugada del 27 de Febrero nos ha entregado imágenes de profunda destrucción.  Además, la cobertura de los medios de prensa, a nivel internacional, ha mostrado escenas de saqueo y de ataques incendiarios ocurridos en los días y horas inmediatamente después del terremoto.

En Chile, la crítica a la respuesta del gobierno es generalizada. Muchos se preguntan cuántas muertes y daño se hubieran podido prevenir, si la respuesta del gobierno y los esfuerzos de rescate ante este terremoto hubiesen tenido la rapidez y eficiencia necesaria, y por qué el orden público se perdió luego de ocurrido el terremoto.

Las críticas se han enfocado en la inhabilidad de las autoridades centrales en enviar una alerta de maremoto a las localidades costeras, en la tardía y tímida reacción al desorden en las zonas más devastadas del sur de Chile (que es donde ha ocurrido la mayor parte de los saqueos), y la demora en el envío de materiales y víveres más esenciales.  [Aquí testimonio de un inocente sobreviviente del tsunami, en Iloca]

Nosotros sugerimos que cuando uno mira la magnitud del desastre natural y las características de gobernabilidad[1] de Chile en comparación a otros eventos, uno encuentra que a pesar de los serios errores el país ha respondido relativamente bien. En este artículo identificamos algunos errores en la reacción frente al terremoto, los cuales constituyen también oportunidades de reforma y mejora para Chile.

Desastres Naturales y su Costo en Vidas

La información entregada por el gobierno hasta el 5 de Marzo mencionaba 279 víctimas identificadas, pero el número final probablemente sea varios centenares mayor dado que existen víctimas no identificadas y la cantidad de gente desaparecida. Aún así, es muy poco probable que las víctimas lleguen a contarse por millares. Sin embargo, la muerte de cientos de compatriotas es profundamente dolorosa y enluta a un número aún mayor.

Pero debemos recordar que el reciente terremoto en Chile es mundialmente el quinto más poderoso en más de cien años, con una magnitud de 8,8 grados. Esto lo coloca en la infame lista de los mega-terremotos, lo que significa que fue cientos de veces más poderoso que otros terremotos que han ocurrido cerca de zonas pobladas en los últimos años, con la excepción de los terremotos ocurridos en Indonesia en los años 2004 y 2005.  [Monitoría Sísmica aquí]

Aún tenemos frescas en nuestras mentes las imágenes de destrucción en Haití, donde un terremoto de magnitud 7,0 causó la muerte de más de 220.000 personas. Más lejanos son los recuerdos de los terremotos de Pakistán el año 2005 (magnitud 7,6 y 86.000 muertos), México en 1985 (magnitud 8,0 y 9.500 muertos), Japón en 1995 (magnitud 6,9 y 5.502 muertos), Armenia en 1988 (magnitud 6,8 y 25.000 muertos), Turquía en 1999 (magnitud 7,6 y 17.118 muertos), o el caso algo más reciente, y dramático, de China el año 2008 (magnitud 7,9 y 87.587 muertos), entre otros. El número de víctimas en estos casos supera con creces la del reciente terremoto, como se puede ver en la Tabla 1 al fin de esta columna.

La pregunta de fondo entonces es por qué en Chile el número de víctimas no es mayor. El hipocentro del mega terremoto chileno fue relativamente profundo, ayudando a reducir en la superficie el efecto de la gran energía liberada. Pero no sólo el terremoto tuvo una larga duración, sino también el epicentro estuvo localizado cerca de zonas altamente pobladas. El resultado de esto es que al área afectada fue extensa, abarcando desde el sur de Chile donde está la segunda ciudad más grande del país, Concepción, hasta la capital Santiago en la zona central e incluso zonas más al norte.

Adicionalmente, el terremoto no solamente causó destrucción en la superficie, sino también generó un maremoto y una larga secuencia de réplicas, algunas de ellas de magnitud superior a 6,0.

Sin duda no es ningún consuelo para los que viven en Chile, pero si un desastre natural de esta magnitud hubiera ocurrido en prácticamente cualquier otro lugar del mundo uno hubiera esperado un número mayor de víctimas.

El Impacto del Terremoto: La Gobernabilidad Es Fundamental

La buena calidad de gobernabilidad de Chile tiene un rol importante en la baja cantidad de víctimas. Dos dimensiones de gobernabilidad son particularmente relevantes: la eficacia del gobierno (la eficiencia del sector público) y el control de la corrupción. A lo largo de los años diversas instituciones chilenas han sido eficientes en el diseño y adopción de mejores códigos de construcción y edificación, que han sido revisados con el tiempo, reflejando la experiencia de terremotos previos, las innovaciones tecnológicas en prevención y el mayor nivel de riqueza del país (en parte también relacionado a los buenos niveles de gobernabilidad).

Igualmente importante es el hecho que se supervisa y exige la aplicación de estas normas. Los medios han dado a conocer al mundo el caso de un edificio de departamentos que colapsó en Concepción y de otro en Santiago que fue declarado inhabitable por estar inclinado como la Torre de Pisa. Lo esencial es que estos ejemplos indican que las violaciones de los códigos (y potencialmente la corrupción) son probablemente casos individualizados y no sistemáticos.

Naturalmente, muchas estructuras tienen daños, especialmente, aunque no exclusivamente, construcciones de mayor antigüedad. Es cierto que hay una gran cantidad de gente damnificada o sin hogar en las zonas cercanas al epicentro, pero el número total de casas no fue diezmado y el número de víctimas ocasionado por colapsos de edificaciones no es enorme. De hecho, buena parte de las víctimas del terremoto habrían sido causadas por el maremoto.

Sin lugar a dudas, y como ha sido el caso después de otros terremotos, se obtendrán muchas lecciones al evaluar los daños y los códigos de construcción serán mejorados, pero el sistema existente en esta área si funcionó. 

Aún más, y a diferencia de los efectos devastadores que tuvo la corrupción en el sector de la construcción en otras ciudades afectadas por terremotos como en los casos de Turquía (donde muchos edificios residenciales nuevos colapsaron) y China (donde escuelas llenas de alumnos colapsaron), los bajos niveles de corrupción imperantes en Chile, en conjunto con instituciones efectivas, ayudan a entender la razón por la cual los códigos fueron efectivamente implementados.

Esta conclusión no es específica a los casos particulares que mencionamos, de hecho la evidencia empírica, como la presentada en el estudio de Kahn sobre los efectos de desastres naturales (publicación), sugiere que gobernabilidad y control de la corrupción son determinantes de la cantidad de víctimas. Una mirada a los terremotos más recientes, como se ve en la Tabla 1 al fin de este artículo, y a indicadores de gobernabilidad (medida como eficacia del gobierno y control de la corrupción) apuntan en esa dirección, tal como se ve en la Figura 1 aquí.

                                              . 

La Respuesta del Gobierno: Errores y el “Test de Gobernabilidad”

La preparación para enfrentar terremotos, simulacros incluidos, es parte integral de la educación de adultos y niños en Chile. Pero hubo serios errores en la respuesta inmediata a la crisis.

Primero, la alerta de maremoto fue manejada inadecuadamente por la unidad de la Armada responsable que no logró coordinarse con la Oficina Nacional de Emergencia (ONEMI). Pero incluso si la amenaza de un maremoto se hubiera identificado inicialmente por los organismos encargados, lo que de todas maneras no ocurrió, es poco probable que la información hubiera sido traspasada a tiempo a las autoridades locales. La razón es simple, el sistema de alarma descansa en el uso de teléfonos e internet, y estos estaban desconectados por la caída del suministro eléctrico.

Segundo, el gobierno reaccionó lentamente en la distribución de artículos esenciales a las ciudades sureñas más afectadas, en parte porque sin electricidad no podía evaluar las necesidades locales.

Tercero, enfrentado al dilema de enviar las fuerzas armadas para asistir en las tareas de ayuda y en la mantención del orden el gobierno titubeó, demorando la decisión –en parte por cálculo político y por una sensibilidad al uso de la fuerza a raíz de la experiencia durante el régimen militar. Los saqueos y los incendios si ocurrieron, y la prensa reportó ampliamente aquéllos incidentes.

Después de los retrasos durante los primeros días, el gobierno central, mejor organizado, con más información y mayor decisión, ha hecho fluir la ayuda hacia las zonas afectadas, entregando provisiones de emergencia y restaurando el orden público.

Estos errores, aunque serios, también deben ser puestos en perspectiva. La perfección es imposible de alcanzar en una situación de crisis de esta magnitud y complejidad, con miles de decisiones críticas que deben ser tomadas de manera coordinada por un gran número de personeros geográficamente separados en un breve período.

Por ejemplo, equivocaciones más serias ocurrieron en Estados Unidos durante la respuesta al Huracán Katrina en Nueva Orleans. Más de 1.800 personas murieron y decenas de miles quedaron atrapadas por días peligrosamente en sus hogares inundados, estadios y centros de convenciones. Los saqueos, la violencia y el desorden aparecieron y duraron hasta el tardío arribo, casi una semana después, de 40.000 tropas para asegurar el orden. 

Hoy en día la ciudad tiene apenas dos tercios de su población antes del huracán. Esta cadena de equivocaciones ocurrió en un país con un gobierno que es generalmente eficaz. Pero también serios errores se cometieron en la evaluación y mantención de las defensas fluviales antiguas, la evacuación de los habitantes, en el acopio de provisiones y víveres antes del huracán, y en la coordinación de las tareas de rescate y recuperación después del huracán.

Como podemos ver en la Figura 1 (arriba), Estados Unidos tiene altos niveles de control de corrupción; aunque en Estados Unidos, Nueva Orleans no era conocida como un gran ejemplo de probidad. Una conclusión de esta breve comparación entre Chile y Estados Unidos es que errores serios ante crisis ocasionadas por desastres naturales no son necesariamente signo de subdesarrollo. Tampoco lo son los disturbios.

El verdadero “test de la gobernabilidad” reside en la habilidad y flexibilidad de las instituciones para enfrentar y corregir los errores. Aún es temprano para tener los primeros análisis cuando aún se está en medio de la operación de rescate y ayuda en Chile. Sin embargo, la evidencia ya es promisoria y consistente con buena gobernabilidad: se han reconocido errores, que están siendo corregidos y se han potenciado las capacidades ya existentes. El resultado es la recuperación de cierta calma al aumentar la ayuda y asegurar el orden.

Otro componente crucial del test de gobernabilidad, son las reacciones e iniciativas a nivel local. Los esfuerzos heroicos de personeros de los gobiernos locales, líderes locales y pobladores a menudo no llaman la atención de las cámaras de la misma manera que un edificio en llamas, una tienda saqueada o una construcción derruida. Estos esfuerzos terminan muchas veces siendo anónimos y desconocidos, pero son fundamentales complementando y, a veces, sustituyendo los esfuerzos del gobierno central. Un excelente ejemplo de estos esfuerzos son los casos de oficiales locales en poblados costeros, que megáfono en mano lograron impartir las instrucciones de evacuación inmediatamente después del terremoto, reemplazando de esta manera el “sofisticado” sistema de alarma.

Desafíos de Gobernabilidad para Chile

En estos momentos es claro que la prioridad debe ser el envío expedito de ayuda, de manera decidida, coordinada y focalizada. Sin embargo, es importante empezar a planificar para la fase de reconstrucción.   

Relativamente hablando, Chile está en buena posición para este desafío por sus buenos niveles de gobernabilidad. En clara diferencia con Haití, no requerirá de un enorme programa de ayuda internacional (aún cuando requerirá de ayuda técnica y de equipamiento focalizada de otros países), ni tampoco requerirá la creación de grandes instituciones nuevas (particularmente, no serán necesarias instituciones manejadas por extranjeros).

La resistente economía chilena y un desempeño macroeconómico estelar, garantizan la existencia de espacio para financiar un esfuerzo de reconstrucción,  que requerirá miles de millones de dólares sin tener que depender excesivamente de financiamiento a través de deuda (o de fuentes inflacionarias). Aún más, se espera que el dinámico sector privado juegue un rol fundamental.

Durante la reconstrucción será importante aplicar las lecciones aprendidas durante este terremoto, tales como la necesidad de mejorar el sistema de alerta de maremoto, asegurar suficiente respaldo en caso de fallas en electricidad y establecer un sistema de comunicación de emergencia, y determinando ubicaciones a lo largo del país para recursos humanos y depósitos de materiales.

También puede requerirse aplicar las lecciones acerca de los estándares para ciertas edificaciones, como reforzamiento de estructuras antiguas y hospitales. Y el moderno y transparente sistema de compras y licitación del Estado será testeado por la magnitud y la urgencia de los proyectos de infraestructura que serán requeridos. También se requerirá de medidas, y fiscalización de de la sociedad civil, para atenuar el riesgo de captura por parte de firmas poderosas, el cual se incrementa cuando hay aumentan el número de contratos más atractivos.

Hay desafíos más generales también que deben ser atendidos. Entre las instituciones, tanto Carabineros como las fuerzas armadas necesitan algunas reformas y modernización. Y medidas que generen al menos un mínimo de descentralización deberían ser consideradas dada la experiencia reciente.

Aún más generalmente, los saqueos y ataques incendiarios son un poderoso recordatorio de que existen tensiones que pueden ser explosivas, inherentes a una sociedad con alta desigualdad. De hecho, los niveles de criminalidad aparecían dentro de la lista de prioridades en cuanto a desafíos de gobernabilidad, lo que responde en parte a la necesidad de profesionalizar aún más a Carabineros, a la desigualdad social y económica y a los bajos niveles de empleo entre los más pobres. Los enormes procesos de reconstrucción y de generación de empleo que se necesitarán en el sur de Chile ofrecen una oportunidad para intentar responder a estos desafíos pendientes.

De hecho, un desastre natural tan trágico como éste puede transformarse en oportunidades para que Chile emerja tanto o más fuerte que antes. Un buen liderazgo es y será crucial.

                                                           ***

Many are wondering whether numerous deaths and severe destruction could have been prevented; whether the government’s emergency response and rescue to this natural disaster was speedy and effective; and why law and order broke down in the earthquake’s aftermath.

Criticism has focused on the failure by the central authorities to alert coastal populations of the impending tsunami, its delayed and timid reaction to unrest in the most devastated region in the south (where most of the looting has taken place), and its slow initial distribution of essential supplies.

By providing a comparative perspective that considers both the magnitude of the natural disaster and Chile’s governance characteristics, we suggest that in spite of some important mistakes Chile has thus far fared relatively well. We identify selected shortcomings, which present an opportunity for further reform and progress in Chile.

Natural Disasters and the Death Toll

As of March 5, the Chilean government had confirmed 279 identified victims, although the death toll is likely to increase by the hundreds considering many have not yet been identified or are deemed missing. Yet the death toll is highly unlikely to reach thousands. Nonetheless, the tragic death of hundreds of people is enormously saddening and brings grief to many others.

Yet, the Chilean earthquake was the fifth strongest quake for over a hundred years, measuring 8.8 on the Richter scale. This propels it to the nefarious elite “mega-earthquake” league, which means that it was hundreds of times stronger than other earthquakes near populated areas in recent years, with the exception of the 2004/5 Indonesian earthquakes. [Global Seismic Monitoring here]

Fresh in our minds are the images of recent disaster in Haiti, with an earthquake magnitude of 7.0 and a death toll of over 220,000 people. More distant are the memories of earthquakes in Pakistan in 2005 (magnitude of 7.6; 86,000 dead), Mexico in 1985 (8.0; 9,500), Japan in 1995 (6.9, 5,502), Armenia in 1988 (6.8; 25,000), Turkey in 1999 (7.6; 17,118), or more recently the infamous earthquake in China in 2008, (7.9; 87,587), among many others.  The death toll in these cases far surpasses that of Chile, as seen in the Table at the bottom of this article.

The real question then is why the death toll in Chile is not vastly larger. Chile’s mega-earthquake was relatively deep, which may have partially mitigated its monstrous force at the surface.  Not only did the earth shake for a long time, but the earthquake’s epicenter was also very close to several highly populated centers. 

As a result, a vast area was affected—from the south where Chile’s second largest city, Concepción, lays very near the epicenter, to Santiago at the country’s center and further north.  And additionally, not only did the earthquake cause massive surface destruction, it also triggered a tsunami and numerous and severe aftershocks (often exceeding a magnitude of 6).

It may be of little consolation for those in Chile, but when a natural disaster of this magnitude hits, the number of expected deaths would have been vastly higher in most other countries.

Earthquake’s Impact: Governance Matters

Chile’s good governance played a significant role in limiting the death toll resulting from this earthquake. In particular, two dimensions of governance stand out—government effectiveness (the efficacy of the public sector), and control of corruption. Over the years, Chile’s effective institutions succeeded in designing and adopting better building codes, which have been periodically upgraded, to take into account previous earthquake experience, innovations in preventative technologies and the country’s growing wealth (made possible in part by good governance).

Equally noteworthy is that these building codes are enforced. The media has brought to international public knowledge a new high-rise that has collapsed in Concepción and an apartment building near Santiago that has been rendered inhabitable since it is leaning more than the Tower of Pisa.

Notably though, these examples indicate that non-compliance with building codes (and possibly corruption) is likely individualized, rather than systemic. Naturally, there are many damaged structures, particularly (but not exclusively) those built long ago.  Even though there are many people close to the epicenter who are now homeless, the overall stock of houses was not decimated and the number of fatalities due to buildings collapsing was limited. In fact, a very large portion of deaths resulted from the tsunami instead.

Undoubtedly, as with past earthquakes, lessons will be drawn from damage assessments and building codes will be improved; but overall the existing system did work. In contrast with the devastating effects that corruption in the construction sector had on the cities affected by the earthquakes in Turkey (where many new residential buildings collapsed) and China (where many schools full of pupils collapsed), the low levels of corruption in Chile, coupled with effective institutions, help explain why building codes were largely enforced.

More broadly, empirical evidence, such as that presented by an academic article by Mathew Kahn on natural disasters, suggests that among other factors, governance and corruption control are determinants of the death tolls. A review of recent earthquakes, as shown in the more detailed Table at the bottom of the article, and of the quality of governance (in terms of governance effectiveness and control of corruption) is also suggestive, as depicted in this Chart here, exhibiting two of the WGI’s Governance Indicators for some countries.

                                                .                                                                                                                                       

Government’s Response: Pitfalls and the “Governance Test”

Advance planning for earthquakes, including training drills, is an integral part of adult and child education in Chile. In terms of immediate crisis response, however, serious mistakes occurred.

First, the tsunami alert was mishandled apparently by a responsible unit in the Navy, which failed to coordinate with the national emergency office. Even if the tsunami threat would have been identified in a timely fashion by the responsible authorities (which it was not), it is unlikely that the information would have been relayed in time to the affected localities. This is because the warning system relied on the internet and telephony, both of which were disabled during the power grid failure.

Second, the government was initially slow in dispersing essential supplies to the most afflicted cities in the south, partly due to its inability to assess local needs as a result of the power failure.

Third, the government hesitated and delayed the deployment of the army to assist in the relief effort and to maintain law and order—partly as a result of narrow political calculations and latent sensitivity to the use of armed force given the memories of the Pinochet regime. Looting and arson did take place in some localities, while the press widely reported those incidents that did occur.

After these initial delays in the first few days, the central government, armed with better organization, more information and increased decisiveness has streamed help into affected areas, providing emergency supplies and restoring law and order.

The mistakes made, while not trivial, need also to be put into perspective. Perfection is wholly unrealistic in any crisis situation of this magnitude and complexity, where thousands of critical decisions and steps need to be taken in a coordinated fashion by many officials in disparate locations and in a very short period of time.

For instance, more serious blunders occurred during the U.S. response to 2005 Hurricane Katrina in New Orleans. Over 1,800 people died and tens of thousands were perilously stranded in their flooded homes, stadiums and convention centers for days. Looting, violence and disorder erupted and lasted nearly a week until 40,000 troops arrived belatedly to restore law and order. Today the city has only about two-thirds its pre-Katrina population.

This serious string of mishaps took place in a country with a generally effective government. Serious mistakes were made regarding the evaluation and maintenance of the old levees, the evacuation of citizens, availability of sufficient stocks of supplies before the hurricane, and in the coordination of rescue and recovery efforts in its aftermath.

As we observe in the chart, the U.S. also exhibits high levels of control of corruption; although within U.S. cities, New Orleans has not historically been known for excelling in probity. A corollary of this comparison between Chile and the U.S. is that a serious mistake by the government in times of a sudden crisis brought by a natural disaster is not a symptom of underdevelopment. Neither is the eruption of riots.

The real “governance test” is the ability and flexibility of a country’s institutions to address and contain crisis, which does include learning and acting quickly to address and correct mistakes.

In the ongoing rescue and relief operation in Chile, it is obviously too early to have a definitive assessment, but the evidence is already encouraging, and consistent with good governance:  while building on its strengths, the government has already acknowledged mistakes made and has been moving decisively to correct them. As a result, some modicum of calm is being restored as relief efforts are broadened and order is restored.

Another crucial component of the “governance test” is the local-level response. The heroic efforts by many local government officials, community leaders and villagers often do not entice the TV cameras the same way that a building ablaze, a looted store, or a collapsed structure does. 

Those good deeds may go largely untold and uncounted (as of yet), but they do play a key role in complementing, and at times, supplanting the central government’s efforts.  A powerful example was the life-saving efforts by local officers in some coastal towns who blared evacuation instructions through bullhorns once the earthquake struck, supplanting the failed “sophisticated” tsunami alert from the center.

Some Governance Implications for Chile

Clearly right now the priority ought to be the continued expediting of the relief effort in a decisive, well-coordinated and targeted fashion. Yet, it is important to start planning for the reconstruction phase as well.

Relatively speaking, Chile will be well positioned for that challenge given its high level of governance. In sharp contrast to Haiti, it will not require a massive international aid effort (although it will require targeted technical and equipment support from other countries), nor will it require the inception of major new institutions (and particularly no foreign-driven institution will be needed).

And while the reconstruction funding needs will be very large, in many billions of dollars, Chile’s resilient economy and stellar macroeconomic discipline gives it substantial headroom to fund this reconstruction without excessive reliance on debt (or inflationary) financing. Further, the dynamic private sector is expected to play a pivotal role.

In the reconstruction effort, it will be important to apply the lessons learned and mistakes made during this earthquake, such as in improving the tsunami warning system, ensuring sufficient backup power and establishing emergency communication systems, and designating strategic locations for crucial human resources and supply stocks around the country.

Applying lessons regarding standards for some types of construction, such as in the reinforcement of older structures and hospitals, may be required as well.  And Chile’s modern and transparent procurement system will now be put through a major test given the scope and urgency of the upcoming infrastructure investments that will be required.  Yet measures will need to be in place, including particular monitoring from civil society, so to mitigate the risk of capture by powerful private firms, a risk whenever there is a surge in large lucrative contracts.

There are also broader challenges that will need to be addressed. Among institutions, the police and the army may need to be reformed and modernized. A move toward some modicum of decentralization and devolution of central authority ought to be considered in light of this experience.

And more generally, the looting and arson is a potent reminder of the potentially explosive socio-economic tensions inherent in an unequal society. In fact, among pre-earthquake governance challenges in Chile, consistently common crime would top the list, which in part is due to an insufficiently professionalized police force, and in part the result of socio-economic inequalities and under-employment among the poor.  The massive investment and job creation effort that will be needed in Chile’s south may offer a unique opportunity to also tackle these pending challenges.

Indeed, a tragic natural disaster such as this can also become an opportunity for Chile to emerge even stronger and more equal. Leadership is, and will be, key.

                                              .

Note:  This entry originates from a Brookings Op Ed Commentary article, written jointly with Jose Tessada, also at Brookings.  

Este artículo esta en castellano (aquí).   This article is also in spanish (here).

Country 1: Its approach to industrialization has relied heavily on a very large public sector that accounts for well over 40 percent of GDP, and on aid financing from richer countries. The country has no fiscal discipline, running a deficit exceeding 13 percent of GDP. Rather, leaders have focused more on ensuring adequate compensation for civil servants and providing a generous social safety net, including retirement at a young age. And transparency and integrity have not been a top priority, contributing to high corruption. This financial mis-governance has resulted recently in the downgrading of their sovereign risk ratings by commercial risk rating agencies.

Country 2: Like Country 1, it also has had numerous governments from the left-of-center; but in contrast, it pays attention to good governance, anti-corruption, and integrity. The state owns some of the country’s large corporations and commercial banks. It has also focused on improvements in health, education and poverty alleviation. Further, fiscal discipline is prioritized more highly than in Country 1 (even if that is not saying much). Consistent with its strategy, the country instituted a very aggressive and generous fiscal stimulus plan during the global crisis, which amounted to over 2 percent of GDP…

Country 3: Like Country 2 (but unlike Country 1), it emphasizes governance and integrity. But unlike the other countries, it promotes free trade, openness, competition, FDI and global competitiveness, as well as private ownership (including pensions and schools). It pursues a very conservative macroeconomic policy—in fact fiscal responsibility is enshrined in law. Moody’s, the commercial risk-rating agency, upgraded its sovereign debt ratings last year in the midst of a global financial crisis…

There are two ways to classify these three countries. One option is to classify them by their ideology-in-government: the first two countries pursue left-of-center polices, while the third pursues policies that are right-of-center. The second option is to classify these three countries according to their institutional quality/governance: while the second and third countries have good governance, the first has weak governance.

So, which countries are we depicting here? The first is Greece, and both the second and the third are actually the same country—Chile—during the past two decades.

Greece’s deteriorating performance on governance is depicted here, while Chile’s performance, compared with Greece, is depicted below. The results motivate us to challenge conventional wisdom about global development and governance. Let us focus briefly on six particular myths:

Myth 1: Initial conditions and external factors determine governance outcomes. Wrong. The contrast between Greece and Chile demonstrates the importance of domestic factors and cautions against exaggerating external factors and initial conditions. Greece’s history, its location, EU membership and aid received all provide favorable initial and external conditions for the emergence of strong institutions. In contrast, Chile’s geographical location and geological faults (and not belonging to the EU), points to less auspicious initial and external conditions.

Yet, Chile has stronger governance and thus pursues better policies. More generally there is growing evidence that concurrent domestic factors are highly significant determinants of country success, initial conditions, history, and external factors notwithstanding. Unfortunately, historical and cultural determinism, as well as external factors, are often used to excuse countries’ failures. Similarly, many continue to believe that large (and often indiscriminate) infusions of external financial assistance will make help countries achieve development outcomes and sustained growth.

Myth 2: Economic ideology still matters. Not very much. The riddle about Chile at the outset may have suggested the existence of two countries (originally in the FT) pursuing different economic policies. However, Chile is an example of one country simultaneously implementing market-led strategies, macro-economic discipline, and progressive social policies with a substantial state role. In Chile nowadays, basic principles of good governance dominate tired ideological divides.

For two decades, left-of-center governments in Chile have successfully implemented hard-nosed and conservative economic reforms, coupled with strong social programs and poverty alleviation, showing that we can transcend ideological divides. There is a consensus among the recent generation that macroeconomic stability, economic efficiency, poverty alleviation and good governance are not substitutes for each other but can be integrated together, and that they are key to achieving sustained growth and development. Disagreement about details on the role of the state vis-à-vis social programs and some regulations may persist across the main political coalitions, but they do so at the margin.

Myth 3: In today’s globalized world, states no longer matter; the focus ought to be on regions and global institutions. At least not for a while. Both Greece and Chile illustrate the dangers of focusing excessively on global and regional governance at the expense of national-level governance. Also, they illustrate that regional generalizations are misleading. Denmark and Greece may both be members of the EU, but they are light-years apart in terms of governance, for instance. Likewise, generalizations about Latin America are not telling.

Myth 4: The quality of a country’s governance is not as important as other factors in determining its long-term success. Wrong. The evidence to the contrary is substantial; including the research work that has been done showing that improved governance is a crucial and causal determinant of sustained growth and socio-economic development. We have found that on average there is about a 300 percent development dividend for good governance: a country that substantially improves, say, the effectiveness of its government, rule of law, and/or corruption control, can expect a tripling of its per capita income in the long run. In the case of Chile, for example, such tripling in per capita income, and enormous reduction in poverty, has taken place over a couple of decades.

Myth 5: Good governance is a luxury good. Not at all. Higher incomes or financial resources cannot ”buy” good governance. The contrast between Greece and Chile also shows that a country’s membership to the ”rich” nations club is not an assurance of sustaining good governance, or of high integrity and strong leadership. Conversely, mis-governance and corruption are not synonymous with emerging and developing economies. There is enormous variation in the quality of governance across neighboring emerging economies and developing countries.

Myth 6: One fights corruption by “fighting corruption:” creating more Anti-Corruption Commissions and redrafting laws and regulations. Not really. Many Anti-Corruption (A-C) strategies are ill advised, focusing on A-C campaigns, new A-C commission, and redrafted A-C laws (which lack enforcement). Instead, as in Chile, the focus ought to be on improving institutions and governance more generally, both on the supply side (e.g. procurement, civil service, financial management) and on the demand side (democratic accountability and integrity of elections, free press, civil society and private sector involvement). Notably, while Chile’s efforts have contributed to its low-level corruption (see chart comparison with Greece), it lacks an A-C Commission. Good governance is not embedded in particular anti-corruption commissions (there is none), rather it is embedded in the core institutions of the state.

Challenging these myths about governance and growth result in a few reflections.

The good news is that no country is a prisoner of its history—yes, history, culture and external factors do matter, but they are not the main determinants of country success. Having strong leadership, good governance, and adequate reforms makes a huge difference.

The challenging news is that while countries may not be prisoners of their past, they do have to be active stewards of their future, which implies hard and continuous efforts to improve institutions, governance, civil society activism, transparency, and leadership. These are not merely technocratic solutions but deeply political phenomena.

Lastly, let us conclude with a reminder of the ”Chilean Miracle,” a common description of Chile’s achievements. Over the past decade, Chile’s poverty rate has declined from 44 percent of the population living below the poverty line to 12 percent. The country just joined the ranks of the OECD. It routinely ranks in the top 20-30 countries in the world, not only in terms of governance and anticorruption but also in global competitiveness, contrasting Greece, for instance, whose global competitiveness index ranking has deteriorated from 47^th in 2006, to 71^st in 2009 among 134 countries ranked in 2009 by the World Economic Forum.

And in terms of corruption control, for instance, Greece rank position in last year’s WGI was 82, while Chile’s was 28 (out of 208 countries we measure).  Surely there are challenges ahead in Chile, but these enormous accomplishments are real. Yet describing them as a “miracle” is misleading; they are after all not acts of God, but of the people and their leaders.

And on a somber note, the tragic earthquake in Chile over this weekend brings these issues to the forefront. The catastrophic mega-earthquake, of a magnitude of 8.8 on the Richter scale (or hundreds of times more powerful than other major earthquakes over the past 20 years, and the fifth most powerful since records have been kept) may have taken the lives of about a 1,000 people. Every single death is painful; yet, if this figure roughly stands it would constitute a very tiny fraction of the numbers that perished in recent and less powerful earthquakes elsewhere. This is not a “miracle” either.  Chile’s good governance has made a difference.

While imperfect, this institutional environment is homegrown resulting from hard work. And Chile will not require a massive international aid rescue effort. Greece will.

Note: this entry is an abridged version of the opening keynote presentation that I gave at the “Policy Forum Armenia’s Conference on Armenia-Diaspora relations”, held at the Cosmos Club in Washington, D.C., last night, Sunday February 28th, 2010.

In that commentary I mention that it could be argued that the system did not fail, but that Amy Bishop broke the law by obtaining and carrying a gun illegally in the Alabama campus.  The problem with this argument goes beyond the simple fact that the gun that killed her own brother 24 years ago was actually a ’legal’ one (so in one lethal incident it was illegal, in the other one it was legal).  The more fundamental challenge touches on the ubiquity of guns and thus on basic supply and demand economics… 

The statistics pointing to a mammoth number of firearms among civilians, in the streets, and under them, are inescapable. It is estimated that there are close to 300 million guns in America today.  The difference between accessing a gun legally (which is commonplace) or illegally (also commonplace) comes down to the price mark-up difference (and transaction costs at the margin, although it is not impossible to order extralegal guns online).

The rate of gun possession per capita in countries like Canada, Denmark, England, Ireland or Japan are a very tiny fraction of that in the U.S. In England, for instance, there are about 6 guns per 100 residents, in Chile and Denmark about 12, in Canada 31, while in the U.S. there are about 90.  And the rate of killings resulting from guns in America (32 per million population per year) is a multiple of that of other countries (1.6 per million in England, 2.6 in Denmark, 4.6 in Canada), as seen in this table (click it to enlarge).  Further, there seems to be no compelling evidence that when gun laws are more stringent, there is a substitution to other weapons that kill.

In today’s political system where lobbying and vested interests by powerful minorities play a prominent role, it is unlikely that the anytime soon the U.S. will enact stringent gun laws aligned with those of other modern societies.  

In fact, last Friday, the same day of the University of Alabama murders, the Virginia House of Delegates approved a bill that allows people to carry concealed weapons into bars (as long as they do not drink), and a few days later it repealed a 17-year old ban on purchasing more than one handgun a month.  This further permissiveness in the purchase and concealed transport of guns is taking place in the very state where less than three years ago the worse peacetime massacre in U.S. history took place, on or off-campus, at the hands of a lone gunman at Virginia Tech.

Finally, the following story in today’s Washington Post tells us what is about to take place in a couple of days:  “The federal government will lift long-standing restrictions on guns in national parks Monday, meaning that visitors with proper permits could pack heat along with camping and picnic gear to most of the 392 parks…” 

Jim Wesberry, a former USAID official and development expert,  pointed out this developing story about carrying guns in national parks (calling it ‘the latest fiasco in point”), in his astute commentary (here), where he explains the “U.S. very difficult historical and constitutional problem with gun control.  At the country’s founding privately owned guns were considered indispensable for both personal protection and readiness for militia participation in defense of the nation…”     

He then mentions that:  “Now we are faced with two great problems: (1) modern rapid fire arms capable of massacring multitudes of persons in minutes, and (2) life’s complexity and pressures causing many persons to lose control of their temperaments and use guns in the process.

Points well taken.  I would add that the historical rationale for civilian guns centuries ago obviously needs revisiting, since nowadays there are solid public institutons other than militia and private individuals that provide national defense and personal protection.  In 2010, three hundred million civilian guns do not contribute an iota to national security, and on balance they threaten personal safety.

My guess is that soon to follow will be psychological profiles of her, and then various analyses of the possible links between decades-long of lofty and often lonely intellectual pursuits, on the one hand, and longstanding mental health challenges that may have gone undetected or unaddressed, on the other.  For now, some reports may superficially state that she ’snapped’ during the Faculty meeting.  But the reporting so far misses another huge challenge altogether, totally absent in the reporting by the New York Times and other main outlets: Amy Bishop had walked into the Faculty meeting, and sat quietly for a long while during its proceedings, with a fully loaded gun.

It is as if such ease of access to guns, and ability to carry them undetected (or detected?), even by high powered scientist professors in university campus, is simply taken for granted nowadays in the U.S.  This is in sharp contrast to other industrialized (and many emerging) countries around the world today.

Of course, people kill other people.  But guns also do the killing, by being so effective in translating a fallible human intent into lethal outcome.  Even in the presence of an evil thought, or even intent, it is much more difficult to perpetrate the killing (and particularly multiple killings in a single incident) without easy access to a gun, and without freely moving around carrying a loaded weapon ready to kill at a snap.

Assume hypothetically that the same Amy Bishop, after obtaining her Harvard Ph. D., would have been offered a teaching position in a European university, which, say, years later, would have also have denied her academic tenure, following the same process and rationale as in the case of the University of Alabama (however unfair it may have been, or not).

Under such scenario, the probability of her having inflicted as much lethal damage over a whole academic department would have been much lower, mostly because it may have been so much more difficult to obtain and carry weapons with such ease.

Further, it may be the case that in another country (or University?) they would have also been effective in doing background checks at the time of giving her a job offer in the first place.  If that would have been done, perhaps a job offer may not have been denied, but certainly it would have warranted a special watch (and lifelong ban) for Amy Bishop to ever get close to a gun.

I say this because we are now finding out that in fact Professor Bishop had fatally shot her own brother in Massachusetts over two decades ago.  The killing of her brother long ago may have been regarded an ‘apparent accident’ (story here).  But, accident or not, it is very telling and significant that with such known antecedent in a police record she could so easily have had access to a gun — and carry it freely on campus in Alabama.  It emerges that guns may have been commonplace in her home as a youngster in Massachusetts as well.

However politically incorrect, this horrible incident is another illustration of the extent of the damage that continues to be inflicted on society by the anachronistic misunderstanding of the 220-year old Second Amendment to the U.S. Constitution ‘protecting the right to keep and bear arms’.  Amy Bishop was keeping and bearing arms decades ago in Massachusetts, and now in Alabama, inflicting mighty damage with a gun each time.

Unfortunately, in today’s political system where money in politics and vested financial interests by powerful minorities play such a prominent role (and where lobbying groups such as the NRA can wield such disproportionate power over lawmakers), the short term likelihood of the U.S. enacting gun ban laws that are aligned with modern societies is not high.  However, this ought not deter a continuation of a vigorous and frank debate on this thorny issue, and the rise of the voice by civil society applying counter pressure to reverse such misrule of law.

[ Postcript:  the post above was quickly written very shortly after the news on the killings broke out.  Subsequently I expanded on some of these issues, and an expanded piece appeared at Brookings as web-ed commentary, here.   Such opinion piece also includes a comparative statistical table (here) on gun ownership and gun homicides across a dozen countries, which suggest the extent of the pending challenge in the U.S. ]

In today’s longer opinion piece at Brookings on this Toyota SUA issue (here), I argue that the complex politics in the relationship between the industry and the government regulator, and between the industry and Congress, require a much deeper look and merits particular monitoring by public interest groups and the media.  Further transparency measures and timely disclosure of data and financial interests are also needed…

Just like it was wrong to address the fundamentals of the banking crisis by only looking at technical mistakes by bankers and policy-makers (and undue focus on narrow technocratic solutions), it would also be a mistake here to focus merely on a quick ‘mechanical pedal fix’ by Toyota.

Strengthening regulatory agencies, which ought to be better protected from political influence and capture from industry, is an important objective if serious future mishaps are to be avoided.  And the broader dilemma of of the nefarious effect of money in politics and how legislators can be unduly influenced by the powerful few cannot be ignored either, however thorny the challenge of making progress in this area may be.