NIGHT OWL
Anna Mae Yu Lamentillo
It was a Wednesday afternoon and we were about to discuss a case study on Ronald MacLean Abaroa — the first democratically elected mayor of La Paz in four decades. This was at a time when Bolivia was considered the poorest nation in South America and was suffering from the world’s highest inflation — an annual rate of roughly 24,000 percent in 1985.
What was rather surprising was the fact that in the middle of the discussion, Prof. Matt Andrews - our faculty chair — called on a man in an ivory coat seated at the back of the classroom and introduced him as the mayor who initiated reforms on La Paz’ corruption-ridden bureaucracy. It was Ronald MacLean Abaroa himself.
The instruction was simple — proceed with the discussion as if the mayor was not there, ask him of his policy choices and criticize him if necessary. It asks us to re-examine public sector reforms via a Problem Driven Iterative Adaptation (PDIA) approach — one which stipulates that a successful reform is motivated by a problem rather than a promise of solution.
In this paradigm, the problem is clearly identified at the start of reform and promotes an “appetite for change” rather than an “implementation of solution.” It deviates from the solution and leader driven change which purports — that successful reform is implemented according to a specified plan of action.
Prof. Andrews has repeatedly said that an examination of prior reforms would in fact suggest that successes are the exception rather than the norm. He calls them “positive deviants” and purports that reform “emerges through a process of experimentation as agents find and fit content to context.” The case of La Paz employed such strategy.
When Mayor Abaroa assumed position — he pledged to make “institutions work.” But while he knew there would be some problems, he did not realize “how deteriorated the situation was.”
“There was no information . There was no balance statement, no income statement, no budget figures. We were operating in total darkness,” Abaroa narrated.
“The city collected over 100 different local taxes and fees. The entire city was hugely over-regulated. We could not pay the salaries of the city hall’s 5,000 employees,” he added.
Mayor Abaroa then turned for help to Robert Klitgaard, a political scientist he met while studying at Harvard. After mapping out the problem — they realized that it was not “inefficiency” but “systemic corruption” that was causing the problems at the city hall. In order to combat such, he followed a basic formula which purports corruption as equivalent to monopoly plus discretion minus accountability.
First, he deregulated and promoted transparency in the issuance of permits and licenses by instituting a single registry of all the transactions and isolating clients from agents handling the permits. Second, he simplified the taxing system by cutting the number of taxes from 126 to 7 and by re-constructing the process by which payments are made directly to the banks. Third, a merit system was established in the employment process and youth employees were integrated into the system. Fourth, procurement process was shortened by about seventy percent.
As a result of the reforms, revenues soared, investment in public works increased by about ten times, international creditworthiness was established and Mayor Abaroa was re-elected four times. Sometimes, he said — it is important to “map a parallel universe” — to look at the same street, the same people, more intently.