Reforms without political power fail / Reforms despite differences in governance and government are doomed to failure / 8 commands for breaking through deadlocks in economic reforms

According to Khabaronline News Agency, Mohammadreza Dadgostar, a public policy researcher, has published a summary of the mentioned book. From Dadgostar’s perspective, the research by William Thompson and Robert Price indicates that structural reforms without an “explicit electoral mandate,” “smart storytelling about the costs of maintaining the status quo,” and “internal governmental cohesion” reach a deadlock. Contrary to common belief, these authors argue that bold and honest reformers are not necessarily penalized electorally; rather, the main threat is rushing decisions and lacking independent analytical institutions to gain public trust. Dadgostar’s article follows below:

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In their book “The Political Economy of Reform,” William Thompson and Robert Price examined the experience of economic reforms in pension systems, labor markets, and commodity markets in OECD countries such as France, the United States, Spain, Sweden, Mexico, Poland, and Australia. They demonstrated that the success or failure of reform policies is rooted more in issues of political economy than in technical factors. According to Thompson and Price, the most important policy lessons learned from the reform experience in these countries are as follows:

Mohammadreza Dadgostar

1. Reforms without a “political mandate” do not last: Major structural reforms (pensions, labor market, and deregulation) must have been proposed in advance in elections or the government’s official agenda. Quiet and hidden reforms only work when their benefits are very quick and tangible (which is usually not the case). Reforms implemented solely based on justifying the current crisis will easily revert after the crisis passes. If a reform is painful, public consent for its implementation must be obtained beforehand, not justified after implementation.
2. Policymaking without public narrative fails: The most successful reforms were those where the government managed to make the costs of maintaining the status quo understandable to society. The important point is that the costs of the status quo are often “invisible” (such as lost opportunities or jobs never created). In contrast, the costs of reforms are highly visible (protests, temporary unemployment, or pressure on specific groups). The conclusion drawn by the authors is that a successful reformer is one who can highlight the damage of inaction in a political and social manner.
3. Good technical analysis is a tool for political power: Analysis is not just for stating that a policy is good. Analysis must make the policy implementable. Analysis must come from credible, independent, and non-partisan institutions to strengthen public trust. Countries with reliable analytical institutions (such as independent commissions or councils) implemented deeper reforms.
4. Haste is the enemy of structural reforms: Successful reforms typically involved more than two years of political and expert preparation. Rushed reforms (often in reaction to a crisis) either failed or remained incomplete. The window of opportunity is important, but using it without preparation yields adverse results.
5. Government cohesion is more important than parliamentary power: A government internally divided over reform is almost doomed to failure. Government cohesion is more important than the size of the parliamentary majority. The authors state that internal governmental conflicts must be resolved before entering the reform phase.
6. Social dialogue is useful but does not replace leadership: Stakeholder participation works when the government simultaneously has the power and will to enforce decisions. The government must either be able to offer incentives or pose a credible threat of unilateral action. Consensus building without power usually leads to deadlock.
7. Not all political systems are equally ready for reform: Reform becomes possible when the existing system has already undergone attrition. Major reforms often become possible after a series of small, even failed, reforms. Policymakers should consider unsuccessful reforms as part of the path, not the end of the road.
8. The myth of electoral punishment for reformers is exaggerated: Contrary to popular belief, governments that implemented reforms with an electoral mandate were often re-elected. It can be concluded that the political fear of reforms is overly exaggerated.