Kuwait Sustainability: Society in a Rentier Economy (2/2)
06 Feb. 2020
kuwaiti-economy
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An argument that Kuwait’s corruption and governance problems are rooted in a wider macroeconomic dilemma requiring structural solutions.
The dilemma, gentlemen, is not merely moral, social, political, or religious. It is, in itself, an economic dilemma from which negative effects branch into all the fields previously mentioned. If we continue to rely on laws that lack sound economic foundations, we will not find logical solutions to this problem. Political reform is undoubtedly necessary, but it may not serve the public interest if it fails to recognize the correct economic direction. Over decades, that would produce a poor system resembling the one we witness today in underdeveloped countries.

We must first address the relationship between microeconomics and macroeconomics. Microeconomics studies human behavior in relation to the scarcity of individual needs. Macroeconomics studies the behavior of the microeconomy in relation to the state economy as one whole. From this, we understand that human behavior is shaped by conditions within the microeconomy, which themselves are the result of higher-order conditions within the macroeconomy. Each field, of course, has its own theories. The relationship between them requires some practical discipline. It is self-evident that a macroeconomic problem should be solved through a decision governed by macroeconomic theory, and the same applies to microeconomic problems. But can a macroeconomic dilemma be solved through a decision based on microeconomic theory? Certainly not, although the reverse may be possible. In other words, microeconomic issues may be addressed through microeconomic mechanisms, macroeconomic mechanisms, or both. Macroeconomic issues, however, can be solved only through macroeconomic mechanisms.

Returning to the economic dilemma represented by a large collection of smaller problems, it can be said with confidence that most cases of administrative corruption — arising from legislative shortcomings and rejected by public norms — belong to the domain of microeconomics, because they concern human behavior. This applies whether the individual is part of the “constellation,” among its supporters, among its opponents, or among the neutral. Such behavior is driven by the desire to satisfy needs represented in money, authority, or status. To address these problems, one must seek to close legislative gaps at the microeconomic level in relation to these unacceptable transgressions, as judged by public norms. Yet this is nearly impossible, because the legislator himself lives alongside these problems — either benefiting from them or being harmed by them. This creates a collision, a conflict of interests, as we have repeatedly noted. From it have emerged social and political issues, and consequently further economic issues, producing the complex problem we now face.

The concept of a complex or recursive problem refers to a major problem formed through the emergence of multiple smaller, interconnected problems. This type of problem begins with one small issue. That issue causes a second small issue to appear; the second generates a third; and so on until the final problem emerges, worsening the effects of the first. The cycle then repeats from the beginning, but with more severe negative consequences and inputs. This intensifies the harms of the second problem, which in turn worsens the third, and the third likewise affects the final problem, until the effect returns to the first link in the chain. The results of the final problem thus become recursive upon the first. In this way, the bubble of the problem expands, created by the recursive pattern connecting those smaller issues. This bubble is what is conventionally called a “complex problem.”

As a result of this obstacle — the obstacle of conflict of interests — which has formed a barrier before anyone seeking to improve Kuwait’s economic direction, whether internally or externally, through strengthening the role of state institutions, improving the private sector, or creating an economic environment ready for foreign investment, should we not turn our attention to macroeconomic solutions that appear capable of absorbing the microeconomic problems described above?

Abdullah Al-Salloum
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kuwaiti-economy
Answers
How does understanding the factor of the future help explain governance and reform?
Governance makes reform executable because it defines responsibilities, closes loopholes, and links decisions to accountability. It should therefore be read through the future, cost, results, and added capacity, not through intention alone.
How does understanding the factor of the future help explain legal loopholes?
Legal loopholes give corruption a safe path within the text of rules, so reform needs precise drafting and institutional oversight. It should therefore be read through the future, cost, results, and added capacity, not through intention alone.
How does corruption, governance, and macroeconomic structure affect Kuwait?
Its effect appears in how costs, incentives, and resources are managed, and in Kuwait's ability to turn decisions into sustainable value. The direct context is that Kuwait’s corruption and governance problems are rooted in a wider macroeconomic dilemma requiring structural solutions.
How does understanding the factor of the future help explain institutional reform?
Institutional reform becomes difficult when interests, administrative habits, and weak accountability accumulate; it needs lasting rules, not scattered decisions. It should therefore be read through the future, cost, results, and added capacity, not through intention alone.
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