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How Much Regulation Does a Country Need?

From the ISET Economist news (http://www.iset.ge/news/?p=3871)

By Eric Livny

Democracy and Freedom Watch reported October 9, that “Georgia’s controversial new immigration law may be changed”. The law, writes DFW, “has caused a wave of confusion and irritation in the country’s expat community. Prime Minister Irakli Gharibashvili … told journalists that if any defects become apparent after the enactment of the new law, ‘we’ll surely correct it.’”

Just a month earlier, confusion, irritation and public outrage were caused by another piece of Georgian legislation – a law greatly limiting the sales of non-prescription drugs (see Florian Biermann’s post). The outrage was caused by the fact that many of the drugs affected by the new law, e.g. plain painkillers, were in extremely wide use. As a result, less than two weeks after coming into force on September 11, the law was amended by the health minister, Davit Sergeenko, allowing 772 medicines to be sold over the counter, without a prescription.

One could perhaps say, as the Germans do, ende gut, alles gut. But, alles is nicht gut. The fact that such REALLY BIG MISTAKES are allowed to occur in the first place suggests that something is deeply flawed in the Georgian policymaking machine. One obvious concern is the lack of due “public policy” process. Indeed, there was nothing particularly urgent about either piece of legislation; both could have benefited from a proper technical review, “stakeholder consultations” and a public debate.

Second, and very importantly, these grand failures suggest that Georgian lawmakers lack a proper understanding as to the role of regulation in an economy, and how much of it a country like Georgia needs (or can afford).

THE BENEFITS OF PROCRASTINATION AND DEBATE

Any discussion of regulations can easily get politicized, sparking seemingly futile and lengthy political exchanges. Left-wing intellectuals would argue that regulations are there to address market failures (such as drug addiction and overconsumption of antibiotics) or protect the weak and vulnerable (e.g. by securing their jobs and providing income support). The libertarians among us would argue that the market can correct itself, and that, in any case, state paternalism is not a solution to any problem. Rather, it creates unnecessary red tape and leads to unintended consequences such as laziness, corruption, illicit economic activities (“black market”) and smuggling. State failures, according to the enlightened libertarian view, are as much of a problem as market failures.

Such a clash of ideas is quite legitimate, and – if conducted in a civil and constructive manner – should be welcome in any community and polity. For one thing, it would provide legislators with a better understanding of the “problem” they are trying to solve (if there is a problem), such as:

the incidence of antibiotic resistance among Georgians;

immigrants competing with (or creating jobs for) low-skilled Georgian workers;

the extent of land grabbing (as well as investment and job creation) by Punjabi farmers.

Ultimately, whether liberal immigration regime (or free access to medications) is to be recognized as a “problem” is about politics rather than science. Still, having some evidence to consider before rushing with regulatory “solutions” would be a good step forward. It may well be the case that, while generating “killer” headlines, a “problem” is ridiculously small in magnitude or does not even exist.

Secondly, when faced with the need to publicly defend their proposals, proponents of regulations would be forced to analyze alternative solutions while taking into account the cost factor, effectiveness in terms of actually solving the problem at hand, related corruption risks, and other types of collateral damage.

DON’T BITE OFF MORE THAN YOU CAN CHEW!

But perhaps the most ideology-free criterion of evaluating the feasibility of regulations is whether a country has the requisite human capacities and skills. Even a relatively simple regulation, such as traffic lights, may be counterproductive if not properly planned and executed. First, there is the basic question of how to regulate a given intersection (traffic lights are effective only when traffic intensity exceeds a certain threshold level, which is almost never reached at night). Second, traffic lights have to be properly timed to maximize intersection capacity and minimize delays). Poorly planned traffic lights – hello, Tbilisi! – are not only a drag on traffic but also a safety hazard.

What is true about traffic, is equally true for extremely complex regulations such as anti-trust, labor, and food safety, which Georgia has subscribed to as part of the Association Agreement with the EU. For instance, it will take years – maybe even generations – to build the necessary professional capacities within the Georgian parliament and judiciary, the competition watchdog, the economics, legal and management professions in order to implement Swedish-style anti-trust law in the Georgian context. Thankfully, for now Georgia is paying lip service to some its EU-related commitments (e.g. by creating a competition agency and copy-pasting anti-trust legislation without caring to enforce it).

The botched attempts to rewrite immigration and pharmaceuticals laws suggest that professional skills are in extremely scarce supply throughout Georgia’s bureaucracy. After all, the Georgian state is one of the youngest in the world; Georgia’s educated urban elite is a tiny sliver of the population; and even this sliver has been impoverished by many years of brain drain and outmigration. In this situation, the Georgian state should not attempt to bite off more than it can chew. It should avoid complex regulations, even when these are theoretically desirable or required by its international partners. It should certainly avoid thoughtlessly copy-pasting regulations that have been designed for other times and other places.

* * *

A short story by Leo Tolstoy titled “How much land does a man need” describes the fate of a land-hungry Russian peasant, Pakhom, who is promised as much land as he can walk around from sunrise till sunset. One condition is attached: he has to make a full circle and return to the point origin by the end of the day. To maximize his future land holdings, Pakhom sets on a rather ambitious circular route, and is too late to realize that he cannot make it back on time. He runs as fast as he can and, exhausted from the effort, drops dead at the point of origin. His servant buries him in a grave only two meters long, thus ironically answering the question posed in the title.

OTHER NEWS
08/06/2015
Female Farmers in Ajara

“Women in Georgia – Tradition and Contemporaneity” is a short documentary film prepared by ‘Netgazeti’ (online newspaper) about women living in Ghordjomi Community (Khulo Municipality, Ajara). Ghordjomi is one of the largest Muslim communities in Ajara and is known for its early marriage traditions, and other strict rules and attitudes towards women. The film describes the harsh daily routine of the women starting from 6 am in the morning with taking care of the cattle, children, household and the restrictions they face in daily life. 

The ALCP AJ programme’s Focus Group Survey and Gender Analysis captured these issues and also noted the consequent effect on the participation of women in the decision-making processes at the community and local governmental levels which is chronically low. 

13/02/2015
Harmonize, but do not Harm!

From the ISET Economist news (http://www.iset.ge/news/?p=4633)

By Eric Livny

The “do no harm” (primum non nocere) principle is well known to students of medical schools. It is one of the most fundamental maxims in medicine, as formulated, for example, in the Epidemics book of the Hippocratic Collection:

“The physician must … have two special objects in view with regard to disease, namely, to do good or to do no harm“.

Doctors are taught that medical interventions are not risk-free. Thus, when facing a “problem” one should consider whether to use a particular procedure (e.g. surgery or chemical treatment) or do NOTHING.

Not surprisingly, this very principle has applications in many fields other than healthcare. And it is high time for this principle to be studied and applied in Georgian policymaking.

30/01/2015
Counteracting Indifference: How to Keep Gender and WEE Alive

By Helen Bradbury: Team Leader, Alliances Lesser Caucasus Programme

We are in an interesting conundrum. Gender in most places has been written-in to law. Bar a few notable exceptions, every country in the world, has varying degrees of success in applying universal suffrage.  Fifty countries are signed up to the CEDAW convention (the UN’s Convention on the Elimination of all forms of Discrimination Against Women).  On the CEDAW world map of Discrepant Government Behaviour  Concerning Women,  the countries shaded dark green which denotes ‘virtually no enforcement of laws consonant with CEDAW or such laws do not even exist’, are where you expect them to be and in fact they are relatively few.  It is the next two categories which disturb, covering the vast majority of the globe, the mid and lighter green, where laws are partly or fully consonant with CEDAW but there is little effective enforcement or spotty enforcement of them and the issue is low priority or hit and miss. After the gains, the laws and ratifications of the last centuries it seems that we must tread very carefully indeed for we must counteract indifference, in which inertia and inactivity stop us moving forward.

17/09/2014
Information Matters: Two New Websites

By Helen Bradbury: Team Leader, Alliances Lesser Caucasus Programme

                           

Information matters, it is our currency, the substance, the commodity which keeps our programmes running.  We live in an age of information, are afloat on and sometimes drowning in a sea of it.  We may check the oracle of google in answer to any question, live feeds, notifications and a torrent of minutiae in a mélange of events of great importance, continually assail us. Once there were spin doctors, now most of us spin daily be it personally or professionally. We are aware of the need to manage information, to have enough of it and of the right kind and most of us are aware too of the need to understand its quality and to know when and what we have is enough or too little.

07/07/2014
Survival of the Fittest in Georgian Agriculture

From the ISET Economist news (http://www.iset.ge/news/?s=survival&lang=en)
By Nino Mosiashvili

The conclusion of the Association Agreement (AA) with the European Union was euphorically acclaimed by Georgian media as well as political and economic decision makers. Part of the AA is the Deep and Comprehensive Free Trade Agreement (DCFTA). The DCFTA is intended to liberalize trade between Georgia and the EU by lowering tariffs and reducing non-tariff barriers. For agriculture, the most relevant changes relate to food safety (bacterial contaminants, pesticides, inspection, and labeling) as well as animal and plant health (phytosanitation). For the manufacturing sector, the removal of so-called “technical barriers to trade” is similarly important, with the goal being to prevent the usage of technical standards as a means to protect domestic markets from foreign competition. “If regulations are set arbitrarily, they could be used as an excuse for protectionism”, states the World Trade Organization on its homepage.

28/05/2014
Farmer Groups: Why We Love Them and When They are Successful

From the ISET Economist news (http://www.iset.ge/news/?p=3311)
By Eric Livny

(Summary of a debate hosted by ISET as part of SDC-supported Inclusive Growth Dialog series.)

There are many reasons to love the concept of farmer cooperation (and cooperation more generally). To begin with, there is a great aesthetic value in seeing people coming together, sharing resources and helping each other. After all, instinctive collectivism was the basic condition of human existence from time immemorial. But, there are also powerful economic reasons for farmer cooperation.

LATEST NEWS
The Georgian Beekeepers Union Celebrates Three Years Anniversary
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On December 20th, the Georgian Beekeepers Union (GBU) hosted an event to celebrate its third anniversary inviting key honey sector stakeholders to Hualing Tbilisi Sea Plaza.  Since 2018, the honey sector has seen huge gains under the auspices of the GBU, which is leading efforts to remove pervasive constraints to growth such as the widespread use of prohibited antibiotics and performing the role of non-governmental national representative of the honey sector. The GBU’s three years of extensive work resulted in increased honey quality, more effective governmental advocacy, better vocational education in beekeeping, including, Jara teaching, available information and trainings for beekeepers, promotion and improved image of Georgian honey at the Apimondia Congress and London Honey Awards, all that paving way for an increase of honey export.    ‘There are some major developments in improving honey testing capacity, increasing awareness of Georgian honey, and opening of new export markets. The comprehensive laboratory analysis, before carried abroad, is now available in Georgia, which resulted in decreasing transaction costs.’ – Giorgi Khanishvili, the First Deputy Minister of the Environmental Protection and Agriculture of Georgia (MEPA).    ‘We were able to achieve significant improvements during these three years. We are continuing cooperation with the government and other honey stakeholders to ensure production of safe and quality honey.’ – Aleko Papava, the Executive Director of the GBU.  Photo source: The MEPA
Jara Enters the Qatar Market
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Nena Jara honey, along with other types of Georgian honey, found its place on the Georgian honey corner opened at the SPAR supermarket branch in Tawar Mall, the largest shopping mall in Doha, Qatar. Georgian honey corner will be opened in every branch of the SPAR chain. The process is backed by the Embassy of Georgia to the State of Qatar. The ALCP facilitated the export of Jara honey. Local influential media AI Raya dedicated a comprehensive article to Georgian honey with a special highlight on Georgian beekeeping characteristics and traditional Jara.   The Qatar market seems promising. The Embassy’s previous facilitation for approval of a VET certificate, an essential requirement for honey export, has contributed to a 255% increase of Georgian honey export to Qatar in 2021 compared to 2020. The same figure saw a 350% boost in 2020.  Photo source: The Embassy of Georgia to the State of Qatar
Sharing of Agricultural Education Experience with Azerbaijanis Colleagues
12/11/2021
The Journalism Resource Centre (JRC), in partnership with the Society of Women for Rational Development in Azerbaijan (WARD), hosted a study visit of media and educational institution representatives of Azerbaijan. Agri-journalism students and lecturers at Caucasus International University shared agricultural journalism teaching practices. In Kakheti, they visited the farm of Beka Gonashvili, Head of the Georgian Shepherds Association, farmer, and entrepreneur.  They also visited Kakhetian Traditional Winemaking to see their Jara honey and wine production and the dairy Leanka in Dedeplitskaro.  The importance of education and information for farmers and producers and their cooperation with agricultural media was emphasized. Beka Gonashvili emphasized the importance of providing quality information to farmers and producers. He is both a blogger and a farmer, so he is regularly publishing useful agriculture-related posts. The female owner of Leanka dairy talked about how the enterprise is ensuring the quality and how media is playing a significant role in this. At Kakhetian Traditional Winemaking Company particpants saw wine and Jara honey production and their export and how the Georgian Beekeepers Union is advocating the interests of honey sector representatives and supporting the awareness raising of beekeepers, such as through the national information campaign - Do’s and Don’ts of Antibiotic Use. Participants also watched a report about Jara Honey by Al Jazeera and Jara the Movie. ‘We will all together will work well for expansion the teaching of agricultural Journalism in Azerbaijan’ – Natia Kuprashvili, the Head of the JRC. The Society Women for Rational Development (WARD) in partnership with the JRC is going to prepare a course of agricultural communication based on the study visit and share it with educational institutions in Azerbaijan. Please see the related links: a textbook of Constructive Agricultural Journalism and video lessons added to this textbook.
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MONITORING, EVALUATION, AND LEARNING POLICY
A Gendered National Honey Sector Survey in Georgia
GENDER EQUALITY, DIVERSITY AND SOCIAL INCLUSION STRATEGY (2020-2023)