Merely a Transactional Relationship?

by Harlan Cohen

Reading about the disintegrating relationship between the United States and Pakistan, I was struck by former Utah Governor, U.S. Ambassador to China, and Presidential-hopeful Jon Huntsman’s take on the situation. As reported in the New York Times:

Asked on “Fox News Sunday” how he would respond in such a situation, Jon M. Huntsman Jr., President Obama’s former ambassador to China who is now seeking the Republican presidential nomination, said, “I would recognize exactly what the U.S.-Pakistani relationship has become, which is merely a transactional relationship.” He said that American aid to Pakistan should be contingent on keeping the supply lines to Afghanistan open and continuing counterterrorism cooperation.

“And I think our expectations have to be very, very low in terms of what we can get out of the relationship,” he said.

Put in such starkly economic terms, the response immediately brought to mind the now well-known behavioral economics literature suggesting that social norms and economic incentives may sometimes work at cross-purposes and be incompatible. The most famous of the studies recounts an experiment done at an Israeli daycare center, in which the introduction of a fine for picking children up late actually increased the frequency of late-pickups. (Late pickup rates also stayed high after the fine was rescinded.) The lesson, it seems, is that putting a relationship in economic terms can sometimes undermine social norms that might otherwise have governed the relationship. As Dan Ariely explains in Predictably Irrational,

So we live in two worlds: one characterized by social exchanges and the other characterized by market exchanges. And we apply different norms to these two kinds of relationships. Moreover, introducing market norms into social exchanges, as we have seen, violates the social norms and hurts the relationships. Once this type of mistake has been committed, recovering a social relationship is difficult.

Figuring out the relationship between different mechanisms of influence, whether coercion, socialization, or persuasion – when to choose one over another, whether they can be employed together or work at cross-purposes, how they should be sequenced – is one of the hardest questions in compliance theory. In the best of all worlds, the U.S.-Pakistan relationship would be based on a solidarity forged of shared goals and values, and the temptation to keep trying to build such a relationship is easy to understand. But as the relationship between the U.S. and Pakistan spirals increasingly downward, does Huntsman have a point? Is a thinner, more clearly economic relationship, unclouded by appeals to shared concerns, the best that can be hoped for? (Of course, there are reasons why even that may not work, including questions about whether there’s enough governmental control to follow through on an agreed deal.)

One Response

  1. As a Pakistani lawyer, I’ll offer my two cents:

    Whilst the Pakistani government or military may be more responsive to economic incentives, those incentives work less with the population a) because much less trickles down to them, b) they rightly do not view it as ‘fair’ compensation for the losses they incur (35k+ people dead) – $60 billion in economic losses (as per a report) or the benefits the U.S. derives from the relationship c) on the point of social norms, in a region where honour important, many view ‘being paid to die and that too such a small amount’ as an affront to honour.
    On the other hand, because the government or military get the most rents from foreign aid or military aid (by using it for their own purposes), they will respond much more to economic incentives.

    Hence, there is great mistrust because the costs are imposed on the population (dead from drone strikes, economic losses, insecurity etc) whilst the economic benefits go to a corrupt government – Raymond Davis and drones would provide a salient example; so here, socialization and building trust with the people would be much more effective, as it was when U.S. helicopters and aid was being sent to the flood affected areas.

    Coercion has problems: it actually alienates the people further whilst empowering the government, because it promotes the latter’s reputation when they resist such coercion. And where they cannot, blame can be outsourced to a foreign aggressor and greater mistrust develops.

    So in some senses, it is not surprising that Pakistanis often complain of giving great sacrifices for America and receiving so little in return whilst Americans complain of not getting enough for their buck – both are partly right because both are cajoled by their agent (the Pak government). Hence, I believe a successful approach would require a combination of all three approaches – whilst the government should be coerced, the people should be persuaded through economic persuasion and other propoganda e.g. advertisements in newspapers, funded schools etc.

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