Fiscal Imbalance is a Wicked Problem

The definition of “wicked”, according to the Cambridge Dictionary, is "morally wrong and bad"[1]. This word is frequently used to define undesirable behaviour displayed by individuals or even associated with witches.

Thus, how is a problem considered wicked?

Horst Rittel, a professor of design science, and Melvin Webber, a professor of city planning, were the two University of California academics who coined the notion of "wicked problems" fifty years ago. They first proposed the term in their article "Dilemmas in General Theory of Planning" in 1973 as the complex social or cultural issues for which there are an unknown number of possible solutions. Based on their writing, the problems are wicked not because they violate moral principles but rather because of the way they are defined and addressed—they are "vicious," "tricky," and "complicated"[2].

The term, however, had only gained popularity in the 21^st century since policymakers realised that particular issues, like inequality, poverty, education, and climate change, cannot be solved by a single best approach. In contrast to "simple" or "tame problems” that have specific solutions, "wicked problems" have the potential to grow or change, and the more we try to solve a problem, the more it becomes apparent to us[3].

In light of the definition, the Directorate General of Fiscal Balance is working to address the wicked problem of interregional fiscal imbalances, either horizontally or vertically. According to Rittel and Webber (1973), there are certain aspects of the wicked problem that fiscal imbalances might share. First, there is only good or bad—not true or false—in the solutions to wicked problems. Second, there's no limit to how many ways or solutions there are to solve a wicked problem. Third, the issue may be a symptom of another issue. Stated differently, we will exacerbate the situation if we solely address the symptoms.

After more than two decades of fiscal decentralisation, now we are implementing Law No. 1 of 2022. We acknowledge that in an effort to reduce fiscal imbalances, we have been making numerous changes to policies and solutions. Every attempt is considered valid, so there is no right or wrong answer. The policies are now output-oriented instead of input-oriented. After experimenting with proportionate allocations, we will now use performance-based allocation. The earmarking component has been added to the general allocation grant concept through redesign. We are encouraging local governments to increase their ability to levy local taxes and increase their quality of spending. Some solutions may not work—that is a wicked problem—while other solutions may be examined and show additional issues that need to be resolved. Some local governments have been successful, while others continue to underperform.  As a result, the number of solutions to solve is limitless; it is the journey and never-ending learning.

Moreover, fiscal imbalances may be the sign of a larger issue; these issues may include infrastructure, governance, education, human resource capacity, and income inequality. It would be crucial to understand how one issue affects fiscal imbalance in order to prioritise and identify the issues that need to be resolved first. The issue of fiscal imbalance is multifaceted, and collaboration is crucial. To address any related issue, we require multiple solutions from multiple stakeholders. A wicked problem is a shared problem that cannot be comprehended or resolved from a single point of view. The same goes for solving it – it can only be tackled as a shared solution. 

Recently, at least two methods have been proposed to address the wicked problem. The first way is through collaborative strategy or co-creation. One government or one organisation could not address all of the problems we were facing. They required and fostered cross-sector and cross-agency thinking. The second is to never stop innovating and to concentrate on promoting the knowledge and insights gained from tackling wicked problems both inside and across public sector organisations.

Recognising that we are faced with a wicked problem allows us to develop policies in a more innovative and cooperative manner. We saw it could be done. And now, we are ready to do more.

This article has been published in Media Defis Edition XXXVI-2023.