“Wasta” – loosely translatable to “influence as an intermediary” – has negative connotations across the Middle East, evoking images of unqualified people securing jobs at the expense of the meritorious. As Gulf countries continue to transform their economies, many view wasta as an outdated relic that needs to be phased out. Yet, wasta can on occasion be a force for good – we just need to teach our children how to distinguish between the benign and malignant varieties. The framework economists use to understand wasta is known as the principal-agent problem. A manager (the principal) hires and compensates a worker (the agent). This straightforward transaction can become a “problem” because two things about the worker are often hidden from the manager. The first is the worker’s traits. Managers rarely know everything about their employees’ abilities and personality traits with certainty, and these characteristics can be concealed by workers versed in the art of exaggerating their positive attributes. Educational qualifications and internships allow managers to more accurately learn more about a worker, but only imperfectly so. Economists refer to this asymmetry of information as “adverse selection”; it is often compared to the challenge of purchasing a used car that is likely to have concealed flaws. The second thing is the worker’s actions. Managers yearn for instant, precise information about how their employees are behaving, motivating some 21st-century overseers to install suffocating surveillance software on their subordinates’ computers. In most jobs, however, employees retain some leeway that enables them to shirk or err undetected. This “moral hazard” problem is analogous to the challenge that insurance companies face in getting you to drive responsibly once your car is covered. A manager’s skillset includes navigating these informational lacunae. Notably, the presence of adverse selection and moral hazard hurts both parties in the employment transaction. Managers suffer from worker deception and have to expend valuable resources on endless interviews and screening methods as a countermeasure. Meanwhile, workers are hurt by the need to spend money on degrees and certificates just to demonstrate their worth and must deal with the effects of managers not trusting them. Consequently, when informational problems disrupt employment relations, low-cost countermeasures may benefit all. It is in this environment where the positive side of wasta emerges. For example, I oversee many interns and teach aspiring researchers in university settings. When a colleague looking to hire a young researcher struggles with a mountain of CVs and asks me to recommend someone who might be suitable for the job based on my experience with the candidates, if I respond honestly – Nur is very creative, or Sabah has trouble sticking to deadlines – then this constitutes wasta playing a constructive role. It costs me virtually nothing to convey the accurate information to my colleague, and it helps Nur demonstrate their true talent, while preventing Sabah from deceiving their prospective employer or unfairly supplanting Nur. Thus, it is not about helping someone unqualified unjustly edge out a more able competitor – it is the exact reverse. By helping to make better matches in the labour market, it makes the economic pie larger. It is for this reason that “networking” is considered a desirable phenomenon in all cultures: it represents a collective attempt at helping both sides overcome adverse selection problems, as people gather valuable information about colleagues. Notably, while the principal-agent framework typically casts the worker as the potentially deceptive party who uses their hidden information, in practice, both sides hide important information from the other. For example, prospective employees are unsure about which managers are supportive and contribute to their development. They don’t know when their supervisor denigrates them to top management behind their back, and so on. The bidirectionality of informational problems in the labour market reinforces the value of networking and the benign form of wasta. Unfortunately, historically speaking, this has not been the typical function of wasta in much of the Arab world. In the Gulf, following the oil-induced modernisation of the region’s labour markets, and the transition from semi-nomadic life to professionalised labour relations, wasta has sometimes served as a tool that exacerbates economic and social inequalities rather than as a means of overcoming destructive forms of deception. In particular, in settings with dense personal networks, personal relations do more than enable the flow of information. They provide frameworks for repeated interactions that enable the trading of favours. One such favour might be: “Employ my underqualified relative or friend as a favour to me, and I will repay you in future when you need my assistance.” Socially adept individuals sometimes position themselves as “brokers” who manage a complex web of quid pro quos. Sadly, the fallout could be much worse than incompetent people securing gainful employment at the expense of the meritorious. This negative form of wasta encourages people to allocate resources away from building their productivity-enhancing skills to gaining favour with the aforementioned brokers, often through nothing more than becoming obsequious members of their entourage. Accordingly, this kind of wasta shrinks the economic pie for everyone. Two factors increase the incidence of wasta in the Gulf compared to western economies. The first is the persistent cultural and social importance of family to daily life, which creates a greater opportunity for both variants of wasta. The second is the abundance of public-sector jobs whose productivity can be harder to measure, as this makes it easier to lobby for an underqualified but well-connected candidate, while also exacerbating the informational problems that positive wasta seeks to overcome. Both factors have shown some degree of abatement in recent years, but it remains incumbent upon officials, business leaders and parents to set the right example for the next generation: wasta should be a vehicle to help, rather than prevent, qualified people to get jobs they deserve. If employers aren’t thanking you for your wasta intervention, you are probably practising the wrong kind.
