My first novel, My Friend Sancho, is now on the stands across India. It is a contemporary love story set in Mumbai, and was longlisted for the Man Asian Literary Prize 2008. To learn more about the book, click here.
It should be our default position that God does not exist, all believers are delusional and all godmen are frauds.
Dear readers, let me begin this column with a question for you: “If donkeys were to paint their own God, what do you think the picture would be like?”
This question was asked in the late-1880s in a classroom in Fergusson College in Poona, where Gopal Ganesh Agarkar, the second principal of that institution, was giving a lecture on logic. What would the Donkey God look like? Agarkar answered his question silently, raising both his hands above his ears and shaking them.
Agarkar was an atheist and a rationalist, and the institution he built carried that reputation as well. The anecdote above is from BR Nanda’s biography of Gopal Krishna Gokhale, and also mentions the time a gentleman named VR Shinde introduced himself as “a Fergussonian” to the Christian reformer, Pandita Ramabai. Her response: “Oh! You come from that Atmosphere of Atheism!”
I graduated from Fergusson College more than two decades ago, and though I am an atheist now, I didn’t have an opinion on the subject of God at the time. There was certainly no Atmosphere of Atheism then, and I suspect that while there has been much progress since Agarkar’s time, his views would be as unpopular today as they were then. We have made wonderful progress thanks to technology, but the human brain is one gadget that cannot be upgraded. It fell into its current design in prehistoric times, and there have been no updates since. Many modules that were features then are bugs now, including a propensity to construct (or be drawn towards) simple narratives that help you navigate a complex world. Religion is the perfect app for that ecosystem.
I wrote about atheism in the very first installment of Lighthouse, this column for BLink. I won’t repeat myself here, but in these days of resurgent religion and gimmicky godmen, here are five things I have to say that I think the good Mr Agarkar would agree with.
One: There is no God. By this, I am taking a default scientific position on everything: unless something can be proven to exist, the default position is that it does not. The existence of God, in many shapes and sizes, has been asserted for millennia without any evidence. The burden of proof is on those who say that God exists, not on those who claim otherwise. (You cannot prove a negative.) Thus, atheism is the common-sense default position, and not something radical.
I should point out here that when I say There is no God, I do not mean There is definitely no God. Instead, I mean There is no God, unless proven otherwise. Please think for a moment about this subtle difference: Atheism is not a belief that there is no God, but an absence of belief in God.
This is an important distinction because it answers those who classify atheism as a belief system just like religion. As a letter writer to the Economist put it many years ago, atheism is no more a religion than not collecting stamps is a hobby.
Two: If there was a God, he’d be a terrible, immoral God, worthy of our contempt. Everything that happens in the universe would be caused by Him. Every rape, every murder, all the suffering of starving infants, all the pain. It doesn’t matter how you justify it, if God exists, he’s a sadist creep. Richard Dawkins once described the God of the Old Testament in terms that would, more or less, fit all Gods:
The God of the Old Testament is arguably the most unpleasant character in all fiction: jealous and proud of it; a petty, unjust, unforgiving control freak; a vindictive, bloodthirst ethnic cleanser; a misogynist, homophobic, racist, infanticidal, genocidal, filicidal, pestilential, megalomaniacal, sadomasochistic, capriciously malevolent bully.
Three: All religious people are delusional by definition. This follows from point one. It is problematic that you believe in something that cannot be proven. It is pathetic that you reside this belief in someone else’s imaginary friend. At least have an original delusion.
It astonishes me that religious belief is actually looked upon a prerequisite for high office. It should be a disqualifier. Even in the USA, for all the hoopla about the first black president, I wait for the day they have an openly atheist president. There was recent praise for a Supreme Court judgement in India by a five-member bench where each judge belonged to a separate religion. If they were all believers, then this only means that they were delusional in different ways. Big deal.
Four: All Godmen are frauds. Don’t fall for the false dichotomy of good godmen and bad godmen, where the bad ones are rapists and paedophiles, while the good ones are sophisticated and gentle. They are all frauds. They are delusional to begin with – unless their piousness is also faked – and masters at mass manipulation. They all use other human beings as a means to an end, and are therefore on the same moral plane. They all deserve our contempt.
Five: We don’t need God to be moral. The ‘morality’ that comes from religion is morality for the wrong reasons. We do certain things because we want to belong in a group. We behave in a particular way because we want to go to heaven or earn good karma, in which case our behaviour is an instrument towards a selfish purpose, and not an end in itself. The best kind of morality arises from reason. It can come from empathy for others. It can come from self-interest, for we are all in this together. (This is a subject for a whole different piece, actually.)
To end this column, here’s a thought experiment inspired by Agarkar’s donkeys: If we make God in our own image, what would your God look like – and what would that say about you? I can easily imagine mine. He would be an atheist God, lacking self-belief, horrified at His own actions. He would also wonder who created Him.
Women are treated as the property of men in India. This is not merely reflected in our culture, but is enshrined in our laws.
Early last year, a 13-year-old girl was raped in Bareilly in Uttar Pradesh. In October, she gave birth to a child. A month ago, she married her rapist. Or rather, she was married off to her rapist. Village elders intervened and felt that to be the honourable course of action.
This is not new, and this anecdote will soon be statistic. Rape victims have been married off to their rapists before. The thinking behind this: now that the girl is ‘damaged goods’, no one will marry her, so why not let the onus fall upon the man who ‘damaged’ her. It’s almost as if a man walks into a shop and breaks a vase, and is then forced to buy it. Who else will buy the vase?
The key word in the paragraph above is not ‘damaged’ but ‘goods’. In India, women are treated as the property of men. It is not only backward villages in the hinterland where this attitude exists – it is enshrined in our laws. I ask you to consider Section 497 of the Indian Penal Code:
Whoever has sexual intercourse with a person who is and whom he knows or has reason to believe to be the wife of another man, without the consent or connivance of that man, such sexual intercourse not amounting to the offence of rape, is guilty of the offence of adultery, and shall be punished with imprisonment of either description for a term which may extend to five years, or with fine, or with both. In such case the wife shall be punishable as an abettor.
The italics are mine. Consider the words without the consent or connivance of that man. As if a woman’s husband is her owner, and you are wronging him by sleeping with her – even if she consents, which would be a crime on her part.
Now take a look at another law from the IPC:
498. Enticing or taking away or detaining with criminal intent a married woman
Whoever takes or entices away any woman who is and whom he knows or has reason to believe to be the wife of any other man, from that man, or from any person having the care of her on behalf of that man, with intent that she may have illicit intercourse with any person, or conceals or detains with that intent any such woman, shall be punished with imprisonment of either description for a term which may extend to two years, or with fine, or with both.
Again, the woman’s consent doesn’t matter, as per this law. Two consenting adults could have sex, and it would qualify as a crime on the woman’s husband. (And not the man’s wife, mind you, showing that it is not marriage that is the issue here but gender.)
This misogyny is common in our laws, but you could argue that the IPC is a colonial relic from Victorian times. We Indians treat our women well. Nonsense. Treating women as property is an old Indian tradition, and finds reflection in our epics. In the Mahabharata, for example, Yudhishthir gambles Draupadi away, as if she is not an autonomous human being but his possession. Read up on the way Kunti, Amba, Gandhari and Madri were treated, and you will see that their fates were never in their own hands. (I recommend reading Irawati Karve’s Yuganta for her brilliant analysis of how the Mahabharata treated women.) And don’t get me started on the Ramayana, and Ram’s treatment of Sita.
This attitude percolates down to modern-day India. Reports on rapes will often mention the marital status of the woman, especially if she was a newlywed. (Do a Google search for “housewife raped.”) This carries the implication that the crime is more serious than if she was single, because it is also a crime against the man she was married to.
This is not an attitude only villagers have. A few years ago, the cultured, well-to-do (and repugnant) Tarun Tejpal, in an email to the woman he was alleged to have raped, offered to apologise to her boyfriend. Why? If he had committed a crime against her, why on earth should be apologise to her boyfriend? What kind of patriarchal nonsense was that? (Perpetuating patriarchy and purple prose are the least of the notorious Tejpal’s sins, of course.)
And just look at Bollywood. The Bollywood hero is the perfect archetype for the entitled Indian male. Most Bollywood wooing is basically sexual harassment. You could argue about whether popular culture reflects society or shapes it, but they amount to the same thing.
This dehumanising of women – as a means to satisfy various male urges – might account for our skewed sex ratios. If girls are looked upon as a liability, no wonder the rates of female foeticide are so high. At one level, there is even a perverse rationale to this: why give birth to a girl child in one of the most misogynist countries in the world?
There has been much posturing from our governments – not just the current one – about how much they care for our women. I call it Patriarchal Paternalism. #SelfieWithDaughter is just optics, and all the Beti Bachao Beti Padhao Yojanas of the world will amount to just talk unless things change at a fundamental level. Social change does take time, and will not happen overnight. But the government could make a start by changing some of our ludicrous, outdated laws, like the ones mentioned earlier in this piece. Do you think that will happen?
Many of the intellectuals who supported Narendra Modi in 2014 should have realised their mistake by now. They haven’t. Here is why.
Almost a century ago, Vladimir Lenin is said to have coined the term ‘Useful Idiots.’ The term referred to those intellectuals or eminent people who gave a movement respectability by association, but weren’t actually respected within the movement itself. RationalWiki defines a Useful Idiot as “someone who supports one side of an ideological debate, but who is manipulated and held in contempt by the leaders of their faction or is unaware of the ultimate agenda driving the ideology to which they subscribe.”
If this sounds familiar, it should. Useful Idiots abounded in Lenin and Stalin’s time – many were sent to the Gulag once their utility diminished – and authoritarian despots since, from Hitler to Mao to Chavez – have had their own set. And of course, if you live in India in 2017, there are Useful Idiots here as well.
I want to make it clear that I am not referring to any of the people I mention in this essay as idiots. I will use the term ‘Useful Idiot’ only in the sense outlined above. Some of the Useful Idiots that will come to mind are accomplished individuals, even giants of their field, and their behaviour is as much poignant as it is deplorable. Some of them are people I admired or liked, and as I look at them, it strikes me that in a parallel universe, I could be in their shoes. We are all frail.
Act 1: The Longing for Better Days
When Narendra Modi spoke of Achhe Din, it had enormous resonance for many people. Here are things reasonable people can agree on: India had been ravaged by over six decades of mostly Congress rule; the bad economic policies of Nehru (otherwise a great leader) and Indira had kept us in poverty for decades longer than we should have; government was basically a mafia, and we were ruled by a kleptocracy rather than served by public-spirited statesmen; the ‘liberalisation’ of 1991, forced upon us by a balance-of-payments crisis, had helped but only a little, as many reforms remained to be done; the current dispensation did not show the will to make reforms; the people of India languished as a parasitic beast called government sucked us dry.
In every tunnel, the eye searches for light. It was easy to be seduced by Modi’s rhetoric. (Much of that rhetoric – ‘Minimum Government, Maximum Governance’ – came from outside intellectuals, and not inner conviction.) It was tempting to give him the benefit of the doubt for the riots of 2002 – after all, it is a liberal principle that a man is innocent until pronounced guilty. It was tempting to see him as the messiah.
I am not saying that the beliefs above are correct. (I myself did not hold them, and was undecided.) I am saying that they are reasonable. It was reasonable to look at 67 years of opportunity cost and ask, What could be worse? It was reasonable to look at the derelict UPA government and ask, What could be worse? I would even say that it was reasonable to recognise that things could indeed be worse under Modi, but consider it a chance worth taking.
With the benefit of hindsight, I feel it is unfair to gloat about the people who got this wrong, as they clearly did. Anyone can be wrong once. But to be wrong repeatedly, when all the facts are before you, when the stakes are so high, is unpardonable.
Many of those who supported Modi did so assuming that the social wing of the Hindutva movement would be kept in check while long-awaited economic reforms would happen. The eminent economists Jagdish Bhagwati and Arvind Panagariya voiced their support of Modi. (Their books contain an excellent diagnosis of India’s condition, as well as a road map for the future.) Many people on the ‘economic right’ (more on this phraseology later) walked into his camp. Modi got a resounding victory, and had the mandate he needed to carry out sweeping changes. He did nothing.
Act 2: Mugged by Reality
I outlined, in a keynote speech I gave a few months ago, all the evident failings of Modi’s government since 2014. I don’t want to spend too much time on them, so a brief summary: no reforms; a move leftwards to a Nehruvian command-and-control view of the economy; a continuation (and even expansion) of most of the flawed schemes of the previous government, often with fancy name changes; maximum government, minimum governance; a rollout of GST, which they had earlier opposed, with so many slabs and exemptions that it was a wet dream for those hoping for another Inspector Raj; demonetisation.
And that’s just the economics. (Saffron is the New Red.) At home, Modi mishandled Kashmir, with violence escalating. And the social wing of the Hindutva Project that he clearly believes in is tearing Indian society apart. Quips about it being safer to be a cow than a woman have become a cliché.
As Arun Shourie famously said, NDA = UPA + Cow.
Many who had supported Modi in 2014 now realised that their optimism was misplaced and the worst-case-scenario was unfolding. Public intellectuals like Sadanand Dhume deserve credit for changing their mind when they were mugged by reality, and for having the intellectual honesty to continue to speak truth to power. But many did not.
Demonetisation (or DeMon) was described by a friend of mine as a litmus test that revealed which intellectuals cared about their principles, and which just wanted proximity to power. DeMon, on which I published many pieces, was the largest assault on property rights in the history of humanity. It led to people dying in queues, businesses shutting down, livelihoods being decimated. There was no way any of its goals could be achieved, and there was no way taking 86% of the money supply out of circulation would fail to devastate the economy. All this was evident from the start. Any economist who supported DeMon lacked either intelligence or integrity. I don’t even know which is the charitable explanation.
Modi is a master of optics, and controlled the narrative to actually make short-terms gains from DeMon. But it was worrying and depressing that so many people who should know better continued in their steadfast support of him. Why did they do so? I posit four reasons.
Act 3: Living in Denial
Here are four possible reasons why these Useful Idiots continued to stay Idiots.
These Useful Idiots, having gone public with their support of Modi, had their reputations and self-esteem at threat. They could not simply change their minds. Also, they badly wanted to be right. So they rationalised away Modi’s inaction. When he did not reform, they called it ‘gradualism’, and pretended that change necessarily had to happen slowly. Let him settle in. Give him time. The political economy is complicated. And so on, despite the fact that the man wasn’t even trying.
Confirmation bias also kicked in. Every time he said something they wanted to hear, they clapped vociferously. Every time he did something they would have condemned under previous administrations, they stayed silent. Every time violence erupted against Muslims or Dalits or anyone near a cow, they blamed it on ‘fringe elements.’ They could rationalise everything until DeMon. But how could they continue to do so after that?
Two: The Carrot
The Patronage Economy swung into place after Modi came to power. Ignore the rumours about the BJP’s IT cell having prominent people on their payroll. There were enough legitimate ways to reward cronies. Rajya Sabha seats, Padma Awards, sinecures at government institutions, lucrative directorships in PSUs, seats in the Niti Aayog, and so on. I bought a recent issue of a magazine that supports the BJP, and most of the advertisements inside were by PSUs. Their editor keeps writing in praise of free markets, but is no more than a parasite living off taxpayers’ money. The irony.
To pre-empt the inevitable Whataboutery, let me agree that such a Patronage Economy existed for decades under the Congress as well. But the honourable thing to do then is to dismantle it once and for all. Instead: jobs for the boys!
Three: The Stick
This government is vindictive, and it appears that it will remain in power for a long time. Who would want to mess around? I know of two free-market supporters in Niti Aayog (not Panagariya) who were appalled by DeMon. But they were given orders to support it publicly. Both of them did so, in ways that would make you cringe. Indeed, friends from within the establishment have told me that those orders were given to all their Useful Idiots. Silence was not an option. Even the previously venerable Jagdish Bhagwati debased himself. (In his case, it could have been any of the above three factors. Does it matter which?)
There were Useful Idiots who had spent their lives on the periphery, dreaming of power. Now that they were establishment intellectuals, why would they risk losing that position? For the sake of principles and truth? Come on!
Four: The Lust For Power
For some of us, power is the means to an end. For others, it is an end in itself. Everything you do to get there is a façade. I have been stunned and saddened over the last few months to see how so many people I knew have been transformed by proximity to power. These Useful Idiots never actually believed in anything: their principles were all Useful Principles. Once close to power, they discarded these principles; just as their masters will one day discard them.
A friend I respect told me a few months ago, “Amit, the economic right must ally with the social right. Then we will be an unbeatable force.” I disagreed. Although ‘right’ and ‘left’ are now useless terms, I’d fall into the economic right because I support free markets. I support free markets because I support individual freedom. And individual freedom is incompatible with the agenda of the social right – which, in India, basically means bigots and misogynists. I told my friend that he was wrong, and that people like him would merely give respectability to this ‘social right’, which would eventually spit them out like paan on the roadside. That process has begun.
Arvind Panagariya left Niti Aayog recently, reportedly under pressure from the Swadeshi Jagran Manch, his reputation in shreds. Modi and gang have consolidated their political capital, and no longer need these Useful Idiots. These Useful Idiots will rationalise, will enjoy the trappings of power and money, and will be cautious about pissing off The Supreme Leader. They may even sleep well at night, for self-delusion is the essential human attribute.
I feel sad for what they have done to themselves. But I feel sadder for what is happening to this country.
If God existed and was not blessed with divine computing power, She would have sat through the last century with an abacus in each hand, counting the deaths caused by those on the Left and Right. On the left, Stalin, Mao, Pol Pot, this many million. On the right, Hitler, Mussolini, Mugabe, that many million. At the end of the exercise, God would have sighed, or perhaps giggled. So much fighting over differences when humans were all the same?
Our hypothetical God would have felt quite as bemused looking at India today. Our discourse is polarised, and the differences in the political battlefield seem too vast to be reconciled. And yet, it is our case that despite our parties seeming to hold opposite visions of what India should be, they are not just all equally bad, but they are bad in the same way. In moral terms, they are identical.
What is common to them is that they all behave as if the end justifies the means.
The Moral Question About Ends and Means
Here’s a fundamental question in philosophy: how do we judge the morality of an action?
Deontologists would say that there is something intrinsic in an action itself that determines its morality. There are certain first principles from which you arrive at sets of rules. For example, you could arrive at the rules, One should not take the property of others by force and One should not kill others. By these rules, theft or murder are wrong in and of themselves. They violate those rules; there is nothing else to consider.
Utilitarians would say that whether an action is good or bad depends on its consequences. Before we pronounce theft or murder to be bad, we have to consider their effects. There are all kinds of hypothetical situations in which theft and murder could be justified because they lead to a net increase of ‘utility’ in the world – however we define it. For example, stealing from one rich miser could enable 10 hungry paupers to be fed for a night. Or imagine a thought experiment where an alien civilisation threatens to wipe out a city unless they conduct a child sacrifice to appease these overlords.
Briefly, utilitarians believe that the end justifies the means. Deontologists disagree. In our view, there are three basic problems with the former position.
Utilitarianism Problem one: Calculation
How does one calculate utility? If you believe that the end justifies the means, you can make up any end you like, and argue that it gives you license to employ any means you like. One of the facilities that sets us apart from the rest of the animal kingdom, after all, is the ability to rationalize.
During Emergency, for example, Sanjay Gandhi famously pushed through a program of forcible mass-sterilisation of men. This was based on the premise that over-population is a problem, and his program was a small cost to be paid for the nation. This was a false premise, but even if we assume for the purpose of argument that it was correct, there remains the problem of calculation. How does one calculate the benefit to the nation from this? How does one calculate the pain caused to the victims of the program? How does one offset one against the other?
These are impossible calculations. One can therefore wing it and state any end and make up any calculations and do any damn thing one pleases.
Utilitarianism Problem two: The Distinction Between Persons
In his classic book A Theory of Justice, John Rawls wrote: “Utilitarianism does not take seriously the distinction between persons.” Utilitarians, like Godlike engineers, aim to calculate the overall utility of an action. Even if this was possible – it is usually not, as we argued above – it would still not be sufficient because victims of the actions would be different from beneficiaries of the action. How can one justify hurting person A by saying it causes pleasure to Persons B and C.
Take the sterilisation example again. The costs were borne by the victims of the forced nasbandi. The benefits that Sanjay Gandhi claimed were dispersed among another group of people entirely, maybe future generations yet to be born. How can this be justified?
Utilitarianism Problem three: The Question of Justice (or Individual Rights)
Harming one group of people for the benefit of another, or of “society at large,” is unjust to the people being harmed. They have rights. The job of the state is to protect those rights, and not infringe them. The whole concept of rights ceases to have meaning if one can hold that the end justifies the means. Society and the rule of law become a charade then.
To go back to the sterilisation example, the state tampered with the bodies of tens of thousands of young men against their will. Were they the property of the state? Was it not the state’s job to protect them from such violence? What is the basis of our justice system then?
Another example would be an innocent man tied to the front of a jeep.
None of us are means to an end
“Act in such a way that you always treat humanity, whether in your own person or in the person of any other, never simply as a means, but always at the same time as an end.” — Immanuel Kant.
“Every man has a property in his own body. This nobody has a right to, but himself.” — John Locke.
The quotes above sum up our position. Human beings have rights. Those rights exist prior to the State, and are not granted by it. The State’s job is merely to safeguard those rights. And the end can never justify the means. Individual rights are paramount.
By this way of thinking, the purpose of the state is to safeguard these rights. To do so, however, the state has to be given a monopoly on violence. This means that those individuals who run the state are handed enormous power. Power always corrupts, and thus, the state always grows, and goes well beyond its only justifiable mandate. The servants become rulers.
Coercion and Social Engineering
This brings us to what the Left and the Right have had in common throughout history: they have disregarded individual rights and behaved as if the end justifies the means. Their ends have been different – but the means they have employed have been the same: coercion.
Take a look at Stalin and Hitler and Mao and Pol Pot. It is clear that they all had visions of the kind of society they wanted to see, and to achieve their respective ends, they were willing to employ any means possible. You can differentiate between them based on their stated intentions, but we believe that the morality of an action is independent of such justifications. They were morally equal, regardless of the precise body count they left behind.
And what of India?
Saffron is the New Red
Narendra Modi, a master salesman, positioned himself as a changemaker prior to the 2014 general elections. But his government has turned out to be more of the same. While he spoke of “Minimum Government, Maximum Governance,” we see just the opposite, as government has grown under him. Instead of charting a new way forward, Modi has renamed old government schemes to pretend he thought of them. (Most of them are so dubious that it is baffling someone should want credit for them.) While the social policies of his party can be described as right-wing, his economic policies are resolutely left-wing: and both these formulations rely heavily on coercion.
In other words, like every Indian prime minister before him, he believes the end justifies the means.
Consider the signature policy of his government: Demonetisation. Its stated aims were dubious, kept changing, and were not achieved. Now, think back to those parts of this essay where we used the forced sterilisation of the 1970s as an illustrative example. What if we use DeMon instead?
Not only did the goalposts of DeMon keep changing, it was impossible to calculate its alleged benefits, and you could rationalise all you wanted. The people who suffered – almost all of India, especially the poor – were not the beneficiaries, if at all there were any besides corrupt old-note launderers. And it was an infringement on the rights of 1.3 billion people, which made it, as we like to point out, the largest assault on property rights in human history. Indeed, in moral terms, there is no difference between Notebandi and Nasbandi.
This also applies to Aadhaar. Our problem with it is that it is being forced upon the people of India. Whatever the stated end might be, the means are wrong.
Every government in India has practised left-wing economics, with its inevitable coercion. (Big government requires much taxation, which is never voluntary, and much rent-seeking.) Most governments in India have also believed in different forms of social engineering. Many of those who sanctimoniously criticize this government are actually on the same moral plane. And this government is no better than the previous governments it disparages. (This is not meant to encourage Whataboutery, which is usually meant to exculpate, while our intention is to condemn equally.)
The Politics of Respect
What kind of politics would we like to see then? Well, one in which politicians actually respect the true bosses of a democracy: its citizens.
Mahatma Gandhi once said, “If one takes care of the means, the end will take care of itself.” That is dead right. We believe that respecting individual rights should be an end in itself. It will then become a means through which society will grow and prosper. If we are to talk of consequences for a moment, we now know, looking back at history, that economic freedom leads to economic prosperity, and personal freedoms, such as the freedom of speech and association, lead to cultures becoming more and more vibrant. In every way possible, freedom makes humanity better off. (Even if it didn’t, we would still argue for individual rights, but our case is strengthened by the fact that it is correct even by the yardstick of utilitarians.)
Freedom, thus, should be both the means and the end. Anything else is immoral.
A year ago, one of us (AV) wrote a limerick that expresses a fundamental truth about politics. Here it is:
A neta who loves currency notes
Told me what his line of work denotes.
‘It is kind of funny.
We steal people’s money
And use some of it to buy their votes.’
We remembered this limerick now in the context of farm-loan waivers. This weekend, the Maharashtra government announced loan waivers for farmers in the state. A few weeks ago, the Uttar Pradesh government had also announced large farm-loan waivers. This is spreading to other states, and might end up as a Waiver Cascade (WC).
Beyond Moral Hazard
The most obvious unintended consequence of these waivers is what economists call Moral Hazard. Simply put, when farmers know that their loans are likely to be waived, they are incentivised to take loans they do not intend to return. (The same phenomenon applies in the case of the Too Big To Fail banks bailed out by the Fed in the US after the 2008 crisis.) This does nothing to solve the problems inherent in the system, and may even perpetuate them.
But this essay is not about farm-loan waivers per se. Nor is it about agriculture in India, which has been crippled by decades of bad policy. Instead, we want to talk about politics.
As we described in our recent essay on public choice economics, politicians come to power on the back of a) special interest groups and b) vote banks that they pander to. Once in power, they pay these groups back – with our money. Most governance amounts to a transfer of wealth from the people at large to special interest groups or vote banks. We call this Redistributive Bribery.
Farm loan waivers are an obvious example of this – the money to pay for the waivers does not fall from the sky, but comes from all of us. But practically all government action falls into this framework, whether or not money is directly involved. Most regulatory measures and government schemes follow this pattern, which is not hard to figure out if one thinks about who the beneficiary of each such action is.
To illustrate, here are four categories of Redistributive Bribery, with examples.
One: Direct Subsidy to a Vote Bank
Farm-loan waivers are an example of this. Farmers are an important vote bank everywhere, and this noble action for their benefit makes many non-farmers feel noble and compassionate. It probably hurts the farmers more than it helps them, by trapping them in a cycle of dependency, but that’s unintuitive and unseen.
Note that we are not picking on any party. Farm-loan waivers predate the BJP. Because the Congress has been the most successful party in our history, it has also done the most pandering. The BJP’s accusations of pseudo-secularism, which found resonance with many, was essentially a claim that the Congress was pandering to Muslim votebanks with measures like the Haj Subsidy. The Samajwadi Party in UP wooed the same vote bank with our money.
Another recent example is of Devendra Fadnavis announcing that his government will redevelop a group of chawls by building 16000 “affordable homes”. These come at the cost of Rs 16000 crore, at one-crore-per-home. You can bet that the beneficiaries of this largesse will vote for Fadnavis – and that those who the money is taken from won’t even notice.
There is no end to this sort of direct subsidy to vote banks. Free televisions, free laptops, free rice – they are all Redistributive Bribery.
Two: Direct Subsidy to an Interest Group
Interest groups spend lots of money getting their favoured politicians into office. Naturally, they want a return on investment. And politicians are keen to deliver, for they need funds for the next election also. It’s a cycle. And one of the two ways through which this happens is direct subsidies.
This can take various forms. Companies getting soft loans from Public Sector Banks, many of which turn into NPAs, is one example of this. So is the acquisition of land by the government to give to big businesses, such as in Gujarat, when then Chief Minister Narendra Modi helped set up the Nano plant. Some of this land can be got dirt cheap, as in the case of Modi’s Gujarat and the Adani group. The allocation of natural resources can fall under this category, as does the granting of government contracts for various things.
Having used the money of these interest groups to get to power, politicians then use that power to generate more money for the interest groups. That’s the whole game.
Three: Regulation to Favour Vote Banks
Wait, you say, surely regulation isn’t redistribution. Well, it mostly is, though in an indirect and unseen way. Consider Rent Control.
Rent Control is a regulation meant to benefit a particular vote bank: renters. But think of its long-term effects. It removes the incentives of property owners to look after their property, and buildings become dilapidated over time. It is a disincentive to new construction in areas where rent control is in effect. It distorts the market and reduces supply, thus driving up prices for everyone not already living in a rent-controlled property. Those lucky few enjoy the benefits paid for by the loss of many, most of whom don’t even realise what they’ve lost.
For all practical purposes, it is a redistribution of wealth from the many to the few. Indeed, think of other regulations that favour a specific votebank, and you’ll find that at its heart, it amounts to redistribution. Whatever the noble stated intent might be, it’s done for votes and is, thus, bribery.
Four: Regulation to Favour Interest Groups
Small traders and businesses have been a crucial support group for the BJP. No wonder, then, that the BJP opposes Foreign Direct Investment (FDI) in retail. Putting a cap on FDI is a great example of how regulation amounts to redistribution. Consider the effects of such a protectionist measure.
The more the competition, the more consumers benefit. When FDI in retail is not allowed, the market is less competitive than it would otherwise be, and consumers lose value. Maybe the goods they buy are not as cheap as they would otherwise be. Maybe they cost the same, but provide less value for money. All of us common people, consumers, citizens, are thus losing value, which has been redistributed away to a specific interest group.
(Again, it’s not just the BJP. Consider that Arvind Kejriwal, who also depends on this base for both votes and money, also opposes FDI in retail. There is only one plausible reason for such bad economics, which is that voters and donors need to be bribed. So much for being anti-corruption.)
It’s not just restricting FDI in retail: All protectionism, without exception, amounts to redistribution of wealth from the common masses at large to special interest groups. Another example is black-and-yellow cabs and auto unions lobbying the government against Uber and Ola. The ban on surge pricing in Uber came out of such lobbying, and we have seen the effects in Bengaluru: a shortage of cabs, as always happens with price controls. Consumers suffer, and the value they have lost has gone to that one interest group.
Concentrated Benefits and Diffuse Costs
All political parties engage in Redistributive Bribery. It is the oldest scam in politics — and perhaps even the basis of it. So why do we put up with it? We do so because while the benefits are visible, the costs are not.
When a poor farmer is given a loan waiver or a small trader is protected from rapacious multinationals, we all clap, feel compassionate and give ourselves a pat on the back for nobility. But we don’t see the full picture, because we cannot see the losses. If the government imposes tariffs on foreign producers of widgets, and domestic producers benefit from the reduced competition, we don’t see the value that all of us lose because of this. Indeed, it is not even possible to calculate it. The loss from much regulation and subsidy is often more than the gain, because incentives change for all involved. A positive-sum game becomes a zero-sum or negative-sum game.
Economists refer to this as ‘Concentrated Benefits and Diffuse Costs.’ To take the example from our previous essay on Public Choice, if Company A gets a subsidy of Rs 1.3 billion from the government, it has plenty of incentive to lobby for it. None of us common Indians will bother, because its only one buck each.
What’s the Plan of Action?
In theory, politicians are supposed to get elected by promising and delivering good governance. In practice, they bribe their way to power in the ways described above. They were meant to be angels, but are actually vampires. We’re stuck in a horror movie. What are we to do?
Well, we need to think more deeply about who pays for the costs of every government action. We all do. This includes the poorest among us, since everyone pays indirect taxes, and suffers from the absence of the better world that is not allowed to come into being. If this outrages you, express that outrage. There is nothing else to be done.
These are the opening words of Timothy Snyder’s book, On Tyranny: Twenty Lessons from the Twentieth Century. Snyder argues that we must not take democracy for granted. (The book was triggered by the rise of Donald Trump in the USA, but applies equally to us in India.) “The European history of the twentieth century,” writes Snyder, “shows us that societies can break, democracies can fall, ethics can collapse, and ordinary men can find themselves standing over death pits with guns in their hands. ”
Everywhere you look, perhaps in human nature itself, tyranny lurks. By understanding how it arises, we can pre-empt it. Snyder offers ‘twenty lessons from the twentieth century,’ and I read them with a deep sense of familiarity. All the lessons of the book apply to us, though in one important way, tyranny in the 21st century might actually end up being worse. I shall get to that, but first, here are some of the lessons.
Lesson number one: ‘Do not obey in advance.’ In authoritarian times, Snyder writes, “individuals think about what a more repressive government will want, and then offer themselves without being asked. A citizen who adapts in this way is teaching power what it can do.”
This reminds me of what LK Advani asked a group of editors after the Emergency of 1975: “You were all asked to bend — but why on earth did all of you crawl?”
Lesson number two: ‘Defend institutions.’ Both in the US and in India, we take refuge in the institutions that are meant to safeguard us. But who will safeguard the institutions? “Institutions do not protect themselves,” writes Snyder. “They fall one after the other unless each is defended from the beginning.” He adds that one common mistake is “to assume that rulers who came to power through institutions cannot change or destroy those very institutions—even when that is exactly what they have announced they will do.”
Consider, as a parallel, what Narendra Modi’s government is doing to our institutions, right from co-opting the RBI as a wing of the Finance Ministry, to using the CBI to carry out raids on political enemies. A friend in government recently told me, “We own the Supreme Court.” Indeed, institutional capture is central to the agenda of this government.
Lesson number three: ‘Beware the one-party state’. Lesson number six: ‘Beware of paramilitaries.’ Lesson number 17: ‘Listen for dangerous words.’ Lesson number 19: ‘Be a patriot.’ (As opposed to a nationalist.) All of the lessons are pertinent, but the one that struck me the most was Lesson number 10: ‘Believe in Truth.’
“To abandon facts is to abandon freedom,” writes Snyder. “If nothing is true, then no one can criticize power, because there is no basis upon which to do so. If nothing is true, then all is spectacle. The biggest wallet pays for the most blinding lights.”
Snyder cites the historian of Nazi Germany, Victor Klemperer, to describe the four modes through which truth dies and a post-truth world emerges. The first mode is “the open hostility to verifiable reality, which takes the form of presenting inventions and lies as if they were facts.” Snyder talks of the study that found that during the 2016 US presidential elections, “78 percent of [Trump’s] factual claims were false.” BWF (Bhakt Whatsapp Factories) probably achieve a higher percentage, but beyond the fake news sweatshops, there is much untruth in government spin as well—for example, during demonetisation.
The second mode is “shamanistic incantation.” Klemperer spoke of the “endless repetition” that served, in Snyder’s words, “to make the fictional plausible and the criminal desirable.” The constant painting of all political opponents as anti-national by default is an example of this, as are the false binaries that are employed. If you don’t support Modi, then you believe that “Bharat ke tukde honge.”
The third mode is “magical thinking, or the open embrace of contradiction.” Modi embodies this, by doing the precise opposite of what he had promised in the runup to 2014. He had promised “Minimum Government, Maximum Governance”, but what he is serving up is “Maximum Government, Minimum Governance.” On economics, Modi’s government, in its expansion of state power and disregard for individual rights, is to the left of Nehru. In both his authoritarianism and his dangerous economics, Modi is a true heir to Indira Gandhi. And yet, his followers keep seeing him as a break from the past.
The fourth mode is “misplaced faith.” As Snyder sums up Klemperer’s insight about the Nazis, “Once truth had become oracular rather than factual, evidence was irrelevant.” Much as I deplore labels and pejoratives, there is some logic to referring to Modi’s followers as bhakts.
“Post-truth is pre-fascism,” Snyder writes, but there is one important way in which this age of post-truth might be a permanent one. We live in a time of social media, which I believe to be a huge net-positive, but it does have this one bad effect of enabling echo chambers and alternate realities. Back in the day, we all got our information from mainstream media, and even if there were ideological biases, there was at least a consensus on facts. Those gatekeepers are irrelevant now.
We can now believe whatever we want to, and cocoon ourselves in with likeminded groups, often very large, that confirm our biases and worldviews. This leads to self-reinforcing loops that then polarises discourse. We each just live in our own version of the world, and the real world doesn’t matter anymore. It’s 1.3 billion reality shows.
This is scary, and I don’t know how we will ever come out of it.
A few days ago, a friend and I tossed a coin for some reason I don’t remember now. I called Heads. The coin fell Tails.
“It’s Tails,” he said. “You were wrong.”
“No, I wasn’t,” I said.
“Huh? You said Heads, this fell Tails. You were obviously wrong. And I was right.”
“No, I wasn’t. And no you weren’t. Right and wrong are not the only two options. We were both right. And we were both wrong.”
My friend shot me a bewildered look, and put the coin in his pocket. I later remembered that the coin had been mine.
I was hanging with some friends at a birthday party. They were my age. I have never been one for celebrating birthdays, but they seemed happy. At one point, we started talking about the present government of Narendra Modi, and I criticized one of his policies. My infallible logic shut everyone up. The undecided nodded their heads. The devout on the other side, who will be convinced by nothing, shifted uneasily in their chairs. Finally, the Birthday Boy said:
“Amit, You’re such a commie, man. You’re a Lutyens insider. You’re like a courtier of the Gandhi family.”
I sighed. For most of the adult life, I’ve railed against the Gandhis and the Congress, their decades of bad economic policy that kept Indians in enforced poverty, their hypocrisy when it came to liberalism (they were the ones who banned The Satanic Verses), and their pandering to different vote banks. When they were in power, people called me a right-winger, and assumed I must be a Modi supporter. And now that I was criticising Modi, for many of the same reasons, I was suddenly a commie and a Congressi.
I sighed again. Someone handed me a glass of water. I said, “Give me back my coin.”
I would, at this point, like to present to you what I call The Binary Fallacy. The term has been used randomly in many other contexts, but never in this specific sense. Here goes:
The Binary Fallacy is the ingrained, mistaken notion that there are just two options in any given situation.
This is a bit like a False Dilemma, but that is a fallacy that is contextual and constructed. It is often a tactic. The Binary Fallacy, I would argue, is an ingrained tendency in us. We have evolved to commit The Binary Fallacy. In fact, it was necessary for our survival.
Here’s a common situation evolutionary psychologists often bring up. You are living in prehistoric times. You are in the fields. There are dense bushes near you. You hear a sudden loud sound from the bushes, as if something is moving through them.
It could be a tiger. It could be nothing. You have two options:
a) You get the hell out of there.
b) You investigate what’s in the bushes, as it’s likely to pose no danger given your past experience.
There is no space for nuance here. A data scientist may stop and think, “Ah well, out of a sample size of 641 noises-in-bush heard over the last three years, two turned out to be tigers, which means there’s a .3% chance this is a tiger. In contrast to that, there’s a 13% chance that this is deer, and if so, there is a 54% chance that I will catch it and thus take care of my hunting needs for a week. Plus, I will gain satisfying sex from admiring tribeswomen (70%), and might even be next alpha male (22%). If I attribute a satisfaction score of 80 Happiness Units for hunting needs satisfied, 200 for sexual needs satisfied, 400 for alpha-male status and minus 10,000 for death by tiger, my expected value from exploring the source of the noise is minus 838. I should probably leave.”
Meanwhile, the tiger’s finished his lunch, and your genes aren’t going anywhere.
Here’s the thing: the world is fake news. It’s deeply complex, with millions of events coinciding every moment, sometimes independent, often with chains of connections to each other that the human mind cannot unravel. We cannot deal with all this complexity. If we tried to do so, we would freeze with bewilderment and indecision.
So we tell ourselves simple stories to make a complex world explicable. And over time, decision-making shortcuts, or heuristics, get programmed into our brain as the species evolves. This is necessary for survival. If we didn’t take cognitive shortcuts, the Decision Fatigue alone could kill us, leave alone the tiger.
So here’s the upshot: the guy who runs from the tiger will get chances to propagate his genes. Alternatively, in a safer environment, the guy who catches the deer will get to have more sex, so his genes go forward. The nuanced data scientist will either die by tiger or miss the deer.
At one level, The Binary Fallacy is a good thing. We need it to negotiate the world. Also, if you give great importance to outcomes, The Binary Fallacy makes sense. Outcomes are binary. Either something happened, or it didn’t. Either there was a tiger in the bushes, or there wasn’t. You can’t be half-pregnant.
But thinking in terms of outcomes is wrong. I learnt this when I spent a few years as a professional poker player. Poker teaches you to think probabilistically, and to ignore outcomes. For those of you who do not know the rules of poker, I will illustrate this with a coin toss instead of a hand of poker. (The example is taken from this essay I wrote on the subject.)
Let us say I come to you and propose the following bet: we will toss an evenly-weighted coin, chosen or vetted by you. If it falls Heads, I will give you 51 rupees. If it falls Tails, you will give me 49 rupees. You agree, and I flip the coin.
Now, your decision at this moment in time is correct. (In poker terms, it’s a Plus EV decision.) Your expected value from this bet is Rs 1 per toss. (51×50 minus 49×50 divided by 100.) But the outcome is binary. You will either win the toss or lose the toss, win Rs 51 or lose Rs 49. You will never win Rs 1, which is the actual value of the toss to you.
Now, this is a bit of a gamble if you just toss the coin once. But if I offer you unlimited tosses of the coin, it becomes less and less of a gamble. You might get unlucky and have a run of five consecutive tails when we start, but in the long run, you will make money because you made the right decision.
This is what poker players learn, and is also the key insight of the Bhagavada Gita: keep making the right decisions, and don’t worry about the fruits of your actions.
The Binary Fallacy militates against this, though. If your elderly aunt watches you make that bet with me, and the coin comes down Tails, she might be rather upset with you. “You were wrong to make that bet,” she might tell you. “Wrong, wrong, wrong. It’s no surprise that my useless sister has such useless offspring.”
But you weren’t wrong. Your aunt just committed The Binary Fallacy. She is the useless sister.
Here’s an example of what this means in contemporary terms. Let us look at classical liberals who supported Narendra Modi in the 2014 elections. Assume that they wanted economic reforms but were wary of social unrest caused by the Hindutva fringe. So how would Modi govern if he came to power? I’d say that there were many possibilities.
X percent of the time he’d carry out economic reforms and keep his Hindutva warriors in check on the social front. Y percent of the time he would carry out zero reforms and unleash communal forces. Z percent of the time he would carry out both reforms and a communal agenda. And so on, with many permutations and combinations.
Now, no one can say what those numbers would be, but X, Y and Z are definitely all more than zero percent. If Y happened, someone who hoped for X would not be proved ‘wrong.’ (And vice versa, of course.) His thinking may have been correct, even if the outcome went the other way.
This holds for almost any historical event. The recent US presidential election was so close that anyone who said Hillary Clinton would win was both wrong and right, just as anyone who bet on Donald Trump was both right and wrong. (Unless they exuded certainty, in which case they were both wrong.) Ditto Brexit or Macron or Goriaghaat.
This brings me to The Hindsight Bias, another tool in the brainkit natural selection gave us to build simple narratives for a complex world. The Hindsight Bias is our tendency to believe that a) whatever happened in the past was inevitable and b) that we knew it would happen. Therefore, someone who makes a fallacious prediction or carries out an action that leads to a bad outcome was… wrong. After all, he wasn’t right, and what other options are there?
(By the way, there were no elections at Goriaghaat. I just made that up to see if you were paying attention.)
Let’s take a mild deviation here from our main subject, and muse about both The Hindsight Bias and probabilistic thinking. Consider what would have happened – and this is a fascinating counterfactual – if Sanjay Gandhi hadn’t died in an air crash in 1980.
I think it’s fair to say that Indian history would have been very different. I’d also add that we couldn’t say in what direction, though I’d wager that we would probably be worse off. But the thing to note here is that the history we take for granted is a confluence of unlikely events that just happen to happen. When Gandhi flew off that June morning, he wasn’t guaranteed to die, for there is no such thing as destiny. (‘Destiny’ itself is a consequence of our urge for narrative and comfort, and yes, The Hindsight Bias.) There was a very small chance that the plane would crash, and he got unlucky. If there were a million parallel universes that diverged at the moment, he’s still alive in most of them.
The Binary Fallacy has poisoned our political discourse. Part of this is the nature of our times. Our senses are bombarded by more information than ever before. We need to simplify. Who has time for nuanced thinking?
Also, we have evolved in prehistoric times to think in terms of tribes, Our People vs The Other. Culture has gone a long way towards fighting off biology – and culture itself is a consequence of biology, for we have contradictory impulses – but our instincts are what they are. We form teams. And we take everything personally.
I hardly need to elaborate on this binarification. (I wrote a post about it a year ago.) All political discourse has become a matter of you are for us or against us. All arguments have only two sides. If I am against Modi, I am an AAPtard, Fiberal Congressi. If I am against Rahul Gandhi, I am a Sanghi who hates Muslims.
Once I protested at the violence carried out by gaurakshaks, and was asked why I didn’t protest when ISIS killed people in Syria. I have had Whataboutery thrown at me when I have criticized the stifling of free speech by this government, and been asked where I was when Muslims were the one doing the muzzling. Naively, I once produced links to pieces I’d written supporting the brave cartoonists at Charlie Hebdo, the Danish cartoonists, and Salman Rushdie (in the context of The Satanic Verses). But to reply to Whataboutery is foolish and futile.
The Binary Fallacy is ingrained in human nature. It is the nature of the beast. We are the beast; and we must also fight the beast. It is not simple.
A century ago, when India was still a British colony, some of our most prominent freedom fighters were lawyers: Gandhi, Ambedkar, Nehru, Rajagopalachari, Mookerjee and Patel, among others. It is fitting, then, that a few days ago, it was a lawyer who made an eloquent plea for freedom against a government that is arguably as oppressive, and certainly more powerful, than the British were. Remember the name: Shyam Divan.
Divan was arguing against the government’s recent decision to make Aadhaar mandatory for filing income tax returns. Previous challenges to this act, on the basis of the Right to Privacy, were held up in court, and Divan could not make that argument for technical reasons. Instead, he based his argument on a person’s ownership of his own body.
“My fingerprints and iris are my own,” he said. “As far as I am concerned, the State cannot take away my body. Others cannot act in a way that subjects my body to their interests.” Divan argued that the imposition of Aadhaar “completely takes away your political and personal choices. You are a dog on an electronic leash, tagged and tracked, your progress hobbled.”
A person’s body, Divan pointed out, could not be “nationalised.”
This is not a new argument. Divan cited both Enlightenment and modern-day philosophers during his masterful submission, and John Locke was among them. It should be intuitive that all humans own their own bodies, but it was Locke, in the 17th century, who gave the first clear articulation of this: “Every man has a property in his own person. This no Body has any right to but himself.”
What does it mean to own yourself? Well, there are three implications of this. One, for the ‘Right to Self-Ownership’ to have any meaning, you need to respect the corresponding right of others. This leads to what libertarians call ‘The Non-Aggression Principle.’ You cannot initiate violence against another person.
Two, all legitimate rights flow from this right to self-ownership. The right to free speech – for your thoughts are yours, and you should be free to express them. The right to property, which is a result of your labours, and of voluntary exchange. The right to interact with any other consenting adult in any way you wish – economic or personal – that does not hurt anyone else.
Three, because a situation where every person has to fend for themselves is unviable, and likely to be violent, the state is a necessary evil. It commits some violence on the people – for taxes are violence – but only to the minimum extent required to protect our rights. Note that these rights are not granted to us by the state, as if they are favours. Instead, we have these rights to begin with, and we have brought the state into being to protect them. The purpose of the constitution is to limit the power of the state, and not to be, in Divan’s words, “a Charter of Servitude.”
Here, then, are the two visions of the state. The old one, where the people are mere subjects, ruled by the state, for all practical purposes owned by the state. The modern one, in which the state is an instrument of the people, tasked only with protecting their rights.
Deep inside the belly of any modern state, though, is the old one waiting to spring forth. Governments consist of humans, who are corrupted by power. The state, with its monopoly on violence, has tons of power. Thus, states tend to grow endlessly, and become an ever-present parasite on its people.
Divan’s argument was based on personal autonomy and consent, and the attorney general of India, Mukul Rohatgi, was ready with a response. Indians do not have a right over their own bodies, he said, adding that there are “various laws which put restrictions on such a right.” This made for a shocking headline, but he was stating the obvious.
India is a country where you can go to jail for what you say or what you eat. There are countless restrictions on markets, which are basically networks of voluntary exchanges. (If two consenting adults can be put behind bars for engaging in an act that infringes on no one else’s rights, can they be said to own themselves?) There are laws against victimless crimes (like gambling and alcohol). And there is an arrogant condescension by the state towards common citizens, as if it exists to rule us, and not to serve us.
Our constitution paid lip service to individual rights, but did not do enough to safeguard them. It will not save us – and thus, nor will the Supreme Court. It is up to us to snap out of our apathy and declare, as that battery of lawyers did a century ago, that we will not be ruled any more, that we own ourselves.
The other day I was out at a restaurant with a friend. I thought we would go Dutch. At the end of the meal, the friend insisted on paying the bill. “Damn,” I said jokingly, “had I known I would have ordered dessert.”
Now, in the sense of that specific incident, this is not true because I am on a Keto diet and would not have ordered that dessert no matter what. (Sugar is evil.) Also, as a matter of courtesy, if a friend was paying, I would either order the same as always or even less. But my awkward quip reveals an important truth about us and our money. This was best articulated by the economist Milton Friedman, who once famously laid out the four ways of spending money.
One, you spend your money on yourself. (Example: you go out dining alone.) You will be careful both about the value you get, as well as on about not spending too much. In other words, you will both economize and seek value, and will thus get maximum value-for-money.
Two, you spend your money on someone else. (Example: you buy a proforma wedding present for someone you are not close to.) Here, you don’t care so much for value – as you are not the beneficiary – but you will certainly economize, as it is your money being spent.
Three, you spend someone else’s money on yourself. (Example: You are on a foreign trip for your company at a five-star, all expenses paid for.) You will seek maximum value for yourself, and won’t be so careful about economising, as it is not your money that is being spent.
Four, you spend someone else’s money on someone else. In this case, you will neither economise, for it is not your money spent, nor look for value, as you are not the beneficiary. It is in this fourth instance that the most money is likely to be spent for the least benefit.
This is government.
Some of us tend to think of government as this divine body run by angels where all good intentions are transformed into good outcomes. But government is really a collection of human beings, and human beings respond to incentives. Friedman’s Law of Spending, in other words, applies to them. And they are spending someone else’s money on someone else.
Let’s look at an illustration of this: the potholes of Mumbai. Now, there is a department in the local municipality that is supposed to look after our roads, and it does not do so well enough. This is not a consequence of the badness of the individuals involved, but of the system itself. These government employees are tenured and unaccountable. Also, they’re spending someone else’s money on someone else. They are likely to overspend and underdeliver. And indeed, every year our potholes get repaired before the monsoons, and in a few months, the roads are pockmarked again.
This is actually a best-case scenario. To begin with, a government is inefficient by inadvertent design. As time goes by, as a consequence of this design, it becomes dysfunctional by deliberate action. In the case of the roads of Mumbai, it is likely that the government servant involved gets work done by a contractor at a higher price than normal so that he can take a hefty bribe for himself. It is also likely that he makes sure the work is shoddy so that more repairs are required soon, necessitating more bribes for himself. That’s the ecosystem right there.
And indeed, that’s all government. Consider public education, where we spend more and more every year and get worse outcomes than low-cost private schools spending a fraction of what the government does. The real travesty here is that the government not only fails to provide quality education, but it puts up barriers for private players to do so. In truth, private entrepreneurs are far likelier to provide good services because their incentives are better. Their survival and their profits depend upon their providing value. Not so in government.
Government is India is bad at two levels. Level one, it spends other people’s money on other people, which is a hopelessly inefficient structure to begin with. Level two, it has become an instrument for individuals to prey on citizens in a parasitic way, making money not by providing value but by robbing others of value. The government is not much more than a legalized mafia, extorting hafta, and yet we behave as if those who avoid paying hafta are the ones in the wrong. Isn’t that perverse?
The great Frédéric Bastiat once said: “Government is the great fiction through which everybody endeavors to live at the expense of everybody else.” It’s a great game. Even if we cannot win this game, we should at least see it for what it is.
Like all technology, Artificial Intelligence (AI) will make humanity better off in the long run. But in the short run, it will cause much disruption, including mammoth job losses in India’s services industry. Futurist Ramez Naam and policy wonk Pavan Srinath join Amit Varma to talk about the Unseen effects of AI.
For decades, there has been a stricture in Karnataka that non-Kannada films cannot be dubbed into Kannada. The idea behind this was to protect the local film industry—but were the unintended consequences just the opposite? Pavan Srinath joins Amit Varma to discuss the Unseen effects of this ban on Kannada dubbing.
Rent control is a classic example of a regulation meant to help the poor that ends up hurting everyone. Alex Tabarrok joins Amit Varma to discuss how real estate in Mumbai would be so much cheaper if not for such government regulation.
It is a sad day for any democracy when MPs and MLAs sell themselves to the highest bidder. Horse-trading is monstrous. It was to prevent exactly this that the Anti-Defection Law was passed in 1985. But did it end up doing more harm than good to democracy? Barun Mitra joins Amit Varma to discuss the unseen effects of this famous legislation.
For decades now, India has either banned or heavily regulated futures markets in agriculture. The conventional wisdom is that futures markets can turn farmers into gamblers. But what if the Unseen Effect of such regulation is exactly the opposite? Karthik Shashidhar joins Amit Varma to chat about the unintended consequences of such well-intentioned but misguided regulation.
Mumbai is one of the most expensive cities in the world, and one of the reasons is that there is too little land and too much sky. Alex Tabarrok joins Amit Varma to discuss Mumbai’s insanely low Floor Space Index (FSI), a key reason why real estate here is at such a premium.
There comes a moment in some lives when a sudden, unexpected event makes you look at the world with greater clarity than before. It could be a happy moment: a childhood friend proposes to you, or you stumble into parenthood. It could be a sad one: you are diagnosed with cancer and told you have six months to live. It makes you look at the world differently, and some things seem so clear that you wonder why you did not notice them before.
In the life of our nation, the rise of Yogi Adityanath to the chief ministership of Uttar Pradesh might well be one such unexpected yet clarifying moment. I was stunned when it was announced; and yet, it makes so much sense that any counterfactual now seems absurd. It was, I have come to believe, a decisive and inevitable event in a conflict that has been simmering in India for at least a century.
The great battle that took place on our peninsula was not between the natives and our colonial overlords, but between a new way of thinking and an old way of existing. While the Enlightenment swept its way across Europe and the USA in the 18th century, its influence was felt in India only in the 19th. Liberalism, however one tries to spin it, was an import from the west, and it is ironic that many of our finest freedom fighters were influenced by British thinkers. The great early figures of our resistance – heroes of mine such as Naoroji, Ranade, Agarkar and Gokhale – were essentially British liberals.
Until Mahatma Gandhi, the freedom struggle was a battle between the British empire on one hand, and Indian elites inspired by Western ideas on the other. Gandhi did catalyse it into a mass movement, but his intellectual influences weren’t Indian either. He was more influenced by Ruskin and Tolstoy than any Indian thinker, and VS Naipaul once called him “the least Indian of Indian leaders.” By the time the British finally quit India, the liberalism of the Gokhale years had been replaced by the soft socialism that was then in vogue. Do note that both these strains, the early classical liberalism and the socialism that is so antithetical to it, were Western imports.
The constitution, intended as an operating manual for this new nation, reflected this. The commentator Nitin Pai, in an essay in Pragati, a magazine I edit, wrote: “On 26th January 1950, the Enlightenment […] was injected into the veins of Indian society in the form of a written statute. We are still dealing with the shock of that moment.”
‘Into the veins of Indian society.’ It is worth reflecting here that the state and society are two different beasts. This difference is a cornerstone of conservatism, which the Encyclopaedia Britannica defines as a “political doctrine that emphasizes the value of traditional institutions and practices.” Who were the Indian conservatives who would lead the fightback of society against the state?
The biggest manifestation of conservatism in India is what we call the Hindutva right. I used to be sceptical of it, as I consider ‘Hindutva’ to be an artificial construct, an insulting caricature of a great inclusive religion. But even if that is so, Hindutva is authentically conservative because it arises out of a nativism that is inherent in human nature – and consequently, rooted in our culture. (Culture can both mitigate and reinforce human nature, which is the whole struggle right there.)
Early Indian conservatives were more interested in social rather than political battles, which is why they didn’t play much of a role in the freedom movement. After Independence, the Nehruvian big state seemed to have subdued the Hindutva social project – but this was temporary. The journalist Rishi Majumder, who is writing a biography of the conservative leader Syama Prasad Mookerjee, describes in a forthcoming essay in Pragati how “the RSS, as well as other right-wing groups, organizations and movements, have thrived and grown through many years when the BJP was not in power.”
Much modern politics is the battle between these competing visions of the state. Should the state be a superstructure that imposes certain values, decided upon by elites, upon society? Or should it be a servant to society, protecting its traditions without judging them from the prism of other value systems?
Narendra Modi’s rise to power was fascinating because he embodied the hopes of people on both sides of that spectrum. Some classical liberals dismayed by Nehruvian socialism backed him because they saw the damage Nehru’s ideas had done to India, and wanted their values imposed from above. And the whole Hindutva movement, obviously, fell in behind Modi because his ascent was the culmination of their century-long struggle.
These two strands are incompatible. And now, with the rise of Yogi Adityanath, there is no more ambiguity.
Big Brother is watching you, and you have no protection. There has been much hype about how ‘Digital India’ will transform our lives, but there are unseen elements to it that should make you worry. Devangshu Datta joins Amit Varma to discuss why it is so alarming that there are no laws in India to protect privacy and defend against data theft.
Jawaharlal Nehru once said that profit is a ‘dirty word’. He wasn’t alone in his distrust of the profit motive, which is effectively banned in education in India. Amit Varma chats with education reformer Parth Shah on why this thinking is misguided, and might be responsible for the pathetic state of education in India.
Healthcare in India is in a dismal state, and so is the state of medical education. Pavan Srinath joins Amit Varma to discuss the role of the Medical Council of India in this mess. Is it a responsible industry watchdog helping keep standards high—or is it a part of the problem?
For any shopper in India, there is no acronym as comforting as MRP: Maximum Retail Price. When you see that on any packaged good, you feel assured that you won’t be ripped off. But is it really that simple? Prithwiraj Mukherjee joins Amit Varma to discuss the seen and unseen effects of MRP.
On September 18, 2016, a group of terrorists attacked an Indian army brigade headquarters near the town of Uri in J&K. Nineteen people died, and there was immense pressure on the Indian government to retaliate. The prime minister, Narendra Modi, eventually launched what he described as ‘surgical strikes’, meant to be a show of strength and resolve. Defence analyst Pranay Kotasthane joins Amit Varma to discuss the Seen and Unseen effects of these surgical strikes.
A few days ago, the magazine Pragati relaunched under my editorship. This was the editorial I wrote to mark its return.
One of my babies on that space: a section called Brainstorm, which aims to “create a space where diverse minds can discuss big issues in a respectful way.” The first such discussion, on ‘The Future of the Indian Republic’, is underway. Here’s my intro post to kick that discussion off. You can read all the essays in that discussion here
At the very moment you read this, there is a Test match going on and two batsmen consulting out in the middle about whether they should use the DRS.
“Was I really lbw? Should I refer? Do you think it was missing?”
“I don’t know. But whatever you do, don’t look at the pavilion. Control your neck. Control it. Hold it if you have to. Here, I’ll hold it for you. Control!”
The big cricket story of last week, somehow, was not India’s excellent comeback in the Test series against Australia, but the DRS controversy. Batsmen are not supposed to look at the pavilion for advice when deciding whether or not to go for a decision review. Those are the rules, Steve Smith broke the rule, and it was fair enough that he was asked to leave the field of play. But the rules themselves are ridiculous.
I’ve been ranting about this for years, and still these people don’t learn. You would think no one reads me. Gah. Anyway, because I care about you, here, once again, are my thoughts on technology in cricket. And in life, which, by the way, is futile. (I don’t shy away from the big questions.)
First up, a question: why do umpires exist in cricket? After all, cricket is about batsmen batting, bowlers bowling and fielders fielding. No one goes to a ground to watch an umpire umpire. Well, umpires exist purely as a means to an end. They have to take decisions about whether a batsman is out or not, and lubricate the action in the game by communicating to scorers exactly what is going on. A secondary function is to step in if there is physical conflict, and to maintain decorum. Their job is not to be the action, but to keep the action flowing smoothly.
In other words, umpires are a technology.
Think of anything that is a means to an end as a technology. Umpires are a conventional technology for arriving at the right decisions on a cricket field. Now, the last couple of decades have seen rapid upgradations to pretty much every other technology there is. And so it is in the case of cricket. The decision-making mechanisms in cricket have been enhanced with new technologies meant to supplement (and not replace) the umpires.
The most significant of these is Hawk-Eye. Umpires, being human (as of now), are prone to all kinds of optical illusions, such as the parallax error, which impede their decision-making ability. Hawk-Eye, in every respect, makes better decisions than an umpire can. (And it makes them in real time – the time-consuming replays you see you on TV are only for the benefit of viewers.) But for the longest time, luddites fought the use of Hawkeye in decision-making, which led to the ridiculous situation that everyone watching a game had accurate information about whether a batsman was out or not – except the bloody umpire. It was ridiculous.
Cricket authorities have since become more open to the use of technology, but not enough. They almost seem to use it grudgingly. Consider DRS, for example. If the idea of the technology called umpires is to make correct decisions, and there is more technology that will lead to even better decisions, then why don’t we use it as much as possible? Why should DRS appeals be limited for a batting side? Why should every dismissal not be reviewed as a matter of course? Reviewing a dismissal would not take more time than a batsman walking back to the pavilion, so this should be a no-brainer.
Steve Smith wouldn’t be so embarrassed then, eh?
But really, the larger issue here is that the world is changing rapidly, and our minds are not adjusting fast enough. It’s not just cricket. As a species, we don’t have enough clarity about means and ends. For example, just as umpires are a technology for making correct decisions on a cricket field, consider that animals are a technology for growing food. And now that scientists have figured out a way to grow meat in labs without sentient animals being involved, they may soon be an outdated technology, at least for this use case. That might lead to goats going extinct. (Not puppies, though, because puppies can be hugged.)
Equally, hugs are a technology for oxytocin generation. Romance is a technology for the way it makes us feel and the chemicals it releases. If we could pop a pill and feel the same way, would we bother to fall in love, or hug or cuddle or caress, or even woo? Are we so arrogant enough to believe that the love we feel for anyone is truly transcendent, and not mere technology? And also, is humanity any loftier than just a carrier for the trillions of bacteria that inhabit us? What suckers we are, that we behave as if we’re the rulers of the universe?
Okay, excuse the digression, your life has meaning. Happy now? Get back to watching the cricket, but do think about how it makes you feel, and the purpose of it all.
The other day, an internet troll sent me a love letter. “Why have you blocked me on Twitter?” he demanded to know. “You claim to believe in the freedom of expression. You are a hypocrite.” After that he said a few colourful things about my family. I think he wanted me to copulate with them.
I am an absolutist when it comes to free speech, and this friendly troll was wrong. Indeed, I find that there is no concept as deeply misunderstood today as the right to free speech. These misunderstandings exist on all sides of the political spectrum. Thus, I find myself duty-bound to write this brief primer on the philosophical origins of free speech, to illustrate what I understand it to be.
The earliest conception of individual rights came from the 17th century Enlightenment philosopher, John Locke. Locke held that the most fundamental right of all, the one from which all others emerged, was the right to self-ownership. After all, it is practically self-evident and beyond argument that, right from birth, all of us own ourselves.
All individual rights arise out of this right to self-ownership. The right to life. The right to our thoughts, and thus to our speech. The right to our actions, which also results in the right to property. And so on. Freedom, another misunderstood term, means a condition in which these rights are not infringed.
All of our rights are contingent to our respecting the corresponding rights (and thus, freedom) of others. My fist stops where your nose begins, as that old saying goes. Libertarians also call this the non-aggression principle, where aggression is defined as infringing someone’s rights. You may do anything as long as there is no coercion involved.
By this reckoning, all voluntary interactions between consenting adults are kosher, as long as they do not infringe on anyone else’s rights. This holds true, as I often point out, whether those interactions happen in the marketplace or in the bedroom. Both the left and the right are thus incoherent when they support one kind of voluntary exchange but not the other.
In accordance with the non-aggression principle, the core question I ask myself in any situation is: Where is the coercion? Looked at this way, many of the questions that keep getting raised about free speech answer themselves. Am I infringing on the rights of the troll I block? No, because there is no coercion involved. He is still free to say whatever he wants, but he is not entitled to my time and attention. Is a college within its rights to withdraw an invitation to a speaker? Yes, it’s their property, and the speaker can still express himself elsewhere.
When it comes to our actions, there is much that we can do that can harm others. But it is very hard to breach the non-aggression principle with words alone. As that old adage goes, “Sticks and stones may break my bones, but words will never harm me.” Recognising this, the first amendment of the US constitution protects free speech in absolute terms. Obviously, words can be used to incite physical violence, and that is a reasonable limit of free speech. The US Supreme Court, in a famous case (Brandeburg vs Ohio, 1969) set the standard as “imminent lawless action.”
The Indian constitution, sadly, does not protect free speech. Article 19(2) lays out caveats such as “public order” and “decency and morality”, which are open to misinterpretation and, thus, misuse. This is a pity, but our democracy is a work in progress, and is made healthier by a free exchange of ideas.
For that reason, I was alarmed when I read Arun Jaitley’s quote last week about free speech being “subordinate to the needs of the sovereign state”. That is the wrong way around, and I would argue that a healthy nation needs an open exchange of ideas, for which free speech is indispensable. That is why, if I were asked to compare Arun Jaitley and Umar Khalid, I would say that it is Jaitley who is anti-national, and a threat to our great republic.
Appearances can be deceptive. I saw two Bollywood films recently that evoked different reactions in me. One was supposed to be gritty, realistic and well-researched, but actually showed completely ignorance of the world it was set in. Another had a small story at the start of it that seemed outlandish, the product of an imagination gone wild, but was spot on. Sometimes the most obvious truth can be a falsehood; and the most surreal story can be true.
Let’s start with the believable story. Shah Rukh Khan plays a bootlegging gangster in Raees, a film directed by Rahul Dholakia, who had made the acclaimed Parzania ten years ago. Raees looks real, and some reviews called it well-researched, but this is a façade. The writers seem to have no actual knowledge of the criminal underworld and the political economy in Gujarat. While the film is full of implausible events, one particular arc gives it away.
You would imagine that a man who sells alcohol would be the enemy of the man who wants alcohol to be banned. So when a sanctimonious politician plans to carry out a Darubandi Yatra (pro-prohibition march) through Gujarat, Raees Alam, our hero bootlegger, warns him not to bring it through his area. He fears it will affect his business. This seems intuitive and natural. These men are working at cross-purposes, right?
Well, in the real world, these men are allies. Prohibition is the greatest boon to a bootlegger. It is the main reason he exists. And a politician who supports prohibition should be his greatest ally. He should support him to the point of funding him, and even share his profits with him. This is best illustrated, in economics, by the concept of Bootleggers and Baptists.
The regulatory economist Bruce Yandle first coined the phrase ‘Bootleggers and Baptists’. It describes how regulations evolve, and how the different interest groups that benefit from them become unlikely allies. For example, take a Baptist who preaches that alcohol is evil, and makes sure it is banned. Where there is demand, supply will spring up, so enter the Bootlegger.
Bootleggers and Baptists share a symbiotic relationship. In Yandle’s words, “Baptists flourish when their moral message forms a visible foundation for political action. […] Bootleggers, who expect to profit from the very regulatory restrictions desired by Baptists, grease the political machinery with some of their expected proceeds.” In other words, not only are their incentives aligned, they might sometimes be overtly hand-in-glove as well, with the Bootlegger funding the Baptist.
Look at the regulation around you, and you will see Bootleggers and Baptists everywhere. Every government regulation on free markets benefits a specific interest group at the expense of the common people. These interest groups then funnel some of their gains back into politics, in the form of donations to the very politicians who create, perpetuate and expand these regulations. It is a vicious cycle in which the common man gets shafted.
Let’s move on, now, to a better movie. Akshay Kumar’s entertaining Jolly LLB 2 gets a few details wrong about the legal system, but the most outrageous story in the film is actually true. Jolly LLB, played with impeccable comic timing by Kumar, takes on a case at the start of the film on behalf of a man who’s been declared dead by his family so that they can take his property. All government papers say he’s dead, and the judge refuses to believe that he is alive. He needs proof that he exists, and he eventually gets it by throwing a shoe at the judge. (This scene was censored, so you won’t actually see it, just the commotion afterwards.) The cops have to record his name as they arrest him, and boom, that becomes the proof that he’s looking for.
Surreal, eh? You haven’t heard the half of it. This story is actually all a true story – and if anything, understates it. Its inspiration is surely a gentleman named Lal Bihari, a farmer from Azamgarh in Uttar Pradesh. Lal Bihari was born in 1951 – and was told by a government officer in 1976 that he was dead, and that his land now belonged to his cousins. “But I am here before you,” he said, as reported in Open magazine. ““You know me. I have met you before.” But nothing doing, he had no proof that he was alive.
That’s only where the story begins. Lal Bihari renamed himself Lal Bihari Mritak (dead man), and went about proving himself alive. To do this, he organised his own funeral (Munnabhai style), applied for compensation for his ‘widow’, threw stones at a police station so that he would get arrested and his existence would be recorded, kidnapped his cousin, and finally, stood for election.
He took on VP Singh from Allahabad in 1988 and Rajiv Gandhi from Amethi in 1989, but dead men don’t win elections, and he didn’t either. By this time, he found that there were many others in the ranks of the walking dead, and founded the Uttar Pradesh Mritak Sangh, an association of legally dead people. At last count, they had 20,000 members, of whom four had managed to come back to life. One of them was Lal Bihari. From 1994 he was no longer Mritak, and when he really dies, I bet the authorities will be, like, been there done that.
You can’t make this shit up, right? Bollywood filmmakers should learn this lesson from Jolly LLB and Lal Bihari Mritak: real life has all the great stories you need. Just dig into that.
A few years ago, a photo studio in Ahmedabad offered its customers free passport photographs. There was no catch, no small print. It was a free lunch. Amit Varma is joined by Mohit Satyanand, as they explore how this free lunch transformed financial regulation in India. They also discuss how bad incentives can lead to corruption becoming a cultural phenomenon.
Here’s the video and transcript of a keynote speech I gave at the Asia Liberty Forum on January 11, 2017 in Mumbai.
Note: In this conference, the word ‘liberal’ was used in its classical, European sense, not in the American one. I’ve used it in the same sense in this speech, almost interchangable with ‘libertarian’, though I usually prefer not to use the word as it means so many things to so many people.
Before I start, I want to congratulate Parth Shah for 20 years of CCS. Parth, I’ve lost count of the number of young people I have met to whom you’ve been a teacher and a guide, and there is one thing common to all of them: not only do they respect you enormously, but they also love and adore you even more than they respect you. That’s remarkable. Thank you for existing!
I’ve started on a happy note, but I’m afraid that the rest of my speech will contain both sadness and anger, and maybe a little hope. The topic of my keynote speech today is “Freedom in India.” Now, I’m not going to talk about the history of what I call this ongoing freedom struggle in India: most of you know that story too well. Instead, I want to share my personal feelings about where we stand today.
I think the quest for freedom in India that all of us care about so much is at an important crossroads. We face challenges we did not face before. We have opportunities we did not have before. And to understand the road ahead, I think there are two things we have to do. One, we must come to terms with Narendra Modi.
Let me first lay the context for why Modi became such an attractive figure for many freedom-loving people before 2014. Eric Hoffer writes in his book The True Believer, which is a book about the rise of mass movements, that they are driven by frustration. Modi tapped into different kinds of frustrations during his rise to power. Among them were classical liberals who cared for freedom – both personal freedom and economic freedom – and were frustrated by nearly seven decades of state oppression that had kept hundreds of millions of people in poverty for much longer than they should have. The reforms of 1991, we must remember, were a product of circumstances, and were not driven by political will. They did lift millions of people out of poverty, but they were limited and half-hearted, and once the balance-of-payments crisis was over, they more or less stopped. We still remain largely an unfree country. In the 2016 Index of Economic Freedom, India was still at a miserable 128 – eight places lower than 2014, by the way. This is trivial – most of you know this.
Modi appeared, to many of my friends, as a beacon of hope. The Congress was – and is – feudal party ruled by a repugnant family that has harmed India immeasurably, and most regional parties were focussed on narrow identity politics. Modi is a master of optics, and as he built himself up as a national leader, he became a bit like a Rorschach Inkblot Test – you could see in him what you wanted to.
No wonder many classical liberals fell in behind him. They were willing to give him the benefit of the doubt for the Gujarat Riots of 2002, and put that down to incompetence rather than collusion. They were sick of the status quo, and he represented a hope for change. As my friend Rajesh Jain put it, he was “a lighter shade of gray.” At least he made the right noises – his slogan ‘Minimum Government, Maximum Governance’ was music to my ears.
Now, a party on the campaign trail is like a young man wooing a woman: he’s on his best behaviour, and he’ll tell her just what she wants to hear. But governance is like what happens after marriage: the girl find out the truth about the guy: he farts all the time, he snores like a hippopotamus getting dental surgery without anaesthetic, he surfs porn all night, he beats her up, indeed, he beats her up day after day after day – and very often, she rationalises this, because she made this choice, and there seems to be no alternative.
Let’s take a brief look at how the Modi government has performed. The first thing we learned about Modi is that he is no reformer. Under him, government has grown bigger and more authoritarian. The welfare schemes he once criticized have grown, and some of them have been renamed and he has pretended that they are his ideas. He has not carried out any of the reforms he promised to, including low-hanging fruit like privatising non-performing public sector units that no one would have fought for. Indeed, he has shown us that he is actually a true heir of the Congress party: he has the economic vision of Nehru, and the political instincts of Indira Gandhi. And I mean both of those as a criticism.
Like Nehru, Modi has a top-down, command-and-control vision of the economy. To him, society is a machine to be engineered: he considers himself a better engineer than his predecessors, but he is an engineer nonetheless. And like Indira, he uses power as a tool to oppress and harass his opponents, and to clamp down on dissent, and to reward his cronies.
For two years between 2014 and 2016, Modi carried out almost no reforms, despite making some noises in the right directions: remember, he is a master of optics. But then, in November last year, he showed his true colours as an authoritarian social engineer. There is a thought experiment that I sometimes throw to my friends: It’s the morning of November 8, 2016, and you are the prime minister of India for exactly one day. In that day, you have to enact exactly one policy which, without breaking the law or going against the constitution, harms the people of India the most. The maximum damage to the maximum people. What are you going to do?
Think about this and let me know if you come up with an answer better than what Narendra Modi actually did. Allow me to break down for you what Demonetisation actually did. Modi essentially took all 1000 and 500 rupee notes out of circulation. Now, a 1000 rupees is equal to around 15 dollars. It is not really a high-denomination note. Modi had perhaps not bought anything from a store in two decades, so he didn’t realise that these notes are not used mainly for as unit of storage, as high denomination notes are in some other countries, but as a medium of exchange. Common people use these notes. So much so that 86% of the currency in use consisted of these notes. 86%!
Let me share some more figures with you. Before November 8, 97% of the transactions in this country were cash transactions. Contrary to the blatant lies of the government, only 53% of all Indians had bank accounts. That’s 600 million people without bank accounts. How do you think they stored their money? Yes, you could notionally go to a bank anyway and exchange this money for new notes, but you need a government ID for this, and again, despite the lies spread by the government, 300 million people in India had no form of government ID at all. And even those who did have bank accounts could deposit their money after standing in a queue for hours, but had limits placed on withdrawals. Get this, they were not being allowed to withdraw their own money!
I wrote at the time that it was the largest assault on property rights in the history of mankind, a point that my friend Barun Mitra reiterated in his excellent speech yesterday. The opportunity costs were huge – people spent hours in queues begging for their own money, and could not use either their time or the money they had productively. Much of the economy is informal, because of structural failures of the state itself, and it came crashing down. Migrant workers across the country were laid off because there was no cash to pay them, and they went back home. Farmers could not sell their produce or buy seeds for the next harvest. Truckers lined up on roads with nowhere to go and nothing to carry. Thousands of businesses across the country shut down.
In all this, the rich got away. The government kept changing the goalposts for why they did this. First, they said it was to counter black money. But a finance ministry estimate, based on thousands of income tax raids in the past, shows that only 6% of black money is kept in the form of cash: the other 94% is in gold, real estate and foreign accounts. Even that 6% was laundered. You see a reflection of this in automobile sales. They have plummeted for two-wheelers and three-wheelers, but SUV sales are steady. The rich got away.
The government also said that Demonetisation would kill fake currency. Well, their own estimate showed that only one in 4000 notes was fake, a perfectly acceptable figure, and the usual way of tackling this, practised across the world, is to phase out old notes. The government also said that terrorist activity would be hurt by this, but cross-border attacks have actually gone up in this time. Yes, criminal activity has been affected, but that’s because ALL business has been affected. You do not cure a cold by cutting someone’s head off.
So there was no benefit, and the cost is incalculable. Some more figures: According to the All India Manufacturer’s Association, in a report released last month, employment is expected to fall 60% by March, and revenues will come down by 55%. And the IMF released a forecast that said that India’s GDP will grow by only 6.6% this year, a full percentage point lower than last year. Let me tell you what that number means. My friend Nitin Pai of the Takshashila Institution recently estimated that with every 1% rise in the GDP, 2 million people come out of poverty. Two million people. That is the opportunity cost of Demonetisation in just the short term: those two million people trapped below the poverty line because of one man named Narendra Modi. This is both a humanitarian disaster and a moral outrage.
Now, the question here is, all these classical liberals who supported Modi in 2014, have they seen the light now? This is a man who doesn’t give a damn about liberal principles, and is taking the country backwards. Friends of mine who are here tonight have invoked The Road to Serfdom to describe what is happening, and some talk of creeping fascism. But what do our classical liberals have to say?
My friend the economist Suyash Rai said an interesting thing to me a few days ago. He said, “Mujhe communist se dar nahin lagta, mujhe classical liberal se dar lagta hai.” (“I am not scared of communists, I am scared of classical liberals.”) There are too many people who pay lip service to freedom but support this oppressive regime. There are a number of reasons for this: Some of them invested too much emotionally in Modi, and will rationalise anything he does. Others have been co-opted into the establishment, with Padma awards or seats on the Niti Aayog or Prasar Bharti or the RBI Board of directors, and now that they are finally establishment intellectuals, they ain’t gonna give it up.
I met one of them the other day and said to him, “Isn’t modern technology wonderful?” He said, “Why?” I said, “Bro, this is the first time I’ve seen a man without a spine stand up straight.”
But leave aside the narrow compulsions of weak men without principles. What are the lessons I draw from all of this? Lesson number one: You can never depend on politicians to advance your principles. David Boaz once said, “There are only two political philosophies: liberty and power.” These are necessarily opposed to each other. Those who enter politics lust for power. If your ideas or your support seems useful to them, they will pretend to be on your side, but when they’ve gotten what they wanted, they will spit you out. Their incentives come firstly, from the special interests that fund them, and secondly from the people who elect them. And that brings me to lesson number two.
Lesson Number Two is that policy advocacy is mostly useless. If you want to make an impact on the political marketplace, you need to attack the demand side, not the supply side. You need to go to the people!
I said earlier in this talk that there are two things that people who care about freedom have to take into account today. One, we have to come to terms with Narendra Modi. Two, we have to understand this political marketplace. And the most important thing to understand about India is its changing demographics.
India is rapidly growing younger and younger. The average age in India today is 27, and 60% of the country is born after the liberalisation of 1991. This is both a problem and an opportunity.
Here’s the problem. These young people are growing up in an India that needs 1 million jobs every month – 12 million jobs a year – to accommodate this new workforce. These jobs aren’t there. One of the reasons Modi won in 2014 was that he promised to create these jobs. He hasn’t delivered; he can’t deliver The government can’t create jobs, it can only enable job creation. But the reforms that would make this happen – labour reforms, ease of doing business reforms – simply aren’t happening.
It’s no surprise then all the recent agitations in India have been centred around reservation in government jobs: The Jat agitation in Haryana, the Patidars under Hardik Patel in Gujarat, and so on. And this will get worse. Artificial intelligence will now decimate jobs in the service industry, where we’ve done relatively well recently. And automation will mean that the window for becoming a manufacturing superpower because of cheap labour will be closed to us forever. So there is a coming crisis.
Now, how are we to sell our ideas in times such as these. Classical liberal notions like spontaneous order and the positive-sumness of things are unintuitive and hard to sell in the best of times, but even more so in times of scarcity. I used to think that rising prosperity will end identity politics in India, but no, identity politics is on the rise, and we are becoming tribal again. No wonder populism is winning.
But there is also an opportunity here. These young people are not bound up in the dogmas of the past. They are not necessarily believers in the religion of government. If we manage to get out there in the marketplace of ideas, they will be more receptive than any generation before them. And that is the principle challenge before us. How can we get into the culture? How can our ideas be part of the discourse? Understand this: the prime minister of India in the year 2050 could be a 15-year-old girl who is sitting in a small town in India somewhere at this very moment, doing her boring homework. How can we reach her with our liberal ideas? Can we shape the way she thinks about the world? Can we package our ideas in an empathetic way that appeals to her emotions? Can we get her off Snapchat? Can we reach her on Snapchat?
In another two or three decades, this demographic tide will reverse itself, and we will become a rapidly ageing country. Will we still be poor or illiberal then, or will we be a beacon of freedom for the world? I can’t answer that – and I don’t even have any specific answers as to how we can get there from here, but I thought it important to highlight the challenges we face. Things are not rosy, freedom is not on the march. But we have to try, and I know this: just by the size of the battlefield alone, this battle for freedom in India will be the most significant freedom struggle in the history of humankind. And we can only win it on a full stomach. It’s time for dinner, guys, thank you for listening to me.
The first three weeks of Donald Trump’s presidency have been frightening. This is because he seems to be that one politician who actually intends to do what he promised on the campaign trail. He’s hitting out at immigrants, attacking free trade and it looks like he’ll build that wall, with his own tiny hands if he has to. But even an unhinged demagogue must get some things right, if only by accident. In the middle of this carnage, Trump’s appointment of Betsy DeVos as education secretary is a move in the right direction.
DeVos has been demonised by the Democrats, who tried to block her appointment, but their attacks were mostly personal ones that did not focus on the substance of what she proposes to do in office. For decades, DeVos has been a proponent of School Choice. This would transform education in America, and would show a way forward to other countries, including India. I’ve been writing in favour of School Choice in India for many years, so let me break down what it means in an Indian context.
Education in India, as we know, is in an abysmal state. The government devotes vast amounts of money to it, but outcomes are terrible. A recent Annual Status of Education Report (ASER), described by the government itself as “pretty depressing,” showed that 52% of students in Class V were unable to read a Class II textbook. As much as 58% of Class VIII students could not do simple division, and teacher absenteeism was rampant. Teachers are not the problem, though, but a symptom of it. The problem is incentives.
Government schools are guaranteed their funding, and their teachers, who are paid many times what teachers in budget private schools get, are more or less tenured. They have no reason to aim for excellence and try to provide quality education. How does one make them accountable, and make sure that our money is better spent? One answer is school vouchers.
Under a voucher system, the government, instead of giving money to government schools, gives vouchers to parents. Parents decide what is the best school for their children, and submit the voucher there. That school then gives the voucher to the government and gets the money.
This changes the incentives for government schools and their teachers. They have to perform now, and deliver quality education, or parents will take their kids elsewhere. Competition brings accountability. This also empowers parents with choice. They are the people who should decide what is best for their children, and not a distant, unaccountable government. In a nutshell, the state funds schooling, not schools.
Vouchers are only one piece of the puzzle, of course. They are pointless if there are harsh entry barriers for private players in education. For 70 years, we have had insane regulations in place that disallow or disincentivise private schools, especially for the poor. If a school provides budget education to children in a slum, why should it matter if its playground isn’t big enough? Let parents decide what they value.
As it happens, there is a vast informal economy of budget private schools, and poor parents vote with their feet. Organisations like the Centre for Civil Society have long documented how thousands of poor parents in slums and villages across India prefer to pay to send their kids to a budget private school rather than to a free government school. This speaks volumes.
Private schools are demonised, but contrast their incentives with those of government schools. In a marketplace with no entry barriers – which India is not – the profit motive is the best incentive. After all, you can only make a profit by delivering value to others. When I was growing up in the 1980s, telecom, airlines and education were all government monopolies, and delivered abysmal service. Today, two of them allow private players to compete freely, and because of competition and the profit motive, we the people are better off. But not education, which is so important for our nation’s growth.
When you fight against the system, of course, the system fights back. The status quo is always fiercely defended by the special interests that benefit from it. (Since they are beneficiaries of the status quo, they also have the money to spend on it.) In the US, for example, teachers’ unions are the biggest opponents of education reform, as the current system give them power and privilege without accountability. They happen to be prominent donors to the Democratic Party who, as a result, oppose School Choice.
As an illustration, consider that the sanctimonious Elizabeth Warren actually advocated school vouchers in a book she wrote in 2003. She changed her stance when she joined politics and realised who the most influential donors in the Democratic Party were. That’s the whole game of politics right there: special interest groups purchasing politicians to benefit at the expense of the common people. It’s ironic, then, that Trump should be on the right side of this issue.
There are two kinds of diversity in India, one good, and one not so good. Our greatest strength is our diversity of people and cultures and languages. But one of our great weaknesses is our diversity of taxes, across states and regions. We have so many different kinds of taxes that the cost of compliance is the most daunting cost for many businesses, and corruption is out of control. Also, taxes create friction in trade, and the costs are borne by consumers and businesses alike. It’s a negative-sum game.
The Goods and Services Tax (GST) was supposed to be the panacea that would get us out of this mess. While India has been one country since 1947, it hasn’t been one market, and the GST was expected to get us to that promised land. It has been many years in the making, though, and has become more and more convoluted in the process of political and bureaucratic negotiation. Thus, while the Seen Effects of a perfect GST would normally be excellent, the potential Unseen Effects of the GST in its evolving form could be quite messy.
In Episode 3 of The Seen and the Unseen, Devangshu Datta takes Amit Varma through the nuances of the GST and their possible implications.
On November 8, 2016, India’s prime minister Narendra Modi announced that 500- and 100-rupee notes would cease to be legal tender from midnight that day. This removed 86% of the cash from circulation, an unprecedented event in human history. Demonetisation, as it was then called, or DeMon or Notebandi as it is also known, had humanitarian and economic effects that might take years to play out. In episode 2 of The Seen and the Unseen, Amit Varma is joined by Suyash Rai, an economic analyst from Delhi, as they examine whether demonetisation achieved any of its intended effects, and try to come to terms with some of its unintended (but foreseeable) consequences.
Both Varma and Rai have been early critics of this demonetization, and have written extensively on the subject. Some of their pieces:
As Donald Trump raised his tiny paw and took the presidential oath this Friday, I had just finished reading an outstanding book that, I thought, explained Trump as well as many other leaders on the world stage today. In ‘What is Populism?’ Jan-Werner Müller, a Princeton professor, lays out all the ingredients from which you can cook up a populist movement. I was struck by how closely our own prime minister, Narendra Modi, matched Müller’s definition. Consider the following characteristics that characterise populists, as defined by Müller.
One, they claim that not only do they represent the people, but that whoever does not support them is, by definition, not part of ‘the people’. Müller says this is “the core claim of populism: only some of the people are really the people.” As Trump put it in May last year, “the only important thing is the unification of the people— because the other people don’t mean anything.” Think of how the BJP treats Muslims and Dalits as second-class citizens.
Two, populists are not just anti-pluralism, but they’re also anti-elite. Müller writes, “Populists pit the pure, innocent, always hardworking people against a corrupt elite who do not really work (…) and, in right-wing populism, also against the very bottom of society.” Think of Modi’s railings against the “Lutyens elite” as an example.
Three, they portray themselves as victims even when they are in power. As Müller puts it, “majorities act like mistreated minorities.” Modi still rants against the elite even though he is now their leader, and paid BPJ trolls still call journalists ‘presstitutes’ even though they control much of the media. Trump, who has been a crony capitalist insider all his life, is a classic example of a pig calling the pigsty dirty.
Four, populist parties tend to become monolithic, “with the rank-and-file clearly subordinated to a single leader.” Trump decimated the Republican Party on the way up, just as Modi is now the Supreme Leader within the BJP, which once had multiple leaders of stature.
Five, populists pride themselves on their “proximity to the people.” Modi being a ‘chaiwalla’ is a key part of his narrative, and as that famous photoshopped picture of him sweeping a floor shows, the common-man element is important to him. As it is, indeed, to other populists. Hungary’s Viktor Orbán and Venezuela’s Hugo Chávez both hosted shows similar to Modi’s Mann Ki Baat.
Six, populism is simplistic, so populists can only think in simplistic terms, which leads to “an oversimplification of policy challenges.” Modi’s Demonetisation is an example of this, as is Trump’s attribution of America’s job losses to immigration and outsourcing.
Seven, they populists tend to believe in conspiracy theories, which “are rooted in and emerge from the very logic of populism itself.” Indeed, the RSS’s view of history is itself a sort of giant conspiracy theory.
How do populists behave once in power? Müller outlines three things that they tend to do.
One, they “colonize or occupy the state”. They fill up all the institutions with their own people, co-opt those that are independent, and reshape the system to their will. Think of Modi’s appointment of incompetent cronies to the Censor Board and FTII, the replacement of the Planning Commission with Niti Aayog, and the recent virtual demotion of the RBI to an arm of the finance ministry.
Two, they “engage in mass clientelism: the exchange of material and immaterial favors by elites for mass political support.” Think of the sops Modi offered before the Bihar elections, or the ones expected in the next couple of budgets leading up to important elections.
Three, they shut down dissent in civil society, starting with NGOs. Müller writes, “rulers like Vladimir Putin in Russia, Viktor Orbán in Hungary, and PiS in Poland have gone out of their way to try to discredit NGOs as being controlled by outside powers (and declare them ‘foreign agents’).” Sounds familiar?
Modi fits Müller’s populist template so precisely that he seems like a bot generated by a populism machine, and not an actual person. It made me wonder: if a near-identical form of populism persists through vast stretches of time and geography, does it then reflect something innate in human nature?
I’ll leave you with a pleasant thought, though. Here’s why I think both Modi’s and Trump’s populism will ultimately fail. The narratives of populism, based on some of the people being all of the people, only work in broadly homogenous societies. The USA will be a minority-majority country by the middle of the century (ie, whites will be less than 50% of the population), and a Trump won’t be possible then. As for India, our diversity is our greatest defence against creeping fascism. Populism might work at the state level, but nationally, we are too diverse. That puts a ceiling on how much support Modi can get, which I believe already peaked in 2014, when he could be all things to all people. I think he already senses this. How will he respond?
India has a panoply of laws that prevent corporations from getting into farming, and which prevent farmers from escaping agriculture, by virtue of not being able to sell their farm land for non-agricultural purposes. The Seen Effect of this is that they are protected from exploitation by rapacious capitalists. But are the Unseen Effects worse?
Amit Varma is joined by guests Pavan Srinath and Karthik Shashidhar, who explain that a key reason why Indian agriculture is in such a dreadful state today is the bad laws governing it set by different governments.
Every December, I like to meet the high and mighty of the world and ask them about their New Year Resolutions. Last year I met Donald Trump. “I’m going to control my foot in 2016,” he told me. “It keeps going into my mouth. It’s like my foot has a mind of its own. What to do?”
“You could try building a wall between your foot and your mouth,” I suggested. “A really yuge wall, like, I know you’ve seen a lot of walls, and this will be the best.”
He rubbed his minuscule hands together, deep in thought, and offered me an orange.
This year, I decided to go closer to home. I dropped in to meet my old friend Narendra Modi. “Wassup, Vallabhai?” I said. It’s an old joke between us.
Modiji gave me a warm hug. “It’s so good to see you after so long,” he said. “I mean, it’s good that it’s been so long since I last saw you. What brings you here?”
“An Uber,” I said. “Listen, I just dropped in to ask what your New Year Resolutions for 2017 are. What new things are you going to do?”
Modiji sat back, and a grim look came over his face. “I have made many resolutions,” he said. “First of all, I need to finish my war against black money. I thought demonetisation would do it, but my own damn IT department did a study that showed that only 6% of black money was kept in the form of cash. Even that was converted from old black money into new black money through new black markets. So phussss.”
“So what are you going to do then?”
“Well, I was told that a lot of black money is kept in the form of gold and real estate. So I will tackle them both. First, I will demonetise gold. I will declare that from now on, gold is aluminium. And boom, in one blow there will be no more gold in the country. Until I declare something else to be gold.”
“Er, this is not how it works,” I said. “You are not God. You can’t just pass a law and change the world like that.”
“You know nothing,” he said. “I am the Badshah of Jumla, and the Emperor of Spin. I am the King of Narrative, and I always win. Did you notice that I just rhymed? That’s what happens when you read Rhyme & Reason every week in the Times of India.”
“You can read?”
“No, a babu summarises it for me. Not Bajrangi. Anyway, so after gold, I will tackle real estate. I will demonetise real estate, Mitron, I mean, Amit. All land holdings of more than 100 square feet will no longer be legal. I will kill black money, I’m telling you.”
“No, you won’t, Modiji, you’ll devastate the poor people of this country all over again. How will you win elections like that?”
“I have a plan for that. All this land that will now belong to the government, I will redistribute it among the people of India. I will deposit one acre of land into every Jan Dhan account.”
“Modiji, oh my god, who has been advising you? You can’t deposit land into Jan Dhan bank accounts.”
“Yes, you can. Only, it won’t be actual physical land. It will be digital land. India needs to move beyond real estate into a landless economy. Everyone will be a homeowner.”
“But how will they withdraw this land?”
“We won’t let them withdraw it. Can you imagine the chaos if people start withdrawing land from Jan Dhan accounts? Amit, you also na, what all you say!”
I sighed, and offered him the orange I’d saved up for a year. “It is vegetarian, isn’t it?” he asked. “I mean, it’s not a steak or something?” To be fair it did look kind of weird.
“So what are your resolutions besides killing poor people, I mean, black money? Any plans of exercise, diet etc?”
“I have already started an exercise regime,” he said proudly. “Look!” He pointed outside the window, where three babus in safari suits were doing on-the-spot jogging. “I have delegated my exercising.”
“Er, ok,” I said. “And any plans to diet? You’re so full of yourself, you must surely be overweight.”
“I will go on a Vedic diet that made our ancients extremely healthy.”
“What do you mean, healthy?” I said. “They’re all dead.”
Modiji glared at me. “Amit,” he said, “your humour is terrible. I must save India from the likes of you. I am going to send all Amits to Pakistan.”
He threw the orange at me, and I lost consciousness. When I came to, I was on a flight to Islamabad. Amit Shah sat besides me, squirming in his middle seat.
“What the hell did you just do?” he barked at me. “Why couldn’t your name have been Arun, dammit?”
This is the script of a musical play starring Arnab Goswami and a few eminent world leaders. At the start of the play, Arnab is at the front of stage, while Donald Trump, Vladimir Putin and Narendra Modi stand behind. There’s also a chorus of 30 cows, spread out among the audience.
Arnab: Hello and welcome! I’m Arnab the magician. It’s time now for an awesome competition. The strong men of the world are here, all set to go. Who’s the most macho of them all, the nation wants to know.
30 cows: The nation wants to know! The nation wants to know!
Arnab: There will be all-out attack, and no surrender. Please welcome, from the US, our first contender.
Donald Trump strides out on the stage.
Trump: My name is Donald Trump, I name buildings for a living. If you troll me on Twitter, I’m most unforgiving. I love India, mitron, and cricket most of all – especially Rahul Dravid, because he’s such a wall. I eat Mexicans for breakfast, and Moslem Men for lunch. When it comes to immigrants, oh boy, I pack a punch. My ego is so yuge, the biggest in my class. Oh, before I forget, I’m gonna kick China’s ass.
Vladimir Putin now walks on.
Putin: My friend Donald, poor guy, he never understands that no macho man can ever have such tiny hands. While Donald’s been busy laying luxury resort foundations, I’ve been killing millions, and conquering nations. You must have seen that picture of me bareback on a horse. After the shoot was over, I ate it with no remorse. When my wife wanted a new purse, I wrestled a crocodile. In front of me, with good reason, Donald is servile. He’s a little man, with little hands, and a little something in his pants. I’ve been saying it all along, you can’t be macho with a little dong!
30 cows: A little dong! A little dong!
Trump: My hands are small, you see, only to compensate. It’s because the size of my dong is very very great. I have even appeared in a movie made by Playboy. I’ve always been the biggest bully with the biggest toy!
Arnab: Stop this nonsense, change the subject, I’m feeling nauseated. I’m a middle-aged Bong with a tiny dong, and my ego is deflated. That’s why I’m always so aggro, it’s a kind of compensation. But the TRPs are great, and hey, I do it for the nation. Anyway, Mr Putin, you cannot win this way. Is there perhaps something else that you would like to say?
Putin: I’m more macho than this fool Trump, that’s all I have to say. After all, for many years, the man’s been in my pay. I now rule two countries, I am such a stud. If you mess with me, my friend, I will drink your blood.
30 Cows: Drink your blood! Drink your blood!
Arnab: Mr Putin, I am impressed, you meet all the criteria. Now tell me something, did Netaji really die in Siberia? Or maybe, oh my goodness, could he still be alive? Anyway, you win the trophy, c’mon, gimme five.
Modi strides forward.
Modi: Wait a minute, Arnab, what’s the freakin’ hurry? I’ll give you a tight tamacha, your vision will be blurry. This Russian fool, he think he’s cool, well, here’s the truth that pinches: See my chest, it is the best, all of 56 inches!
30 cows: 56 inches! 56 inches!
Modi: Killing people, invading countries, all that’s so old school. (And oh, my friend, Donald, your hands are miniscule!) Massacres are child’s play, when you’re off your rocker. But can you reach into every pocket, and empty every locker? I’ve just pulled off a surgical strike against the poor of my nation. No more cash for them, unless they give the BJP a donation. We’re going cashless, I am matchless, Arnab, you silly clown: Give these men ghagra cholis, and give me the crown!
Arnab: Mr Modi, most impressive, but you’re still a pretender. Hold your horses, because you see, there is one more contender. Men, you see, beneath their bluster, can be quite weak. But here comes a fine lady who never turns the other cheek.
Mamata Banerjee enters the stage, wearing a sash that says, ‘Most Macho Person.’
Mamata: Hello boys, I’m pleased to meet you, ridiculous wimps. You behave like such gorillas, but you’re really tiny chimps. You boast about how strong you are, and about your brains. You’d be bawling on the floor if you ever went through period pains. Mama’s here now, and she’s gonna whack your asses with her magic broom. So get up, get out, and when you get home, tidy up your room. Trump, Mr Macho, eat a nacho. Putin, so potent, you look like a rodent. Modi, have you realized that you will be demonetised. Mama’s here!
30 cows: Mama! Mama! Mama! Where is my Pajama? Mama Mama Mama!
I am a great admirer of Mahatma Gandhi, but the man had some strange views. In Hind Swaraj, written shortly after he turned 40 in 1909, Gandhi tore into some of the symbols of the modern age. “Hospitals are institutions for propagating sin,” he wrote. “To study European medicine is to deepen our slavery.” He railed against the railways, saying “it is beyond dispute that they propagate evil.” He argued against lawyers, despite being one himself, saying they had “impoverished the country.” But here’s a thing to note: despite these personal views, he never once suggested that railways, hospitals and lawyers should be banned.
There is a notion being spread these days that is as absurd as the ideas above: it is the notion that there is something wrong with using cash, and that we should head towards being a cashless society. This is nonsense. A cashless society would be a disaster for India. Here’s why.
One, a fully cashless society would mean the end of privacy. There would be a digital trail of every action you take through your purchases and transfers. If you buy AIDS medication or a porn magazine or book a hotel room for a romantic alliance, this information can be accessed by the government – or any hacker with the requisite skills – and used against you. India has no privacy laws, and data protection is also a big worry – every week we hear stories of some some big hacking or the other, from the Congress in India to the Democratic Party in the US.
Two, a fully cashless society could mean the end of dissent. The government can use any data it gathers against you. (Even if you commit no crime, there is much you may be embarrassed by.) What’s more, they could make any opponent a pauper with one keystroke, freezing your bank account while they investigate alleged misdeeds. Just the fact that they have this power could have a chilling effect on dissent. Those in government now may well salivate over this, but tables turn fast, and when they are in opposition, would they want their opponents to have such power over them?
Three, a fully cashless society endangers freedom. Cash is empowerment: ask the young wife who saves spare cash from her alcoholic husband; or the old mother who stuffs spare notes under her mattress for years because it gives her a sense of autonomy. Indeed, in a misogynist country like India, cashlessness would hit women the hardest.
It is a myth that an advanced society must necessarily be cashless. In Germany, a country which knows the perils of authoritarianism, more than 80% of transactions are in cash, as citizens safeguard their privacy and freedom. Even in the USA, 45% of transactions are in cash. Note that Germany and the USA actually have the banking and technological infrastructure to enable cashlessness. In India, 600 million people have no bank account, and less than 20% of all Indians have a smartphone. Internet penetration is iffy, as is power. (By ‘power’, I mean electricity, not the government’s control over you.) Trying to make India cashless is akin to putting a bullock cart in an F1 race, and whipping the driver because he’s too slow.
It is true that many technologies imperil our privacy, like any app we download on our phones, for example. But those actions are voluntary, and we can choose to avoid them. That is the crux of the matter. My objection here is not to cashlessness per se, but to the coercion implicit in the currency swap of November 8 and its aftermath. A cashless society would only be good if we evolve towards it, not if we are forced into it.
At the moment, the common Indian is wary, for good reason. Digital payments involve transaction costs, are unreliable because of infrastructure issues, and hey, who would trust an Indian bank after what the RBI just did? The beneficiaries of forced cashlessness are not consumers, but vested interests like banks and payment companies. Indeed, this might even be the largest redistribution of wealth from poor to rich in the history of humanity.
The BJP itself continues to take cash donations and shift goalposts. When the demonetisation was announced, they said it was meant to attack black money and counterfeit currency. Once it became apparent that those reasons were nonsense, the government tried to change the narrative into one about a cashless society. Within a fortnight of that, they are already backtracking and saying they meant ‘less cash’ when they said ‘cashless’. The truth is this: demonetisation was a humanitarian disaster that is crippling our economy, and no matter how many times Modi and gang try to rationalise it, it cannot be done. One day, these men will stop trying. When they cannot justify any more, they will distract.