- How much black money is in cash
- Efficiency of the laundering channels that will develop (The more efficient the channel, the quicker the economy will recover)
- How much of the remonetized cash will be sucked back into storing black money
- How’s quickly the Banking system can be remonetized with the new notes.
A bill to reserve 33% of seats in legislatures for women would be a bad idea at any time; it is a terrible idea when a popular leader like Modi, with tendencies towards authoritarianism, is Prime Minister.
A characteristic of the Parliamentary System is that it tends to weaken the power of parliaments over time. This is particularly true when the nation is led by a strong and charismatic leader who can run a presidential-style campaign. In the General Election, voters want to elect this leader as Prime Minister, but his name is not on the ballot. Instead, they have to vote for the leader’s candidates in their constituencies. This means that the candidates owe their careers to this charismatic leader, and they don’t have to be very capable leaders themselves.
What I have outlined above may be called the Lamp Post Theory of Parliamentary Democracies, after the popular saying that Nehru was so popular that even a lamp post standing for the Congress had a good chance of election to the Lok Sabha.
Now, India is such a large, heterogeneous and unpredictable country that lamp post phenomena have not lasted for long. Yes Nehru was very popular, but towards the end of his career he was faced with strong grassroots state leaders who were electing chief ministers he was not fully comfortable with. Indira Gandhi managed to gain dominance over her party and the country. This, she managed by stamping out local leadership from the INC. Eventually, she too lost popularity, and her party is paying the price for not cultivating strong local leadership.
After the recent General Election, much analysis has been wasted on whether there was a Modi wave. I believe that the answer is obvious. Modi was very popular, probably the most popular leader India has seen in the past three decades. But he could not have won the elections without skillful alliance-building. He was able to negotiate alliances with other parties like the TDP from a position of strength. His popularity attracted other popular local leaders, both within and outside the BJP, and they worked with him rather than at cross purposes.
So yes, although Modi is a strong leader and has been handed what is a decisive mandate by the standards of the past 30 years, he has not acquired the kind of dominance Gandhi did. The BJP still has a mind of its own, the RSS is a very autonomous body and local leaders are still important to win elections.
If I were Modi, how would I move to acquire that kind of dominance? Modi has already moved to gain control over the BJP. He has forced some leaders into retirement, he has denied tickets to potential thorns on his side. But he has had to make compromises. He couldn’t sideline Sushma Swaraj, for example.
That is where a Women’s Reservation Act will come in handy. The Act will reserve 33% of seats in all legislatures for women, and these seats will change every election.
If you are a popular local male leader, there is a 50% chance that your seat will get reserved for women in the next election. You are at the mercy of your party’s leadership to provide you with a seat elsewhere, a constituency where you may not be as popular. Right now, your popularity provides insurance against that happening. If the party leadership denies you a ticket, they risk losing that seat, either because you can stand as an independent and win, or because the opposing party can put up a strong candidate. But now, because the seat is reserved for women, the party leadership can be assured that all candidates will be newbies. As a result, the importance of the local leaders will reduce and the charisma of a strong leader will be what wins elections.
What about women leaders? Their lot will be worse, for two reasons. First, they will be shunted from constituency to constituency and will not be given time to build a local base. They will be perpetual newbies. This means that they will be even more dependent on the national leadership to win elections. Second, because they will end up always fighting other newbies, they will be unable to build up a profile – for example the fight Smriti Irani put up against Rahul Gandhi, which raised her profile significantly, will be a thing of the past.
All MPs will be at the mercy of the party leadership. And when the party leadership is controlled by a popular and charismatic leader like Modi, you can imagine the consequences.
For these reasons, the Women’s Reservation Bill is a bad idea. The Anti-Defection Act, passed 30 years ago, grievously injured parliamentary democracy in the country. This will kill it off completely. We will end up with presidential democracy without a legislature to check the powers of the chief executive. I am in favour of the presidential system, but this is not the way to achieve it.
My son loves playing Subway Surfers, and he is very good at it. I have been trying to put some sensible limits on his playing, and I have realized that I am faced with the same set of considerations I’d face if I were a regulator responsible for reining in an industry.
First, I need to know the game to be able to set my limits, if for no other reason than that I wouldn’t get my son’s respect if I didn’t. When I told him that he could play “five games a day”, he immediately corrected me to tell me that I should say “five times” because in his mind, “five games” meant five distinct games, not playing the same game five times.
Now, to know the game, I need to be at least mildly interested in the game, which means that I must have played it. But now, my limit setting is influenced, sometimes by my desire to take the tab away from him and play it myself, and other times by my thrill at seeing him play so well and wanting him to play more. An uninterested observer like my wife would be disinterested enough to be unswayed by these considerations, but she wouldn’t know enough to set good limits. This is exactly the kind of dilemma that one faces when one regulates industries.
I had started with the limit of five games a day. But soon I found that I needed to be dynamic and flexible. Sometimes, he’ll make an uncharacteristic error and get out of that turn early. To assuage his disappointment, I tell him that that turn wouldn’t count towards his limit of five games. Recently, school has started and he is unable to play on weekdays, so I increased his weekend limit to ten games. Sometimes I just let him play a few more games when he has to collect a certain targeted number of coins to make a purchase or something.
Such dynamic and frequent changes violate the principle that governance should provide consistency. If my son were a devious character, he would have learnt that the limits I set can be violated by protesting loudly. He isn’t, and that makes it easier for me to set sensible limits. Plus, he trusts me to do the right thing. In regulatory systems where the regulator isn’t clean and fair minded, providing the regulator with flexibility to set limits is a recipe for disaster.
Now, it so happens that I have only one son old enough to play Subway Surfer. If I had more than one son to regulate, my regulations would face issues of fairness very soon. If I had were regulating a whole bunch of Subway surfing children, my regulations would also face the problem of scale. I wouldn’t possibly have been able to tailor regulations for each kid. I would have to set one limit and be done with it.
Finally, there is the question of monitoring compliance. How closely should I monitor? Should I depend on my son’s self-reported count of how many times he has played or should I sit next to him and monitor? Like all good kids, my son lies and cheats on occasion, and sometimes he loses count of how many times he has played. Sitting next to him may suck up time and increases the risk of regulatory capture (I am tempted to play myself). I have learnt that letting him comply by himself by imposing a penalty for non-compliance works for him. It may not work for a different type of kd, with a different equation between the regulator and the regulated.
This story played itself out back when I was a teenager. The two protagonists, let’s call them A and B, were locked in a dispute. The dispute was about how the affairs of a particular association ought to be run. Now, it is somewhat important to mention that the association in question was a caste-based association, and the specific caste in question is Brahminism. However, I feel some regret having to mention this, because this fact will prejudice the minds of many of my readers. I, therefore, ask them to try and ignore the caste-based nature of the association and treat it like any other voluntary association of citizens. The import of the story and the morals to draw from it will not change significantly.
With this caveat in order, let us return to the story of A and B. Now, as it happened, both A and B were government employees. A was known to be extremely corrupt. Not a file passed through his desk without a bribe having to be paid to him. His extra-income showed up, not in his lifestyle, but in the assets that he was known to possess. He had no flashy taste in clothes and he had no unbrahminical “bad habits”. His wife, a genuinely good woman, wore much less jewellery than the ordinary middle-class woman at weddings. However, it was well-known that he had accumulated a lot of money. He had used it to buy up houses and stock up enough in his benaami bank accounts to last his descendants seven generations.
B, on the other hand, was known to be an honest man. He had never taken a bribe in his life, and his family’s lifestyle reflected this as well. For long, they lived in the same Central Government Quarters that his employer provided, and while his family did eventually achieve its ambition of buying a modest house, at the time of the story, they had been unable to achieve it. B was widely reputed to be uninterested in wealth – and rumour has it that he was also uninterested in family life, believing himself to be cut out for higher pursuits, one of which was the association that is the subject of our story.
Let us now turn our attention to the subject of the dispute between the two men. We will not get too much into detail, but suffice it to say that the rights and wrongs of the dispute were exactly what one would expect from the character sketches of the two men we have drawn above. A had monopolized the affairs of the association, and it was widely thought that he took a cut from the association’s budget. To be fair to him, however, it was also widely thought that the association was in fact being run well, and its members regularly reelected him. B was proposing a change in the association’s by-laws that would bring in more transparency and bring in some degree of fresh blood in the association’s managing committee.
The dispute between the two men got personal, as these things frequently do. Apparently A struck the first blow – the details of which I do not remember. In response, B retaliated by calling in his contacts – he had many – and getting the CBI to open an investigation of A’s affairs. (“CBI” was the term used in the conversations I listened in on. It might have been some other investigative wing.) The CBI carried out a series of raids on A’s property.
The response to the raids among the association’s members – and here I think it is relevant to point out that almost all of them were middle-class, educated Brahmins – was mixed. Some thought that A had got his comeuppance. Many others felt that B had gone too far in involving the police in an internal dispute.
In any case, these raids shook up A and made him ready to open talks with B for a possible compromise. After extensive discussions, a “compromise” was reached, which can better be described as a surrender. A agreed to the rule change that B wanted – and B used his contacts to call off the CBI raids and hush up the investigation.
I will end this story here. There are of course many lessons to draw from this, and if I start off on them, the size of this post will double, so I will leave those for a subsequent post. But I must mention that this story tells us almost everything we need to know about the Indian’s attitude towards corruption, and the Indian’s conception of honesty. Of course, we will get a Jan Lok Pal who will fix everything.
If I were to write a post on Bhopal, I would write almost exactly what Shruti has written.
You can, if you wish, paint Bhopal as an example of rapacious profit-seeking corporations putting profits above human lives. You can argue that thatzwhy we need strong regulations. But your argument will run into the problem that Bhopal occurred in 1984, in the India of the license-permit-quota raj. Not all the permissions that Union Carbide had to seek, not all the inspectors they were forced to bribe, could prevent the disaster from occurring. Once it did occur, the paternalistic State, instead of looking out for its children, sold them out.
So, if the failure of the free market makes the case for regulations, does the failure of regulation make the case for loosening them? Well, that’s not what usually happens. We’re more likely to hear that Bhopal makes the case for strengthening the regulatory framework. We don’t need deregulation. We need stronger, more effective regulations, the argument goes. If we don’t have strong regulations, what is to prevent corporations from creating a Bhopal every other day in pursuit of profits?
Well, strict liability and the tort system, for one. If we could sue the pants off any company that dares to impose harm on third parties, we would see fewer industrial disasters. If we junk half our regulations and use the resources freed up to modernize our courts so that they deliver verdicts in months rather than decades, we will be much, much better off than we are. Shruti notes in her piece that the Indian government actively worked to minimize the compensation victims could claim from Union Carbide. This phenomenon is familiar, and has a name – regulatory capture.
Six months back I had asked:
What is common to Sanskrit, Brahmin, Sion and Matunga?
The answer is that they are all Indian words written in English that would have been correctly pronounced if they were pronounced the way a native English speaker would pronounce them, but mispronounced because of the way Indians pronounce English.
In “Sanskrit” and “Brahmin”, the “i” is supposed to be pronounced the way it is in “Sir” and the pronunciation would have been correct. Instead, we Indians pronounce them as “Sanskreet” and “Brahmeen” thinking that we are anglicizing them.
“Sion” comes from the Marathi word “Sheev”, which means border. (Sion is the northern border of Bombay city. Beyond it is suburban Bombay.) It is supposed to be pronounced “Seeon”. But everyone pronounces it “Saayan”.
If you were to pronounce the “u” in “Matunga” like the “u” in “but”, you’d be close to the original name of the suburb, which is “Mathanga”, so called apparently because an elephant stable used to be housed there. But everyone calls it “Matoonga”.
Incidentally, the last two examples tell us something about the original inhabitants of Bombay, viz. how few actually exist. They also tell us a lot about the state of Hindi and Marathi scripts in Bombay till recently.
Domino’s likes to announce that it doesn’t penalize its delivery boys for not meeting its 30-minute guarantees. It says so on its website, on its menus and the statement is even tagged on the uniforms of said boys. This seems like a good strategy to have – after all, you don’t want your delivery people to cause or suffer accidents. It is also a good strategy to announce. Apart from the good reputation you get, it also stops the delivery guys from giving a sob story and getting sympathetic customers to condone delays – this is assuming that Domino’s wants data on delivery performance so that it can track the efficiency of its operations.
Of course, saying that they won’t penalize delivery boys for bad performance is not the same thing as saying that they won’t reward them for good performance. The two aren’t the same, because of the endowment effect. Then again, you shouldn’t reward them every time they do an on-time delivery, because it will effectively amount to the same thing. You need to reward them for aggregate performance.
Sanskrit, Brahmin, Sion and Matunga?
Something to do with their pronunciations.
So, you’ve got a job in India. Welcome. I like the fact that a stint in India is a valuable addition to your CV. I also appreciate that your salary enables you to live among India’s rich. I also understand that you’d like to stay in yuppie enclaves as you find yourself most comfortable there. But having done that, what sense does it make for you to complain that India’s rich yuppies behave like the rich yuppies back home? If you really want to “find” yourself, well, locate yourself elsewhere. There is a lot of India for your kids to experience, if you can sacrifice the comforts of an expatriate lifestyle.
Also, most Indians aim to live their lives. We aren’t particularly interested in being a country-sized museum of anthropology for you guys to visit for extended periods when you get bored of your suburban life.
One of H G Wells’ stories or novels had a character who behaved as if he was well-up on all the latest news, but had an out-of date library. If I remember correctly, that character later turns out to be an alien. Does anyone remember the name of the story? Is it from “War of the Worlds”?
The dark lord says:
The typical arguments are made by the right too. If the economy is going good “see, the deregulation has brought about unprecedented wealth. How can you propose more regulation?”
When the economy goes bad, we get the answer “see, the crisis is brought about due to regulation in the housing mortgage market. How can you propose more regulation?”
Yes, the libertarian right makes this argument, but there is a consistency in it. We believe that most regulations do harm, and that a lightly regulated economy works best.
If the socialist left made the counter-argument, that too would be internally consistent. If you really wanted to regulate the economy all the way to the Soviet Union, you could justifiably claim that both the US and India are variants of the same system. But in my post, I wasn’t arguing with the socialist left – I don’t need to, as history has already answered them.
My argument is with those who say that “we need a free market with some regulations, but that doesn’t mean that we should be socialist”. If you hold that belief, I would expect you to believe that there is some point at which additional regulations do more harm than good, so you’d support some regulations and oppose others. But what I notice is that for supporters of regulation, the right amount of regulation is always “A little more than we have now”.