Anticipating the Unintended

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#101 The Vaccine Question 🎧 Jan 22, 2021

Show notes

PS: If you enjoy listening instead of reading, we have this edition available as an audio narration on all podcasting platforms courtesy the good folks at Ad-Auris. If you have any feedback, please send it to us.

- RSJ

News reports suggest the vaccination drive among frontline workers is going slower than expected.

The issue isn’t the supply. It’s demand.

Frontline workers seem to have apprehensions about the safety of the vaccines.

An Old Story

I was reading up on the history of vaccines last week after I heard a good BBC history podcast on Edward Jenner who did pioneering work on smallpox vaccine. Four points stood out:

* The scourge that was smallpox. It was super infectious, and the fatality rates were over 30 per cent. It wiped out civilizations as European powers spread it through South America and Africa. There was no real cure except something called variolation where a small amount of material from smallpox scabs were given directly to healthy people. These healthy people then developed symptoms of smallpox but these were milder. Fewer of them died through this than the normal method of getting the pox.

* Jenner discovered vaccination somewhat serendipitously. He came across a milkmaid who told him she won’t get smallpox because she had already got cow pox (a milder disease). Jenner tested this theory by giving his gardener’s son a small dose of cow pox material. After a few months, he exposed the boy to the smallpox virus on multiple occasions. The boy never developed smallpox. Soon, Jenner wrote his treatise ‘On the Origin of the Vaccine Inoculation’. It wasn’t accepted by any reputed journal because it lacked adequate scientific rigour (even for those days). Jenner self-published the treatise.

* The vaccination method became hugely popular. There was no state drive to spread it. People tried it out and it spread through word of mouth. So widespread was Jenner’s fame that when France jailed a few doctors from England on some specious charge of espionage, he wrote to Napoleon to free them. Napoleon agreed because it was Jenner.

* The anti-vaxxer movement started right away. Since Jenner published his methodology for anyone to adopt, the doctors who earned their living through variolation and its side effects didn’t take to it. They did their bit by spreading misinformation. Also, injecting cow pox material meant other infections could get into a health person. This meant there were always cases of people contracting, or even dying, of other diseases after taking the vaccine. The vaccine scepticism took roots. And it hasn’t gone away since then.

Why The Scepticism?

This got me thinking on why is it difficult for people to believe in the effectiveness of vaccines? Or, on climate change? Or, why do good policy proposals often lack popular support?

Three reasons seem likely:

* Our brains aren’t wired to believe non-intuitive concepts. These concepts aren’t often self-evident. Even if we understand them in theory, we end up doing the more intuitive wrong thing in practice. Behavioral economists have demonstrated this with multiple experiments. Vaccination is a non-intuitive concept. To inject oneself with a mild variant of a disease willingly in the hope that it will create long-term immunity goes against the intuitive idea of self-preservation. The notion of price in economics is similar for lay people. That price is a signal that adjusts itself to demand and supply instead of being centrally controlled is difficult to comprehend even if you are taught the theory. The first instance of surge pricing by Uber and the theory collapses. You believe it must be controlled. Pretty much the same way we react when people hear the news of deaths after vaccination.

* People don’t get probabilities. That more people will likely die without a vaccine than because of an unproven side effect of taking the vaccine can be proven with data. But the notion that we invite the side effects because we take a vaccine on our own while contracting a disease is outside of our control is quite strong. This obfuscates our understanding of probability. Even during the current pandemic, the probabilities weren’t clearly thought through by the policymakers. The Covid-19 vaccine was clinically ready almost a year back when we had the virus genome mapped. From then on it was about doing a sound cost-benefit analysis of what level of vaccine testing is acceptable given the costs of loss of human lives and the impact of lockdown on the economy. We might have been ready to use a vaccine much earlier had we done this right. In any case, that the vaccine is ready within a year when compared to almost a decade it took earlier is proof that we have taken a right probabilistic call, albeit a bit late. This should have been the norm earlier.

* News amplifies exceptions and this erodes the trust on experts. You will not hear of the millions who have taken the vaccines without any side effect. But every single death of someone who has taken a vaccine will be reported. That the cause of death is unrelated to the vaccine itself will struggle to find space in the news cycle. This is because we are looking for adverse news to confirm our intuitive bias about it. The more we come across this kind of news, the greater our scepticism of experts. Conspiracy theories take off from here.

The solution to this kind of scepticism about a sound public policy is available. Eugene Bardach in his seminal book A Practical Guide for Policy Analysis outlined the eightfold path to arriving at a policy decision. The eighth and the final step is ‘tell your story’ which is as important a step as any of the previous steps taken to arrive at the policy decision. This is often an area that’s given less thought by policymakers as they plan a rollout. I suspect we have done the same with the vaccination programme in India.

As Bardach writes:

If one of your goals is to engage a lay audience, keep in mind that ordinary folk are rarely moved by statistics alone. Indeed, relying on numbers to demonstrate the importance of addressing a problem can actually undermine the psychological processes needed to prompt a response; people may not only fail to grasp the statistics, they may be numbed into inaction. Data and statistics are obviously indispensable to analysis, but when it comes to telling your story to a general audience, be sure to put a human face on the problem. And show how your solution could make life better for real people.

If you are making a clear recommendation, make sure that you raise and rebut possible objections to it that might occur to various important audiences. Also, make sure that you compare it to what you or others might regard as the next best course of action, so as to be ready to show why yours is better.

HomeWork

Reading and listening recommendations on public policy matters

* [Article] Charlemagne in The Economist on ‘Why is Europe so riddled with vaccine scepticism?’

* [Article] A comprehensive view by The Guardian on vaccine scepticism

This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit publicpolicy.substack.com

#100 Intoxicating Eardrops 🎧 Jan 17, 2021

Show notes

We have hit a century! Thank you for reading us.This newsletter is really a public policy thought-letter. While excellent newsletters on specific themes within public policy already exist, this thought-letter is about frameworks, mental models, and key ideas that will hopefully help you think about any public policy problem in imaginative ways. It seeks to answer just one question: how do I think about a particular public policy problem/solution?PS: If you enjoy listening instead of reading, we have this edition available as an audio narration on all podcasting platforms courtesy the good folks at Ad-Auris. PolicyWTF: Prohibition and MoralityThis section looks at egregious public policies. Policies that make you go: WTF, Did that really happen?— Pranay KotasthaneIf one were to write a book chronicling bans on victimless crimes in India, the index entry for Morarji Desai would be a long one. After all, he holds the dubious distinction of turning lakhs of ordinary citizens into criminals by prohibiting two independent victimless crimes. The first ban, on alcohol, is rather well-known. The notorious Bombay Prohibition Act of 1949 was passed when Desai was the state’s Home Minister. To enforce the ban, the government created elaborate compliance machinery, misdirecting the limited policing capacity towards apprehending tipplers instead of protecting victims of other crimes. By the time this act was watered down in 1964, more than four lakh people had been convicted under Prohibition! The draconian law is well-documented in Rohit De’s excellent book The People’s Constitution. Read this, for instance:“The BPA granted vast powers to the police and Prohibition officers. It empowered Prohibition officers and all police officers to “enter at any time, by day or by night, any warehouse, shop, house, building, vessel, vehicle, or enclosed place in which [they have] reason to believe [that] intoxicants or utensils, apparatus or implements used for manufacturing intoxicants are kept.” They could also open packages and confiscate goods that they suspected of containing illicit liquor. Warrants were not required for arrests for any of these offenses or for searching premises. The BPA provided that people believed to have committed an offense under the act could be detained without trial and have their movements restricted. The Prohibition policy thus created a system that operated outside the penal code and the criminal procedure code that applied to most offenses.” [The People’s Constitution, Rohit De, page 45]The direct consequences of this PolicyWTF aren’t hard to anticipate. People either switched to alternatives that bypassed the law or started consuming a far worse quality of alcohol in the black market. For instance, De writes:By 1963 the Planning Commission was protesting the number of tinctures available in India. It pointed out that the British Pharmacopeia had reduced the number of tinctures from thirty-four in 1932 to fourteen in 1963, but the Indian Pharmacopeia of 1955 listed forty-two different tinctures. After interviewing leading medical representatives, the Planning Commission came to the conclusion that there was hardly any medical use of tinctures, which were outmoded and being replaced by modern drugs that were not alcohol-based. Spot checks revealed that several tinctures on the market were actually spurious, consisting solely of alcohol and a suitable coloring agent. Other manufacturers were producing eardrops and eyedrops with a large percentage of alcohol. The frustrated Planning Commission suggested that tinctures be abandoned for more modern medicine and that industrially produced eyedrops and eardrops be replaced by prescriptions that could be made by pharmacists. [The People’s Constitution, Rohit De, page 61]Says a lot about central planning. When there’s demand, supply finds a way out in imaginative ways that governments can’t clamp down easily. Desai’s second prohibition was on the sale and holding of gold, even in small quantities. It was this policyWTF that made smuggling of gold a lucrative profession. Here’s what the Directorate of Revenue Intelligence — a union government agency — observed in its Smuggling in India Report 2019-20: The economic reforms of 1990s witnessed the repeal of the Gold (Control) Act, 1968 that had prohibited the import of gold except for jewellery. The erstwhile statute had led to the emergence of a notorious network of gold smugglers during 1970s and 1980s. The economic reforms and liberalisation led to the imposition of a modest specific duty of Rs 300 on 10 grams in 2011-12 (increased from Rs 200 in 2010-11) on the imported yellow metal, bringing gold smuggling almost to a grinding halt. While both these policies had immediate adverse consequences, the general equilibrium effect was far worse: the successful and respected people in the society were the ones whose only competence was breaking the law.PS: Nitin Pai, on his blog, succinctly captures the general equilibrium effects of banning victimless crimes in this figure.Global Policy Watch: Student Loan Forgiveness and Friedman - RSJThe new Biden administration is expected to enact a student loan relief programme through legislation or an executive order when it assumes office later this month. There might even be a more comprehensive student loan reform on its agenda. The left-wing of the Democratic Party has made a case for a total student loan forgiveness for a long time now. Biden is a centrist, yet he might use the student loan relief proposal as a bargaining chip to rein in other more socialist ideas from them. It will be interesting to see if the administration merely forgives a part of the outstanding loan or it uses the student loan crisis to arrive at a more market-driven long-term solution to the problem of funding higher education and the role of government in education in general.Quantum Of CrisisThere are about 45 million student loan borrowers who owed roughly USD 1.6 trillion in 2019. To put that in perspective, India’s total credit outstanding is in the same ballpark. On average, each borrower has over USD 34,000 outstanding credit. By some estimates, the Biden forgiveness proposal is to waive off USD 10,000 from this. That would mean a total waiver of about USD 500 billion. No small change even in the days where stimulus packages routinely run into trillions.So, what explains these eye-popping numbers that are unique to the US education system?Well, there are a few reasons.* Because the colleges can: There has been no disruption in the higher education model over the past two hundred years. The system is an oligopoly. The same set of universities have remained at the top through a combination of brand building, (alumni) network benefits and bigger endowments (that are tax-free). The price set at the top is high and everyone below the chain benchmarks to that price. As income inequality has grown, the price has gotten unaffordable at every level except the very top.* Student loans are expensive by design: There’s hardly any collateral to hold as security for a student who is getting started in life. These loans are largely unsecured, unlike a mortgage where the house is the underlying security for the banks. The possibility of a student getting a good job and paying back the loan is relatively lower than most other loan types. Added to this is the uncertainty about the final location of the student after he finishes off his education and the costs of tracking them down. It is no surprise the default rates of these loans are in excess of 10 per cent. These uncertainties are baked into the pricing of a student loan. They tend to be long-term and expensive.* Universities have no incentive to innovate: Why should they? They control their supply and keep college seats ‘scarce’. The admission rates of Ivy league schools have been coming down over the years. They are at sub-five per cent these days. This scarcity gives them enormous pricing power. They offer lifelong tenures to the professors. There’s hardly anyone who holds a university to account for failed careers of its students. The student cops most of the blame. It is a great business model with limited accountability. Here’s a sample statistic. Students at public four-year institutions paid an average of $3,190 in tuition fee for the 1987-1988 school year, with prices adjusted to reflect 2017 dollars. Thirty years later, that average has risen to $9,970 for the 2017-2018 school year. That’s over 200 per cent increase after adjusting for inflation. The entry-level salaries haven’t kept pace with that. After adjusting for inflation, they are almost flat over this time. This is what riles the ‘progressives’. The higher education system now perpetuates inequalities instead of reducing them. The system is rigged from the start - SAT scores track family income closely, private counsellors help kids from rich families to write their applications and expensive tuitions in drama, music or elite sports help in making the cut. The list of such privileges that are needed to get in is long. And the higher education system explains all of this away in the name of merit. The Moral Burden Of Student DebtThose who battle this entrenched system and take expensive loans to fund themselves can find the going tough. The job market remains choppy, the nature of jobs is changing and there’s increasing automation in every sector. To start your career with a debt that you can’t be sure of paying off is a burden that seems unjust. Worse, there are many others who can’t get a loan or don’t venture into higher education at all because the costs are high. It is a terrible loss of human potential. This much is commonly understood. The problem is with the solution that the ‘progressives’ advocate - a kind of a universal free higher education model best captured by Bernie Sanders line “College For All and Cancel All Student Debt”:Today, we say to our young people that we want you to get the best education that you can, regardless of the income of your family. Good jobs require a good education. That is why we are going to make public colleges and universities tuition free, and cancel all student debt. The problems with such prescriptions are aplenty. We have devoted multiple newsletters to them. When the price is zero, supply tends to zero. The inherent moral hazard of cancelling debts. What about those who actually paid their debts? What about those who didn’t take up college because they didn’t want to take debt? What about other borrowers who took other types of loans? Why should their debts be not cancelled? This a terrain full of moral hazard landmines.Government, Market and EducationSo how should we think about solving this? To start with we need to understand the market failures in the education system. What are they?* Primary and secondary education has positive externalities. There’s a benefit that accrues to the society in educating one person which can’t be captured by the supplier. This restricts the supply of such goods because they can’t be priced accurately. The government has a role in addressing this failure through subsidies or vouchers. Higher education or vocational training are tailored to provide employment to an individual. The positive externalities here are overshadowed by the private economic benefits to an individual. So higher education doesn’t have this type of market failure* But it has other failures. One is the information asymmetry problem. You can never know how good a college is till after you finish college and enter the job market. The college and your goals aren’t exactly aligned. There’s no downside risk to the college if you don’t get the right kind of job after it. This asymmetry problem extends to the banks providing student loans. They don’t have enough information about either the student or the quality of college education to assess the risk of future payments. They err on the side of caution. The interesting thing is there’s a 65-year old paper authored by Milton Friedman that captures the role of the government in education. The 1965 paper ‘The Role of Government in Education’ is a document of remarkable clarity and vision even by Friedman standards. It is not a dogmatic advancement of the market as a solution to the problem of funding education. It is nuanced and deeply insightful about what the government should be doing in education. Friedman On Government In Education I will end with two key excerpts from it. First, Friedman’s views on primary and secondary education and the role of the government in it. His solution was simple - public financing but private operations of education in this space:“The arrangement that perhaps comes closest to being justified by these considerations--at least for primary and secondary education--is a mixed one under which governments would continue to administer some schools but parents who chose to send their children to other schools would be paid a sum equal to the estimated cost of educating a child in a government school, provided that at least this sum was spent on education in an approved school. This arrangement would meet the valid features of the "natural monopoly" argument, while at the same time it would permit competition to develop where it could. It would meet the just complaints of parents that if they send their children to private nonsubsidized schools they are required to pay twice for education--once in the form of general taxes and once directly--and in this way stimulate the development and improvement of such schools. The interjection of competition would do much to promote a healthy variety of schools. It would do much, also, to introduce flexibility into school systems. Not least of its benefits would be to make the salaries of school teachers responsive to market forces. It would thereby give governmental educational authorities an independent standard against which to judge salary scales and promote a more rapid adjustment to changes in conditions of demand or supply. “ The second excerpt is about how to think of funding higher education or vocational programmes taken to improve employment prospects. Friedman suggests an Income Share Agreement (ISA) model all those years ago.“For vocational education, the government, this time however the central government, might likewise deal directly with the individual seeking such education. If it did so, it would make funds available to him to finance his education, not as a subsidy but as "equity" capital. In return, he would obligate himself to pay the state a specified fraction of his earnings above some minimum, the fraction and minimum being determined to make the program self-financing. Such a program would eliminate existing imperfections in the capital market and so widen the opportunity of individuals to make productive investments in themselves while at the same time assuring that the costs are borne by those who benefit most directly rather than by the population at large. An alternative, and a highly desirable one if it is feasible, is to stimulate private arrangements directed toward the same end.” It is instructive to conclude here with Friedman’s conclusions from the paper:“This re-examination of the role of government in education suggests that the growth of governmental responsibility in this area has been unbalanced. Government has appropriately financed general education for citizenship, but in the process it has been led also to administer most of the schools that provide such education. Yet, as we have seen, the administration of schools is neither required by the financing of education, nor justifiable in its own right in a predominantly free enterprise society. Government has appropriately been concerned with widening the opportunity of young men and women to get professional and technical training, but it has sought to further this objective by the inappropriate means…

Full show notes at the publisher

#99 Rage Against The Dying Of The Light 🎧 Jan 13, 2021

Show notes

- RSJ

The West German band Scorpions released their anthemic number Wind of Change sometime in early 1991. It is hard to find a better popular culture artefact that captures the mood in Europe during those times. The Berlin Wall had come down, democratic revolutions were sweeping across the countries of eastern Europe and it was clear the liberal democratic order running their economies on the ‘Washington consensus’ had won the Cold War.

The lyrics had both that triumph and a hope for future contained within:

“The world is closing in

Did you ever think

That we could be so close, like brothers

The future’s in the air

Can feel it everywhere

Blowing with the wind of change..

The wind of change

Blows straight into the face of time

Like a storm wind that will ring the freedom bell

For peace of mind”

To broaden things a bit beyond Europe, the 90s were also the time when China was entering the global economy and India was ‘reforming’. Things seemed to be all converging towards the same end. The ‘end of history’ as Fukuyama put it was nigh. Liberal democracy was the ultimate political system. Nothing could better it. We just needed to wait for every nation-state to realise this truth.

Not Quite The Expected Future

Exactly 30 years later, the obvious question is staring at our face. There’s the rise of populist, xenophobic and authoritarian leaders all across eastern and central Europe over the last decade. Russia is a kleptocratic oligarchy that bullies it neighbours who don’t toe its line. On various counts, India has regressed on liberal values and has slowed considerably on reforms. China, contrary to expectations, didn’t become more liberal or democratic as it integrated itself with the world. Instead, it now mocks the liberal western order for its weakness while exporting its brand of illiberal governance as it continues it inevitable rise to the top. Leave these aside for a moment. What’s worse, even the western democracies that were flagbearers of liberalism are caught in the pincer-like grip of populist political urges on both the right and the left.

So, what happened?

How did the spirit of liberalism that pervaded the world in the 90s dissipate so easily? Well, there’s a whole small-scale industry that’s developed over the years to answer this question. And I must add I’m a platinum-card carrying customer of this industry. Over the last year or so I have been reading up every book that elaborates either on the failure of the market economy or the shortcomings of liberalism.

The Light That Failed

A recent entrant to this list is the magnificent ‘The Light That Failed: Why The West Is Losing The Fight For Democracy’ by Ivan Krastev and Stephen Holmes. Krastev, a Bulgarian by birth, serves at the Institute for Human Science in Vienna while Holmes teaches at NYU School of Law. They bring a wide east-west perspective to their arguments on why liberalism failed. Among the books I have read in this genre (including Fukuyama’s Political Order And Political Decay), this is the most analytical in understanding the underlying psychosis of illiberal, populist movements sweeping the world.

At the start of the book, the authors talk about John Feffer, a young American, who in 1990 spends most of the year traversing across post-Communist Europe with an intent to record the transition of these countries into free, open and liberal societies. There’s something Naipaul-ian about this. Naipaul wrote Among The Believers based on his travels across non-Arabic Muslim world with a long pre-Islamic history (Iran, Pakistan, Malaysia and Indonesia) immediately after the Iranian Revolution. Naipaul wandered around without a definite plan, talked to a cross-section of people and ended up with deep insights about these societies. In a similar vein, Feffer spends most of his time speaking to local people to document their hopes and apprehensions in times of tumultuous change in their lives. And quite like Naipaul went back to the same countries two decades later and wrote Beyond Belief, Feffer goes back in 2015 to speak to the same people on how their lives have panned out in the intervening period. What he found was a warped kind of capitalism had taken root that had accentuated inequalities in the society. There was widespread resentment of western values that were transplanted there and a feeling of betrayal about the failed promise of 1990s. Feffer concludes: Communism was the god that failed for the post WW2 generation in eastern Europe. For the current generation, liberalism is the god that failed.

While Krastev and Holmes explain the reasons for the failing in eastern Europe in great detail, there are broader conclusions one can draw that could be used to explain the widespread disappointment about liberalism across the world. I drew three of them.

* Cheap Imitation: Liberal democracy adapted by these countries are a cheap imitation of the western model. There was limited attempt at locating it in the history and the culture of these nations. The national traditions were given a go by and there was no desire to transform the society from within to manage this transition. Foreign experts who barely understood the ground realities were flown in to set up democratic institutions. There was festering discontent among people who found the struggle to become a cheap imitation of a western democracy humiliating. The nativist backlash shouldn’t have surprised anyone. A spark was waiting to be lit. The populist leaders waded in. They questioned the superiority of this model, delegitimised the moral authority of political parties that followed the western liberal mores unquestioningly and spoke about a glorious past which should be the guiding light for the society. It worked. This is pretty much the playbook for all populist leaders around the world. Some of this has been followed in India too. The only thing remarkable about us is the backlash came some 70 years after independence. There was an undercurrent of resentment about western imitation in our society driven by a liberal constitution that seemed to have been thrust upon us. A combination of factors – heterogeneity in our society, charismatic leaders who were steeped in western ideals and an urban, educated elite who held the levers of power and media for long – seemed to have kept this resentment at bay for long. But this edifice is crumbling. Or maybe, it has already crumbled.

* Triumphalism of Liberals: The hard-won benefits of cold war were frittered away by a remarkable dropping of the guard by the liberals over the last two decades. As the authors write: “Liberalism fell in love with itself and lost its way”. The years of heady growth till 2008 where an interplay of forces of globalisation, technology advances and cheap credit kept the growth engine humming and led everyone to believe a rising tide was lifting all. The Global Financial Crisis (GFC, 2008) was a rude jolt. The faultlines of economic inequality, unaccountable financial institutions, a self-serving set of elites and a corrupt political class became stark and visible. The reckoning that was expected after the GFC never came. Instead the solutions to the GFC led most to believe the real culprits not only got away but also profited from it. The belief that losses are socialised while the gains are cornered by a few strengthened. GFC still casts a long shadow on the polity across the world. We have reached a stage where both the extreme right and left rile against liberalism to work up their base following the GFC.

* Demographic Anxieties: As the growth became more lopsided and inequality grew, the demographic anxieties strengthened. These anxieties take various shape in different democracies, but they have one similar feature – a sustained othering of the minority. The irrational fear that the more fecund minorities will gradually engineer a democratic and cultural ‘coup’ by turning themselves into a demographic majority and take over political and social power has gained strong currency. This takes shape differently across countries. In eastern Europe there is a steady degrowth of the native ethnic groups over the last 2 decades where the educated, liberal elites have voted with their feet and left their homes. In US and UK, income inequality, social fallout of globalisation and an ageing population has fed the paranoia about minorities. The story in India, of late, is well known to be repeated here. The common outcome of all of this is a lurch towards ethno-nationalism with a ‘nation-first’ doctrine. It is a far cry from the boundaryless global village that liberals thought they had achieved sometime back.

In the list of books I have read over the past 18 months, The Light That Failed scores over others in its rigorous analytical dissection of the reason for failure of liberalism. It is short on rhetoric. And unusually for the genre, it believes a diversity of ideologies is good while simultaneously holding out hope that liberalism will learn its lessons. That it will not again strive for homogeneity and ideological dominance around the world.

The authors end the book with a tip to Rudyard Kipling’s first book (from where the title is drawn) The Light That Failed. That novel had two different endings – one happy and one sad. The authors hope that a “chastised liberalism having recovered from its unrealistic and self-defeating aspirations to global hegemony, remains the political idea most at home in the 21st century. It is our choice to celebrate rather than moan.” That’s their expectation of a happy closure.

HomeWork

Reading and listening recommendations on public policy matters

* [Video] Krastev and Holmes discuss the book at CEU (Vienna)

This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit publicpolicy.substack.com

#98 Parliamentary Overslide 🎧 Jan 10, 2021

Show notes

This newsletter is really a public policy thought-letter. While excellent newsletters on specific themes within public policy already exist, this thought-letter is about frameworks, mental models, and key ideas that will hopefully help you think about any public policy problem in imaginative ways. It seeks to answer just one question: how do I think about a particular public policy problem/solution?PS: If you enjoy listening instead of reading, we have this edition available as an audio narration on all podcasting platforms courtesy the good folks at Ad-Auris. Global Policy Watch — Storming Se Storming Tak: From 1642 To 2021- RSJHere’s a short quiz to begin things. What’s common to these dates (not an exhaustive list)?4 January 1642: EnglandFeb 27, 1933: Germany Feb 23, 1981: SpainApril 27, 2017: MacedoniaDifficult? Here’s a clue. The latest entrant to this listJan 6, 2021: USA‘Workout-able’ now? These are select instances of attacks on parliament buildings in democracies over the years. Of course, this is different from attacks that happen within the parliament building where lawmakers have a go at each other using microphone stands, paper-weights and files as projectiles. That’s a rich and glorious tradition where Taiwan, South Korea and India are global leaders.The attacks on parliament from the outside is a different phenomenon. It points to a fracture in the common belief among citizens about the power or legitimacy of the sovereign. This is not mere symbolism. Often the attacks are real attempts to disrupt or change the outcomes of a parliamentary process to elect the head of the government. That’s what happened, say, in Spain on Feb 23, 1981 when Lt. Col Tejero and his small band of army men burst into the lower house of the Spanish legislature during the vote to elect a new Prime Minister. The attempt to overthrow the democratic regime came unstuck when King Juan Carlos denounced it in a televised address. The storming of the Macedonian parliament in 2017 was done in somewhat similar circumstances though without any section of army backing it. That brings us to Germany. The fire at Reichstag in 1933 right after the Hitler had been sworn in as the Chancellor was blamed on a communist conspiracy. It is almost certain now that this was engineered by the Nazis to demonise their opponents. This incident of arson was then used by the Nazis to issue a nationwide emergency and pursue the communists with a vengeance. The Communists MPs were arrested and the Nazis won the elections to those vacant seats as was expected. Within a year the Nazis had complete control over the German state. You know how that story ends.The Original StormingMy interest, however, is in the first instance of the storming of a Parliament: Jan 4, 1642. This was no ordinary rebel laying siege over the lawmakers in Westminster. It was Charles I, the king of England. He entered the Parliament with armed soldiers to arrest five MPs who he accused of treason. What had they done? Well, to the king and his loyalists, they were anti-nationals. Sounds familiar. They were accused of encouraging Scotland to invade England and a conspiracy to defame the king. Charles went into the parliament and called out the name of the five MPs seeking their arrest. He asked the House speaker, William Lenthall, about their whereabouts. Lenthall responded:“May it please your majesty, I have neither eyes to see nor tongue to speak in this place but as this House is pleased to direct me whose servant I am here; and I humbly beg your majesty's pardon that I cannot give any other answer than this to what your majesty is pleased to demand of me.” In a historic first of sorts, the speaker had sided with the parliament over the divine will of the king.“All my birds have flown,” Charles I said as he scanned the member benches for the five MPs.The storming of the parliament by Charles I was a seminal moment in the history of democracy. The tussle for sovereignty between the parliament and monarchy that had been simmering for over three decades had reached its flashpoint. The English parliament in those days was a collection of landed gentry who controlled the exchequer through their power of collecting taxes. The king needed its approval to raise taxes. By the time Charles I ascended the throne in 1625, the Crown was deep in debt no thanks to the expensive wars of the Tudor and Stuart periods and the lavish lifestyles of the royalty. This apart Charles had other problems too. There was a deep suspicion among the aristocrats about the strength of his Protestant affiliation after he married the Catholic Bourbon princess Maria of France. His subsequent religious acts did nothing to dispel this impression. The desire of Charles I to go to war with Scotland meant he wanted the parliament to increase taxes and do his bidding. The parliament continued to resist and Charles dissolved it in 1629. The next 11 years when he ruled without a sitting parliament is termed his ‘personal rule’. He introduced new taxes arbitrarily, supported Catholic religious policies and hounded the aristocrats who opposed him. The tyranny was going well but for a small hitch. He still needed the parliament to convene for collecting the tax revenues. He called a new parliament in 1640 in the hope he will be able to control it. Not quite. The parliament passed an act that forbade its own dissolution and went about rolling back the policies that Charles had set in motion. The stage was set for him to storm the parliament looking for the errant MPs.The Post-Metaphysical AgeThe storming of the parliament led to what is collectively called the English Civil Wars (1642-1651) between the Royalists and the Parliamentarians. Charles I was tried and executed in 1649 (none of this namby-pamby impeachment business in those days). There were three key outcomes of the civil wars:* The replacement of English monarch by the Commonwealth of England* The consolidation of Protestant ascendancy and the defeat of Catholicism in England. The downstream impact of this was huge* The precedent that the English monarch cannot rule without the Parliament’s approval. The seal of Parliamentary sovereignty and the establishment of individual rights, however, were legally established only after the Glorious Revolution of 1688. There’s a subplot here. A gifted English polymath who had fled England in 1640 to Paris watched all this unfold with interest and concern. A man of science who counted Galileo, Bacon and Mersenne among his friends, he was developing a theory of about people, nature and politics as he came to terms with the chaos in his country. He was also the tutor to Charles II, the young prince, who was in exile in Paris. By 1650, he was ready with his magnum opus that broke new ground on the relation between the state and its subjects. In 1651, he returned to England. His name was Thomas Hobbes. The book was Leviathan. The Genesis Of The Modern Liberal StateHobbes is, arguably, the founder of modern political philosophy and Leviathan is a masterpiece of original thinking. Hobbes made three core arguments in it:* The State of Nature: Human beings left to themselves will pursue their objectives of maximising their comforts. These pursuits will bring them in conflict with others. People are similar (within a range) in terms of their physical and mental prowess. So no one person can dominate others for long. This led him to conclude that humans in their state of nature would be in constant strife with one another. “A war of everyone against everyone” is how he called it. In this state, he famously said, human life would be “nasty, brutish and short.”* The Laws of Nature: Hobbes argued that humans were rational beings who understood the futility of living in the state of nature. They would seek a practical solution to establish peace. To Hobbes, this solution was for people to establish mutual covenant (agreement) among themselves to submit to the authority of a sovereign. Simply put, people will be willing to forego some of their freedoms to a sovereign institution in return for peace and rule of law governed by that authority.* Unlimited Sovereign Authority: For Hobbes, once the people had come together to hand over the power to the sovereign, its power was unlimited. There was no quid pro quo involved here. No real checks and balances. So long as the sovereign kept peace among its people and protected them from outside powers, it retained its political legitimacy. Nothing else mattered. Any attempt to split the powers of the sovereign would render it ineffective. The impact of Leviathan on future political philosophers was profound. In many ways, it is the foundational text of the modern state. Everyone from Locke, Rousseau, Weber to Rawls have used it either as a springboard or as a counter to develop their social and political theories. The criticism of Hobbes over the centuries is also useful to shine a light on the originality of his thinking. The usual arguments offered against his political philosophy include:* A bleak view of human nature: The short conclusion easily drawn from Leviathan is that Hobbes held no illusions about the nature of human beings. Left to themselves in a natural state, they would be in an endless series of internecine wars. This is Hunger Games territory. But Hobbes was a bit more nuanced than that. To him, it is not human nature to be in a war of everyone against everyone. Instead, in the absence of laws and its enforcer, human beings pursuing their rational interests will get in the way of each other. This will be the basis for strife and not the absence of better angels of their nature* Social contract theorist: Some view Hobbes belonging to the line of social contract theorists who thought and wrote about the arrangement between the society and the state or the ruled and the rulers. This isn’t exactly accurate. Social contract theory assumes that society already exists with a contract among its members. The society then enters into a ‘second contract’ with the state by relinquishing some of its freedom in exchange for peace and stability from the sovereign. For Hobbes, there was no second contract. The society or the state don’t exist ab initio. There is only a single contract - the covenant between the members of the society to come together. The sovereign emerges from this. It is almost like the ‘Big Bang’ theory of political philosophy.* Totalitarian: The other criticism of Hobbes is he justifies a totalitarian regime when he lets the sovereign off the hook for any kind of quid pro quo contract with the society. This is misreading of the term absolute. Hobbes considers the sovereign absolute in terms of its power which means they ‘can interfere’ in ‘any aspect’ of the lives of its citizens. This is different from a totalitarian regime which is based on the idea that the state ‘will permeate’ into ‘every aspect’ of the lives of its people. In fact, Hobbes was the first to free religion from the construct of the state. Once you are free from theology, you set the basis for a liberal state. Bookended By HobbesThe storming of the Capitol building by pro-Trump protesters marks a moment in the history of democracy in America. There’s always a temptation to over-read the current moment. But the irreversible slide of the discourse, the shrinking of the middle ground with a loony, conspiracy-theory fed right and an anarchist, self-righteous left and an almost cult-like adherence to prior beliefs that get accentuated in the echo chambers of social media have meant this moment was nigh. The strength of the social covenant (“we, the people) is under stress rarely experienced before. Once that covenant is broken, the political authority wanes or gets delegitimised as we see it happening in America for most of last year. Unless checked and reversed, we will be back to the state of nature. Chaos will follow. Maybe there’s a polymath philosopher watching all of this unfold with unease while developing an original political thesis like Hobbes over four hundred years ago. The storming of the English parliament of 1642 and the siege of the Capitol in 2021 seem to bookend the political era whose foundation was laid by Hobbes. There’s a need for a new social contract for these times. A Framework a Week: OOOTools for thinking public policy— Pranay KotasthaneThe union government’s first post-pandemic budget will be presented in the Parliament on Feb 1. The all-consuming buildup has already begun as if it were a Rajinikanth movie. As the budget date nears, you will come across many more number-based narratives — the need for higher public health expenditure, the imperative to reduce allocations for subsidies, and the necessity to adequately fund the requirements of our armed forces. So let’s revisit a framework that helps put these numbers in perspective. The Outlays-Outputs-Outcomes (OOO) framework is a useful way to analyse the many schemes that the Finance Minister will announce on Feb 1. Inputs/Outlays refer to the resources provided to a scheme or project that the government runs. Once the budget is presented, virtually all the public discussion will be on these outlays. This gives an idea of how the union government prioritises all its functions. But as we all know, outlays for a project is no guarantee for success. To measure success, policies or schemes need two other parameters: outputs and outcomes. Outputs refer to the direct and measurable product of program activities, often expressed in physical terms or units. Outcomes, on the other hand, are the long-term benefits that a project or intervention is designed to deliver.Using this framework allows us to scrutinise government schemes better. As Ajay Shah writes:This framework became famous around education, where the inputs are school buildings and recruitment of teachers, the outputs are kids who are enrolled and attend school, and the outcomes are what the kids actually know. From about 2004 onwards, we have understood that very large increases in public expenditure in the per-pupil expenses were associated with essentially no gains in the outcomes. The education bureaucracy has proclaimed its victories as counted by school buildings, teachers employed or kids enrolled. But at a fundamental level, state spending on elementary education has not delivered: vast increases in the input has not delivered gains in the outcome.This framework also yields a useful vocabulary for measuring success. We can assess policies in terms of its economy, efficiency, and effectiveness. Economy refers to inputs. It answers the question: are project inputs being purchased at the right price? Efficiency relates to outputs over inputs. It answers the question: what is the relationship between investment in inputs and the outputs that are produced? Effectiveness relates to outcomes over outputs. It answers the question: are outputs leading to the expected outcomes? (all definitions are taken from Indicators of Inputs, Activities, Outputs, Outcomes and Impacts in Security and Justice Programming, DFID).Ideally, any government programme should begin with a theory of change that connects the desired end state (outcomes) to the programme activities that need to be carried out (outputs) which further require a set of resources (inputs). Seen from this frame, a policy that fails to achieve the desired outcomes can mean two things. One, that there was an implementation failure. Insufficient outlays or difficulty in converting outlays into outputs due to corruption are examples of implementation issues. Two, that there was a theory of change failure which means that the assumed causal linkage between outputs and outcomes was incorrect. In the Indian context, a commonly held notion is that governments have good policies but poor implementation. What’s less appreciated is that policies often fail because the underlying theory of change itself is inaccurate. Bett…

Full show notes at the publisher

#97 What To make Of Protests? 🎧 Jan 06, 2021

Show notes

Welcome to the mid-week edition in which we write essays on a public policy theme. The usual public policy review comes out on weekends.

- RSJ

The farmers protesting against the three new farm laws (“Farm Laws 2020”) have entered into the seventh round of negotiations with the Union government. We have discussed these laws a few times here, here and here. For a moment, leave the laws aside and focus on the protests. Not the conspiracy theories about who is funding them and what their ‘real’ agenda is. But on how protests work. I had a few questions as I thought about them.

Why do some issues generate protest over others?

Take the last couple of months in India. We have the new farm laws that seek to open up the markets for farmers to freely sell their produce. The economic conditions of our farmers under the APMC mandis and MSP regime need no retelling. The new laws are new only for India. In most parts of the world, this is normal. Yet we have protests that have built up quite a steam.

Now contrast this with the Prohibition of Unlawful Conversion of Religion Ordinance that the UP Assembly passed in November. This so-called love jihad law is being sought to be replicated in other states like Himachal Pradesh, MP, Haryana and Karnataka. The provisions under these laws (which are quite similar across the states) fly in the face of the fair, liberal and democratic order that India has enshrined in its constitution. There is a subversion of the individual right to freedom of religion, free will and of the fundamental legal principle on who bears the burden of proof. And it isn’t as if there weren’t existing laws to curb forced mass conversions in these states. These laws have only one purpose – to strengthen the strawman about a global Islamic conspiracy to turn India into a Muslim majority state. Demographics, arithmetic, or logic militate against this strawman. But the strawman has been created and now it is about demolishing it to prove the effectiveness of the regime.

So, what explains the absence of any mass protests against questionable love jihad laws while there are protests against farm laws that most political parties had in their manifestos in the past?

There are two possible reasons for this. First, for any protest to start there is a need for a core group that feels aggrieved by an issue and questions the fairness of the actions of the state or the society. Both the points are critical – a sense of hurt and a moral basis to question the action that has created it. Second, the core group has to have a long-held common identity that’s clearly defined. It isn’t an identity that has been formed only because of the issue on hand.

Now let’s use this to look at love jihad laws.

Is there a core group that’s aggrieved by this? Muslim youth? Not really. The idea that there’s an organised group of Muslims being trained to woo Hindu girls in some kind of love academy and then sent out to marry them and Islamise India is in the realm of fantasy. As a strategy, it’s plain stupid with high investment and low returns. There’s no ‘superhit formula’ for wooing girls and Hindu girls aren’t waiting to be picked while having no agency of their own. So, there won’t be any Muslim or Hindu protest against these laws. As an aside, this was different in case of the Citizenship Amendment Act. There you had a core group (of Muslims citizens) who had a reason to be aggrieved and a moral basis to protest. On love jihad laws, the only group aggrieved would be those who believe in liberal values of freedom and justice. They will question the fairness of it. But does this group of ‘liberals’ have a long-held common identity? Not exactly. Most liberals can’t agree on the definition of liberals itself, forget about forging a common identity. So, don’t expect mass protests against a genuinely bad law anytime soon. Also, expect more of such laws in future that play the dog-whistle to the base without any protests from any group.

Things are a bit different with farm laws.

There’s a core group of farmers in Punjab and Haryana (and possibly in western U.P.) that benefit from the MSP regime who are agitated by these laws. That they – farmers whose toil ensures food on our table – are being given short shrift gives them a moral basis to protest. Finally, as farmers, they have a common identity around which they have organised, politically or otherwise, on numerous occasions in the past. So, you will have protests from this group.

That brings us to the next question.

What creates momentum for a protest?

Protests are started by a small, core group of protesters. The economic rationale is simple. The costs of protesting – organising, the opportunity cost of time and the likely threat of state violence – is weighed by them against foregoing existing benefits or incurring new losses (tangible or intangible). The initial group of protesters tend to be those who stand to lose the most. This loss outweighs the costs especially the threat of state violence which could be high for a small band of initial protesters. As the protest gets going, a positive network effect comes into play. Every new member joining the protest has a lower marginal cost than the previous member since the costs of organising and of state violence is now spread over more people. But the benefits remain the same. Or increase because the probability of a protest being successful increases with more members joining it.

The positive network effect is relatively easier to create in the radically networked societies we inhabit now. Once the costs and benefits are articulated clearly, the dissemination costs through social media can be almost zero.

Two other factors influence the momentum.

One, the ability of protesters to broaden their support base without diluting the focus of their objectives. This is a delicate balance and often protests fail in treading this line. Not broadening the base runs the risk of the momentum of protest fizzling out eventually since the state can play the patience game for longer than protesters. But adding too many allies who might bring in their own issues into the mix and then speak in multiple voices can derail the original cause of the protest. The great mass protests of Indian independence (Non-cooperation or Quit India movements) are fine examples of getting this balance right. Two, the ability of the state to run a counter-narrative about the protest and undercut the support base. The democratic states aren’t usually great in doing this since their response time is significant when compared to the speed of a radically networked group. However, a more authoritarian state can compete with a counter-narrative through mainstream media and through its own radically networked base which is ready and can respond quickly.

The current farmers’ protest has two problems in creating momentum. The positive network effect hasn’t taken shape in states beyond Punjab and Haryana. A likely reason for this is the benefits of the APMC and MSP regime are restricted to those two states while farmers from other states don’t have any incentive to protest against the new laws. The other reason is possibly the poor articulation of the grievances of the farmers and its broadcast to the farmers across the country. This scenario is unlikely in current times of social networks.

Finally, what does it take to make a protest successful?

The state responds when the continuation of the protest threatens its core interest of perpetuating itself. The size and the spread of the protest could reach a critical mass in the calculation of the state where it could threaten a regime change. Or the protest derails the lives of ordinary citizens who then turn against the state. Reasonable states will act in advance of such a scenario. In most cases, the state partly accepts the moral basis for protests and arrives at a reasoned compromise or it lets it counternarrative undercut the protest and let time take its own course. Only in rare cases does a state accept the moral basis of the protest and go back on its stand.

The protests we have seen in recent times (CAA, Article 370, farm laws) have seen this government use the counternarrative effectively. In fact, more than any other time in the past, this strength of the current regime will render most street protests ineffective. The protest on farm laws is a bit tricky since farmers account for 40-50 per cent of the voters in most states and have a history of mobilising themselves during elections. The narrative created in favour of the farm laws is strong and the limited appeal of the protests in other states has meant the government has stalled the protesters with multiple rounds of talks. Considering the limited geographic spread of the protests, the likely conclusion to these talks could be a few concessions made in the laws for these states. A full repeal of these laws is unlikely unless a groundswell of support for the protesters that’s so far missing emerges in the next few weeks.

HomeWork

Reading and listening recommendations on public policy matters

* [Article] Nathan Heller in The New Yorker: Is There Any Point To Protesting?

* [Article] Pratap Bhanu Mehta in The Indian Express on the farmers’ protests.

This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit publicpolicy.substack.com

#96 A Lazy Start To 2021🎧 Jan 03, 2021

Show notes

PS: If you enjoy listening instead of reading, we have this edition available as an audio narration courtesy the good folks at Ad-Auris. If you have any feedback, please send it to us.

— RSJ

Happy 2021 everyone!

There’s no logical reason to believe that turning over to a new year will make a difference in the fortunes of humankind. But we are an optimistic lot.

So, we hope the spectre of 2020 is behind us. It was what it was. If you are a believer, you’d think there was a cosmic message to us through the year.

Like Alexander Pope wrote in that great defence of the ways of God to men – An Essay On Man:

“Hope humbly then; with trembling pinions soar;

Wait the great teacher Death; and God adore!

What future bliss, he gives not thee to know,

But gives that hope to be thy blessing now.

Hope springs eternal in the human breast:

Man never is, but always to be blest:

The soul, uneasy and confin'd from home,

Rests and expatiates in a life to come.”

Pope concludes with:

“All nature is but art, unknown to thee;

All chance, direction, which thou canst not see;

All discord, harmony, not understood;

All partial evil, universal good:

And, spite of pride, in erring reason's spite,

One truth is clear, Whatever is, is right.”

We must accept whatever is, is right

We will continue to write to help us make sense of the world around in 2021. But a year like 2020 helps put things in perspective. The world works in mysterious ways. You can’t control it. Spontaneous order is ordained.

Ten (or Fifteen) Predictions For 2021

The laziest way to start a new year edition is to post predictions. Admittedly, I’m basking in my garden with the late winter morning Bangalore Sun warming my toes. So, let’s do the lazy thing here.

By the end of 2021, we will all realise we overrated the long-term impact of the pandemic on everything. There won’t be any ‘new normal’ to write home about. Things will be more of the same. There will be a plethora of books on the post-pandemic world (hey, Pranay has edited one too😊) and the lessons to be drawn from the pandemic. But my guess is barring the strange experience of the lockdown that will linger in our memories, the world at the end of 2021 will be quite similar to how it was at the end of 2019. There will be fewer business travels and more people will work from home, but this will be a mere acceleration of the long-term trend than a radical departure from the past. That apart there won’t be any great reset.

Global financial markets will be one area where the impact of the pandemic will be felt in the (really) long term. Don’t worry we will all be dead by then. The size of the stimulus in most developed economies and the amount of liquidity pumped into the system will mean two things – eventual inflation and a repeat of the taper tantrum in future. In some ways, we have subscribed to the modern monetary theory (MMT) without admitting to it. Deficits have come to mean nothing and any future slowdown in the economy or fall in markets will mean more stimulus. Someone in future will be left holding the can. We can’t see them nor can we feel deeply empathetic about them. ‘Deficit is all a myth’ line of argument will gather momentum.

The stock markets are in bubble territory now. But there won’t be any reckoning in 2021. The stocks doing well during the pandemic will continue to do well. Others who were impacted by the lockdown will limp back to normalcy. With interest rates at historic lows and excess liquidity all around, the top 2-3 per cent who invest in equity will have no other options but to park surplus funds in the market. The millennials (who believe the markets only go up?) will enter the markets in large numbers on the back of zero-fee platforms like Robinhood and Zerodha. The divergence between the real economy and the street will continue to confound all of us.

We spent a lot of time in 2020 thinking about economic recovery. What policy actions will aid it, what will be the shape of it and how quickly will we get back to the pre-pandemic levels on a sustained basis? The early signs are of a K-shaped recovery around the world. This will be strengthened in 2021. A small set of companies and people will see a rising graph of growth and prosperity. The long-term impact of the pandemic will be to worsen inequality. The early but definite signs of this will show up in 2021. In India, this K-shaped recovery will have a second-order impact. We will measure recovery on the rising part of the ‘K’ since the data there is available at a greater frequency. Expect terms like ‘roars back’, ‘strikes back’ to be in vogue in the second quarter of the year while describing the economy. There will be limited economic rationale behind such commentary.

The Indian economy will trundle along. The twin balance sheet problem will persist. The impact of the moratorium on the financial services sector will show up in the latter part of the year. PSU banks will need more capital once they are done with their consolidation. The government will find it difficult to do that. Some kind of divestment will be attempted that will be stalled by the usual protests from the opposition, unions and public opinion. Banks and NBFCs will be extremely careful with lending, especially to new projects or new customers. Credit offtake will be weak and the revival of consumption story will be dampened because of this. Private investments were trending downwards anyway before the pandemic. Its revival seems unlikely in 2021. Government finances will continue to be under strain and its borrowings will crowd out others. Expect RBI to continue to bear the burden of holding up the economy.

The Chinese economy will lead the global growth engine. Despite its misadventures during the pandemic, China will continue its rise to the top. The Biden administration will take a more accommodative stance towards China. The trade war will subside and the EU will continue to strengthen its relationship with China. The anticipated move of global supply chains away from China will be insignificant in the larger scheme of things. China will continue with bullying its neighbours and those who don’t toe its line. India’s reluctance to be seen in the US camp and the new Biden administration will mean there won’t be any real Quad counterpoint to China in Indo Pacific. Most of US attention will be on domestic issues where race and identity politics will consume everything in the next year. There will be the usual handwringing about a democratic coalition of the willing to take on illiberal Chinese authoritarianism. But those will be words. There won’t be any real US response to China’s rise to the top.

Technology sovereignty will be a key theme in 2021. Countries across the western world will assert their technology independence. The most common form this will take is in keeping Chinese technology companies out of strategic sectors like telecom and finance infrastructure services. Some early efforts will be made to create common standards and shared investments in data protection, usage of AI, 5G protocol and cybersecurity in the western democracies. There will be greater regulation of Big Tech and social media platforms with some serious repercussions for Google and Facebook in 2021. The blunt instrument will be hiving off some of their businesses into separate companies. Or you could expect heavy fines for restrictive or anti-competitive practices and heavier hand of regulations on these companies.

How to vaccinate India will be a policy question that will keep everyone busy in the first half of 2021. Everything about vaccines – procurement, pricing, storage, administration and safety – will test our policymakers. My guess is we will do quite well in this entire exercise. We know how to pull off large events of this kind. The state that’s all-pervasive and weak in getting things done is good in one thing. Mobilising people to stand in haphazard queues and getting them to do its bidding. Vaccination drive falls squarely in its sweet spot. Expect many ad hoc regulations, orders and trampling of individual liberties and common sense when this is being done. But we will surprise ourselves on this front. My bet is the PM uses the Republic Day platform this year to have the first person to be vaccinated in India. Expect it to be an old, female health worker from West Bengal.

It won’t be a great year for reforms. The wrong lessons will be learnt from the protests against farm law reforms. Plus, the usual set of assembly elections and the weak economy post the pandemic will continue to weigh on the government. So good, bold and much-needed reforms across sectors will again go into the backburner. The weak economic performance will then be compensated by the unnecessary and illiberal social policies to keep the base enthralled. Expect more states to pass laws against love jihad and cow slaughter. Some kind of population control bill and revoking of the amendments made to the Constitution during the emergency might also be in news. Those worried that India is headed in the wrong direction will be driven to deeper despair.

#10

The BJP election machine will have a mixed year. Barring Assam where it should keep its majority and some gains in West Bengal, it won’t see much success. The campaign and the narrative building leading up to elections in Assam and West Bengal will not be for the faint-hearted. There will be a plethora of fake news, violence and no-holds-barred Muslim bashing. The signs are already there on the news channels. The opposition will remain largely ineffective with some kind of split happening in the Congress during the year. But there will also be the earliest sign of some kind of coming together of regional parties to counter BJP in 2024. This seems inevitable. PM Modi will continue to remain above all of this as he cultivates his spiritual Mahatma image.

— Pranay Kotasthane

There are two kinds of 2021 predictions I have come across. The first kind says that the post-pandemic world will be the same as the pre-pandemic one. The second kind says that the post-pandemic world will have a far-reaching impact on that one phenomenon that the author is deeply invested in.

Both kinds of predictions are susceptible to what Philip Tetlock calls ‘outcome-irrelevant learning’ — a situation wherein no matter the reality, people are in an excellent position to explain that what happened was consistent with their view.

One way to check outcome-irrelevant learning is first to make specific, measurable predictions and then reflect on real-world outcomes at the end of the prediction horizon. Which, for this newsletter, means we will do another post at the end of 2021 reflecting on our hits and misses.

With that caveat out of the way, I have five predictions to add to RSJ’s ten.

#11 Petrol prices in Bangalore will hit ₹100 at least once before the end of 2021.

We have previously written about excise duties on petrol and diesel being the superhero of last resort for state and union governments. Given the resource crunch that’s set to continue in 2021, I expect the retail price of petrol to hit a swashbuckling century in my city.

#12 A maximum of 2 CPSUs will be privatised by the end of 2021.

There are many news reports indicating the union government plans to sell its stake in over 25 CPSUs. My prediction is that in only two of them (possibly, Air India and BPCL), the government will sell all its shares. In the remaining companies, the government will reduce its stake or the sale process might not complete.

#13 GST will continue to have the current five tax slabs.

The fiasco on GST compensation cess has meant that union-state relations are in the wrong place. Negotiations will be more challenging as both sides will harden their stands. They will guard the status quo and resist attempts to simplify the GST regime.

#14 The status quo at Ladakh in terms of territorial control will continue.

Even if there is a reduction in the numbers deployed, PRC is unlikely to back off. A negotiated settlement doesn’t suit the PRC.

#15 The number of US service personnel in Afghanistan will fall below 2500 by the end of 2021.

There seems to be a bipartisan consensus on Afghanistan in the US. Trump administration plans to reduce uniformed US troops from the current 4500 to 2500 by Jan 15. My prediction is that Biden will stay the course.

Finally, I disagree with RSJ’s prediction that there will be no real response from the US to China’s rise. There might be fewer tariff hikes but efforts to slow down China’s progress in advanced technology will gather steam. I did not include this in my list as I couldn’t come up with a specific, measurable prediction in relation to US-China relations. It’s hard to make good predictions!

What are your predictions for 2021?

HomeWork

* [Video] Fareed Zakaria interview on his new book - Ten Lessons For A Post-Pandemic World. Snark alert: a bit amazing that he already has a book about the post-pandemic world while we haven’t gotten over the pandemic yet! But he makes sensible points here. Watch it.

* [Article] What is Wrong with Econ 101. An excellent primer on common misconceptions about economics.

* [Article] Ajay Shah explains the critical difference between Inputs, Outputs, and Outcomes in relation to NFHS data.

This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit publicpolicy.substack.com

#95 Lippman-Dewey Debates: Janata Is Janardhan? 🎧 Dec 17, 2020

Show notes

Note: Anticipating The Unintended will be on its annual break over the next two weeks. Normal service will resume from Jan 3, 2021

Welcome to the mid-week edition in which we write essays on a public policy theme. The usual public policy review comes out on weekends.

- RSJ

The focus of this newsletter is to make public policy accessible to the public. That’s a claim we often make around here. There are thinktanks and public policy specialists to advise those who are in power. We are at the other end of the pipe. Trying to influence the demand side of the market of democracy. The hope is that an aware and an enlightened public will demand better from their representatives. Once the pattern of demand changes, supply will adjust itself.

The reassuring bit about working at this end of the democratic pipe is the freedom to engage with and critique policies on their merits without tiptoeing our way around giant political or bureaucratic egos. Also, simplifying the language used in policy discourse is fun and enriching. Of course, the difficult part is getting people to listen to you. Not because it is difficult to reach them. Instead as we often realise, the public isn’t interested to know more. They interpret the world around them with limited information available to them and construct an imagined world in their heads. This constructed imagination is the lens through which they view all information they receive. This is what spurs them into political or social actions.

There’s no good answer on who should a public policy newsletter try and influence? The powers that be or the general public?

I realised last week while reading about the Lippman-Dewey debates, this is a century-old question. In the 1920s, the two were engaged in a fascinating duel of ideas and philosophy. While both believed in democracy, one saw it half-empty, the other half-full.

Lippman’s Scepticism About The Ordinary Citizen

Democracy is founded on the belief that public opinion matters. But as the society becomes more advanced, knowledge more specialised and a wider range of issues impact lives, citizens find it difficult to inform themselves about all the issues impacting their lives. The ordinary public can’t be ‘omnicompetent’. This is the problem of knowledge that Lippman probed in his two seminal books – Public Opinion (1922) and The Phantom Public (1925). As Lippman wrote:

"The real environment is altogether too big, too complex, and too fleeting for direct acquaintance.”

The ordinary citizen “lives in a world he cannot see, does not understand and is unable to direct.” This leads to an inevitable discrepancy between “the world outside and the picture in our heads.” This “pseudo environment” in our heads is what we use to form political and public opinions. This is what political parties and media work on to create narratives. For Lippman this was the flaw with the democratic ideal of public participation in decision making. They are coming at it with the “most inadequate picture”.

Lippman though is empathetic to the ordinary citizen’s plight:

“My sympathies are with [the citizen], for I believe that he has been saddled with an impossible task and that he is asked to practice an unattainable ideal. I find it so myself for, although public business is my main interest and I give most of my time to watching it, I cannot find time to do what is expected of me in the theory of democracy.”

Democracy needs competent citizens. If the majority of voters aren’t able to make sense of the real world around them to make clear-headed judgments, what’s the point of it all?

Lippman’s response to this problem was in the role of experts. Representative politics “cannot be worked successfully…..unless there is an independent, expert organization for making the unseen facts intelligible”. An enlightened oligarchy of experts is the answer. In Lippman’s prescription, the expert is a disinterested participant with deep mastery of an area who advises those in power within the government or administration. As Lippman writes:

“The power of the expert depends upon separating himself from those who make the decisions, upon not caring, in his expert self, what decision is made.”

For Lippman this separation of responsibilities is critical for the functioning of the democracy. The role of the ordinary public is restricted in mobilising themselves to elect their representatives on the basis of their performance (real or promised) which in turn depends on how they have used the experts to frame laws and policies. Lippman has no illusions about the capabilities of a popular government that sways to the mood of the public. They need guidance from experts. The citizens neither possess the knowledge or the competence on the wide range of issues that concern their world nor can this be taught to them. Education is a bit overrated and only the optimists see it as a solution. The media and the political parties will continue to construct reality for the citizens that will drive their decision making. The best hope for democracy therefore is to have detached experts who have the ears of those at the helm.

Dewey’s Democratic Faith

The riposte to Lippman came from political philosopher and a champion of public voice in democracy, John Dewey. While Dewey agreed with Lippman’s thesis about an omnicompetent citizen being an illusion, he questioned the need for such special capability. Instead, he argued there are ways in which citizens can acquire sufficient knowledge to participate effectively in a democracy. This to him was a better option than the tyranny of the experts that Lippman favoured.

Dewey viewed knowledge as a kind of social capital that each individual possesses stemming from their participation in the society and from the long history of people gathering knowledge before them. To believe an individual has to know everything about the world around them is to ignore the accumulated knowledge that’s available and which people draw upon in their everyday lives. To him, as he wrote in The Public And Its Problems (1927), this knowledge is built-up through “association and communication; it depends upon tradition, upon tools and methods socially transmitted, developed and sanctioned.”

Dewey gives the example of scientific progress made by humankind as an example of this kind of knowledge. As he wrote:

“The development of tools into machines, the characteristic of the industrial age, was made possible only by taking advantage of science socially accumulated and transmitted.”

And he was convinced this accumulation of knowledge was possible for the political sphere too.

“Just as the specialized mind and knowledge of the past is embodied in implements, utensils, devices and technologies which those of a grade of intelligence which could not produce them can now intelligently use, so it will be when currents of public knowledge blow through social affairs.”

The build up of this social knowledge happens over the years through experts who study this area. So, there is still a role of experts in Dewey’s thesis. However, unlike Lippman, Dewey sees their role is to focus on informing the public, not the experts. The experts must continue to study the complex world around us and the forces that shape them. They must then interpret this for the average citizen who can then act with foresight within their social and political environment. Dewey wrote:

“…inquiry, indeed, is a work which devolves upon experts. But their expertness is not shown in framing and executing policies, but in discovering and making known the facts upon which the former depend.”

For Dewey, the experts must be guided by public spirit and owe their allegiance to the public. They must share their knowledge directly with the public and not restrict it to those in positions of power. The citizen doesn’t need to be omnicompetent; they must know enough through the stock of social knowledge and the guidance of experts to contribute meaningfully to public life.

We are no experts here. But as a public policy newsletter, we side with Dewey in these debates.

HomeWork

Reading and listening recommendations on public policy matters

* [Article] A primer on Lippman-Dewey debates: Notes from Carl R. Bybee, 1997, Media, Public Opinion and Governance: Burning Down the Barn to Roast the Pig, Module 10, Unit 56 of the MA in Mass Communications, University of Leicester

* [Article] Sean Illing writing in the Vox: Walter Lippmann’s famous critique of democracy revisited.

This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit publicpolicy.substack.com

#94 Reforms: Caught Consensus, Bowled Hubris Dec 13, 2020

Show notes

PS: If you enjoy listening instead of reading, we have this edition available as an audio narration courtesy the good folks at Ad-Auris. If you have any feedback, please send it to us.

PolicyWTF: What Broke the Constitution’s Seventh Schedule?

This section looks at egregious public policies. Policies that make you go: WTF, Did that really happen?

— Pranay Kotasthane

The Seventh Schedule of the Consitution has three lists scoping out the responsibilities of the parliament and the state legislatures. List I contains the subject-matters over which the parliament has exclusive power to make laws (defence, foreign affairs, banking etc.). List II does the same for state legislatures (health, public order, water, land, agriculture). List III contains subject-matters on which both the parliament and state legislatures can legislate (education, forests etc.).

Looks neat. Except that this assignment of powers hasn’t stopped union governments from designing and funding hundreds of schemes that squarely fall under List II — National Health Mission, Swachch Bharat Mission, Pradhan Mantri Awas Yojana, to name a few. You would imagine that these schemes, known as Centrally Sponsored Schemes (CSS), would be opposed tooth and nail by state governments, right?

Wrong. We’ve reached a low-level equilibrium where the state governments have grudgingly reconciled to the reality of CSS. They oppose it on paper or complain to Finance Commissions but are also happy to receive funds as part of these union government-sponsored schemes. And so, successive union governments have continued to misuse Article 282 of the Constitution — which permits union and states to make grants for any ‘public purpose’ regardless of where that purpose lies in the seventh schedule — to interfere with state subject-matters.

With no clear effective assignment of responsibilities, it is not surprising that people expect prime ministers to provide them with water supplies, public order, and clean streets, none of which are union government subjects. Without a clear assignment, there is no way to fix accountability. Without accountability, citizen preferences don’t matter. The State does what it can and citizens endure because they must.

In short, the Seventh Schedule is broken. As NK Singh, Chairman of the 15th Finance Commission argues: there’s a need to change the Seventh Schedule and Article 282, both. Absent that, we will keep CSS proliferating depending on how populist a union government wants to be. At present, there are approximately 211 schemes and sub-schemes under the 29 umbrella CSS!

For more, read:

* Ten Little Schemes, my article for Pragati

* Chapter 5, Review of Inter-Governmental Transfers and Consolidated Public Finance, Report of the Fourteenth Finance Commission, Volume 1.

* Rationalising Central Schemes, The Financial Express, M Govinda Rao

India Policy Watch #1: Missing Artists in Our Polity

Insights on burning policy issues in India

— RSJ

The farmers’ protests are now into their third week. The Union government seems to be in the mood for talks with farmer leaders now; after trying out the other alternatives, namely, barricading road, lathi-charging and using water cannons in cold Delhi winter. We aren’t sure about the kind of compromise that will be worked out. The track record of the government in arriving at a common ground isn’t great.

That we have fluffed our lines on reforms in a sector that needs them direly is quite incredible. It is starker when you consider the numerous expert committees in the past that have recommended exactly what the new agriculture laws aim to achieve. These recommendations have had broad-based support from most political parties and even made their way into their election manifestos. With such support and history, you’d expect we would have got these much-needed reforms off the ground. Yet we are struggling with it. It’s an object lesson in public policy implementation.

A Reform Whose Time Has Come

We have made our arguments in support of farm reforms before. No one can claim with conviction our agriculture policies have been a success since independence. The entire agriculture value chain – from pricing, storage, distribution and purchase – has been in a regulatory chokehold that was designed during the early 60s. Faced with successive failures of monsoon and with the memory of famines (Bengal, particularly) still fresh, we had to seek US support to import food grains under the PL 480 scheme. The scars of that event led to the Green Revolution that saw a dramatic increase in agriculture productivity.

Agriculture in India is a state subject. So, alongside the miracle of the Green Revolution, a majority of Indian states decided to enforce the Agricultural Produce and Market Regulation (APMR) to ensure food security. Soon, the purchase and the auction of food grains was restricted to the markets that were run by the state. The Agricultural Produce Market Committee (APMCs) and their mandis became the only legal buyer of the farmers’ produce. This was in keeping with the spirit of the times. The Indian state was in a massive expansion drive. It swallowed the whole of agriculture.

What has the past half-a-century of this state control given us? It is important to summarise the points again to appreciate how the status quo cannot be the answer.

* We achieved food surplus by the early 80s, but we didn’t stop the Food Corporation of India (FCI) continue the practice of buying wheat and rice at Minimum Support Price (MSP). The MSPs have continued an upward trajectory ever since. Where are we today with this policy? The FCI godowns today are bursting at seams with about 100 million tonnes (MTs) of food grains as against the buffer requirement of about 40 MTs. The burden of supporting FCI procurement is a huge drain on the exchequer. The 2020 budget had set aside Rs 1.36 lakh crores as FCI borrowings to support the MSP regime. The unintended consequences of this borrowing on our fiscal health are a separate story. This is the price we pay to sustain MSP.

* The farmers of Punjab and Haryana who constitute the bulk of protesters have a reason to feel aggrieved with the dismantling of the current system. Take rice for example. Only about 12 per cent of farmers benefit from MSP in India. That same number is north of 90 per cent in Punjab and in a similar range in Haryana. MSP support to rice has created a scenario where a primarily wheat eating region like Punjab is the biggest producer of rice in the country. This coupled with free electricity to farmers has meant a significant reduction in groundwater levels in these states. The narrow focus on these two food grains has meant we run a deficit in other crops including dals, oilseeds and other cash crops. We import these while continuing to produce surplus rice and wheat every year. The local variety of grains that are hardy and require less water (jowar, bajra and ragi) have all but disappeared from our plates over the years. Separately, the desire to raise two crops every year leads to farmers in Punjab burn their stubble. This adds to Delhi’s gas-chamber like pollution. Lesson: incentives matter and negative externalities are real.

* The Essential Commodities Act (ECA) that runs in parallel with the APMC makes things worse. The Union government periodically imposes stock holding limits for various grains and takes away the market flexibility to manage supply-demand swings. This has meant there are no organised sector entities in the agriculture supply chain to manage the storage. No wonder tur dal or onion prices skyrocket at various times in the year. Our retail inflation sways to these price movements.

* The upshot of it all? Agriculture with about 16 per cent contribution to our GDP supports about 60 per cent of our population. Less than 1 per cent of farmers own 10 hectares of land that can be considered optimal to pursue agriculture as an enterprise. The rest are in subsistence farming. Like we have asked before, how can anyone argue to continue with this system?

How Not To Reform

Despite this, we seem to be in a situation where we have to negotiate and may be dilute the three bills that sought to reform the farm sector. The bills allowed the sale of farm produce to players outside APMC, relaxed stocking restrictions under the ECA and enabled contract farming. The problem was correctly diagnosed, and the right solution offered. So, what could go wrong?

* Agriculture is a state subject. Any big reform needs consultations with state governments, farmers, and the opposition. Since a broad consensus on these reforms had emerged from the reports of various expert panels over the years, this could have been a process less fraught than what has been seen in the case of GST or other reforms that needed a federal consensus. Yet there were no deliberations. The manner of passing the bill especially in Rajya Sabha where a debate was avoided, and a voice vote was used to pass them through betrayed a lack of faith in parliamentary procedures.

* There is a strong desire for a big reveal that underlines the way the PM operates. This is how all key measures – from demonetisation, amending Article 370, CAA and labour reforms – have been announced and then pushed through. The desire to stun the nation with a bold move is seen to be the key to make a decision. This doesn’t help in managing change that big reforms entail. There is wider anxiety among the impacted stakeholders if things aren’t discussed and deliberated. This is further stoked by the minority that wants to stonewall these reforms. The opposition also latched on to this opportunistically. That’s how this has played out. Then the usual bogey of big corporates (Ambani and Adani) was raised. There’s always a currency for this in India.

* The desire and speed for a bold move have invariably meant poor anticipation of unintended consequences of these reforms. Clauses that can only be called illiberal have seen their way through these laws including those where the executive is given powers to adjudicate with no remedial mechanism to appeal against the decision in civil courts. This won’t stand in any court of law.

* Lastly, when confronted with the first signs of protests, the entire playbook of how not to manage protests was put into action. First, the police force was deployed to break the protests. Then the protesters were dismissed as rich farmers or middlemen protecting their turf. Finally, they were branded terrorists and anti-nationals before some mediation was attempted.

Missing Artists?

The unfortunate outcome of this might be the wrong lessons we will learn for future – that reforms are difficult to implement. Further, as Pratap Bhanu Mehta writes in the Indian Express there is a greater loss to the polity that’s likely:

“Chances are that, for the moment, given its overwhelming power, the government will ride out the protests. But the simmering discontent will remain. Cooperative federalism is in tatters, and the weakness of political parties means protests now take an amorphous form. Given the far-reaching changes we need in agriculture in Punjab, it is important that the trust between the state and the farmer remains. A good faith dialogue that gives the farmers reasonable assurances and a face-saver is necessary. It is easy for the government to win. But how many times in Indian politics have we won short-term victories that create long-term political precariousness?”

Over the years we have gotten used to the many reasons why we haven’t seen structural reforms gather pace in India. These have ranged from coalition compulsions, lack of majority in both houses, absence of political will, obstructionist opposition or ‘too much democracy’. As the farm reforms saga shows, these are mere ruses.

Politics is the art of possible. And we are missing those artists.

India Policy Watch #2: Lessons for Politics in Radically Networked Societies

Insights on burning policy issues in India

— Pranay Kotasthane

Beyond the specifics of India’s agriculture, some broader lessons come out of the ongoing logjam for politics and policymaking. Some quick intuitions here:

* Vocal Local is also the Global. The Canadian PM’s comments are an indication of a broader trend. No political issue is purely “internal” to a State anymore, at least as far as narrative-building is concerned. With networked communities, this trend will become stronger as outrage is the new form of entertainment. A corollary is that stakeholders with more narrative power but little interest in the issue can end up setting the narrative. Just like the ISI using this issue to fan Khalistani separatism again.

* Popular governments will try to bypass parliaments in crises citing the need for fast-tracking reforms in the backdrop of COVID-19.

* More of the same. No statement or action by the government and the opposition suggests a realisation that they aren’t willing to come together to tide over India’s first recession after 40 years. Unfortunate.

HomeWork

Reading and listening recommendations on public policy matters

* [Article] Sandip Das on “A fiscal crisis: Why FCI needs provisioning in food subsidy”

* [Podcast] On Puliyabaazi, Saurabh and Pranay speak to Gunwant Patil of the Shetkari Sangathana Farmers’ Movement on the three farm laws.

If you like the kind of things this newsletter talks about, consider taking up the Takshashila Institution’s Post Graduate Programme in Public Policy (PGP) course. It’s a 48-week in-depth online course meant for working professionals. Applications for the Jan 2021 cohort are now open. For more details, check here.

This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit publicpolicy.substack.com

#93 Democracy, Aap Too Much Ho!🎧 Dec 11, 2020

Show notes

Note: Sorry for the delay in the mid-week edition. Life intervened

Welcome to the mid-week edition in which we write essays on a public policy theme. The usual public policy review comes out on weekends.

- RSJ

Readers are sending in all sorts of questions. So, our parampujya guru of economic and political reasoning, Prof. Arthananda Ilyich Smith-Hayek (AISH), is back. Prof AISH is a home-grown economist without a single videshi bone or cartilage in him. He is a veritable sangam of three key economic streams – Neoclassical, Marxist and Austrian – whose advice can be safely consumed in these low trust times.

Over to the burning question.

Dear Prof,

The CEO of Niti Aayog yesterday complained we have too much democracy in India. He later claimed he was misquoted. That, of course, dispelled any remaining doubt among us that he had indeed made that statement. All hell broke loose. Memes appeared, Immanuel Kant was quoted, and Twitter had a field day with the usual leftist malcontents suggesting fascism is nigh. I don’t understand this. All my life living in India I have felt we have too much democracy. Nothing moves in India because everyone has a say. You can’t get anything worthwhile done because no one is willing to pay any price. We elect goons and criminals because every fool has a vote. Anything that’s good for the majority can be hijacked by a minority that’s vocal and organised. We have all seen this. How can we outrage over the ‘too much democracy’ comment when we know it is true? What do you have to say? I hope you are wise enough to know what’s good for us.

Yours etc,

Prajatantra Mallik

Prof AISH:

Dear Prajatantra,

Thank you for writing in. There’s always a complaint of too much democracy when you are thwarted by the people. Never when you win elections by the slenderest of margins but earn the right to govern with full powers of the executive. That’s how things roll.

Anyway, there are three parts to my answer. The first part will clarify a few things about democracy and the state. The second part will be on the critique of democracy over the years. And at the end, I will talk about how despite everything blaming too much of democracy in the Indian context is meaningless.

Democracy, Republic, and The State

To start with democracy is a form of government - nothing more. There is an element of religious passion towards it by its adherents. This is particularly true in America and, possibly, stems from Walt Whitman, the poet of Democracy. Whitman elevated democracy to a mystical phenomenon. His poem For You O Democracy (from Leaves of Grass, 1892) is a hymn to it:

“I will plant companionship thick as trees along all the rivers of America, and along the shores of the great lakes, and all over the prairies,

I will make inseparable cities with their arms about each other’s necks,

By the love of comrades,

By the manly love of comrades.

For you these from me, O Democracy, to serve you ma femme!

For you, for you I am trilling these songs.”

It is difficult to top that. Democracy is an end to itself and it must be valued with passion. Whitman’s spirit pervades the US polity till date. The American exceptionalism over the last century has made democracy more than a mere form of government. It has come to be seen as an ideal for society. India too adopted not just a form of government following independence, but this belief about the virtues of democracy beyond it. This is one part of the problem.

But let’s start with its definition itself. Democracy may not even be an ideal form to choose who will govern the state. But like Churchill (never) said it is the worst form of government except for all the others. Broadly, it means everyone has a share of the government and the majority view prevails. This is understood to recognise every citizen has an equal opportunity in creating the legislature that will govern them. The state that has the monopoly of legitimate violence over its citizens has multiple arms to conduct its affairs. Not every arm of it is democratic in nature like the legislature. We don’t elect our judges or our bureaucrats through popular mandate. In most cases, the process is designed to find the most qualified or the most appropriate person for the role instead of the most popular. Through an elaborate mechanism of checks and balances, these non-democratic institutions are subject to the will of the people. There are hardly any pure democratic institutions in any democracy.

Even the will of the people to determine the legislature isn’t democracy in its purest form. Most modern democracies are representative in their form. This is a recognition that the rule can never be directly of all people but of ‘typical members’ who represent them. It tacitly acknowledges those who represent the people are better suited than others to ‘rule’. In that sense, every democracy still retains an element of aristocracy or the rule of the elite. It is important to remember here, this representative form of government while being partly elitist still can’t be replicated in other spheres of the society. No firm or enterprise can run on democratic principles. Nor can any team, guild or community.

We shouldn’t seek more democracy in society; probably striving for more inclusiveness and openness makes more sense. Instead, we should be striving for a better republic that strengthens the process of choosing the best representatives among the people who then wield the power of the state and use it to enhance the welfare of individuals.

Criticising Democracy

There hasn’t been any shortage of criticism of democracy over the ages. And we aren’t including tyrants, despots, and dictators in this list. This is led by Plato and Aristotle who it could be argued lived in a society that was democratic (slavery notwithstanding). They viewed democracy as good in theory but difficult to put in practice. Aristotle clubbed democracy as a deviant constitutional form clubbing it with tyranny and oligarchy. To him, the ultimate end of a state was neither to maximize wealth as oligarchs would believe, nor was it to promote liberty and equality in every public sphere as the democrats aspire. Instead, he argued, it was ‘good life’ that’s the true end of the state. That requires a ‘middle constitution’ or a ‘mixed government’ of a numerous middle class that chooses a wise few to govern. If one were to be kind to Aristotle, the mixed constitution he bats for is the precursor to the modern Republic.

Following the French and American revolutions in the late 18th century, the ideas of liberty and democracy were debated widely. Political philosophers from Ruskin, Carlyle to Tocqueville were troubled by the exaggerated deference to the will of the majority. In their view, there was a qualitative difference among people and the idea to treat all of them equal in their right to rule the state was terrible. The majority will be swayed by demagogues who will pander to their worst instincts and the minority that’s qualitatively better will lose the will to fight. James Bryce in ‘Hindrances To Good Citizenship’ laid out the arguments of this school in detail. In a chapter titled, The True Faults of Democracy, he pointed out four flaws:

“First, a certain commonness of mind and tone, a want of dignity and elevation in and about the conduct of public affairs, an insensibility to the nobler aspects and finer responsibilities of national life.

Secondly, a certain apathy among the luxurious classes and fastidious minds, who find themselves of no more specific account than the ordinary voter, and are disgusted by the superficial vulgarities of public life.

Thirdly, a want of knowledge, tact, and judgment in the details of legislation, as well as in administration, with an inadequate recognition of the difficulty of these kinds of work, and of the worth of special experience and skill in dealing with them. Because it is incompetent, the multitude will not feel its incompetence, and will not seek or defer to the counsels of those who possess the requisite capacity.

Fourthly; laxity in the management of public business. The persons entrusted with such business being only average men, thinking themselves and thought of by others as average men, and not rising to a due sense of their responsibilities, may succumb to the temptations which the control of legislation and the public funds present, in cases where persons of a more enlarged view and with more of a social reputation to support would remain incorruptible. To repress such derelictions of duty is every citizen's duty, but for that reason it is in large communities apt to be neglected. Thus the very causes which implant the mischief favour its growth.”

Fairly prescient there. The criticism of democracy remained muted through much of the great wars of 20th century and the cold war. However, the last 20 years have seen a revival of sorts. The question has been on new democracies that have sprung up without a fierce adherence to the notion of individual liberties. The earliest work on this was by Fareed Zakaria who in a piece titled The Rise of Illiberal Democracy (Foreign Affairs, Nov 1997) wrote about the perils of democracy without the concomitant pursuit of liberalism. In an interview in 2017, Zakaria updates his warning about democracy:

“The happy narrative we told ourselves was that there was an almost ineluctable path to liberal democracy, and the evidence suggests that this is not how it works. Liberal democracy seems to be one of the many exits on which the democratic experiment could end, but there are others, like illiberal democracy, that are equally likely.

It appears this is what's happening in Turkey right now and in parts of Central Europe and in Russia. It's important to remember that despite all the repression, Putin is very popular. What we're learning is that authoritarian politicians have figured out how to achieve a balance between liberalism and illiberalism that keeps people satisfied. If they can give enough bread and circus to the public, they can maintain a stable working majority buttressed by a certain degree of repression of the press and political opposition.

And we have to reckon with the possibility that this model might become the most stable alternative to liberal democracy.”

The Indian Case

All of the above is not to suggest there’s a reason to applaud the lament of ‘too much democracy’ that springs among elite Indians. The reasons that have stymied India don’t have much to do with the perceived flaws of democracy. Like we have pointed out earlier, it has more to do with an overextended state that’s weak. Instead of being good in a few things, the state has chosen to be bad in a lot of things. The Niti Aayog and its earlier avatar, the Planning Commission, are great examples of this overreach. The check against ‘too much democracy’ is to become a better republic and to fix the ‘flailing state’.

HomeWork

Reading and listening recommendations on public policy matters

* [Book] Bryce on American Democracy Selections from "The American Commonwealth" And "The Hindrances to Good Citizenship" and edited by Maurice Fulton.

* [Article] Caleb Crain in the New Yorker book review on The Case Against Democracy

This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit publicpolicy.substack.com

#92 India's Marathon 🎧 Dec 06, 2020

Show notes

This newsletter is really a weekly public policy thought-letter. While excellent newsletters on specific themes within public policy already exist, this thought-letter is about frameworks, mental models, and key ideas that will hopefully help you think about any public policy problem in imaginative ways. It seeks to answer just one question: how do I think about a particular public policy problem/solution?PS: If you enjoy listening instead of reading, we have this edition available as an audio narration courtesy the good folks at Ad-Auris. If you have any feedback, please send it to us.New Book Out! — India’s Marathon: Reshaping the Post-Pandemic World Order— Pranay KotasthaneI’ve co-edited India’s Marathon — a collaborative effort that brings together bold ideas on India’s place in the changing world order from some of India’s finest young thinkers. (India’s Marathon, book cover by Anirudh Kanisetti)Don’t take my word for it. This is what Ambassador Shivshankar Menon writes in his foreword:“This volume poses questions which everyone wants answered but few dare to reply: how will the world order evolve and how can India deal with it? The Takshashila Institution has brought together some of the best minds to answer this question, and to give an Indian perspective on world order issues. Just for this the book deserves to be welcomed. This volume consists of coherent contributions from these scholars covering how India should manage its external relationships and the reforms that India needs to undertake domestically.… No reader would or should agree with everything in this book. I, for one, am not sure that India’s choice is between alignment and non-alignment any more, or that strategic autonomy is an unattainable goal for India. After all, strategic autonomy by one name or another is what all powers, even superpowers, seek. But this book would have served its purpose if it provokes thought and rational discussion about India’s place in the emerging world, whether it is ‘orderly’ or not. Despite the daunting world that seems likely, and the scale and scope of the necessary domestic reforms outlined in this book, I found it reassuring that so many contributors found it possible to rationally conceptualise these issues from an Indian perspective, and to map out a path through the dimly sensed future that awaits us.”Pranay Kotasthane, Anirudh Kanisetti, Nitin Pai (editors). India's Marathon (Kindle Locations 144-150). The Takshashila Institution. Kindle Edition.This Twitter thread lists all chapter ideas and contributors. It’s a stellar list, I tell you.Get your copy from Amazon India. Do give it a read!Global Policy Watch: Fukuyama (et al) And The ‘Middleware’ Solution To Social Media Monopolies — RSJTwitter India did a first last week. It labelled a tweet by BJP IT cell head as ‘manipulated media’. It claimed the label was based on its Synthetic and Manipulated Media policy. This was a policy launched by it in February this year. The rule for its user states:“You may not deceptively share synthetic or manipulated media that are likely to cause harm. In addition, we may label Tweets containing synthetic and manipulated media to help people understand their authenticity and to provide context.”Curbing Digital ColonialismIt is unclear if Twitter found no such tweets in India since February that satisfied the criteria for manipulate media. Surely, this wasn’t the first instance of false information shared by a blue-tick user in India. In any case, a beginning has been made and it will be interesting to see where and how far it will go with this. These steps are part of similar efforts by other social medial platforms to self-regulate themselves as they come under increasing government and regulatory scrutiny. There is a greater urgency among regulators around the world to curb the abuse of the dominant positions of the big tech platforms. EU pursued antitrust charges against Google for over a decade. In 2018, it fined it nearly $10 billion. But not much has come out of it. Google was left to devise its own measures to offer a level playing field to its rivals. Google continues to dominate the search-engine market in Europe with over 90 per cent market share. The U.S. Justice Department last month sued Google for violating federal antitrust laws in running its search and advertising business. Also, the US Congressional investigation into the power of Big Tech (Amazon, Apple, Facebook and Google) concluded in September this year with a voluminous 450-page report. The report indicts them in no uncertain terms:"These firms have too much power, and that power must be reined in and subject to appropriate oversight and enforcement. Our economy and democracy are at stake.”India hasn’t yet taken a concrete view about the dominance of Big Tech but there are rumblings. Last month, India’s antitrust regulator (CCI) opened an investigation against Google based on complaints from the start-up ecosystem. The practices of ‘forcing’ the app makers to exclusively use its billing system for in-app purchases and for bundling its payments app with Android smartphones sold in the country are under the regulatory lens. Last month, India brought all OTT platforms under the purview of its Information and Broadcasting ministry by changing the GoI (Allocation of Business) Roles, 1961. And it has been considering regulating the social media platforms and their content for a while now.Not The Usual Lens There are three key points that we have made about regulating Big Tech and social media platforms:* Antitrust regulators take the old Chicago school view to monopolies. This looks at monopolies through the economic lens of consumers and checks if they are being harmed by the dominance of monopolies. This is difficult to prove in case of Big Tech monopolies who provide most of their services for free and have deep customer loyalty.* The nature of these monopolies is quite different from those of the past. These players have appropriated huge amounts of data, run 2-sided platforms, have asymmetrical knowledge and power over their users, and can easily move into newer businesses based on these strengths. The traditional measures to curb the monopolies like breaking them up or stopping a line of business are difficult to implement. * Economic dominance is only one part of their power. It is the political dominance or the dominance of thought that can be more insidious. Like we wrote in edition #74, “the data and attention appropriation done through these platforms constrain our choices: we live in echo chamber of our opinions, we buy things that are suggested to us and we see a version of reality that’s tailor-made for us and that no one else is seeing. Often the term ‘digital colonialism’ is bandied about when talking about Big Tech. This lack of freedom to be oneself, discover things on our own and not be dispossessed of our right to choose is what colonialism is about.” * The current antitrust laws have nothing to manage this.In short, our view was the minimum acceptable price of Big Tech businesses to exist wasn’t zero. It was you. Your data and your liberty. In the normal course of events, politics would be about contestation of ideas and narratives in the political marketplace. And the best or the most acceptable idea would surface from this that would guide the polity. But social media platforms engineer a failure in these markets. The ideas that get pushed to your timelines haven’t won their duels in the marketplace of ideas. They have been programmatically fed to you. That program can be gamed. And Big Tech isn’t willing to solve this problem on its own. It took a long time to even acknowledge it is a problem. We had concluded edition #74 with these lines:“These are early days of policymaking in this area. There’s a need for deeper philosophical and sociological work in this space that will enable our thinking in how to legislate this.”A Novel But Half-formed Approach As if on cue this week we had Francis Fukuyama, Barak Richman, and Ashish Goel publish an article in Foreign Affairs titled How to Save Democracy From Technology: Ending Big Tech’s Information Monopoly. The article picks up the core point made by us. The antitrust regulations are using old tools to solve the economic problem. They may or may not be enough. But they don’t even begin to address the political costs of the Big Tech monopolies. The solution offered is not exactly fleshed out in the article, but it is important because it goes beyond the conventional thinking that has dominated this space.They write:“The economic case for reining in Big Tech is complicated. But there is a much more convincing political case. Internet platforms cause political harms that are far more alarming than any economic damage they create. Their real danger is not that they distort markets; it is that they threaten democracy.”It is remarkably similar to the points made by us in the past. The article then picks up the usual solution to break monopoly power – more regulations, breakup, data probability and privacy laws – and dismisses them all before proposing a solution:“If regulation, breakup, data portability, and privacy law all fall short, then what remains to be done about concentrated platform power? One of the most promising solutions has received little attention: middleware. Middleware is generally defined as software that rides on top of an existing platform and can modify the presentation of underlying data. Added to current technology platforms’ services, middleware could allow users to choose how information is curated and filtered for them. Users would select middleware services that would determine the importance and veracity of political content, and the platforms would use those determinations to curate what those users saw. In other words, a competitive layer of new companies with transparent algorithms would step in and take over the editorial gateway functions currently filled by dominant technology platforms whose algorithms are opaque.”The solution comes with its own set of problems. The authors acknowledge it and posit this as the start of a conversation to find a solution:“Many details would have to be worked out. The first question is how much curation power to transfer to the new companies. At one extreme, middleware providers could completely transform the information presented by the underlying platform to the user, with the platform serving as little more than a neutral pipe. Under this model, middleware alone would determine the substance and priority of Amazon or Google searches, with those platforms merely offering access to their servers. At the other extreme, the platform could continue to curate and rank the content entirely with its own algorithms, and the middleware would serve only as a supplemental filter. Under this model, for example, a Facebook or Twitter interface would remain largely unchanged. Middleware would just fact-check or label content without assigning importance to content or providing more fine-tuned recommendations. The best approach probably lies somewhere in between. Handing middleware companies too much power could mean the underlying technology platforms would lose their direct connection to the consumer. With their business models undermined, the technology companies would fight back. On the other hand, handing middleware companies too little control would fail to curb the platforms’ power to curate and disseminate content. But regardless of where exactly the line were drawn, government intervention would be necessary. Congress would likely have to pass a law requiring platforms to use open and uniform application programming interfaces, or APIs, which would allow middleware companies to work seamlessly with different technology platforms. Congress would also have to carefully regulate the middleware providers themselves, so that they met clear minimum standards of reliability, transparency, and consistency.”As a new approach to deal with the problem of fake news and lies circulating on social media platforms and making it sit well with the notion of free speech, this is a useful starting point. The control of what kind of content we want to see should lie with us. Like it has always been in media, the content consumer has to be active while engaging with it and the provider passive. Not the other way around.Matsyanyaaya: The Strategic Consequences of India’s Low Economic GrowthBig fish eating small fish = Foreign Policy in action— Pranay KotasthaneLast week I came across a data story in The Business Standard and I haven’t been able to erase off my mind. Krishna Kant writes:“Over the past 10 years, India’s per capita GDP is up 35 per cent cumulatively from $1,384 in 2010 to $1,877 now. In the same period, per capita GDP in China rose 141 per cent from $4,500 to $10,839, while it doubled in East Asian countries (excluding Japan, South Korea, Taiwan and Hong Kong) from $4,006 to $8,195.Bangladesh saw the fastest growth with its per capita up nearly two-and-a-half times from $763 in 2010 to around $1,900 at the end of this year. And, Vietnam’s per capita rose 115 per cent from $1,628 to around $3,500.”There’s a nice chart showing how the India growth story lost its way over the last full decade. (Source: Krishna Kant, India's 10-year growth one of the biggest laggards in Asia, EM peers, The Business Standard)The humanitarian consequences of low economic growth are obvious. I won’t bring them up here. The questions I have are concerned with India’s engagement with the world: what would be the strategic consequences of this poor economic performance? Does a decade of slow growth foreclose some options for India? Would India’s position on RCEP have been different had the last decade’s performance been at par with other peers? Would the PRC have been just as aggressive against a more prosperous India? The search for answers took me back to Sanjaya Baru’s 2002 landmark paper titled Strategic Consequences of India’s Economic Performance. The paper captures what scholars were thinking nearly twenty years ago, just before the golden growth years between 2004 and 2009. “For India, there is no doubt that the first and most important challenge is that of accelerating the rate of economic growth and development. Economic performance and capability certainly constitute the foundation of national security and power even more so for a developing nation like India. It will define the limits to military capability and alter the relationship between India and its neighbourhood, especially its two major adversaries, namely, China and Pakistan.The paper’s observations on Pakistan have broadly stood the test of time. The Pakistani military-jihadi complex’s self-defeating policies have strangled the economy in ways that even a nuclear weapons status and use of terrorism as a state policy haven’t been able to offset. The dehyphenation between India and Pakistan in international affairs is now self-evident. However, the story of this last decade is humbling. The gap between the two has increased not because India has done well but because Pakistan has done far worse. On China, the paper argued:“The strategic consequences of the economic competition with China are, there- fore, fundamental to India’s future role within Asia and the global system. If India can sustain above average growth (over 7 per cent per annum in the next decade) and if China experiences a deceleration of growth, coupled with domestic political uncertainty, the widening gap between the two civilisational neighbours can be reversed to an extent. If not, China will emerge as the pre-eminent Asian power and force India into accepting its strategic leadership even within south Asia. The key to this strategic rivalry will be the relative economic performance of the two countries. The main strategic challenge for India in the medium term is, therefore, its relativ…

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