What lies to the right of centre in India?

The cohabitation of traditionalists and market liberals

Ever since India’s 2009 general election, it has become fashionable for many politically-minded people in the country to style themselves as being “right of centre”, “centre-right” and other terms where “right” and something else is joined together with a hyphen.

It is clear what people who label themselves thus are against — the Congress party, and especially the family that constitutes its apex leadership. Mostly, they oppose its “appeasement” of minorities, especially Muslims. They oppose its propensity to create “entitlements” in the form of reservations, quotas, subsidies and special treatment. They oppose the cronyism in the economy and political corruption in governance. They oppose its pusillanimity in foreign policy. There are many more, but these strike me as the big ones.

It is less clear what they stand for. Many of our self-styled right-of-centrists are strident opponents of liberalism. Many have deep misgivings, if not outright opposition to markets and free trade. The most coherent “right” in India is the Hindu right, which is clear about its commitment to Hindu nationalism, broad or narrow. However, even the Hindu right does not have an economic agenda that is consistent with its political ideology: should the Hindu nation rely on individual liberty and free markets, or should it construct a strong state that draws lines on individual freedom and controls the levers of economic power? During and after the 2014 election campaign, market liberals and social illiberals found themselves in the same “right of centre” camp, often having to pretend to be each other in order to fit in.

This ideological confusion and political tension within the segment that calls itself right-of-centre in India comes because our political context and historical development is different from that of the West, where the Right and Left first came into existence. I’ve written about this in my Niti-Mandala post, constructing India’s political spectrum. I was reminded of it last week as I read Jonah Goldberg’s statement of the Conservative position in the United States: which connects tradition and markets and forms the basic worldview of the American Right that the Republicans used to champion before Donald Trump, er, shook things up.

As a Chestertonian at heart, I like and respect old things. I like it when stuff beats the law of averages for reasons we cannot easily fathom. The Hayekian in me thinks old things that last often do so for good reasons we just don’t — and sometimes can’t — know. Unfortunately, we live in an age where we take the razor of reason to every little thing and strain to know the whys of it, as if knowing the why will empower the how. [National Review, emphasis added]

The same argument would be self-contradicting in India: where there are inhuman inequities embedded in caste discrimination and social practices. You can either defend the traditional Indian social order or individual liberty (and markets and so on). You can’t defend both, because the former is constructed without regard to, and often in suppression of the latter. This explains the confusion and tension among our “right of centre” compatriots, who are at best, — to turn a phrase from a best-selling novelist — Half Right. No pun intended.

They can either be traditionalists who seek to defend the old order from social revolution, and therefore come into tension with the Constitution that demands it. Or they can be liberals who pursue individual liberty and free markets, and thereby come into tension with everyone else who opposes either individualism or markets or both. They can’t be both.

Logical consistency apart, the practical question is to what extent can the two Half Right constituencies come together in politics. Is the tension between them bridgeable? Well, that’s hard to say, but the side with greater political clout will force the other into submission. Market liberals are not driving policy in the Modi government today.

The arrangement will hold to the extent that their dislike for the Left outweighs their dislike for each other. If the Congress party sheds its baggage — and that’s a big, big if — or another party takes up its Centrist space, it is likely that the the more liberal of the liberal Half Right will gravitate towards it. Until that time, the liberal Half Right will cohabit with the traditionalist Half Right, because most who seek the security of an ideological label are likely to lack the courage and commitment to stand apart, because that means standing alone.

Everyone loves a good outrage

The reform agenda must be defended from Montek Singh Ahluwalia’s attackers

As far as op-eds go, this one marks a new low from P Sainath. It is not uncommon for him to frame grave issues in a divisive manner by conflating them with unrelated matters—like, for instance, agrarian crises and beauty pageants. This technique seeks to arbitrage outrage, as if decent people cannot be anguished at a tragedy without having to contrast it with an unrelated celebration. But when Mr Sainath links the poverty line, expenses incurred by the Planning Commission chief while traveling on official business overseas, the lavishness with which some tycoons spend their private funds and dubious dealings of crony capitalism, it can’t merely be his usual, unfortunate and misguided conflation.

Make no mistake: Mr Sainath’s hatchet job on Montek Singh Ahluwalia is part of an internal campaign against reform-minded individuals within the UPA government. This week’s manufactured controversy over renovation expenses of toilets in the Planning Commission’s headquarters is another manifestation of the same campaign.

Let us examine Mr Sainath’s cleverly framed allegations. His case is that at Mr Ahluwalia’s travel expenses are exorbitant, at an average of $4000 per day abroad. You would think he would give you some comparable data to prove Mr Ahluwalia has been unusually proliferate in spending public funds. Say, for instance, the average daily expenditure when cabinet-ranked Indian officials travel abroad on official business. Or for instance, the average daily expenditure incurred by Mr Ahluwalia’s counterparts from other countries. These would be like-for-like comparisons. Mr Sainath, however, does not do that. He compares these to a income of a person on India’s poverty line. All this proves is that $4000 is much higher than Rs 28. It does not even come close to proving that public funds were misspent, nor does it show that Mr Ahluwalia was unusually liberal with his expense budget. The onus of doing this research is on Mr Sainath, the person making the argument.

How Mukesh Ambani spends his personal wealth is irrelevant to the argument—he is free to spend his money as he pleases, even if it does not suit our tastes—, so is a discussion on cronyism and corruption in IPL. You don’t need to read the Planning Commission’s response to conclude that Mr Sainath’s allegations are sensationalistic nonsense.

But why choose Mr Ahluwalia at all? Mr Sainath’s arguments against profligacy would have been worthy of respect if he had compared the travel expenses of the top officials of government—from President Patil to the lowest ranking minister of state. How much, for instance, does Sonia Gandhi, as chairperson of the National Advisory Council, spend on her foreign trips? Whatever her political role, she’s an official of equivalent rank. How much do the members of the National Advisory Council spend on their foreign and domestic trips? Unless we have some numbers to compare with, we can’t say anything about Mr Ahluwalia’s trips.

What we do know is that Mr Ahluwalia is among the few people known to be advocating economic reforms in the UPA government. Singling him out with a view to making him the lightning rod for public outrage has all the signs of a political hatchet job. The objective is to discredit the reformist agenda by associating it with imaginary wrongdoing. After running the Indian economy to the ground, the socialists that haunt the UPA government’s policymaking are now trying to bury the narrative of reform, liberalisation and markets through subterfuge and intellectual dishonesty.

It’s no different with the renovation expenses of public toilets in Yojana Bhavan, the Planning Commission’s headquarters. One of the earliest reports on this, in the Times of India, again compared toilet renovation expenses with the the poverty line. Few in the mainstream or social media bothered to ascertain the scope of the renovations and compare it with similar renovations conducted in New Delhi’s public and private buildings. The purpose of the revelations was to insinuate wrongdoing on the part of Mr Ahluwalia, rather than to establish whether there was any wrongdoing at all.

Mr Ahluwalia is guilty: of not throwing his credibility on the line to compel the UPA government to launch the second-generation reforms, and to prevent it from engaging in monumental fiscal irresponsibility that has put India’s future at risk. Like his mentor Prime Minister Dr Manmohan Singh, he becomes complicit in the UPA’s misgovernance. He will have to answer these charges both to the nation and to history. This does not mean he’s lavishing public funds on unnecessary foreign excursions, building gold-plated toilets or taking a cut from the renovation contractor.

It is fair for the Opposition parties to politically exploit the situation to their advantage. However, it is in the national interest not to allow a campaign of unfair personal calumny to discredit the reform agenda—or indeed, to prevent Mr Ahluwalia from a chance to redeem his reformist record—to succeed. The Acorn completely agrees with Mint’s editorial defence of Montek Singh Ahluwalia. Mr Ahluwalia has “done far more for the poor than the busybodies and peddlers of poverty porn who are now attacking him.”

The mantra for the alternative

Economic freedom, individual liberty and competent government

Longtime readers might recall that this blog has long argued that India’s crisis of governance arises from the UPA government’s institution of entitlement economics, surrender to competitive intolerance and returns to political violence. Corruption and unaccounted money — issues that have captured popular imagination in the last few months — are merely symptoms of the underlying disease. Ridding the body politic of this malaise requires the building of a political alternative around a new mantra:

Give us back our economic freedom, and let it reverse the entitlement economy of corruption and cronyism.

Give us back our individual liberty, and let it reverse the competitive intolerance that is destroying India’s social capital.

Give us a government that restricts itself to being competent in its basic duties — like ensuring the rule of law –, and let it reverse the tide of violence and the grammar of anarchy.

Peace! Peace! Peace!

Garibi Hatao Hatao

The old, failed and corrupt political economy of poverty alleviation fights attempts at reform

Jean Dreze, member of the influential, unaccountable and extra-constitutional National Advisory Council, has launched a pre-emptive attack against conditional cash transfers in the pages of today’s Indian Express. It provides an excellent example of how rank paternalism and contempt for the poor Indian’s right to live a free life guides the UPA government’s mindset. This mindset, of course, is covered in the language of “development economics”. In reality it is bad economics and bad for development in addition to being morally repugnant.

Before we look at Mr Dreze’s arguments, let’s look at this conclusion:

The most common argument for cash transfers is that cash makes it possible to satisfy a variety of needs (not just food), and that people are best judges of their own priorities. Fair enough. But if people are best judges of their own interest, why not ask them whether they prefer food or cash? In my limited experience, poor people tend to prefer food, with a gradual shift from food-preference to cash-preference among better-off households…I am more inclined to listen to them than to the learned champions of cash transfers. [IE]

The arrogance in the last sentence must come from sitting close to the Congress party president (another NAC member recently wanted to impose how many dishes could be served at wedding dinners). Mr Dreze, unsurprisingly, does not believe the people are the best judges of their own interests, for he uses the conditional “if”.

Even so, doesn’t he have a point when he says “why not ask them whether they prefer food or cash?” Not quite, because the question is a bit of sophistry. Basic economics will tell you that because cash is most fungible, if you give them cash, the question itself is redundant. If they prefer food they’ll buy food. If they prefer arrack they’ll buy arrack. Neither Jean Dreze nor the National Advisory Council, nor indeed the Government of India has any business dictating what an Indian ought to do with his or her income. Only ‘development economists’ of the dubious sort can think that development is possible when hundreds of millions of adult citizens have the right to vote and procreate but not to decide what to do with their money.

Just because the government gives this money doesn’t mean it can override the individual’s freedom to choose. Neither the government, nor the taxpayer whose money is transferred can deprive the recipient of her freedom.

Let’s consider Mr Dreze’s policy arguments. He first argues that conditional cash transfers won’t work in India (as they did in Latin America) because public services are “missing to a large extent”. This is bizarre, for giving Indians the money to procure services like healthcare and education from private operators allows them to escape having to depend on the government. Just because conditional cash transfers complement public provision in Latin America doesn’t mean they have to do so in India too. There’s no reason—other than socialist ones—why India shouldn’t go in for privately provided, but publicly financed, services. [See this post on the critics of the UID]

Next, he argues that targeting the scheme properly is a problem in India. And in so doing, he expects us to believe that conditional transfers in kind (for instance, food entitlements) can be better targeted than cash. In reality, targeting will remain a problem, not least because of the ‘political economies of development’ which require poverty to remain a problem. A poverty line, even if arbitrarily drawn, helps show the extent of the challenge. But once you target policies around a poverty line you run into all ‘targeting problems’ (see the case of Karnataka’s BPL cards). The entitlement economy also breeds competitive intolerance and political violence.

On these feeble legs Mr Dreze erects his defence of the Public Distribution System (PDS), independent India’s largest and longest running ‘scam’:

First, (food entitlements under PDS) are inflation-proof, unlike cash transfers that can be eroded by local price increases, even if they are indexed to the general price level.

Food entitlements may be “inflation-proof” for the recipient, but not for the government, which still needs to pay for it. It also creates incentives for government to interfere in the pricing of food: from underpaying farmers, to blocking exports, to entering into non-competitive import arrangements. Moreover, Mr Dreze fails to account for the true economic cost of the PDS—procurement, storage, distribution, wastage, pilferage and the associated shadiness that characterises it from bottom to top. Once you see the PDS as mostly inefficient and usually corrupt, you are unlikely to think throwing more money through it is a clever thing to do.

A government that really cares about inflation hurting the poor will be careful about the consequences of its policies. On the other hand, the UPA government listened to Mr Dreze.

Second, food tends to be consumed more wisely and sparingly; cash, on the other hand, can easily be misused.

The contempt for individual freedom apart, there is a practical reason why Mr Dreze is wrong: you can’t save, lend or invest food. Food entitlements will at best lead to hundreds of millions of well-fed, but poor people. To use Atanu Dey’s phrase food entitlements are a pro-poor scheme. They will keep people poor.

Third, food is shared equitably within the family, while cash can easily be cornered by selfish individuals.

Why, hasn’t Mr Dreze heard of families who treat their boy and girl children differently? Can’t food be bartered for arrack or exchanged for cash? Indeed, food or cash, there is nothing to prevent selfish individuals from hurting their families. It is conceit to believe that a government that lacks the competence to deliver drinking water to its citizens can somehow change human behaviour. Social ills need to be addressed, but unless the government is parsimonious in ambitions, outcomes will suffer.

Then again, the irony of disparaging cash is surely lost on Mr Dreze, champion of a scheme to provide, err, cash for work. NREGA is a conditional cash transfer, isn’t it?

Fourth, the PDS network has a much wider reach than the banking system. In remote areas, where the need for social assistance is the greatest, banking facilities are simply not ready for a system of cash transfers (as it is, they are unable to cope with NREGA wage payments).

This is an argument for getting the banking system pervasively into rural areas. Indeed, implementing conditional cash transfers provides banks with an incentive to set up more outlets in rural areas. Liberalising the financial sector to enable greater financial inclusion is necessary in any case, and implementing cash transfers might provide enough of an anchor tenant effect to get it going.

Last but not least, cash transfers are likely to bring in their trail predatory commercial interests and exploitative elements, eager to sell alcohol, branded products, fake insurance policies or other items that would contribute very little to people’s nutrition or well-being.

There is nothing wrong in buying or selling alcohol and branded products. Selling fake insurance policies is illegal. Conflating the two is a manifestation of an ideological prism that abhors free markets and free people. Indians might be poor but they are aspiring for the comforts, fashions and fallacies of modernity. The government has no mandate to prevent his and condemn to have-nots into shall-not-haves.

Mr Dreze’s pre-emptive salvo seeks to defend against the dismantling of the edifice of India’s old, failed and corrupt political economy of poverty alleviation. Ideologues confuse socialism for development. The vested interests that collect rent from the PDS, government hospitals, schools and suchlike are fighting to retain their spoils. Both have little interest in making Indians prosperous.

Amartya Sen’s wrong idea of justice

Social justice is not justice, and it is dangerous and wrong to conflate the two

It’s not out yet, but we are at imminent risk of being drenched by a book on the principle of justice written by an celebrated expert on…economics. Now, no one would give too much credence to a book on nuclear physics written by a professor of English literature,if not for the Law of Indian Expertise (LIE). That law says that an Indian who has achieved distinction in one area is immediately considered an expert in all others. If you have a Booker or a Nobel, you will immediately be taken seriously by many people on almost anything…including nuclear physics.

According to the Times of India Amartya Sen’s latest book, “The Idea of Justice”, is “his most ambitious book yet.” When Rashmee Roshan Lall asked him to summarise his key argument, Dr Sen’s response was incomprehensible.

Justice is a complex idea (I was not surprised that it took me 496 pages to discuss it), but it is very important to understand that justice has much to do with everyone being treated fairly. Even though that connection has been well discussed by the leading political philosopher of our time, John Rawls, I have argued that he neglects a couple of important connections. One neglect is the central recognition that a theory of justice has to be deeply concerned with systematic assessment of how to reduce injustice in the world, rather than only with the identification of what a hypothetical “perfectly just society” would look like.

There may be no agreement on the shape of perfect justice (and also perfect justice will hardly be achievable even if people did agree about what would be immaculately just), but we can still have reasoned agreement on many removable cases of manifest injustice, for example, slavery, or subjugation of women, or widespread hunger and deprivation, or the lack of schooling of children, or absence of available and affordable health care. Second, analysis of justice has to pay attention to the lives that people are actually able to lead, rather than exclusively concentrating only on the nature of “just institutions”. In India, as anywhere else, we have to concentrate on removing injustices that are identifiable and that can be remedied. [TOI]

Hasan Suroor’s report in The Hindu is more helpful. It says Dr Sen has argued “that there was no such thing as “perfect” justice; that justice was relative to a situation; and that instead of searching for “ideal” justice, the stress should be on removing the more visible forms of injustice such as subjugation of women, poverty and malnutrition.”

It is unjust to criticise Dr Sen’s book before reading it. But it is not unjust to criticise what he says about its contents.

Going by what Ms Lall and Mr Suroor write, he is engaged in the dubious enterprise of conflating “justice” with “social justice”. This is a dangerous argument: for delivering justice is the basic function of the state, and to do this efficiently, a parsimonious definition of justice is necessary. The simplest definition of justice is the redressal of a violation of rights. On the contrary, Dr Sen’s definition is expansive—covering everything from gender inequality to poverty to malnutrition. The more you ask a justice delivery system to do, the less efficiently it can do it, everything else being the same. Since Dr Sen professes to be concerned with practical delivery of justice, he contradicts his own objective by enlarging the scope of what justice should mean.

Then comes his reported contention that “justice is relative to a situation”, which is slippery and dangerous. Justice is the response to an objective evaluation of a deviation from a normative code—for practical purposes, a written or an unwritten constitution. In a rule-of-law environment, justice cannot be “relative to a situation”, but rather, has to be uniform across situations. If violation of rights is objective, how can the redressal be relative and just at the same time? (It’s like saying that justice should be, as a norm, different for a poor burgler caught stealing from Mukesh Ambani’s house and well-fed burgler caught stealing from mine.)

Dr Sen’s line is dangerous because it threatens to reduce the importance of individual rights and freedom, and supplant them with the discourse of social justice. It is dangerous because the premise of justice being relative befits an environment where the law of the jungle prevails, where the more powerful can make subjective decisions that the less powerful have to accept as justice. In a rule-of-law enviroment, the more powerful might still violate the rights of the less powerful, but it can’t be passed off as “justice”.

Related Post: Dandaniti, Arthashastra and Andre Béteille’s observation on Indian constitutional morality

The hole that the UPA dug India into

Caught in a storm without an umbrella

Mint makes a very important point in today’s editorial:

We have often said in these columns that the UPA government made a cardinal mistake during its term: buoyant tax revenues should have been used to fix the fiscal problem. The money that flowed into the kitty was frittered away, even as the promise to restructure government spending was not followed up on. India is in a fiscal mess at precisely the point when it needs fiscal muscle to support weakening demand. The blame for this has to be laid squarely at the door of the Manmohan Singh government.

The overall tone of ministerial statements is one of innocent helplessness: The domestic slowdown is because of the global economic crisis. That is technically correct. But then the domestic acceleration, too, was partly because of the global boom between 2003 and 2007. The UPA government can’t have it both ways: claiming credit in good times and blaming others during bad times.[Mint]

The man who can’t

India needs a can-do leader

If you wanted some irony supplements today, consider this. When his cabinet colleagues demanded that the Government of India take action against a glorified thug, Prime Minister Manmohan Singh helplessly said “what can I do?”

Oh, but that didn’t stop him from setting in motion a communal socialist policy that will force private primary schools to set aside one out of every four places for economically underprivileged children in the neighbourhood. Those who want to continue believing that he is a genuine reformer and other childhood fairy tales would perhaps say in his defence, “what can he do?”

If he can’t, perhaps he should just step down. Like he should have done a long time ago. For what good is a prime minister who can’t?

Stating the obvious

Nothing ideological about it

First he said that his government had no ideological view on anti-terrorism laws. Now Prime Minister Manmohan Singh—he who is the much celebrated ‘father of the economic reforms’—says he has no ideological commitment to markets either.

Asked if the current global financial disorder was an occasion to revise the faith in the markets, he argued that “we have no ideological positions. We have been cautious reformers, [carrying out] reforms with a human face. We do not have a strong ideological commitment to the markets; markets are useful servants but markets also need regulations, purposeful regulations.” [Hindu]

Well, it shows.

What is even more revealing is that Prime Minister Singh should think that purposeful regulations should somehow be inconsistent with an ideological commitment to markets.

And it is left to your imagination whether it was caution or lack of ideological commitment that has entirely buried the ‘second generation reforms’ that were being talked about just before he became prime minister.

Ill-conceived dialogue

…played into the Hurriyat’s hands

Praveen Swami’s indictment is damning: “New Delhi’s well-meaning but ill-conceived dialogue process communalised Jammu and Kashmir and laid the ground for the ongoing crisis”

Experts have been telling New Delhi that the solution to this Islamist upsurge lies in negotiations which will give power—if not independence—to secessionists. Both the premise of this received-wisdom and the prescriptions it lends itself to are false. In fact, the crisis now unfolding in Jammu and Kashmir can also be read as the consequence of New Delhi’s peace process. In its effort to make peace with the Islamist-led secessionist movement in Kashmir, this counter-intuitive argument suggests, India ended up fuelling competitive communalism in each of the State’s three regions.

New Delhi deferred the (round table conference) dialogue process until after the Assembly elections scheduled for October. Islamists in Kashmir, though, feared that the elections would lead to their annihilation, and began sharpening their knives. To anyone other than Prime Minister Singh’s house-intellectuals, whose eyes seemed to have been paper-clipped shut, the brewing crisis was evident. [The Hindu emphasis added]

The dialogue process in Jammu & Kashmir was in piece with the UPA government’s policy DNA: entitlements based on communal socialism, accepting competitive intolerance and yielding to the resulting political violence.

Social justice is injustice

And the source of so many of India’s problems

Today’s dose of excellent writing comes from Mint, where Vipin Veetil argues that “social justice is injustice”.

Governments were larger than ever before, and socialism the intellectual high ground. And justice became muddled. Right to education, right to leisure, right to what politicians want were all called justice. And this is (Amartya) Sen’s notion of justice. Social justice is, however, self-contradictory, for a simple reason. Since individuals have the right to own their produce, heavy taxation is theft. So is price control and taking away land for social good. We run into a logical contradiction—for justice we practise injustice.

And once justice loses meaning, collectivism triumphs, for the old solid moral foundation of law can now be replaced with political opportunism. The government takes to cost benefit analysis (CBA)—any and all actions are possible if politicians can claim it’s for the greater good of society. Only trade can ensure that exchange of property rights happen only when both parties are better off. With CBA, experts decide who should command resource and who should leave their property. Violence erupts as some citizens feel they lost out. Interest groups capture the government; if there is going to be theft, why not get the government to steal for me than from me.

And justice begins to mean different things to different people. The Communist Party of India (Marxist) claims it is unjust to halt development that will bring jobs to millions; displaced farmers claim it is unjust to take away lands. And both are right because justice has no meaning. Behind the present turmoil lies a muddled notion of justice. Private property must be reinstated as a fundamental constitutional right for justice to have meaning. [Mint]

Related Links: Here at INI, in the December 2007 issue, Pragati argued for the reinstatement of the right to private property; and Offstumped had declared war on social justice.