Against cash rewards for our world champions

Why we must challenge medieval-style patronage at public expense

You’ve heard it in stories. You’ve seen it in plays and movies. The all powerful king is sitting on his throne. A poet, artist or athlete arrives in his court, and impresses the king with his accomplishments. The king then hands out a reward—gold coins, land and sometimes even his daughter—to the man. You might even remember scenes where the king takes off a pearl necklace from around his neck and throws it around that of the grateful subject.

Times have changed. India is a democratic republic. Unlike kings and emperors its political leaders do not rule over us. They are the representatives we appoint to govern our affairs according to laws made with our consent. India’s treasury is not their personal purse to do with as they please. They are the custodians of the taxes we pay to be used for purposes we have pre-approved. Sadly, this is only the theory. In reality the relationship between the government and citizen is more like the one between king and subject rather than between republic and free citizen.

It is precisely this mindset of giving inams that causes our state governments to shower cash prizes and land allocations on the members of world champion cricket team. Let there be no mistake — it is important for governments to publicly recognise and honour excellence in any field. But it must be done so in an appropriate manner. There is no reason why the Indian taxpayer should spend even a paisa rewarding the Indian cricket team for winning the world cup. The tax rupee has many more pressing uses.

Now it can be reasonably argued that the money thus given away does not pinch the exchequer. What’s a few crores in budgets that run into thousands of crores? This view misses the point. These are not the private funds of the politician giving away the money to bask in the afterglow of India’s World Cup victory, but public funds over which the politician is merely a custodian. The legalistic response that these funds come out of the discretionary budget of the chief minister doesn’t wash, because even discretionary spending must be in the public interest to be justified.

It is not that the Republic lacks ways to honour and reward accomplished citizens. There are the Arjuna awards for sportspeople. Why have them if crores are arbitrarily handed to cricketers? Why hand out crores when there are Arjunas?

There are other ways the state can honour sportspeople. There are tens of stadiums in the country named after Jawaharlal Nehru, a great man certainly, but one whose sporting achievements were modest. Why not rename these stadiums after sportspeople who have done the nation proud? It won’t cost more than a coat of paint to paint a new signboard. Bangalore’s Anil Kumble Circle is in the right direction, but why not name new urban landmarks after them (yes, this can be done only after creating new urban infrastructure)?

There is another reason why inams are unacceptable. They perpetuate the medieval mindset of a government that rules and patronises its subjects, rather than a government that governs and respects its citizens. It is the same mindset that robs people of their dignity by patronising them. It is the mindset that robs people of power by doling out entitlements. The entitlement economy aims to make India a nation where goods are free but people are not. As Ramesh Srivats says “Get a free laptop. But not the freedom to say what you want. A free TV, but not the freedom to see what you want.” It bans websites that you should not visit. It bans books that you should not read. It gives you the right to education but insists that you cannot send your children to a nearby school because it doesn’t have a playground.

Javed Akhtar’s unfortunate comment shows just how entitlements cause divisiveness and lead society down the path of competitive intolerance.

Far more than any external threat or domestic challenge, it is this mindset that holds India back. If the person handing out the pearls believes he is the ruler, it is implicit that the person taking inam is subordinate and subject, not a free citizen.

Pax Indica: Work permits for Bangladeshi migrants

Illegal immigration can only be tackled by allowing legal migration

In an email exchange last week, Sanjoy Hazarika, author of one of the best books on India’s North East, told me that he has been advocating work permits for the last two decades. The proposal needs a serious consideration now.

[The] blunt, impractical and half-heartedly implemented measures we have used to address the problem have only worsened it. Attempts to force them to go back have created an illicit political protection racket that has undermined national security. Fencing is in progress, but it is impossible to erect an impenetrable barrier along the entire India-Bangladesh border. Over the years, many border officials and security personnel have become mixed up in organised networks smuggling everything from cough syrup to human beings. Indian and Bangladeshi border guards sometimes even exchange fire, indicating policy failure at so many levels. Amid all this, tens of thousands of illegal immigrants make their way into India each year.

We need a new approach. India should consider establishing a system of work permits to allow Bangladeshis to work in India, legally.

It is practically impossible to fight demographic pressure, not least given the geography of India’s North East. It is, however, possible to ensure that the flow of immigrants does not concentrate in Assam or other states adjoining Bangladesh. The real political problem is not so much the inflow, but the accumulation of illegal immigrants in one state. If work permits are subject to state-wise quotas, then it is possible to distribute the flow across Indian states. This will allow migrant workers to work in states that need them, and prevent them from crowding in certain states.

Work permits with state-wise quotas can thus address Assam’s genuine and longstanding concerns — the state can cap the number of Bangladeshi migrants it will accept. India’s national security concerns become more manageable by bringing the migration out into the open. Obviously, Bangladesh stands to benefit too, not least the immigrant who need not live a often fearful life in the twilight zone. [Read the rest at Yahoo! India]

This column benefits from the discussions I had with participants and friends at Economic Freedom Network Asia’s conference on international migration in Jakarta last week.

Is Vikram Pandit a geoeconomic realist?

Looks like it

There is much in Vikram Pandit’s speech that The Acorn agrees with:

Mr. Pandit argued that the world could create healthy and sustainable economic growth through completely open trade markets, flexible exchange rates, open capital markets and free labor markets.

“If this were the case, these imbalances would be corrected rather quickly, and the result would be a more broadly distributed sustainable growth rate around the world,” Mr. Pandit said, according to the text of his speech. “Let‘s be realistic: This is very unlikely to happen. We must find a robust self-help program for the interim.”

Mr. Pandit asserted that the American economic model is the best way to achieve that growth.

“Many of us of course are keenly aware that the U.S. model is not immune to periodic excesses, or to disheartening setbacks that impact the lives of millions of people,” Mr. Pandit said. “Yet it remains a viable model for creating economic growth and raising living standards.”

The elements to unleash this “magic formula,” in today‘s environment consist of six main themes, Mr. Pandit said. First is fostering talent through the creation of large, well-funded universities. Second is a globally competitive tax and industrial policy. Third is an energy policy that reduces inefficiencies and energy costs with limited environmental impact. Fourth is the formation of a public-private partnership to strengthen the nation’s infrastructure. Fifth is the will to address fiscal and savings imbalances with discipline.

And last is confidence in the financial markets — bringing Mr. Pandit’s speech back to some of the systemic problems that nearly pulled Citigroup down during the financial crisis in 2008. [NYT, emphasis added]

Indian CEOs have a lot to learn from Mr Pandit—both in having the right convictions and the courage to express them.

It was wrong to leave Pakistani cricketers out

It is in India’s interests to be the subcontinent’s talent magnet

If you have been reading this blog for some time you might have noticed that The Acorn has consistently been against any measure that falsely conveys an impression that Pakistan is no longer a sponsor of international terrorism in general and proxy-war against India in particular. That is the reason why this blog has opposed using a cricket series in Pakistan to initiate a ‘peace process’. And that was the motivation behind the April 2005 online banner campaign against inviting General Musharraf for a cricket match.

No to Musharraf - April 2007 campaign
The "No to Musharraf" campaign - April 2005

India must resolutely work towards the dismantling and eventual destruction of the Pakistani military-jihadi complex. Well-meaning but strategically unsound moves—from officially contrived ‘peace processes’ to grotesque media campaigns—are counterproductive towards this end. Even serious diplomatic dialogue with the Pakistani government is unlikely to lead to anything productive, given the chronic powerlessness of the civilian government and the unremitting hostility of the military establishment.

But does this mean India should close its doors to individual Pakistanis who might wish to travel, trade, work or study in India? Not at all.

It is in India’s interests to be a magnet for the subcontinent—and the world’s—talent. This has historically been a source of India’s civilisational strength, and will continue to enrich the country in the future. Indeed, like it is for the United States, openness to foreigners can be a competitive advantage for India, because China will find it much harder to do so. Also India is the only nation that has the capability to remain open to victims of cultural illiberalism and persecution (even if competitive intolerance has diminished its capability to do so). Now, given the nature of the threat from Pakistan, there is good reason to be extremely careful in issuing visas, but it would be strategically counterproductive to close doors indiscriminately.

That is why it was wrong of Indian Premier League teams to drop all Pakistani players from the competition—if there was a risk of their not turning up due to bilateral tensions, then that risk could well have been reflected in the price during the auction. [Note: I am only interested in cricket when India wins by a large margin. But my INI co-blogger Dhruva Jaishankar is a genuine cricket fan. Read his take at Polaris]

Just as it is wishful thinking to believe that the Pakistani military-jihadi complex is interested in a settlement with India on anything other than its own terms, it is self-defeating to turn away influential and talented Pakistanis from developing vested interests in India’s success. Unilaterally dropping trade restrictions and unilaterally allowing Pakistani cricketers to play in India is entirely consistent with weakening the military-jihadi complex.

The world’s punching bag

The fault, dear Mr Naik, is not across the Himalayas

Mint has a very good editorial in response to the accusation that China is “systematically killing” Indian manufacturing.

Admittedly, there are geopolitical considerations at stake for India. But as the trade deficit with China widens over the last few years, it’s giving vent to populism, not some concerted strategy…
And if India wants its domestic manufacturing to compete at comparable costs, it should stop trying to block outside firms, and ask how it can better internal conditions. But that would mean a concerted policy that improves financing conditions, not to mention land acquisition clarifications and better regulations. Protectionism is just so much easier, no? [Mint]

Urban Indians lead the world in support of free markets

Really.

Ajay Shah draws attention to some very interesting findings from a Pew Global survey. To the question “whether you completely agree, mostly agree, mostly disagree or completely disagree with the following statements: Most people are better off in a free market economy, even though some people are rich and some are poor“, 81% of the (mostly urban) Indians said they agreed. As Dr Shah writes “In 2002, India was halfway in the list with 62% support. In 2009, India is at the top of the list, with 81% support.”

Similarly, to the question “What do you think about the growing trade and business ties between (survey country) and other countries – do you think it is a very good thing, somewhat good, somewhat bad or a very bad thing for our country?” 96% of the Indian respondents said that it’s a good thing, compared to 88% in 2002.

A few years ago (circa 2005), an India Today survey showed that the urban middle class wanted the job security of the public sector but the income and opportunities of the private sector. Are urban Indians changing their mind?

Dr Shah believes that a combination of demographic change (the median Indian is 29), experience of sustained economic growth and the absence of the need to protect a welfare state might be the reasons why the urban Indian ended up on top of the table.

On legalising prostitution

Social respectability shouldn’t get in the way of legality

Madhu Kishwar takes an eminently sensible comment by the Supreme Court—that the government ought to consider legalising prostitution—and engages in a tangential polemic on the social respectability of the oldest profession. “While there is need to decriminalise this activity and free sex workers from the terror and the extortionist grip of the police,” she writes “to make it respectable and socially acceptable would mean turning a blind eye to the dehumanising circumstances through which the vast majority of children and women are trapped into trading their bodies.”

The fundamental flaw in her argument is that the mere fact that an activity is legal doesn’t make that activity socially respectable. In fact, ‘social respectability’ is itself subjective—depending the time, place and people concerned. It is an unfortunate fact that in many places in twenty-first century India, working as a public sanitation professional is not considered socially respectable. Yet no one argues that sewage cleaning ought to be illegal. Governments might try, but they are largely powerless in trying to change the social mores.

Even while Ms Kishwar’s questions on legalising prostitution appear rhetorical, it is useful and educative to answer them—not least because they help conceptualise how the prostitution industry might be governed.

What does the term “legalise” actually imply?

It would imply that consensual trade in sexual services between adult citizens is permitted.

Does it mean that a prostitute can open a sexshop anywhere she likes and advertise her services? Does it mean men or women supplying call girls should be able to set up an office in any neighborhood they like, just as doctors set up their clinics, proclaiming that call girls are available between such and such hours?

No. Zoning laws have existed in India for a long time and prostitution can be subject to it. Merely because leather tanning is legal doesn’t mean you can open a tannery anywhere you like. So too for brothels. Just because selling cigarettes and beer is legal doesn’t mean you can put up beer and cigarette advertisements anywhere you please. So too for brothels.

How many of us are willing to let our young children grow up amidst an atmosphere where renting a woman’s body for sex is considered a perfectly legitimate activity?

It’s not as if our young children are growing in an atmosphere where they are oblivious to the realities of the world they live in. But should the need to retain the pretence of innocence of our children outweigh the benefits—from exploitation by the mafia and by the police—to the hundreds of thousands of people in the sex industry today? Is Ms Kishwar suggesting that it is okay to allow hundreds of thousands of women and men to be exploited by criminal gangs and corrupt policemen so that we can tell our children, in the relative comfort of our middle-class homes, that prostitution is morally wrong?

If people come to know that a mafia don has set up a call-girl racket in their neighbourhood, do they have the right to seek its removal or does it mean other citizens have to suffer the presence of such activities in the name of “respecting” the rights of sex workers to an occupation of their choice and thereby endanger their own lives?

One major advantage of legalising prostitution is that it will be less susceptible to be a mafia-run business, with all the criminal political economy that is associated with an underground business. But Ms Kishwar has a point—how does one balance the rights of the prostitutes against the rights of the community they live in. It is a political question—and ought to be decided by the same political processes that govern other decisions. Democratic politics is noisy, messy and imperfect. It is, however, a very good way to answer questions involving such trade-offs. (See an earlier post from Amsterdam)

Those who demand that sex work be given the same “respect” as any other profession, need to explain whose duty it is to give or ensure “respect” for prostitutes and pimps? Is the government expected to enact a law requiring people not to shun prostitutes, as for instance it did to ban the practice of untouchability? One can prove that one does not practice untouchability by freely intermixing and inter-dining with castes condemned as untouchables. How does one prove one’s “respect” for a prostitute?

Governments can’t force anyone to respect anyone else. But as discussed earlier, this is largely irrelevant to the issue of whether it makes sense to legalise the sex industry. Ms Kishwar appears to come out against legalising prostitution because she is against according it social respectability. She is entitled to her view on what ought to be socially respectable, but it would be sad if that subjective judgement should be allowed to get in the way of de-illegalising prostitution.

In fact, there is a great danger in a society where only the socially respectable is legal, for such a society has closed its doors to progress.

Pragati August 2009: To be free

Here’s how Shruti Rajagopalan—who, as guest editor, helped to put together this month’s special issue of Pragati—describes its theme:

In process of conceptualising this issue of Pragati, I asked the contributors to discuss “how the laws, their enforcement and the judiciary affecting can be reformed in India.” In my effort, I revisited the Constitution to understand the rules of the game and how it affects human action in areas of life as diverse as financial regulation and sexual freedom, and realised that Ludwig von Mises got it right when he said that “the idea that political freedom can be preserved in the absence of economic freedom, and vice versa, is an illusion. Political freedom is the corollary of economic freedom.”

The purpose of the issue is not to just to catalogue the various areas that need reform, but also to highlight many ways in which the state infringes on individuals using the legislative and judicial machinery at its disposal. Mises said that “freedom is indivisible. As soon as one starts to restrict it, one enters upon a decline on which it is difficult to stop.” This has become the reality of the Indian social, political and economic spectrum where no means are left unused to abridge the rights of individuals and their ability to make decisions.

This issue is in defence of our right to think, talk and trade without interference. It is in defence of our liberty. [Shruti Rajagopalan/In Defence of Liberty]

Download (2.6 MB PDF) | For a free subscription, visit the website

The Other Vidarbha

When villagers are free to do what they want

Jaideep Hardikar of DNA reports something that P Sainath somehow manages not to (linkthanks Neelakantan). A village in Vidarbha that refused to take up the UPA government’s “debt relief” measures and…is doing rather well for itself.

The Girata SHG, to which he’s a mentor, is imitating his mode—farming and live stock management that reduces risks and shields them from volatilities. “We transport milk in autorickshaws to Washim, where we sell it,” informs Prakash. The dairy collective clocks a monthly income of Rs4 lakh with a net profit of Rs1 lakh, which is shared equally by its 20 members. That comes to a modest Rs5,000 a month-per head or Rs60,000 per annum, in addition to the returns from agriculture. Each member contributes Rs100 to the collective as his monthly saving. Thus the 20 members save Rs2,000 every month, or Rs24,000 annually.

A majority of the villagers are now linked to this activity. Now, the neighbouring 23 villages have decided to follow the model, with Girata as the epicenter. “We’ll increase our production, form a 23-village federation, and diversify into processing,” says Prakash. The collective that owns an autorickshaw, a tractor, and a deep-freezer now wants to buy a van with a chiller for better milk transportation. The SHG has also set up an outlet at Washim to sell milk to consumers. Two women’s collectives of the village have taken on the responsibility of keeping the financial records of the village dairy. [DNA]

Imagine the UPA government’s policy initiatives had focused on building good roads and reliable power supply instead of seeing the problem as one of “debt”.

The Girata initiative is an experiment—it’s too early to tell whether it will succeed. But what it shows is that people take the initiative to help themselves. Imagine the government stopped discouraging from doing so.

Related Links: Vidarbha whodunit; half-baked solutions; and Suvrat Kher’s post on groundwater management that was published in Pragati.

The answer is good governance, not secession

Reversing alienation is difficult, but not impossible

At a time of crisis, the UPA government’s abject lack of leadership shows. In the absence of a resolute voice and action from the national leadership, the punditry in New Delhi has gotten into tailspin of defeatism. So it is good to see a timely editorial in Mint that helps put things back in perspective

India is no stranger to secessionist movements and Kashmir is no different in this respect. India has had to weather insurgencies in many states in the 20th century and has always succeeded in stemming this tide. There has been no exception.

The events of the last one month have, however, made commentators think otherwise. It is now being openly argued that such is the extent of alienation in Kashmir valley that, except for letting it go, there is little else that can be done. We believe this is a misreading of the situation and there is little to theories of Kashmiri exceptionalism.

Jammu and Kashmir (J&K), more than any other state, has suffered from a deficit of good governance. Since 1953, when autonomy of the state was greatly whittled down, most elections have been rigged there. This has deprived the people living there of precious public goods such as uncorrupt public representatives, equality of opportunity in public employment, and finally security. New Delhi’s preoccupation with security fundamentally eroded what it sought. This has greatly fuelled alienation.

But there’s more to this story. There is no way of providing public goods efficiently in a centralized manner. As a result, border provinces have problems in getting the right quantity of these goods. Punjab and states in the North-East have seen separatism. So, in that sense there is nothing exceptional to Kashmir’s current woes. This is where the Left (and now liberal) opinion misreads the situation. [Mint]