Tag Archives | socialism

Three thoughts on Independence Day

On social trust, on leaving welfare to society and on the problem of identity-based parochialism

For quiet contemplation on Independence Day—how distrusting fellow Indians and institutions is costing us; why a welfare state is not suited to India; and why parochialism based on identity is our big problem.

The Three Thoughts Archive:
It is a tradition on this blog to use Independence and Republic Days as opportunities for contemplation, reflection and introspection.

Three thoughts on Independence Day 2012, 2011, 2010, 2009, 2008, 2007, 2006, 2005, 2004.

and on Republic Day 2013, 2012, 2011, 2010, 2009, 2008, 2007, 2006, 2005;

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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.

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After Gandhi is dead, we have socialism

“Licence-permit-raj generated corruption in election, in public life and in the economy”

An extract from Jawaharlal Nehru, a biography, by Sankar Ghose (p250):

Rajaji on Socialism

Click to enlarge

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Socialism and the Supreme Court (2)

Forcing parties to be socialist is not an academic question

Strange are the ways of the Supreme Court. Ruling against a petition to expunge the adjective “Socialist” to describe the Indian republic in January 2008, the Court said socialism “hasn’t got any definite meaning. It gets different meaning in different times.” If we are to accept this bizarre logic, why not declare India a Variable Republic, because the word variable is the most appropriate to describe something that “gets different meanings in different times.”

Yesterday, a three-judge bench of the Supreme Court, presided over by the Chief Justice, turned down the petition again:

saying though the PIL raised an important question of law, it was purely academic in nature at present. “The court will decide such a question as and when a political party which is refused recognition by EC raises it.” [TOI]

(Also see J Venkatesan’s report in The Hindu)

This is equally bizarre. Even if we were to grant that the Supreme Court should decide only on non-academic questions—and requiring every party to swear by socialism is certainly not academic—hasn’t the Bench heard of Swatantra Party’s case that is with the Mumbai High Court?

It may well be that the petitioners presented their case as a question of law and principle. That it is. But it is also more than that. Next time, the petitioners should present socialism as the cause of India’s poverty and a threat to its development. (See Atanu Dey’s recent post)

Related Posts: The background; the petition to expunge socialism from the Constitution; the first dismissal.

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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

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Socialising assets, privatising liabilities

What do you with a problem like Gyanendra?

From Nepal comes news of an royal billing dispute. After doing away with the monarchy and nationalising many of the royal assets—including the main royal palace—the government of the new republic wants King Gyanendra to cough up payment for the electricity the royal family used while he was still the monarch.

Oh, it is quite likely that Mr Gyanendra has a lot of private wealth arising from his numerous business ventures, but that’s not the point. Billing him for the electricity he used after stepping down is fine. The question is whether the financial liabilities he accumulated during the period he was the monarch can be turned into his personal liabilities now, when his royal assets have already been nationalised.

Lest you wonder—yes, the Maoists are in power. Going after the former monarch is the beginning of the slide down the slippery slope. Big landowners would be next. And rich businessmen might follow.

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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.

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Three thoughts on Independence Day

On socialism, constitutionalism and curbing intolerance

For contemplation on Independence Day—on the need to expunge socialism from the Constitution in letter and spirit; on the norms of public activism; and how competitive intolerance might be reined in.

Related Links: Three thoughts on Independence Day 2007, 2006, 2005, 2004 & on Republic Day 2008, 2007, 2006, 2005

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Instrument of social control

Epics out of proportion

Over at Varnam, JK has pithy on a commenter:

T.R.Ramaswami: Would you not also classify epics like the Mahabharatha and Ramayana, whose historic authencity is doubtful and also other religious texts as instruments for political and social control?

JK: No. Socialism has been used for political and social control in India. [Varnam]

.

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Periyar, Bhagat Singh, untouchability and poverty

And a very faulty analogy

In a piece commemorating Bhagat Singh’s hanging by the colonial British government, historian Irfan Habib describes how the Dravidian movement in Tamil Nadu interpreted his politics. Bhagat Singh’s views on the political use of religion struck a chord down south. As did his economics.

Periyar wrote further in the editorial that “to abolish untouchability we have to abolish the principle of upper and lower castes. In the same manner, to remove poverty we have to do away with the principle of capitalists and wage-earners. So socialism and communism are nothing but getting rid of these concepts and systems. These are the principles Bhagat Singh stood for.” [The Hindu]

The fallacy should be clear: one cannot change one’s caste, but one can get richer.

Now it is possible to argue, with some justification, that the social structure and colonial policies made it practically impossible for people of the early decades of the 20th century to break out of poverty. But the analogy was philosophically wrong then, as it is now. Economic fortunes of people did change, albeit very slowly. Instead of calling for economic freedom and individual liberty that would create avenues for upward mobility that generation of leaders fell for the easy seduction of Socialism and Communism.

Those short-cuts didn’t work. The tragedy is that almost a century later, with abundant empirical evidence that these short-cuts are cul-de-sacs, India’s leaders still fall for the same faulty premise.

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