Renouncing The Gandhi-Nehru Legacy

What is this legacy of Mahatma Gandhi and Jawaharlal Nehru which is to be renounced now and why? Were actions by successive governments in independent India always guided by these two individuals, that too more than half a century of their deaths? Does not naming these two individuals amount to marginalizing the contribution of  their contemporaries like Sardar Patel not to speak of those from other ideological backgrounds, Bhim Rao Ambedkar from the past or Narendra Modi in contemporary India?

The legacy identified here is a philosophy that tries to define what India as a country ought to be. It is a view of how the country has to be governed and why. Over emphasizing the contrast between the village economy advocated by Gandhi and the advanced technological one advocated by Nehru is very common. But it misses a crucial point. At the core Gandhian vision was moralistic. It dreamt of a Ram Rajya, a country where both the rulers and the citizens occupied the moral high ground. As a consequence it advocated and encouraged the individual breaking immoral laws.

The Nehruvian vision was similarly naive. There was no respect for the compulsions of real world. It was not  merely an advocacy of an egalitarian economic order. A conviction that an egalitarian economic order could be created without the coercion employed in the Soviet Union was dominant. The dream was to transform the society into a free association of individuals committed to the upliftment of the disadvantaged rather than personal accomplishments. Equally naive was the new definition of secularism as equal respect for all religions and not the western view of the individual’s innate right not to be dictated to by co-religionists. As in the economic sphere, the individual was required to subsume his individuality into the good of the many. It was assumed that the groups would transform their medieval outlook just because they could convince themselves of the logical necessity to do so, without any legal enforcement of individual rights or coercion. Such naivete was responsible for taking the Kashmir problem to UNO, or advocating Hindi-Chini brotherhood.

As can be expected neither the government nor the individuals could live up to these standards. The consequence has been the India of today. Government institutions do not deliver. Judicial delays benefit the law breakers. Individuals hide their wealth to the extent possible. Everyone justifies personal illegal acts by pointing either at other law breakers or at “social discrimination”.

But despite the failure to deliver, the vision has not been renounced. It is the common intellectual position of an overwhelming fraction of Indians. They continue to believe that the failure of the government to deliver is due to individual corruption. They continue to be extremely receptive to every conspiracy theory that accuses a few rich people of conspiring to sabotage government programs. The violence depicted in mainstream Indian cinema has become more graphic. The identification of a few criminals, politicians and or wealthy individuals as the criminals has not.

This intellectual commitment against market economics is the basic reason why even liberalization has been half hearted. It has been forced by circumstances. The gates were forced opened by the precarious financial situation of the day not by an acceptance of the underlying philosophy. There is very little support for denationalisation of public sector banks, insurance companies and industries despite their being a large drain on tax revenues. Their failure is always due to political interference or corruption, never due to the impossibility of enforcing discipline on the work force or their incompetence to operate in a competitive environment.

It is almost as if the mystic belief in a Maryada Purushottam Ram has transformed into an unshakable belief in a government sponsored system of economic and social services. Truly an example of the synergy of the Gandhian and Nehruvian visions. So much for those who saw them as opposing each other.

Quite early in post independent India, the Ambedkarite vision of compensating for historical injustices was co-opted into the Nehruvian socialist vision. Once again the fundamental limitations of a government enforced social justice program are never conceded. The belief in a large government is at least partly rooted in the parallel demand for ever expanding reservations. A strong government is obviously necessary for enforcing them, now in private, self financed educational institutions and perhaps eventually in private sector jobs.

Even hindutva, currently in ascendency, is a reaction to the legacy. Providing legal sanction to the medieval personal laws of the Muslims in the name of minority protection has only hindered reform in the community. Minority communalism fuelled the advent of majority communalism. Rejecting the individualistic basis of secularism and creating a naive indian definition has contributed to the malice. Naively encouraging false history to encourage a socialist bias and Hindu-Muslim unity has made critical response to the current hindutva narrative impossible. Mediocrity in all academic disciplines due to social justice initiatives has left no one with a shred of credibility to tackle the menace.

The reality remains that social justice programs cannot correct historical injustices. Neither will government implemented financial redistribution and social safety nets, particularly in a country like India where the so called haves are a small minority. The undisciplined, non law abiding contemporary India is the natural consequence if following the Gandhi-Nehru legacy. It is an object lesson to those dreaming of  creating a socialist utopia and that too without coercion

Intellectually renouncing the Gandhi-Nehru legacy as unworkable is the first necessary step. At the very least it will reduce the all pervading sense of frustration and searching for conspiracies. Then perhaps the proposals to be outlined in subsequent posts would appeal as practical, implementable steps in improving the situation.

Extravagance, Investment And Hoarding

Gold foil was being spread on food being served in a marriage in Bhimavaram, Andhra Pradesh or so a recent post being shared on the social media claims. This extravagance is being roundly denounced citing the billions in the world going hungry. Spreading very very thin layers of precious metals like gold and silver on food items was claimed to be an ancient practice being revived now. It however makes no medical sense. At best gold would be excreted and at worst the heavy metal atoms would damage the liver. This example largely replaced the earlier examples of inhuman extravagance by the rich Ambani family. Their sixteen floor mansion  and  the saree embroidered with real gold to depict the paintings of Ravi Varma costing a reported ten crore rupees were circulating earlier. The general consensus is that the super rich, instead of such vulgar display and waste should spend their wealth for benefiting the poor. It is quite common to see calculations of how many poor people can be fed with the same money. The realization however begins to creep in that there are many other ways of ostentatious spending at a smaller scale, ranging from costly imported liquor to luxury automobiles. While individual expenditure may be more modest but large number of people spend on such items. So the total could represent quite a significant share of the economy.  

Depictions of brides wearing several kilograms of gold are also very common in social media. However, the condemnation is not as vehement firstly because the targets are not as prominent and secondly because almost all Indians view buying gold as investment and not merely extravagance. This is one Indian attitude that has not changed since historical times. For example, there has never been a silver mine in India. But an estimated one third of all silver mined in all countries is presently in India. All of it was imported! Indians continue to buy gold. Efforts by the socialist minded post independent government of India to discourage this has been a dismal failure. Even the import duty has been kept low to reduce smuggling. Today official gold imports at 30-40 billion US$ are about a quarter of the trade deficit.

There are two logical reasons behind Indian attraction for gold as an investment. First and foremost, the price of gold has been increasing. The increase is partially due to the demand but this basic law of economics is simply ignored by Indians. Secondly, Indians view gold as one form of investment that is most secure and immune from government taxation. Indians prefer investment in real estate for the same reasons. The assets are tangible and hence offer a strong feeling of security. They are also immune from government taxation.

The most interesting thing about real estate investment in India is the reliance on capital appreciation rather than returns in form of rents. The rental values are far below even the interest realized on savings bank deposits. Thus keeping the premises untenanted is quite often preferred. The rent control laws of the socialist era make evicting a tenant difficult and the extremely slow legal processes make it impossible in practice. Even commercial properties except perhaps in the recently developed malls have these limitations.

It is amusing to note there is no depreciation with time due to aging of the construction. Any construction has a lifespan after which it has to be demolished.  So with time, the residual life is decreasing and obviously the rents that can be expected. The land costs are expected to appreciate considerably and this argument is used to justify increase of real estate prices.  In reality the prime reason is that most people are prepared to hold on to their assets indefinitely.

The concept of buying and holding a commodity with the expectation of its price increasing is properly called hoarding. Outside India, buying works of art, rare manuscripts, celebrity momentoes etc are all examples of hoarding masquerading as investment. The prime difference is quantitative. Outside India, their share of the economic activity is a minuscule fraction of the total economy. In contrast, gold and real estate purchased at non commercial rates are a significant fraction of Indian economy. Both also contribute significantly to secondary economic activity.

Building construction in particular is very labor intensive. Even the trade in gold is recognized to provide livelihoods to large number of workers involved in making jewellery, trade and offering security services. Governments are very much willing to offer subsidies and tax rebates to the construction sector. Aside from the usual socialist fears of the rich immoral builders exploiting the innocent buyers, no one in India expresses any reservations about its contribution to beneficial economic activity. The intellectuals and to an extent the government keep preaching the negative consequences of the Indian obsession with gold. It is of course conceded that both these sectors play a major role in the black economy. They are the final destination of all illegal financial gains. This unaccounted, untaxed part is a major factor in the attractiveness of participation in this hoarding activity.  Sustainability of the current situation in view of the low rentals and returns is ignored both by the investors and the government.

However, the complaint against gold is moralistic. The complaint against black money is in reality again moralistic stressing as it does the corruption of the government agencies. The moralistic voices become extremely shrill when discussing extravagance. But in reality extravagance has no negative economic consequences only moral issues. What an individual spends on extravagance is not a waste. It is simply income for other individuals. The saree with Ravi Varma paintings woven in gold mentioned at the start, costs far more than the silk and gold it contains. As a friend pointed out, the best description of extravagance is drinking coca cola in a five star hotel. The bill paid has nothing to do with the physical product. This is generally true. Only the items that come under the category of hoarding offer an exception to this reality. An original painting costs for more than an identical copy despite offering the same visual experience.

Moral repugnance of extravagance is entirely understandable. But charity is not a viable method for changing the society in accordance with this desire. If all those currently patronizing the five star hotels decide to instead buy food for the poor, the demand will raise without increased supply, thereby merely increasing the cost of food. A government  controlling the entire process of investment to ensure a socially just society can be conceived but the failures of the hard Soviet socialism and the soft version of India and Britain are recent history.

In the context of an open Indian society which will not return to the earlier vision of a public sector dominated license and permit raj, it is important to recognize that extravagance is benign and much less harmful than hoarding of land and gold, masquerading as investment. Even more than the basic unsustainability of the situation, this desire for tangible secure assets is harming the investment climate in India. As said before, land and gold are physical tangible assets. They appear far more sensible than  investment in intangible assets in the form of shares. It is unfortunately true that  investment in shares are may fail and that too spectacularly and totally. Thus one sees an extreme desire for short time gains in the stock market, trying to cut the losses and run at the slightest hint of trouble and above all else a receptiveness for conspiracy theories and corruption as causes of all failures. It is most significant to note that one’s own successes are not attributed to corruption and no one complains as long as they get benefits.

Ultimately, the moral preaching against extravagance, the hypocrisy of hoarding, the demands for success without failure and profits without losses are all the attributes of a large segment of indian population that need to change to make any significant difference at the national level. The first step has to be the self confident intellectual acceptance that extravagance, corruption, or conspiracy  by a few are not responsible.

 

Broken Windows : A Useful Metaphor

An individual will not hesitate to add to the garbage littering a public place. After all, what is the sense in making an effort to search around for a designated garbage dump when everyone else is taking the easy route and dumping garbage everywhere? Similarly, there is no incentive to obey traffic rules on Indian roads where the vast majority do not obey them. There are however observable cultural differences. An Indian for example has far less inhibitions in contributing to the general lawlessness than a Japanese. Are these   differences purely a consequence of the lower economic standards? And even if they are to a larger or smaller extent dependant on economic prosperity, would these attitudes be an additional hindrance to alleviation of the economic situation? Several American intellectuals have tried to analyze this conundrum in the framework of “Broken Windows”. The approach is useful even if the policies followed on this basis have become notorious.   

If  “broken windows” in a building are left unrepaired and neglected for a long time, it does not require much imagination to expect it to eventually become a haunt for criminals. This reasonable logic was demonstrated by an experiment involving a pair of cars abandoned in two different locations. In the high crime area, the unlocked car was stripped of all Its interior parts in a very short time but the car abandoned in the low crime area was untouched for a longer duration.  But when the windows of the car were deliberately broken, it too was stripped of all internal parts in a very short time. Obviously, the visual confirmation of an earlier episode of lawlessness in the form of broken windows lowers the inhibition for more lawlessness even in a low crime area. By extension it was assumed that the high crime area has become such due to the earlier neglect of low level crime. A policy of strict policing and punishing minor crime was implemented in many places in the USA.  Many claim that “Broken Windows” policing is responsible for the reduced crime rate. Many others disagree and many alternate causes including the rate of abortions have been advanced. The key fact remains that a society is a complex entity and there will be many externalities and undesirable consequences for any simplistic procedures such as “Broken Windows” policing to work. If the credit for lowered crime rate is claimed, the discredit for a highly dysfunctional society with a huge prison population and broken family structure can also be justifiably considered a consequence of  “Broken Windows” policing.

As with most concepts concerning a complex entity called the society, “Broken Windows” provides a philosophical idea that can guide individual action but not a legal framework that can be run on autopilot. It is no wonder. Even the ten commandments cannot be so used.  An individual following them mechanically will not be  a religious person in the true sense  and a society of such individuals will be collectively inhuman. In particular,  “Broken Windows” offers a good framework for understanding the problems of contemporary India.

As mentioned lawlessness on indian roads is phenomenal. When queried the typical response is to shrug the shoulders and point out that everyone is doing the same. This is typical “Broken Windows” justification.  The “Swachh Bharat” initiative has made no visible difference to the situation and Indians are most indifferent about adding their share to the garbage in public spaces. Once again pointing fingers at others is the common refrain. The legal system in India is notoriously slow. That is the reason why both the politicians and the public simply ignore the law. Whether it is the politician roughing up an employee of the airline, an incident that resulted in a lot of media hype recently or the average house owner making illegal alterations to his house, there is no fear of law. After all everyone is doing the same!!!! No one expects any work to be done in a government office without greasing palms. Once again, no one even attempts to try to get the work done without offering illegal gratifications. Similarly, demonetization has not made any visible change to the black economy.

The sad reality is that these illegal measures hardly provide any real benefit. When most people obey traffic rules, the few who break them get a substantial benefit. When a majority do not one gets only traffic snarls. The few who obey the rules do not really suffer a disadvantage. Since the pace of justice is glacial, people avoid getting involved. Paying bribes doesn’t really ensure prompt action. Ultimately what the people get is only a psychological satisfaction of having tried all measures fair and foul. The situation has a lot of similarities with the use of alternative medicine in incurable or terminal diseases. There is no benefit but a lot of personal satisfaction.

Indians are not familiar with the “Broken Windows” metaphor but they are independently ardent supporters of policing as the solution to the broken system. They demand that police should ensure traffic discipline. They demand the income tax department ferret out the black money. They insist that corruption in government departments should be put down with an iron hand. They demand that the courts prevent corrupt politicians from misusing their power. But they continue to violate rules for the smallest benefit and as discussed above often with no discernable benefit at all. The attitude remains that individual minor transgressions are excusable particularly personal ones.

The most important issue with policing is conveniently overlooked. When everyone tends to break laws policing does not work. There was the hilarious incident of a man waiting to park in a no parking area while the tow truck was removing the previous wrongly parked vehicle. It was a perfectly logical choice.  It would take the tow truck a lot of time to take the current vehicle to the impounding area and return!!!  Even more problematic is the desire for humane punishment and the necessity to prove the crime beyond all reasonable doubt before even these punishments are imposed. The later requires time and resources. The former ensures that contrary to popular perception you cannot frighten people by making a public spectacle of those convicted. Public opinion still occasionally causes punishments to be imposed despite lack of evidence but it is a very rare occurrence.

All this brings into focus the limitations of  “Broken Windows” policing. despite this however, “Broken Windows” is a very useful metaphor. That people regress into anti social behaviour in an environment of “Broken Windows” is true enough. But it is not some kind of compulsive behaviour or an addiction that is difficult to overcome. Realization of the individual ability to avoid this pitfall is its best use.  On the other hand, abdicating individual responsibility and viewing this as a scientific truth that could be amenable to legal or governmental dictate is best avoided.