The first element of achieving change is a dissatisfied public that
is able to speak up. In places like China, freedom of speech is
circumscribed and it is not that easy to express dissatisfaction with
the way things are going. In India also, freedom
of speech is under attack, and particularly when it comes to our
problems
of crony capitalism, the threats that we face are dire. But in
some other fields -- e.g. the protests against the events in Delhi --
there are no real barriers to speaking out.
When does democratic outrage genuinely change the republic?
Everyone is against rape. Shouldn't our outrage about rape
immediately yield a world where women are safe? Unfortunately, the
safety of women comes from the functioning of the complex machinery
of laws, police, lawyers, judges, courts. To fix the problem, we
have to modify this machinery.
The workings of government are a vast clanking machinery with many
moving parts. When you see something going wrong in the outcomes, it
isn't always easy to diagnose the problems of objectives,
accountability, and organisation structure that are inducing the
problem, and envisioning the change that is required in order to
solve the problem. The protester is saying I'm mad because the
car does not work. But it takes a skilled engineer to understand
why the car does not work and how to fix it.
Sometimes, I see activists who are revulsed at the workings of the
dark satanic mills; who emphasise the protesting and downplay the
fixing. There is sometimes a mix of frustration and reverse snobbery
in play. I think that at its best, democratic society needs both:
the activism (that puts a searchlight on things going wrong in
society) and the wonkery (that actually gets things done). I respect
the work of activists: What is in the searchlight of the public
debate is where we have a chance to break free from the tyranny of
the status quo. But there is no escape from getting engaged in the
plumbing, from figuring out how it works, and coming up with fully
articulated blueprints for change.
In a blog post about Occupy Wall Street, Paul
Krugman says:
It would probably be helpful if protesters could agree on at least a
few main policy changes they would like to see enacted. But we
shouldn't make too much of the lack of specifics. It's clear what
kinds of things the Occupy Wall Street demonstrators want, and it's
really the job of policy intellectuals and politicians to fill in the
details.
This emphasises a two-part process: a democratic process throws up
an opportunity for change, after which the quality of the change
that is obtained depends on the capabilities of the policy
intellectuals and politicians.
While voice is a precondition, it is not enough. The Anna Hazare
movement set out to conquer corruption and achieved nothing. A great
deal of energy was expended, and it generated plenty of television
footage, but it came to nought.
A related example: a while ago, there was a public outcry about
insecticides in soft drinks. I think the activists got it wrong : the
really important target should be the low quality of drinking water,
and not corporations peddling soft drinks. We did not have the policy
intellectuals and politicians who could think about reforming water
and sanitation, who could harness the outrage and get a meaningful
reform program going. Hence, that episode has failed to alleviate the
insecticide in India's drinking water.
Example: London's Great Smog of 1952
The
Great Smog of China by Clarissa Sebag-Montefiore in the
New York Times tells a great story. In 1952, London was hit
by a terrible bout of air pollution, termed `The Great Smog of
1952'. 4000 people died. As she says: Most Londoners who lived
through the Great Smog thought it was simply an especially foggy
period until the undertakers ran out of coffins and the florists
sold out of funeral flowers. This led to a `Clean Air Act' of
1956.
Look at
the Clean
Air Act of 1956. It takes a great deal of thinking to go from
outrage at 4000 dead, to figuring out how to draft this. There are
hundreds of decisions in the 15,389 words of the law, all of which
have complex implications in terms of public administration,
incentives for private households and firms, and so on. It isn't
about setting up a death penalty for emitting smoke: it is about
finding the smallest possible intervention that will get the job
done, and one that is feasible given the implementation constraints
of government.
Example: India and airports
Circa 2002, the airports were a disgrace. There was a public
outcry. The government reacted. Today Bombay and Delhi have decent
airports. Why did this work so well?
- The outcome - a high quality airport - is visible and
measurable and monitorable. In other fields -- e.g. criminal justice
system -- it is much harder to know where you stand, which reduces
accountability.
- MPs and ministers use the airport. In contrast, with the criminal justice
system, they have opted out of public systems. In a problem like corruption,
many might actually want the status quo to continue.
- Airports are relatively cheap and easy: All you had to do was
to offend the employees of AAI. The government wrote contracts with
GMR/GVK, and the passengers are footing the bill in terms of paying
user charges every time they fly. There was no tradeoff
between pushing airports and pushing welfare programs.
Under these circumstances it was possible for the political
leadership to achieve airports, and make some in the elite (and
themselves) happy, at no cost to their conventional focus on welfare
programs and at no cost to anyone other than a few unhappy employees
of AAI (who did not even lose their jobs).
There was the difficult problem of building regulatory capacity at
AERA. The leadership in AERA of the early
years did
things better than most infrastructure or financial regulation in
some respects. My personal experiences with AERA in recent months have
left me enormously impressed at the capabilities in the
organisation. But at the same time, the problem that they face is a
relatively simple one. To
use Pratap Bhanu Mehta's delicious
phrase, building airports in Bombay and Delhi was not a wicked
problem.
Example: London's Big Stink of 1858
Going much further back into time, London went through the `Big
Stink of 1858', where the Thames was clogged with human waste. In
the summer of 1858, within 18 days, Parliament drafted and enacted
legislation that, in time, made the Thames one of the cleanest rivers
of the world.
That's a remarkable story. As an illustration of the firepower
amongst the policy intellectuals: they had Michael Faraday working on
the problem! We don't have a Michael Faraday in our midst; we have yet
to match the capabilities of the UK circa 1858.
Some areas are harder than others
Drawing on work by Lant Pritchett and Michael Woolcock, we should
apply three tests to understand when doing something in government
is hard: (a) Does a public service have a large number of
transactions? (b) Do front line workers have discretion? (c) Are
the stakes high?
When these three problems come together, building sound public
systems is extremely hard. As an example of this
thinking, financial
regulation is hard while monetary policy is easy. By these three
tests, building a criminal justice system is truly hard.
How do good countries grapple with the problem of constructing a
criminal justice system? As an example,
the John
Jay College of Criminal Justice, at the City University of New
York, works in this field. It has over 1000 academics working on
this one field! In this one field, they have placed more than 2x the
number of academics across all fields at IIT Bombay.
There are thus two reasons why making progress on the criminal
justice system is hard. Unlike the airports example, these are
difficult areas: Large number of transactions, front line civil
servants have discretion, and the stakes are high. And unlike the
partial success of the equity market reforms, we in India have not
laid the foundations in terms of analysis of problems,
consensus-building, and construction of key individuals that can
play leadership roles in the change.
Example: India's stock market reforms
Financial regulation is a wickedly hard problem. There are a large
number of transactions, front-line workers have discretion, and the
stakes are sky-high. If all regulation and supervision were done in
government, it would be truly hard to make things work, particularly
in India.
Hence, there is a neat two-part separation of the work. The
exchange is a unique private body that does regulation and
supervision. In the bad old days, the exchanges in Bombay and Calcutta
were riven with conflicts of interest and did not do a good job of
supervision. This gave us stock market crises in 1992 and 2001, which
had large-scale consequences for the country. Calcutta Stock Exchange
was a small player in 2001, but the problems there were big enough to
matter to everyone.
There was an outcry. This led to a dramatic
program for change. A new governance model was put into place at NSE
and BSE, where there is a three-way separation between shareholders,
managers and trading members. The managers, who perform quasi-State
functions in supervision, have no shareholding nor stock options. It
worked.
Why did it work? It is important to look back into time. Right from
the 1980s, ideas for reform had been tossed about. The G. S. Patel
Committee, in 1984, had many of the key ideas of the following 20
years in its report. A little noticed feature of the G. S. Patel
Committee report is in the preface, where the research support of a
R. H. Patil from IDBI is acknowledged. Many of the names that figure
in the story of the Indian stock market in the following 20 years were
part of the G. S. Patel Committee; as an example R. H. Patil was the
founding CEO of NSE.
As a consequence, in 1992, when the crisis came, there were people and ideas in the
system that were ready to respond. The knowledge and consensus that
was available then carried us half the way.
Through the 1990s, there was a process of analysis and thinking
about policy alternatives. There was a view on how change should
proceed, and the conservatives were able to stall it. In the listless
years from 1996 to 2001, a lot of hard work got done on fully thinking
through the next batch of reforms. When, in 2001, the next crisis
came, the Ministry of Finance was able to access well-developed ideas
and people that drove the next batch of change.
From the viewpoint of politicians, all change is risky. Fear of the
unknown feeds into inertia: Why suffer a political cost for sure,
offending the status quo, for a reform that might not work? We
improve the probability of a reform being attempted when two
properties hold: (a) We have a fully articulated blueprint for
change, which is backed by high quality thinking and evidence, and
(b) People who can staff the reform effort are available.
From 1980 to 2000, the committee process created a working
consensus on what was needed to be done, took new ideas from heretical
to mainstream, and built individuals who went on to play leadership
roles in achieving the change.
That's the good part. And yet, in some ways, this has started
turning into a failure
story of sorts. After 2001, when the big changes fell into place, the
policy community stopped focusing on the stock market. It was felt
this is a solved problem. There was a lack of institutional memory
about what had gone wrong in 1992 and 2001. The three-way separation
between shareholding, management and securities firms was not
remembered, and has
been undone. We
are going back to dangerous times.
Why has the wonkery been so weak in India?
Why are the policy intellectuals and politicians of India so weak
on the questions that matter for India's future? There are two
elements of an explanation. The first is money.
In India, we spend roughly 1% of GDP on research in four fields :
defence, nuclear engineering, the space program and agriculture. But
all these fields are of second order importance when compared with the
main story of India's future, which is at the intersection of
politics, economics, law, ethics and philosophy. In these areas, we
are spending 0.001% of GDP. This ratio of 1000:1 of expenditure
between these areas is inappropriate. As a consequence, we are failing
to grow the intellectuals and university departments in these
fields.
This matters for the wonkery. It also matters for the activism. If
we could do better on the education that millions of people get in
college, we could have a much more thinking citizenry which could be
much more effective in mass political action. Our failures on
universities are limiting the feedback loop through which growth
should feed higher education and should feed back into better
politics.
The second problem is development economics. What little is there
of the social sciences and humanities in India matters less than it
should, owing
to the
development economics worldview. Everyone outraged about violence
in India should ask why the policy wonks of India are so interested in
health, education and welfare programs, and so disengaged
with the
most basic public good of all, law and order. Why have economists
thought
the private
goods of primary health centres are more important
than the
public goods of policing and courts?
To some extent, the two problems are related. India has offered
little by way of career paths in studying India, and getting engaged
in the project of building the republic. The development economics
establishment, in contrast, offers a full career path: with Western
aid agencies, NGOs, the World Bank, academic development economics,
and much nourishment from a socialist government. This gives strong
incentives for people to focus on poverty, inequality and welfare
programs. This has enfeebled the wonks, for the big questions that
India now faces are not poverty, inequality or welfare programs.
Conclusion
As Sunil Khilnani says, the most important task for each of us in
India is to get involved in politics, in the sense of taking interest
in how the State functions and undertaking actions small and large
that will prod it towards better functioning. We have traditionally
felt that the greatest threat that we face is that of an apathetic
citizenry.
It now appears that we have a more active and
participatory demos and this is a great thing. We are seeing
profound changes in the world of activism. New technologies are
reducing the cost of mobilisation. Millions of people have joined
the conversation. We find that they care about core public goods and
corruption. The voice of the people is negating the socialist claim
of all these years, that what people care most about is garibi
hatao and inequality. These are great developments.
But while this is a necessary element for a well functioning
republic, it is not sufficient. The surge of policy involvement by
citizenry is not getting translated into action on a commensurate
scale. The constraint is the weakness of the elite. We lack the
policy intellectuals and politicians who are able to pursue wicked
problems, diagnose what is going wrong, and articulate a tangible
program for change.
The policy intellectuals and politicians are missing in action on
the questions that matter. The bulk of the existing policy
establishment is focused on poverty, inequality and welfare
programs. As Shekhar
Gupta has emphasised, the ruling ideology among most politicians
is ossified in the thought process of the 1970s. India has moved on,
but our political ideologies haven't.
Intellectuals are the yeast that make a society rise. Our
under-development in intellectual capacity limits our ability to
translate a moment -- like the anti corruption movement -- into
change. In addition, there is a danger that an irate public that is
weak on political philosophy will settle for cartoonish solutions like
Lok Pal or Naxalism or a death penalty for rape.
The wonkery is intellectually bankrupt today. The policy
intellectuals and politicians who are able to reshape themselves to
fit the needs of India from 2013 to 2038 will matter. A greater
conversation between the two cultures will also matter greatly, with
each cross-fertilising the other. Activism and wonkery are the yin
and yang that must work together to build the republic.
Acknowledgements
This post grew out of email discussions with Joshua Felman.
