THE BJP-OWAISI TANGO:
The immediate politics of the BJP-Owaisi tango, as a bipolar political whole, should be obvious. In public, they are the North and South poles of a straight magnet, destined to be always poles apart. Very few among the laity would suspect that in portraying themselves as the singular champions of their respective communities, Hindu and Muslim, they are in fact helping each other consolidate their hold over the laity, by simultaneously creating a sharply defined “enemy” for the other, and thus deeply entrenching a sectarian and communal divide between them. Hate on both sides only grows.
BJP gains from the staged confrontation with an “arch enemy” by consolidating the Hindu vote in its favor. Owaisi similarly gains the backing of Muslims as some one seen to contesting BJP’s effort to marginalize Muslims. As this staged confrontation gains center-stage, Hindus and Muslims drift towards opposite poles, while the moderate middle [note I don’t call it secular middle because I am no longer sure such a thing exists] loses support. The ultimate aim of all extreme opinion is to scorch the middle, making reconciliation impossible, and confrontation inevitable.
The advantage to Owaisi is similarly obvious. The staged confrontation pits him as champion of the Muslims, fighting the BJP leviathan. It helps him consolidate the Muslim vote behind him, and emerge as the sole voice of Muslims. In a sense, BJP is “creating” the political Owaisi, in order to slot Muslims, as the permanent “other” in national politics. This may suit Owaisi for now, but what of the future for Muslims, and that for the Indian polity?
THE GREEK TRAGEDY:
To the extent that BJP relentlessly pursues its aggressive Hindu Nationalism agenda, a backlash of sub-nationalism from minorities becomes inevitable. So in a sense, Owaisi is playing a role that was inevitable. If not him, it would be somebody else like him.
So I am not writing this piece to apportion blame to X, Y or Z, but to examine the consequences of the tango for the polity as a whole, from the POV of an Indian, interested in a liberal democracy.
Firstly, it is for Modi, BJP, and RSS, to stop and think what they are doing. A good starting point for such introspection would be the the role of the Khilafat Movement, particularly Gandhis support for it, in the rise of Muslim Nationalism on the sub-continent.
LESSON FROM KHILAFAT MOVEMENT:
Consider the irony of the situation as it existed then. The Khilafat Movement was launched by Muslims in South Asia to save the Caliphate from dismemberment following the Ottoman defeat in WW I, and the treaty of Severes. Very few Muslims in the sub-continent were bothered by the fate of the Caliphate in distant Turkey. Turkey itself turned secular after the movement collapsed as Britain relaxed a few provisions of the treaty.
The fledgling Muslim League had a hard time rousing any support for its Movement. A beleaguered Gandhi, desperate to consolidate his own hold over the Congress party in a contest with the more Conservative wing, stepped in to back the Muslim League. In doing so he legitimized the Muslim League, helped establish it as the authentic voice of Muslims in the sub-continent, and sowed the seeds of Muslim sub-nationalism, which did not exist before that movement was launched.
I am not arguing that Muslim nationalism would not have reared its head but for Gandhi’s support of the Khilafat Movement. But it is also a fact, that after he had done so, Congress could no longer fight Muslim nationalism effectively, even as it continued to claim the support of Muslims for its secular ideology. Nationalist movement crave publicity, an atmosphere of confrontation with an adversary, – the larger the better – and a rallying cry of peril.
BJP is helping Owaisi with the wherewithal for exactly such a denouement. I repeat, it is but inevitable that RSS/BJP’s aggressive Hindu Nationalism will provoke minority sub-nationalism. By seeking to mould it in the person of Owaisi, it might think, it will control the outcome. Hence think back to Gandhi. He too imagined the Muslim League would be an ally, rather than a contestant for power. The minnow that Muslim League was then, then went on to partition India.
Contiguity, or lack of it, is over-rated. The Muslim population was widely dispersed in pre-partitioned sub-continent, and therefor lacked one of the pre-requisites for a successful Nationalist movement: a geographically contiguous region in which to locate the movement. Yet it is fact, that by means fair & foul, the idea of Pakistan arose from the Nationalist movement in less than two decades, and imagination created the geographical contiguity.
HOSTILE NEIGHBORS:
RSS/BJP need to seriously ponder what they are pushing the Muslims towards. A 14% minority is not insignificant. India is not China that the world overlooks. India will not survive as a quasi-democracy that Modi has turned India into, much less a liberal one, if BJP/RSS continue on the present perilous course of othering Muslims, and fanning the flames of another sub-nationalist movement.
India is now surrounded by enemies, some created needlessly by Modi’s own flawed policies at home and abroad. India needs to grow its economy as the first national priority. It can ill-afford to divert its attention to fighting another sun-nationalist movement at home, with eager support from some of neighbors, not excluding China.
As far as short-term politics goes, the friend-enemy marriage of BJP-Owaisi is perfect. Both grow by feeding off each-other. The Noora-kushti match can be a gripping spectacle. There is little doubt that Owaisi will eventually emerge as the main spokesman of the Muslims in India, with a 14% vote share, if not now, then a decade hence. The outcome is logically inevitable, as hate overwhelms reason, on both sides of the divide among the laity.
As I have argued before, Owaisi has no choice in the matter. If not Owaisi, then RSS/BJP will find someone like him, to purse their “win-at-any-cost” electoral strategy. He just happens to be available, and he is both smart enough to realize that, and articulate enough to carry off the role to perfection.
So my plea for reason is addressed more to the RSS/BJP than him. Not that it would hurt Owaisi to pay heed.
CONGRESS MUKT BHARAT:
RSS/BJP must realize, as must the polity as a whole, that we are approaching a cross-road from which there will be no turning back. What RSS/BJP are pursuing is not revocable, even if the party is ousted from power in a subsequent election. Sowing the seeds of sub-nationalism is an irreversible process, that will inevitably bear bitter fruit, if not now, then in the future. If there are any sane voices left in RSS/BJP, they must speak now.
It is not difficult to read the RSS/BJP thinking that motivates the present course. The idea is to consecrate Owaisi as the Muslim leader, and his party as the party of Muslims. It then becomes a party with 14% vote share, but given the lack of geographical contiguity, its dispersion ensures it will never be a challenge to BJP’s 35% to 40% vote share through out the land.
Furthermore, Owaisi’ vote share of 14% will predominantly come out of Congress’ 20% share of the national vote, reducing the Congress to a non-entity, with sub-ten percentage share on a pan-India basis. So Owaisi is the key to a Congress-Mukt Bharat. That is the big prize be for Modi and RSS/BJP. And being the gamblers they are, the prize is big enough to blind them to the inherent risks.
They will think the risks are contained. Or containable. The argument would be that 14% vote share, and its geographical dispersion, pose no immediate problems. While they produce almost certain death of the Congress. What could be better? Besides, even if Owaisi merely uses the RSS/BJP to build his party, and later follows a course of his own, what can he do with his 14%? And when does indeed turn against them, their own vote would grow from 45% of Hindu vote, to 60%, as a backlash. So they have nothing to worry about.
MURPHY’S LAW
Gamblers lose gambles not because they are stupid, unintelligent, or even reckless. Their fatal flaw is that they focus too much on the favorable outcome – Congress mukt-bharat – and this focus makes them minimize the risks inherent in the situation & forget Murphy’s Law: What can go wrong, will go wrong.
We have a long list of such gambles from Modi, whose consequences are either with us, or will weigh-in in the future: demonetization, abrogation of 370, the Depsang fiasco with China, the resort to protectionism, the walking out of trade pacts. Modi tends not to realize that scale almost inevitably produces outcomes in accordance with Murphy’s Law.
And when you are surrounded by implacable adversaries, like we are, Murphy’s Law applies with redoubled vigor, because the adversaries are there to ensure that what can go wrong, is expertly exploited, to make it go wrong. Modi must remember every action has a reaction; something he ignored when his Home Minister made empty boasts of taking back Askai Chin, in the euphoria following a needless abrogation of article 370.
Now is not the time for reckless adventure but sober contemplation of the future.
Sonali Ranade.
The total revenue foregone by Govt over last week is 1.45 lac crores in tax reliefs to corporates announced now + 50,000 crore is export credits given away earlier. So in all, about 1.95 lac crores of revenue has been given away by @nsitharaman – about 1% of GDP.
Sanjay Jha
✔@JhaSanjay
On a day when India’s ranking remains wretched on the Global Hunger Index , the Finance Minister gives a massive Rs 1.45 Lakh crore and more in corporate incentives.
Weird, because the government instead needs funds for health, education, skilling, jobs and infrastructure etc.
Such a genuine tax cut is hugely beneficial to the economy as people investing the extra income in productive assets create more immediate demand in the economy & and also push out the production envelope 4 the future.
Nothing of this sort has happened.
Govt. has no plans to cut its expenditure. So if its expenditure is 2 continue as b4, how will these tax cuts be paid 4?
They can be paid for only in one of the 2 ways. Either somebody pays higher taxes in the system or the Govt prints more money by monetising higher deficit.
The earlier deficit was projected at 3.5% of GDP. This has now gone up to about 4.5% of GDP. Considering all the fudges, off balance sheet borrowings, and postponed payments, the full deficit of centre + states has now jumped to about 11% of GDP.
That is a huge hole 2 fill.
Will the extra 1% of deficit be monetised? In which case the burden of tax cuts will fall immediately on those without pricing power in the economy. This is the farm sector.
In short if the tax cut deficit is monetised, the farmers & rural workers will pay for the tax cuts.
If that be so, will the announced tax cuts to corporates, and to be paid by the income challenged rural & farming communities actually act as a fiscal stimulus for the economy.
Obviously not. Rural wages have hardly grown last 6 years. Farm produces prices are in a deflation.
It will do nothing of that kind although stock markets will celebrate the income transfer from rural pockets to corporate treasuries b/c that means higher corporate profits.
But stimulate the economy it will not. This mere income transfer from poor too rich. Crassly stupid.
If the deficit is not monetised, then we are back to my basic economic equation. Which is that now you have a higher combined deficit of 11% of GDP when financial household savings are just 9% of GDP.
How in the world is the Govt going to fund the extra 4 trillion INR from?
Remember sovereign borrowings by issuing bonds abroad is an option but it can’t produce INR which the Govt needs only through monetisation by @rbi.
So the dilemma remains. Except that the deficit has gone up by 1 percentage point more than earlier.
So step back from the drama a bit and ask yourself what has Govt actually done here?
The answer is that it has pulled some very fine wool over your eyes. The classic grifter trick whereby an increase in deficit financing is cleverly packaged as a tax cut 4 the gullible folks.
You laugh all the way to the bank b/c the higher deficit is now forgotten in the euphoria of relief coming from the spurious tax cuts.
Brilliant politics, spurious economic as usual from the greatest feel good guru of all times.
That is the take home truth.
PM Vidyut ji,
As your manager of the treasury of our realm, it is my bounden duty to acquaint you with how much treasure you have, and – more importantly – do not have, at your disposal to run your Government.
Central Bankers are usually bearers of bad news for new Governments eager to change the world. Which no doubt accounts for their inordinately high mortality or short half-lives. I am no exception. Please bear with me.
First of all, I would like to talk to you about India’s tax-to-GDP ratio, which is a measure of what the Govt. takes away from the total produce of its citizens in an year. We may call this annual tax yield or Govt. “income.”
World over, the tax-to-GDP ratio for most normal economies is between 15% to 20%. In the US it is something like 16%. In India, as per last count, it was a shade over 18%. For my exposition, I shall assume a round number of 20%.
Now, if our economy were entirely composed of households, one half of which fried pakoras for a living, and the other half brewed chai, which they exchanged with each other, we could say a 20% tax-to-GDP ratio would give Govt about one-fifth of all the chai-pani & pakoras produced annually.
That, even by our lax standards, would be too high a proportion of GDP to take as chai-pani-pakoras from the poor knaves. But it can be justified by noting that, historically, excluding the periodic pillage & loot by raiders from Afghanistan, a despot’s take was usually of that order.
Beyond 20%, the law of diminishing returns sets in. As history notes, the earliest Aryans very nearly took over almost 100% of our hearths & homes. In fact they claim to be the original owners today. The later arrivals took progressively less & less.
You may think that almost sinks all your plans to give your voters the bright future that you promised them. That is correct. But I have even more grim news for you. Your predecessor Govts. have been borrowing from the wealth of future generations – wealth that doesn’t exit.
You may have heard of fiscal deficits. It is a polite way of spending money you don’t have; usually allowed only to Govts. This fiscal deficit is about 4% of our GDP. Over and above this, about 2% has been borrowed by Govt. through some very creative accounting.
Furthermore, the States have their own deficits. The combined deficit of all States is rumored to be about 5 to 6% of out GDP. If you tot up all of the deficits, official + hidden + States, the number adds up to something between 10 to 12% of GDP.
Now here is the crucial maths for us to understand which no economist or babu in our civil service will explain to you. But it is something you must never forget. The Govt. takes in about 20% of GDP by way of taxes but spends – actually spends – 30%+ of GDP. Let that sink in.
Of everything thing that India produces in an year – every chai, every pakora – the Govt. takes away 20% or one-fifth. That is bad enough because in a growing economy, the number should be less – say 10% – leaving more money with people to spend & invest.
But, Govt. takes in 20% and SPENDS 30%. A full one-third of everything we produce in the economy in an year is actually gobbled up by Govt. We may call this 30% spend by Govt. as “extraction” which is made up of 2 parts – taxes 20% + forced borrowings 10%.
For perspective, please note that barring pillage & plunder by Afghan raiders, the total “extraction” in India under despots of all sorts from Mad Tuglaq, through Moghuls to the British, never reached 30% of GDP, even when land revenue was one-third of farm produce.
I realize you may have some questions about the 10% forced borrowings that I have added to taxes to arrive at the total extraction. Clever babus will tell you there is no forced borrowings but only legitimate loans taken from citizens. This is baloney.
Banks, public and private, have to hold Govt. debt as a statutory requirement. This ratio over time has been around 30% of all bank liabilities. Citizens put savings in bank, Govt. forces banks to lend to Govt., and babus pretend there is no forced borrowing.
There are 2 things to note here 4 you. Firstly, Govt. total extraction, by of taxes & forced borrowings, is way too high to permit people to actually save & and invest anything on their own. And second, Govt. has no way of repaying what it borrows. Sorry, if you fell of the chair.
That is right. Govt. has no way of repaying what it borrows. We pretend it does but what it repays on bonds comes from more borrowings. The only income that a Govt. has is taxes. Since taxes cannot exceed 20% of GDP, the extra 10% of GDP that the Govt. borrows will never be repaid.
But that is an issue which is intractable and so must be put aside for the moment because we have an even more urgent problem to contend with. The money that Govt. borrows to spend annually, the extra 10% of GDP, has to come from financial savings of households & others.
A bulk of the savings in the economy come from households. We put that number at about 15% of GDP. Corporate business add another 10% of GDP to the kitty. So total saving – financial and non-financial – add up to about 25% of GDP.
Corporates need to invest. In a growing economy they would invest far more than they save. So Govt. shouldn’t count on them to finance its spending. That leaves households who typically save about 60% of their savings in financial assets and 40% in fixed assets such as Gold or land & housing.
So households can typically give the Govt. the maximum – if they did nothing else but buy Govt. bonds – of 9 to 10% of GDP as the pool of savings that Govt. can borrow from, one way or the other – through banks or debt mutual funds.
So here is the equation PM Vidyut ji which your Babus & tycoons & politicians with grubby hands will never ever tell you in plain words. The Govt. needs to borrow 10 to 12 % of GDP annually, while the total available pool of financial savings is only 9 to 10% of GDP.
Daboo ledu. There is no more money to borrow. The Govt. has for all practical purposes borrowed every penny that is available as savings in the economy – and a bit more by starving corporates, especially PSUs. That’s why it finds virtue in borrowing abroad now.
But as I said earlier, the Govt’s income is only 20% of GDP. No more extortion in taxes has ever proved feasible. Its extra 10% of GDP borrowing can never be repaid. But thereby hangs an important difference that you must grasp.
Everybody in the domestic economy “knows” Govt. borrowings will never be repaid. But nobody can demand repayment as long as Govt. owns all the tanks. And if they did, Govt. has the nuclear option of printing as much currency as required to repay.
But Govt. tanks, backed by printing presses, are of no use when it comes to borrowing abroad – say via sovereign bonds as some babus have been shoving at you. Foreigners can & do demand repayment, and that too usually when the economy is in trouble.
Since your income is limited to 20% of GDP, and on top of that you are already borrowing another unsustainable 10% of GDP, and on top of that you wanna borrow another 2% of GDP as sovereign bonds, how can you repay foreign borrowings if ever asked 2 do so?
The “as a going concern argument” doesn’t apply to foreign borrowings. The world is littered with debris of economies who were sold that argument by clever investment bankers who offered to sell sovereign bonds for no fees with a green shoe option. Be very wary.
I will sum up this note here by simply saying you are the first unfortunate PM who has no money to spend, either by extorting or borrowing, though there is no difference between the two. Daboo ledu. Let that be your abiding mantra.
All is not lost however. There are plenty of ways to save from current expenses to have money to spend on things that really benefit people & build for the future. I shall revert to you with them shortly. Meanwhile please meet every request to spend more with “Daboo ledu.”
It is the abiding truth.
Humbly but sincerely.
#AltSarkar
In both democracies and dictatorships, it is getting harder to speak up
On june 22nd there was an alleged coup attempt in Ethiopia. The army chief of staff was murdered, as was the president of Amhara, one of the country’s nine regions. Ordinary Ethiopians were desperate to find out what was going on. And then the government shut down the internet. By midnight some 98% of Ethiopia was offline.
“People were getting distorted news and were getting very confused about what was happening…at that very moment there was no information at all,” recalls Gashaw Fentahun, a journalist at the Amhara Mass Media Agency, a state-owned outlet. He and his colleagues were trying to file a report. Rather than uploading audio and video files digitally, they had to send them to head office by plane, causing a huge delay.
Last year 25 governments imposed internet blackouts. Choking off connectivity infuriates people and kneecaps economies. Yet autocrats think it worthwhile, usually to stop information from circulating during a crisis.
This month the Indian government shut down the internet in disputed Kashmir—for the 51st time this year. “There is no news, nothing,” says Aadil Ganie, a Kashmiri stuck in Delhi, adding that he does not even know where his family is because phones are blocked, too. In recent months Sudan shut down social media to prevent protesters from organising; Congo’s regime switched off mobile networks so it could rig an election in the dark; and Chad nobbled social media to silence protests against the president’s plan to stay in power until 2033.
Free speech is hard won and easily lost. Only a year ago it flowered in Ethiopia, under a supposedly liberal new prime minister, Abiy Ahmed. All the journalists in jail were released, and hundreds of websites, blogs and satellite TV channels were unblocked. But now the regime is having second thoughts. Without a dictatorship to suppress it, ethnic violence has flared. Bigots have incited ethnic cleansing on newly free social media. Nearly 3m Ethiopians have been driven from their homes.
Ethiopia faces a genuine emergency, and many Ethiopians think it reasonable for the government to silence those who advocate violence. But during the alleged coup it did far more than that—in effect it silenced everyone. As Befekadu Haile, a journalist and activist, put it: “In the darkness, the government told all the stories.”
Some now fear a return to the dark days of Abiy’s predecessors, when dissident bloggers were tortured. The regime still has truckloads of electronic kit for snooping and censoring, much of it bought from China. It is also planning to criminalise “hate speech”, under a law that may require mass surveillance and close monitoring of social media by police. Many fret that the law will be used to lock up peaceful dissidents.
According to Freedom House, a watchdog, free speech has declined globally over the past decade. The most repressive regimes have become more so: among those classed as “not free” by Freedom House, 28% have tightened the muzzle in the past five years; only 14% have loosened it. “Partly free” countries were as likely to improve as to get worse, but “free” countries regressed. Some 19% of them (16 countries) have grown less hospitable to free speech in the past five years, while only 14% have improved (see map).
There are two main reasons for this. First, ruling parties in many countries have found new tools for suppressing awkward facts and ideas. Second, they feel emboldened to use such tools, partly because global support for free speech has faltered. Neither of the world’s superpowers is likely to stand up for it. China ruthlessly censors dissent at home and exports the technology to censor it abroad. The United States, once a champion of free expression, is now led by a man who says things like this:
“We certainly don’t want to stifle free speech, but … I don’t think that the mainstream media is free speech … because it’s so crooked. So, to me, free speech is not when you see something good and then you purposely write bad. To me, that’s very dangerous speech and you become angry at it.”
Really? Seeing something that the government claims is good and pointing out why it is bad is an essential function of journalism. Indeed, it is one of democracy’s most crucial safeguards. President Donald Trump cannot censor the media in America, but his words contribute to a global climate of contempt for independent journalism. Censorious authoritarians elsewhere often cite Mr Trump’s catchphrases, calling critical reporting “fake news” and critical journalists “enemies of the people”.
The notion that certain views should be silenced is popular on the left, too. In Britain and America students shout down speakers they deem racist or transphobic, and Twitter mobs demand the sacking of anyone who violates an expanding list of taboos. Many western radicals contend that if they think something is offensive, no one should be allowed to say it.
Authoritarians elsewhere agree. What counts as offensive is subjective, so “hate speech” laws can be elastic tools for criminalising dissent. In March Kazakhstan arrested Serikzhan Bilash for “inciting ethnic hatred”. (He had complained about the mass incarceration of Uighurs in China, a big trading partner of Kazakhstan.) Rwanda’s government interprets almost any criticism of itself as support for another genocide. In India proposed new rules would require digital platforms to block all unlawful content—a tough task given that it is illegal in India to promote disharmony “on grounds of religion, race, place of birth, residence, language, caste or community or any other ground whatsoever”.
One way to silence speech is to murder the speaker. At least 53 journalists were killed on the job in 2018, slightly more than in the previous two years, according to the Committee to Protect Journalists (cpj), a watchdog. Few of the killers were caught. The deadliest country for journalists was Afghanistan, where 13 were killed. In one case, a jihadist disguised himself as a journalist so as to mingle with, and slaughter, the first reporters and medics to arrive at the scene of an earlier suicide bombing.
Perhaps the most brazen murder in 2018 was of Jamal Khashoggi, a critic of the Saudi regime. A team of assassins landed in Turkey on easily identifiable private jets, drove in luxury cars to the Saudi consulate in Istanbul and cut Khashoggi to pieces on consular property. Whoever ordered this presumably thought there would be no serious consequences for dismembering a Washington Post contributor. He was right. Although Germany, Denmark and Norway stopped arms sales to Saudi Arabia, Mr Trump stressed America would remain the kingdom’s “steadfast partner”.
On December 1st 2018 the cpj counted more than 250 journalists in jail for their work: at least 68 in Turkey, 47 in China, 25 in Egypt and 16 in Eritrea. The true number is surely higher, since many journalists are held without charge or publicity. However, the number in Eritrea may be lower, since nearly all have been held in awful conditions since President Issaias Afwerki shut down the independent media in 2001, and some are probably dead.
Rather than risking the bother and bad publicity of putting journalists on trial, some regimes try to intimidate them into docility. In Pakistan, when military officers ring up editors to complain about coverage, the editors typically buckle. Ahmad Noorani, a reporter who dared to write about the army’s role in politics, was ambushed by unknown assailants on a busy street in the capital, Islamabad, and beaten almost to death with a crowbar.
In India journalists who criticise the ruling Bharatiya Janata Party receive torrents of threats on social media from Hindu nationalists. If female, those threats may include rape. Reporters are often “doxxed”—pictures of their families are circulated, inviting others to harm them. Barkha Dutt, a television pundit, filed a complaint against trolls who had sent her a death threat and published her personal telephone number as that of an escort service. Four suspects were arrested in March.
Occasionally, the worst threats against Indian journalists are carried out, lending chilling credibility to the rest. Gauri Lankesh, an editor who often lambasted Hindu nationalism, was gunned down outside her home in 2017. Pro-bjp commenters celebrated. The man arrested for pulling the trigger told police that his handlers told him he had to do it to “save” his religion.
Intimidation does not always work. Ivan Golunov, a Russian reporter, investigated Moscow city officials buying mansions with undeclared millions and security officers going into business with the mafia. His stories were little known, published on a small website called Meduza. On June 6th police grabbed Mr Golunov, bundled him into a car, took him to a government building, beat him up and claimed to have found drugs in his backpack. The ministry of interior posted nine photos of drugs allegedly found in his flat, but then removed eight of them, admitting that they were taken elsewhere and saying they had been published by mistake.
Mr Golunov’s supporters think the drugs were planted. To the authorities’ surprise, the story spread rapidly on Facebook and Twitter—Russia does not have anything like China’s capacity for suppressing unwelcome posts on social media. Street protesters demanded Mr Golunov’s release. Foreign media picked up the story, which overshadowed Mr Putin’s summit with Xi Jinping, China’s president, that week. An embarrassed Kremlin ordered Mr Golunov’s release. When his new investigation was published by Meduza a few weeks later, it was read by 1.5m people—several times its usual audience.
As the advertising revenues that used to support independent journalism dwindle, many governments have found it easier to distort the news with taxpayers’ hard-earned cash. The simplest method is to pump it into state media that unctuously support the ruling party. Most authoritarian regimes do this. China and Russia go further, sponsoring global media outlets that seek to undermine democracy everywhere. However, the problem with state media, from an autocrat’s point of view, is that they tend to be boring.
So another method is to use government advertising to reward subservience and punish uppityness. In many countries the government is now by far the biggest advertiser, so newspapers and television stations are terrified of annoying it.
A subtler method is to cultivate tycoons who depend on the state for permits or contracts, and urge them to buy up media outlets. Unlike normal moguls, they don’t need their media firms to make profits. The favours their construction firms receive far outweigh any losses they incur running obsequious television stations. Indeed, they can often undercut their independent media rivals, exacerbating the financial distress caused by the decline of advertising, aggressive tax audits, unreasonable fines and so forth. Cash-strapped independent media are of course cheaper for the president’s cronies to buy and de-fang.
Several ruling parties use these techniques. India’s uses most of them, as do Russia’s and Turkey’s. Israel’s prime minister, Binyamin Netanyahu, is accused of promising favourable regulation to a telecoms firm in exchange for positive coverage on a news website it owns. In January, Nicaragua’s most popular newspaper ran a blank front page to complain that its imported supplies of ink, paper and other materials had been mysteriously impounded at customs after it published critical reports about the ruling Sandinista party.
Such skulduggery has even crept into supposedly democratic parts of Europe. Hungary’s ruling party, Fidesz, has used public money to dominate the national conversation. The state news agency has been stuffed with toadies and offers its bulletins free to cash-strapped outlets. “When you get a news flash on [an independent] rock radio station, [it’s] totally government propaganda…because it’s free,” complains a local journalist.
The Hungarian government’s advertising budget has swollen enormously since 2010, when Prime Minister Viktor Orban took power. His cronies have bought up previously feisty broadcasters and websites. “It’s an unstoppable process,” says an independent editor. “Hungarians are used to the idea that online news is free. So [media firms] become reliant on the money of their owners. And many of the businessmen in public life are linked to the government.” Last year the proprietors of 476 media firms, including practically all the local newspapers in Hungary, gave them without charge to a new mega-foundation run by a pal of Mr Orban. Starved of cash, serious journalists find it hard to do their jobs. “It’s practically impossible to investigate even the major corruption stories, because there are so many,” says Agnes Urban of Mertek, a media watchdog.
Meanwhile, in mature democracies, support for free speech is ebbing, especially among the young, and outright hostility to it is growing. Nowhere is this more striking than in universities in the United States. In a Gallup poll published last year, 61% of American students said that their campus climate prevented people from saying what they believe, up from 54% the previous year. Other data from the same poll may explain why. Fully 37% said it was “acceptable” to shout down speakers they disapproved of to prevent them from being heard, and an incredible 10% approved of using violence to silence them.
Many students justify this by arguing that some speakers are racist, homophobic or hostile to other disadvantaged groups. This is sometimes true. But the targets of campus outrage have often been reputable, serious thinkers. Heather Mac Donald, for example, who argues that “Black Lives Matter” protests prompted police to pull back from high-crime neighbourhoods, and that this allowed the murder rate to spike, had to be evacuated from Claremont McKenna College in California in a police car. Furious protesters argued that letting her speak was an act of “violence” that denied “the right of black people to exist”.
Such verbal contortions have become common on the left. Many radicals argue that words are “violence” if they denigrate disadvantaged groups. Some add that anyone who allows offensive speakers a platform is condoning their wicked ideas. Furthermore, as America has polarised politically, many people have started to divide the world simplistically into “good” people (who agree with them) and “evil” people (who don’t). This has led to bizarre altercations. At Reed College in Portland, Oregon, Lucia Martinez Valdivia, a gay, mixed-race lecturer with post-traumatic stress disorder, was accused of being “anti-black” because she complained about the aggressive students who stood next to her shouting down her lectures on ancient Greek lesbian poetry (to which the hecklers objected because the poet Sappho would today be considered white). As Greg Lukianoff and Jonathan Haidt argue in “The coddling of the American mind”:
“If some students now think it’s OK to punch a fascist or white supremacist, and if anyone who disagrees with them can be labelled a fascist or a white supremacist, well, you can see how this rhetorical move might make people hesitant to voice dissenting views on campus.”
The habit of trying to silence opposing views, instead of rebutting them, has spread off campus. In Portland, Oregon, this weekend, far-right extremists are planning to rally, their “antifa” (anti-fascist) opponents are expected to try to stop them, and both sides are spoiling for a fight. When the same groups clashed in June, a conservative journalist, Andy Ngo, was so badly beaten that he was hospitalised with a brain haemorrhage.
Similar intolerance has spread to Europe, too. French “yellow jacket” protesters have repeatedly beaten up television crews. In Britain any discussion of transgender issues is explosive. In September, for example, Leeds City Council barred Woman’s Place uk, a feminist group, from holding a meeting because activists had accused them of “transphobia”. (The feminists do not think that simply saying “I am a woman” should confer on biological males the right to enter women’s spaces, such as changing rooms and rape shelters.)
“It’s nearly impossible to have a free debate [on this topic]. I’ve never seen anything like it,” says Ruth Serwotka, a co-founder of Woman’s Place uk. Today, the group only tells members where meetings will take place a couple of hours in advance, to avoid disruption. Feminists who question “gender self-identification” (the notion that if you say you are a woman, you should automatically be legally treated as one) are routinely threatened with rape or death. Some have faced organised campaigns to get them sacked from their jobs, barred from Twitter or arrested. In March, for instance, Caroline Farrow, a Catholic journalist, was interviewed by British police after someone complained that she had used the wrong pronoun to describe a transgender girl. Another feminist, 60-year-old Maria MacLachlan, was beaten up by a transgender activist at Speakers’ Corner in London, where free speech is supposed to be sacrosanct. ■
By @ArguingIndia
India needs an investment of around $1 trillion a year over the next five years, if Indian GDP is to grow above 10 per cent to create about 70 to 80 lakh new jobs annually to absorb all new entrants to the job market. Finding the required pool of savings, and, more crucially, the entrepreneurs to use this pool of capital productively is a herculean task.
However, as I show below using ideas generated by Peruvian economist Hernando de Soto, a substantial pool of this capital, something like $2-3 trillion, already exists in the country but remains not fully tapped. More than that, some two-three million small entrepreneurs have this capital in their possession but cannot fully deploy it, although they have tremendous experience in running small businesses successfully.
In his book, The Mystery of Missing Capital, Hernando de Soto writes: “Capital is the force that raises the productivity of labour and creates the wealth of nations. It is the lifeblood of the capitalist system, the foundation of progress, and the one thing that the poor countries of the world cannot seem to produce for themselves, no matter how eagerly their people engage in all the other activities that characterize a capitalist economy.”
Developed countries, on the other hand, are awash with capital despite lower GDP growth and abysmally lower savings rates. Why is it that millions of hardworking, self-employed entrepreneurs, who save as much as 35 per cent of their earnings, are short of capital for expanding their businesses, and are unable to break out of the chains that bind them? What keeps them from greater prosperity despite such hard work and extraordinary risk-taking? This is the paradox that Hernando sets out to demystify.
Before we can get set to this task, we need to understand the link between property and capital on one hand, and how and when property becomes full-fledged capital that can be put to multiple uses in the economy, on the other. Property here means any asset an individual possesses – bank account, financial asset, or real estate. We will focus on real estate since self-employed entrepreneurs mostly use this asset for savings.
What is the problem with holding such a property in a slum? As Hernando explains, these resources are held “in defective forms: houses built on land whose ownership rights are not adequately recorded, unincorporated businesses with undefined liability, industries located where financiers and investors cannot see them. Because the rights to these possessions are not adequately documented, these assets cannot readily be turned into capital, cannot be traded outside of narrow local circles where people know and trust each other, cannot be used as collateral for a loan, and cannot be used as a share against an investment.”
Applying Hernando’s model to our taxi driver’s case makes three points clear:
1. The taxi driver’s ownership of the shanty is not visible to anybody in the larger economy due to the absence of a formal title and its registration in his name. He owns the shanty, he has put years of savings in it, but he cannot use it outside of the local slum’s knowledge. The important point to note is that no asset can become property, and eventually a capital that is fungible with other capital stock in the economy, unless it is legally tied to an individual. That is the irreducible minimum in the process of converting property into capital.
2. The taxi driver’s property has a single use. The owner and his family can use it among themselves but cannot use the shanty as, say, collateral for a bank loan to buy another taxi and expand his business or develop his farm back home in Bihar or finance his child’s study in a good professional college. The utility or productivity of his property is, thus, not going to be fully exploited. In other words, the self-employed entrepreneur is hugely handicapped because he cannot reap the full benefit of his savings for want of a formal property system that can recognise the value of his savings – which, incidentally, are real and as hard-earned as any legally recognised savings.
3. The taxi driver’s property is not fungible with his other assets or with other such assets in the economy as a whole. His property is neither proper capital for himself nor others in the economy. In other words, his capital, created out of hard-earned savings, is hobbled, chained and cannot become productive to create wealth for him or others unless we find a way to make it fungible with other capital stock in the economy. That is the mystery of missing capital stock in the third world. It is there but we have not yet learned how to unlock it and bring it into use as full-fledged capital stock.
Hernando says that it is this handicap – lack of visibility, missing individual identity tied to title, and lack of fungibility with other capital stock – that makes it look as though capitalism doesn’t work for the poor in third world countries.
“The enterprises of the poor are very much like corporations that cannot issue shares or bonds to obtain new investment and finance. Without representations, their assets are dead capital. The poor inhabitants of these nations — five-sixths of humanity — do have things, but they lack the process to represent their property and create capital. They have houses but not titles; crops but not deeds; businesses but not statutes of incorporation. It is the unavailability of these essential representations that explains why people who have adapted every other Western invention, from the paper clip to the nuclear reactor, have not been able to produce sufficient capital to make their domestic capitalism work,” Hernando explains.
How can these defects in Indian property systems that prevent recognition of invisible and hobbled pools of capital be cured in order to make them as productive as any other capital?
It requires attitudinal changes and deep reforms in our systems that govern property.
Hernando explains why the process is simple but again not so visible to us. “But only the West has the conversion process required to transform the invisible to the visible. It is this disparity that explains why Western nations can create capital and the Third World and former communist nations cannot. The absence of this process in the poorer regions of the world –where two-thirds of humanity lives – is not the consequence of some Western monopolistic conspiracy. It is rather that Westerners take this mechanism so completely for granted that they have lost all awareness of its existence. Although it is huge, nobody sees it, including the Americans, Europeans, and Japanese who owe all their wealth to their ability to use it. It is an implicit legal infrastructure hidden deep within their property systems – of which ownership is but the tip of the iceberg. The rest of the iceberg is an intricate man-made process that can transform assets and labour into capital. This process was not created from a blueprint and is not described in a glossy brochure. Its origins are obscure and its significance buried in the economic subconscious of Western capitalist nations.”
What is clear is that property systems to govern property and convert it into productive capital stock were invented by Western nations long ago when they faced similar problems as we face in our shanties and slums today. The so-called squatter problem that bedevilled the USA for 100 years in the 19th century is one such example. So, we do have templates to resolve the problem:
“Western politicians once faced the same dramatic challenges that leaders of the developing and former communist countries are facing today. But their successors have lost contact with the days when the pioneers who opened the American West were undercapitalized because they seldom possessed title to the lands they settled and the goods they owned, when Adam Smith did his shopping in black markets and English street urchins plucked pennies cast by laughing tourists into the mud banks of the Thames, when Jean-Baptiste Colbert’s technocrats executed 16,000 small entrepreneurs whose only crime was manufacturing and importing cotton cloth in violation of France’s industrial codes. That past is many nations’ present. The Western nations have so successfully integrated their poor into their economies that they have lost even the memory of how it was done, how the creation of capital began back when, as the American historian Gordon Wood has written, “something momentous was happening in the society and culture that released the aspirations and energies of common people as never before in American history.” The “something momentous” was that Americans and Europeans were on the verge of establishing widespread formal property law and inventing the conversion process in that law that allowed them to create capital. This was the moment when the West crossed the demarcation line that led to successful capitalism – when it ceased being a private club and became a popular culture, when George Washington’s dreaded “banditti” were transformed into the beloved pioneers that American culture now venerates.”
How was it done? Quite simply by recognising that formal law follows custom and what is created by custom in slums and shanties is as valid as any other economic process that converts savings into property and then useable capital. These laws have their own logic, validity, and set of practices that we need to recognise and incorporate into our formal systems. These slums and shanties are decades old. The one at Cuffe Parade is more than 50 years old. The original squatters are all gone. The current owners are third generation occupants who bought these properties with hard-earned savings with legitimate income. These shanties represent a significant portion of their life savings. By keeping them out of the formal property system, we are neither going to get rid of the slums nor can we find a way to use the locked up idle capital productively to create more income and wealth.
Such locked up but idle wealth/capital is huge by any measure. A rough estimate – the total capital lying idle at just one of the slums next to Navy Nagar, Mumbai, is in excess of $3-5 billion. The total wealth lying idle in the Dharavi slum is estimated to be upwards of $200 billion. Multiply these slums across metros and major towns and the unused and untapped hidden capital could be upwards of $2-3 trillion. The slums and shanties represent a huge drain on our wealth for what really requires nothing more than a clear-headed policy towards urban property.
If we can find the political will to integrate the property already present but locked up and idle in the shanties and slums across India, we could set free some $2 trillion worth of additional capital to work for creating more wealth and capital for our self-employed and other entrepreneurs. This is not difficult given the requisite political will.
In the second part of this article, we will return to examine the specific in which this hobbled wealth can be put to use in the economy to boost its productivity and increase our GDP growth rate.
This article has been updated to reflect a change. Hernando de Soto is a Peruvian economist.
By @ArguingUndian
@sonalirande
“Liberals were wrong and have lost,” screams twitter on my time line. I didn’t know if any liberals were actually contesting the election that they have just lost. A more subtle form of the above argument holds that the elections have proved liberals no longer speak for the subaltern classes since the subalterns have overwhelmingly voted for Modi ji who is a subaltern personified. I didn’t know liberals spoke for subalterns because as a liberal I speak only for myself. Politicians speak for others, not liberals. And I do believe it is right to speak of fairness in society, especially when the underprivileged are given the short shrift, and will continue to do so. It doesn’t mean I own the subalterns or that they even care for what I have to say. So why are the liberals the losers here? It is something worth exploring.
Populism is often set up as “we vs. them” where “we” represents the masses that shower adulation on the populist leader. The “them” can be anything opposed to what populism is pushing at any particular point in time. So if populism is pushing Hindu majoritarianism, then the other are minorities, or termites. If populism is pushing nationalism then the other are anti-nationals who love Muslims and/or Pakistan. On the other hand, if populism is pushing right wing orthodoxy then the “them” is communists, urban naxals or tukde tukde gang. Populism by definition is very light on ideology because it aims to attract voters uncommitted to any particular party or ideology and must therefore be all things to all people. Perforce it picks on a vague thing like “Making America Great Again” or “Strong & Resurgent India” as a coverall for all sorts of things. The trick lies in conflating the slogan with the populist leader through propaganda. Now who in her right mind wouldn’t want a “strong & resurgent India”? But since the leader is identified with this notion, the moment you oppose the leader you are ipso facto against strong & resurgent India. On such cheap rhetorical trickery are people branded anti-nationals, urban naxals, tukde tukde gang or whatever. In this gaggle of emerging epithets the liberal is a catchall category for the “other.”
What is a liberal? The fact is “liberalism” has no meaning outside of a context. Who were the original liberals in history? The original liberals were Christians who argued that all souls were equal before God and hence all people should be equals here on earth as well with each being entitled to redemption according to deeds. In time, the first liberal agenda was abolition of slavery and that helped to eliminate the scourge over the following decades starting with the Roman period. Did the liberals of that era remain liberals after the Church was established, slavery tamped down etc.? No. Over time, liberals themselves turned orthodox, defending the Church’s orthodoxy as vigorously as they had opposed slavery. Modern liberalism surfaced with the founding of a number of Universities in Italy circa 1500 that opposed the Church orthodoxy but were Christian in faith nevertheless. Much like Hindu liberals that Hindutva despises. The liberal cause then was that truth could be discovered through the application of reason and that an individual, not church or society [class or caste], had primary agency. Church, or the revealed truth, was not the basis of all that was known or knowable. Truth was something we had to discover through reason applied to facts and experience. And that is what real liberalism is all about. In short, a liberal is an individual who believes truth can, & must be, discovered by application of reason. Now try and find somebody who is not a liberal today in this context? The entire edifice of what we know today is owed to liberals starting with the Greeks of antiquity who recognized no Church other than reason and were rediscovered by renaissance circa 1500.
To be liberal is to be political. For the simple reason that application of reason is what creates new knowledge and new knowledge is what threatens the established order of things. Reason will uncover new knowledge. In fact that is the only way we know how to discover & create new knowledge. There is no other way. And as new knowledge is discovered the priesthood of existing knowledge denies it. The established order ridicules it, laughs at it, points to the inconsistencies it gives rise to, and quotes authority to hold that since the established order is proven over time, the new knowledge & the liberals who back it, are wrong. This sequence is unchanging in time. But as we know, new knowledge gets applied tentatively at first, then with more confidence, and as people gain familiarity & confidence, new knowledge replaces the old. Old authority is set aside & new authority created. Yesterday’s liberals become the new Conservatives and society then waits for the next new thing to emerge. The enduring liberal then is one who not only believes that new knowledge must be discovered through reason but also keeps in mind that, almost certainly, what is discovered today may well be set aside with new discoveries tomorrow. I find it hard to believe how the world at large can fault a true liberal unless of course you are establishment and have something crucial to lose from the new ideas.
As I said before, Greeks worshiped reason and were the first liberals in thought if not in deed. [Plato’s liberalism coexisted with a caste system and slavery, worshipped the Spartan totalitarian dystopia as an ideal and denounced his own democratic Athens as debauchery!] People of Plato’s era would have seen him as a Conservative who preached the ideal of communism to elites & upper castes. In contrast we have Heraclitus who recommended we celebrate change as new knowledge is discovered and would have rubbished Plato’s theory of the permanent ideal that decays over time because it assumes the perfect is already known and there is nothing new to discover. That is an idea that runs through Hindu thought & philosophy as well. Moral of the story? To be a liberal is to welcome new knowledge & to be ready to apply it. That unfortunately is neither simple nor easy. Being a liberal is tough while being a conformist is to go with received wisdom. Bracketing a liberal with an ideology forever is futile and a negation of the very idea of liberalism.
So why are liberals pilloried all the time? Why is a liberal always intensely political? The reason is simple. All new knowledge will always be followed an argument in society about if it is wrong, right, its correct scope, application, changes need etc. And there will be a liberal argument for it just as there will be conservative argument against it. But more than just the validity of the new idea, there is the political. An example from the times of Pythagoras may help. Back then Mathematics was revered much like religion because it was so useful & magical in constructing houses, buildings, bridges, monuments etc. Temples were raised to the glory of perfect rational numbers. Until a mathematician named Hippasus arrived on the scene arguing that there could be no rational root of the natural number 2 and that there many such irrational numbers. There was no way around Hippasus’ argument and so what did his fellow mathematicians do? They took him out to sea for boating and drowned him rather than see their temples demolished! And you thought the Hindutva lot was luddites? New knowledge is usually not as welcome as you might assume from a casual reading of history. As Michel Foucault famously said, every new idea creates its own priesthood. But before it can do so, it falls to the liberals to demolish the old. Which is why we liberals are the permanent enemy of the old & the new establishment. And so rarely found except in the wild.
Liberalism without a context is meaningless and must always be discussed in a frame of reference. Liberals in a communist society argued against communism with as much vehemence as conservatives argued for orthodox totalitarian communism. Likewise liberals in a Capitalist society will argue against orthodox laissez faire as conservatives argue for it. Liberalism is neither pro this dogma nor anti-that. A liberal is against dogma of the left & the right, whether economic or social, because she wants to remain open to the possibility of change but also because dogma inhibits the agency of an individual to pursue new knowledge. Note a liberal is not always anti-establishment either. If for instance you find a society where the individual is celebrated and individualism is encouraged as in the US, then a liberal is very much pro-establishment. Which is why you find liberalism more of a conservative virtue in the US rather than in the collectivism of the left. Liberalism in India is much misunderstood term in politics. Who is true political liberal in India? Very few. The leftists would almost never count among them. Neither would the Hindu right. But a distinction needs to be made here between the personal and society at large.
At the personal level, I can hardly think of any educated person who would not be a liberal in the sense of choosing reason over dogma as the way to discover the truth. Most of us are liberals in that sense. The political liberal though is hard to find. A liberal being one who wants maximum agency, economic & political freedom for an individual, is most unlikely to found in the left parties, communists or Hindu right. Ever since independence India has lost its individuals. They don’t exist. We see individuals only as a part of collective categories – caste, class, religion, student, teacher, haves, have-nots, nationalist, anti-nationalists, male, female, termites, non-termites, whatever. India has lost her individual. And without individuals, there are no liberals. We have reduced liberalism itself to a permanent category of empty ritual. In India the idea of a liberal is still stuck at the level of an individual and has yet to be adopted as a norm for society as a whole. As a society we are steeped in religiosity and conservatism/orthodoxy to the core.
So which liberal lost the election that the populists won so handsomely? The correct answer is none.
India needs an army of liberals to break the chains of economic and political orthodoxies that constrain Indian enterprise and Indian ideas. Our contribution to the world’s store of new knowledge and new ideas over last 500 years & more has been pathetic. Revolutions have come and gone bypassing us while we remain stuck in orthodoxies of an irrelevant past, our economic & political prowess a fraction of what it needs to be. Remember an entrepreneur is a liberal first, an entrepreneur second. And our orthodoxies set up such perverse incentives for entrepreneurs and liberals that we revere those who kill them. No, the liberals haven’t lost because there weren’t any liberals in the fray to begin with. What has happened is that left wing orthodoxy has lost to right wing orthodoxy. That is at best a pyrrhic victory for India. India will win only when liberals & entrepreneurs win and that won’t happen under any orthodoxy, left or right.
By Shealja Sharma @ArguingIndian
Sonali Ranade @sonaliranade
Modi’s victory in 2019 is a triumph of populism over a liberal democracy. Populism has often been defined as an illiberal democracy that relies on majoritarianism but bypassing many of the others aspects critical to a democracy. Populism poses a direct threat to democracy and its institutions. Democracies are uniquely susceptible to populism and have a way of being waylaid by it from time to time. India itself has witnessed a spell of populism under Indira Gandhi in the early 70s that did not play out well and culminated in an emergency where democracy itself was derailed. It is imperative therefore to pause at this juncture to understand what is exactly is populism, and how and why democracies succumb to it. Political scientists have studied Populism’s political character and it well worth reviewing this here in order to be better placed to negotiate the perilous way ahead.
Populism may be defined as a process of political mobilization that transcends party structures and seeks to build people’s support around a charismatic personality by creating a direct link between the leader and people using mass communication technologies like the media, including social media, mass rallies, propaganda etc. The essential difference between a populist mobilization and other forms of political mobilization is that the link between the leader & supporters is direct, non-intermediated by political party or institutions, and light on ideology. The person of the populist leader is the rallying cause per se. The causes he or she espouses are transitory, ever changing according political need, and are usually formulated in such way as to cut across all established political parties and structures. For instance Modi’s appeal to Hindu nationalism is designed cut across the usual caste and class structures around which normal politics has been built so far. Populism also seeks to create a people vs. other paradigm where the other may be economic, social or political elites, minorities, and liberals, whatever. The aim is to fragment existing political structures and attract support of the floating opinion towards the strong & charismatic personality of the leader. The causes could be anything from ethno or religious nationalism, communal polarization, to vaguely structured peoples vs. established elites. The cause itself is secondary but focuses on an existing political fault line.
Populism doesn’t arise in vacuum. It is usually a reaction to something else that happens in the polity or the economy. Looking at the way populist movements arose in history, from that in Germany in the 1930s, to those caused by failing economies in Latin America to our very experience with populism under Indira Gandhi, we may surmise that populism is occasioned by a breakdown in the ability of existing political parties to cope with change in the polity. In the case of Indira Gandhi, the patronage distribution system on which the Congress party was built broke down after Nehru’s death. Without control of the brokers who worked the system, Indira Gandhi had no choice but to resort to populism appealing directly to people with a catchy “Garibi Hatao” slogan over the head of the Congress party. This ruptured the party apparatus, split it into two, but she was never able to rebuild the patronage system in full in all geographies. With that began the decline of the Congress party structures. Elsewhere in the world, populism has arisen out of an economic crisis as in Latin America or collapse of political system as in the post communist soviet system. Presently, we are seeing populist movements in Europe and US triggered by threat of immigration. Whatever be the proximate cause, populism is invariably accompanied by an inability of existing political structures to cope with a discontinuity in the political, social or economic environment.
Closer to our times, we witnessed such a discontinuity in the system occasioned by bankruptcy that necessitated economic reforms. As consequence of those reforms, the patronage system of the Congress party was shattered in 90/91 because they transferred effective power over resources from Centre to States. Effective control of the patronage system had already faced considerable dilution as sub-national actors within or outside the Congress captured power in the States. They developed their own patronage networks and cultivated their own satrapies often using populism as the means to build support for themselves using sub-nationalism & regional pride. We saw such satrapies in Andhra, Bihar, Tamil Nadu, and West Bengal. Indeed we saw one in Gujarat under Modi himself. This shattering of the patronage system within the Congress party structures at the Centre created a vital power vacuum that was never filled under Sonia Gandhi or Manmohan Singh. Irony is that Congress lost power because it dismantled its own funding model without creating an alternative. It is not corruption but lack of it under UPA I & II that led to its downfall. Which not to say there were no corrupt ministers in UPA. Merely, that the funds they raised didn’t get to the central kitty. Which perhaps explains the alacrity with which BJP filled the vacuum with anonymous electoral bonds. Corruption is now fully sanitized & legal.
Modi’s populism is therefore a reaction to the breakdown of the patronage system and an effort to resurrect it under a different name. However, Modi’s populism is not just the garden-variety pure populism. Political mobilization is usually characterized as progmatic, patronage based or populist. A core of progmatic political mobilization represented by the RSS and its vast organizational & ideological resources backs Modi. This progmatic agenda of the RSS relies heavily on communal polarization as well as upper caste opposition to affirmative action. It is anti-Muslim and anti-lower castes. This core however cannot produce the required numbers for electoral domination of the polity. Historically, BJP’s vote share has struggled to get past the 25% mark. Modi’s utility lies in energizing this core with Hindutva and adding to the core with a lot of floating supporters and unattached voters attracted by his personality as strong leader who has a vision of a strong and prosperous India. That this additional layer of support is ideology-thin is by design, not accident. The lack of a clear-cut ideology/program gives him flexibility to go for whatever sells at the moment. It also has the effect of amplifying the Hindutva message which otherwise would be restricted to just the core.
It is also essential to realize that Modi’s populism is the effect of, not only the breakdown of the established patronage system of the Congress, but also a deep response of the people to the populism of populist leaders at the regional and/or State level. Modi did not invent populism. That form of political mobilization has long been in use in States be it Tamil Nadu, Andhra, West Bengal, Odisha, Gujarat, Mumbai, Bihar and even Uttar Pradesh under many regional populist leaders like MGR, Karunanidhi, NTR, Mamata Banerjee, Patnaik, Lalu Prasad Yadav or Mayawati. They were all ideology-thin, non-patronage based political players, who built their parties around a single idea, ranging from regional autonomy in Tamil Nadu, caste based mobilization in UP/Bihar, to regional pride in Gujarat, Bengal etc. Shiv Sena in Mumbai began its politics as labor union busting organization favored by tycoons but latched on to Shivaji & regional Maratha pride later. So populism is not something new. However, these regional populisms have asserted themselves against the center at times, and are seen as centrifugal tendencies that are gathering strength. At times, populism can only be fought with populism. Modi has been able to build his version of populism as something countering fissiparous trends in the polity, vaguely portrayed as misguided liberalism, minority appeasement, regionalism or separatism, etc. It helps that the Border States like Kashmir, Punjab, Bengal, Assam, Tripura, even Kerala with its Dubai connection, have higher percentage of minorities and have been among the first to fall to regional populist leaders. Tamil Nadu too falls in this category but for a different reason. This feeling of a latent sub-nationalism led by populist regional leaders evokes a counter in the form of Modi’s potent nationalistic appeal. Whether it is the right response or not is a different matter. What is important is that Modi is not the only populist in town.
Congress has largely failed to grasp the emerging political challenges after PVNR. The failure began not with Rahul Gandhi but his mother and at two levels. Firstly, despite the stunning success of 90/91 reforms, Sonia Gandhi failed to take pride in them and rebuild her party around them. Instead she continued the party’s hugely dysfunctional and largely futile alliance with a Marxist cabal around her that frustrated all meaningful reforms after PVNR. Secondly, she was unable or unwilling to rebuild the patronage systems her party depended on and allowed a free for all system to evolve that amplified the perception of corruption in her party. There is simply no escape from the reality of party funds. If you don’t centralize them, you hand over the party apparatus to regional satraps and pay a double price. Corruption not only increases but you cannot escape the blame for it. So under Sonia Gandhi, not only did the Congress lose its ideological moorings to economic reforms but gained a stench for corruption, – largely unjustified and grossly exaggerated – that it has been unable to shake off since.
Rahul Gandhi has been unable to rebuild the Congress party as per his dreams despite a decade of trying. But like Sisyphus, he keeps trying to roll his heavy rock up the hill in the same way as before, hoping for a change of luck. Just as there is no free lunch in a dog eat dog world, there is no such thing as a lucky break in highly competitive politics. The fact is RG will never be able to rebuild his party the conventional way because the building blocks no longer exist. As his party’s empty treasury should tell him, the old patronage system is gone from his grasp. It has been captured by Modi-Shah and they aren’t about to do him any favors. Without funding party machines cannot be kept in good repair. They wither away. Congress now faces the uphill task of finding a charismatic leader who can fashion a populist movement to take on the party juggernaut of the BJP. It is an advantage that his party once enjoyed. Now the shoe is on the other foot. Short of populism, there is simply no other viable alternative for political mobilization available to the Congress any more. In short he has to the charismatic leader with a powerful populist program that can work on a shoestring budget or it is game over. He has no other choice.
What of the polity? It is hard to say how this “national” populism vs. regional populism will play out. The future is portentous. We can pretend everything is normal now that we have a strong popular leader at the center. But two things should be clear. India is a State with 20 odd potential nations who fulfill the criteria of a distinct people, culture, history, language and geographical contiguity. The regionalism that we see at the periphery is well grounded in latent sub-nationalism. The glue that holds the Indian state together against the regional pull of latent sub-nationalism is a common market, common law, growing economy and most important of all, lived experience. What does not hold it together is a “strong center”. RSS may fondly hope that Hindu-Hindi-Hindustan will hold everything together but this is far from proven. We will never be able to resort to coercion, alone or in a major way, to hold the periphery. We will hold them only through a shared vision of the future.
Populism will not suffice to tamp the divisive forces arising out of stoking of Hindu sub-nationalism that has become the defining signature of the Hindu Right. If anything, it will accelerate the fissiparous tendencies by legitimizing sub-nationalism and provoking regional leaders to exploit it in order to cement support for themselves. Tamil Nadu provides a classic example of how to build a two party regional political system that shuts out pan-India parties. The model can be easily copied in other states as well. The Hindu-Hindi-Hindustan formulation has very limited appeal. That fact should not be obfuscated by the pan-India appeal of Modi. Nor should we buy the idea that Hindu nationalism per se will unify the polity. India is just too diverse for that. We should also not forget that no meaningful economic reform is possible without real economic decentralization and the latter is impossible without regional autonomy.
Wisdom demands Modi dial back on Hindu nationalism. It has served its limited purpose. If at all it had a purpose. Wisdom demands Modi moves to restore the critical institutions of the State & dial back on the cult building around his persona. And wisdom also demands opposition parties sit down together & evolve a common program. If they don’t hang together, they will hang separately.
Populism has rarely ended well despite good intentions. It is inherently illiberal and impatient with democracy and rule of law. It is impelled to justify every shortcut with the mandate that the populist leader enjoys. It refuses to abide with checks and balances of institutions. And it has scant respect for dissent. It is impossible to say how India’s second tryst with unabashed populism at the Centre will end. We can only hope rule of law, democracy and its institutions & the innate good sense of our people will prove enough of a check against its excesses.
The basic problem is that because Modi ji kept the INR over valued to the $, it became cheaper to make a Ganesh idol 4 puja & ship it to Mumbai rather than have the same thing made at Urnoli, in Uran District,a village some 30 km from Mumbai wiping out artisans of generations.
he village in Urnoli has made these idols 4 generations. It is located by a backwater Channel to Mumbai harbour, home to lots of clay & free water. The idols are made by hand by families. They are dried in the sun & painted by hand. Used once, they have no further value.
So you see my case? Clay is free, so is water & sunshine. Colouring paints & wooden scafolding are the only raw material which costs less than 5% of sale value. The idols are transported in mini-tempos at night to Mumbai. The only major cost is labour. So …
… we have a village, 30 km from Mumbai, unable to competitively sell a low tech product requiring little more than skilled labour to make against imports from China?
How is that even THINKABLE? Yet it is true across a swathe of industries. What economic factor accounts 4 this?
The example implies manufacturers in China are virtually using slave labour at slave wages in order to be able to compete with labour in Urnoli. Or that the INR is so highly overvalued in relation to the Renminbi, that to workers in Urnoli, Chinese labour is cheaper by that much.
Note there is no slave labour in China. And here we are directly comparing wages in China with wages in India. Now since wages in India are cheaper, the only thing that makes Urnoli workers uncompetitive in India’s over-valued INR or dysfunctional exchange rate policies.
The problem predates Modi ji’s 5 years. But the exchange rate problem was exacerbated by Modi ji’s penchant for strong INR. He had to retreat in the face of an explosive rise in crude but the bias continues.
Now there are a army of sarkari economists & others there who will point REER to me. All I say to them is REER itself is bunkum. Firstly despite REER we have hair-cut devaluation every decade or so ranging from 15 to 20%. If REER worked, these devaluations would be unnecessary
Second, in the Urnoli idol case we are directly comparing Chinese & Indian wages. 4 all practical purposes, there are no other costs involved except transportation. 30km in one case, 3000 km in the other. So how does China beat India in Mumbai?
You can go to Urnoli’s villages 2 ways. Firstly via JNPT by ferry/car. Or you can turn off from the Goa Mumbai highway after Pen going towards Mumbai. You can’t miss the turn now that it has flyovers etc. The place is beautiful 4 bird lovers. Verify & tell me how this works.
That is the tragedy of our Sarkari economists. They dare not go beyond sarkars models to apply their trade. They don’t ask stupid questions like me b/c they can’t afford look stupid.
As you can see from the map [load it into your Google Earth] the clay & water are both abundant & free & there villages I speak of are on the banks of the channels. The place is home to millions of sea birds.
sonaliranade 