August 20, 2005

Only way

"The only way", they'll say confidently, though often in sepulchral tones. "This is the only way to tackle poverty, there's no alternative." They'll point to Singapore and Taiwan and other Asian tigers, saying, "Look at them! They followed it!" And they'll sit back, sure that they have proved the worth of "the only way."

Free markets, they mean.

And me, a faint alarm goes off. Not because it's free markets -- not at all -- but because "the only way" smacks a little too much of faith, cuts a little too close to religion.

After all, every religion speaks that language -- the only path to god, or salvation, or fulfilment and inner peace. As every religion must. The flock must stay in line, or they might get tempted by some other faith that talks of the one path, of its only way.

By now, I'm sceptical of looking at the world this way. With religion, I believe it has caused great misery, always in the name of good. My faith in the supremacy of my way makes me intolerant of others who find their own. Too often, my faith persuades me that I must torment them until they see I'm right.

And this -- leaving aside the misery and torment -- is too often how free marketers sound.

Two caveats. First, I believe the policies of the past have largely failed us. Whatever that thing was that we followed in India for 45 years -- socialism, statism, whatever -- it too was always sold to us as "the only way" to tackle poverty. It didn't. When we turned away from it, there were more desperately poor Indians than there were Indians at Independence, which says it all. Yes, there are food for work programmes, employment guarantee schemes, which address poverty head-on at least in some places. But overall, Indian socialism has failed the poor.

Second, therefore I believe the reforms we embarked on in 1991 had to happen. There were many reasons, but for me the fundamental one was the miserable lives too many Indians lived. For me, the reforms were an effort to address that misery. They had to. Their promise was that Indian poverty would start to disappear; that relatively soon, we would not easily see the kind of squalor we had got inured to in this country. Not because we push the squalor under a Shyam Ahuja dhurrie, but because the reforms would truly reduce poverty.

By now, we've had 15 years of reforms: enough time for some change, surely. After all, in that time the change in our urban landscape -- malls, multiplexes, spanking new cars -- is stunning.

Yet the squalor? It's still easily visible.

Buy a coconut on the seaside promenade near my home, and a scrawny woman will plead with you for the flesh. On Tulsi Pipe Road, hundreds of huts have been there 40 years and more, their residents asleep on the road every night. Stroll past the piles of garbage that dot this city and watch dogs and pigs and kids searching through them.

Why haven't the reforms made such sights harder to find?

And when I see these things, as years pass and I see them still, I begin to wonder: is something wrong with how we are pursuing reforms? Is something wrong with our experiment with free markets, as something was wrong with our experiment with socialism? Is something wrong with free markets themselves, as applied to India, as something was wrong with socialism itself?

Ask those questions out loud, and the free marketers object. They do not see that the continuing visibility of poverty is itself a reason to worry about reforms -- even among people, like me, who welcome reforms. They do not understand that such people might find the old socialism repellent anyway. No, if you have even small worries about reforms, free marketers say you want to return to socialism, and will label you accordingly: "leftist", "statist", "pinko".

And then they start on "the only way." Instead of questioning it, they say, your questions themselves should spur you to sing its praises even louder, persuade the masses that the benefits of reforms will "trickle down" to them "eventually".

Until "eventually" comes around, the masses must wait.

The free marketers seem unable to understand, above all, that some among those masses have seen the sweeping changes in middle- and upper-class lives, in our urban landscape, in the last decade. And they ask, why aren't our lives changing, even if not so dramatically? Why do I still have to queue for water, or send my kid out to beg and work?

They think, we were asked to wait under socialism, we're being asked to wait now. What's the difference?

A final parallel to religion. You might be an agnostic, repelled by religion but equally, unable to see rationality in atheism. In the same way, you might be repelled by socialism, but equally, unable to see the fruits of free markets falling where they should. Just as atheists find agnostics even more annoying than the religious, the free marketers glower at the questioners even more than they do the socialists. How can you reject socialism -- or religion -- and still not see "the only way"?

The answer, as with most things, is that tackling poverty needs a mix of approach and ideology. For the lesson from our experiment with socialism is not just that it failed. More important, it showed us the perils of "the only way."

***

Thanks to Anand for comments on an earlier draft of this piece. I plan to work on it some more to send elsewhere; your comments welcome.

40 comments:

Shrinivas said...

Great analysis and I appreciate your watchful thoughts and the way you narrated it. I too feel the part of religion has been the highlight of this content. I do good I feel good, I do bad, I feel bad thats my religion, I am in that category.
Free market or anything, if there been a power to make a end to poverty, lets realise it.

Abi said...

Well, Dilip, I can hear the footsteps of free market fundamentalists, on their way to pounce on you!

Our government spends a lot of money on 'poverty eradication'. If it has not worked, it is certainly not for the lack of funds. Clearly, there ought to be better methods of pursuing this goal, but we seem to be lurching from one scheme to another.

The latest seems to be the Employment Guarantee Scheme (EGS). Jean Dreze wrote recently about how its precursor program (Food for Work) was going astray; he clearly pointed out where the 'leakage' occurs. I was truly distressed to find that at least one pundit mocked Dreze who, unperturbed, has gone ahead and suggested viable ways (using the newly enacted Right to Information Act) in which EGS can be made to work, and work well.

It would really be nice if management experts (in particular, the free marketers who claim to know a thing or two about how things really work) come up with ways of helping the poor; the government, after all, is willing to foot the bill.

I too find it tiresome when someone goes on and on about the great virtues of 'the only way'. There are quite a few countries (in particular those in Scandinavia) that have married socialism and capitalism in a socially fruitful way.

Hemamalini said...

you have contradicted yourself in your own statements.Few blogs back, you have mentioned that social help like vitamin tablets have to be done away with because they don't reach the poor..and now u say that there are no social efforts taken!
i guess the problem is not at the source or the receiver,but somewhere in between where someone has to explain the connecting - 'why?'

annie said...

Besides, there is no such thing as a free market...
If market forces determine everything in a capitalist system, how do you explain social security? Why is it such a huge issue in the USA?
And why do people ninny and neigh with fear of the 'economic burden' when we want to introduce social security measures (of which the EGA is a part) here? Why is this not perceived as one more step towards the path taken by the developed nations?

km said...

Dilip,

Thanks for this Saturday morning brainfeed.

The religion analogy is an apt one. As the great Oriental sage Bruce Lee once said, do not look at the finger pointing to the moon, look at the moon. There are 1.6 billion Indians. It is indeed absurd to expect one model to serve them all.

But policy-makers and policy-implementors must try, do and experiment. And it seems there lies the challenge.

Krishna

Anand said...

Dilip -- I do hope this post generates some thoughtful discussions.

Abi -- Thanks for those pointers. Dreze has a convincing argument that corruption cannot be an excuse to abdicate state's responsibility to protect the right to work. His example of how muster roll fudging was fought in Rajasthan was indeed enlightening.

rubbersoul said...

Some excellent points made Dilip. I think there's no doubt socialism of the sort that is practiced has pretty much failed everywhere, but that being said, the whole point of government is to provide certain basic necessities for its citizens.

If the government would have concentrated on basic social and economic sectors like education, healthcare instead of sticking its fingers into everything and making a pigs breakfast of it all, we would probably be in a better state now.

Abi said...

Hi all, I am sorry to barge in with yet another link. This one is to T.N. Ninan's signed editorial in yesterday's (Saturday, 20 Aug 2005) Business Standard. Ninan starts with, "I want to be on the side of the angels, with the people rooting for the new employment guarantee Bill", and goes on to pour a lot of cold water on it.

Interestingly, he points to Dreze's original ToI piece, Surjit Bhalla's mocking rebuttal in BS and Dreze's measured response in ToI (links in my previous comment). How does he respond to Dreze's proposal that civil society groups must keep a vigilant eye (as they did in Rajasthan, using the RTI act) in curbing the main form of corruption -- namely, fudging the muster roll? Ninan dismisses it with a rhetorical question: " Is it realistic to expect the replication of Rajasthan's NGOs"? That's it!

On the other hand, if the government spends 40,000 crores on a program meant to benefit the poor, is it too much to expect NGOs and other civil society organs -- including 'business' newspapers -- to keep a close watch and expose the irregularities?

IMHO, the EGS is different from all other earlier schemes -- employment (even if it is only limited to 100 days, and pays low wages) is now a 'right'. Those folks who are conscious of their rights (and emerging political formations -- such as Dalit-oriented parties -- that align themselves with their interests) will now get into the act, and hopefully, help ensure that EGS is not derailed.

Sunil said...

This has the makings of a great discussion, thanks Dilip.

I think the EGS is bound to fail, and the reason is the opposite of what Abi's saying

and emerging political formations -- such as Dalit-oriented parties -- that align themselves with their interests

I think it's going to be derailed because most emerging political formations (AND the existing ones) have very narrow or parochial interests, and will allow the EGS to work only for their own interests.

And yes, Socialism in it's indian avataar has failed quite miserably. That's because the state has failed in its basic duties; urban and rural planning, basic means of mass transport, water, power, access to food, removal of middlemen and transparency. Instead it has wasted it's resources on huge, grand schemes, when much more could have been achieved with more commitment and less hot air or wasted resources.

Dilip....you're right in that the sceptics (or agnostics) are disliked the most. At least, with athiests, they have a concrete belief, and so it's easy to bracket them. But if some one is questioning you rationally, and constantly, you don't like it.

Anirudh said...

Excellent post.

I don't have an opinion in this matter as my knowledge of economics and economic systems is unfortunately, poor.

But "the only way" argument- how right you are!

Dilip D'Souza said...

Just one quick response as I'm rushed now (more later):

Hemamalini, I have simply no recollection of saying vitamin tablets should be done away with. Can you refresh my memory with a pointer? Incidentally, I enjoyed you in Sholay, which I saw recently.

Anonymous said...

Dilip, you ask why the reforms haven't worked in reducing poverty. The simple answer is: they haven't been carried out in the areas that benefit the poor, and have been extremely limited in scope. Amit Varma explained this very well in this piece in the AWSJ.

Also, you caricature believers in free markets. They believe in free markets not out of faith but out of reason, because all the evidence points to economic freedom being directly linked with prosperity. Do you have any to the contrary?

Rgds

Mahesh Rao

Gautam said...

Hi Dilip,

I empathise with your perceptions of poverty and destitution in our country. I also agree that reforms starting in 1991 were a consequence of the horrid anti-people policies of the socialists.

However, I don't think you fully understand the meaning of markets and free markets. Markets are not about just one way, they are about discovering the rights way*s* to produce things, and fulfil demands. Markets don't involve just one blanket solution, but a myriad of tailor made solutions suited to particlar circumstances.

I am one of 'them', but only partially so. I don't believe that other countries that have adopted freer-markets are in anyway a sufficient argument for India doing the same. I think that they are good examples of what might happen. India being what it is should expect much more to happen and at a far greater degree of complexity than these countries.

The poor today are as subject to the licences and permits raj, as they were 15 years ago. The overt removal of the Licence Raj, has only given way to a complex regulatory mechanism for formal industries. A mechanism that can be manipulated by wily industrialists. For the poor though there has been no respite.

You are welcome to your views, but do consider some of the less apparent facts about "reforms", before reaching a conclusion about the culpability of free markets for maintaining mass impoverishment.

Gautam said...

Hi Dilip,

I empathise with your perceptions of poverty and destitution in our country. I also agree that reforms starting in 1991 were a consequence of the horrid anti-people policies of the socialists.

However, I don't think you fully understand the meaning of markets and free markets. Markets are not about just one way, they are about discovering the rights way*s* to produce things, and fulfil demands. Markets don't involve just one blanket solution, but a myriad of tailor made solutions suited to particlar circumstances.

I am one of 'them', but only partially so. I don't believe that other countries that have adopted freer-markets are in anyway a sufficient argument for India doing the same. I think that they are good examples of what might happen. India being what it is should expect much more to happen and at a far greater degree of complexity than these countries.

The poor today are as subject to the licences and permits raj, as they were 15 years ago. The overt removal of the Licence Raj, has only given way to a complex regulatory mechanism for formal industries. A mechanism that can be manipulated by wily industrialists. For the poor though there has been no respite.

You are welcome to your views, but do consider some of the less apparent facts about "reforms", before reaching a conclusion about the culpability of free markets for maintaining mass impoverishment.

Eswaran B said...

Dilip,

I doubt if you can find many supporters of free-market systems in India who do so just out of 'faith'. I hope you realize that you are painting all supporters of capitalism in one brush - it might make good reading, but it isn't true.

If anything, there are many many more believers in the 'evils of capitalism' who will not be able to provide a reasoned explanation of what they say they believe in.

Come to think of it, if we had a debate about choosing between democracy and authoritarianism, most supporters of democracy would do so just out of their faith, and not because it has been proven to work.

Gaurav said...

is something wrong with how we are pursuing reforms?

Yes, not enough reforms

Is something wrong with our experiment with free markets, as something was wrong with our experiment with socialism?

There is something wrong indeed. Only reforms which "free" the middle class have been implemented, that too partially. Reforms which "free" the poor are still a dream.

Is something wrong with free markets themselves, as applied to India, as something was wrong with socialism itself?

We can judge that only when free markets are implemented in full measure, the way socialism was.

They think, we were asked to wait under socialism, we're being asked to wait now. What's the difference?

Even now, they are suffering under socialism.

Gaurav said...

I work in the "posh" Bandra Kurla Complex. One day I spied a panipuriwallah outside my office. I rushed over, and downed a plate of panipuri. When I asked him how much I had to pay, he said 10 rupees. Usually street panipuri costs 5 rupees. I guessed he was charging the oremium as he was the only panipuri vendor in the whole BKC area.

A few months later, after having provided him business running into some hundred rupees, I had established enough of a rapport to have a frank conversation with him. I made a friendly comment about how he must be making good money, selling panipuri at twice the price, in Bandra Kurla Complex.

He smiled wanly and recounted his tale. When he bribed his way into being permitted to sell panipuri at BKC, he thought he would make a lot more money than he did selling it on the streets of Kurla. After all, he could get more money from the rich clientele here. However, the cops, and the corporation officials were always taking their "cuts" of the pie for letting him do business, and left him with pretty much the same income he had in Kurla.

In the story of this panipuriwallah lies the answer to what is wrong with reforms. For him, life hasn't changed at all. Not only does the socialism prevent him from making a living without bribing someone. It also prevents him from benefitting from the so-called "trickle-down" effect. Today, I make a lot of money and can afford to pay him 10 rupees for panipuri. Sadly, the extra money I am willing to pay, thanks to the job I have gotten due to liberalisation, goes not to him, but again to the rentiers in the vast stil-socialist government set-up.

Dilip D'Souza said...

Thanks all for a thoroughly thought-provoking back-and-forth so far, and I hope it goes on.

Abi, I read the Dreze/Bhalla/Ninan pieces, and I share your distress at Bhalla's tone. Apart from that, I do think (like you) that this EGS is a landmark. For being different from previous measures, yes; but even more so, for being in place at the same time as we have RTI also in place.

(And Sunil, this is for you) This is why I think this EGS can succeed. Dreze mentions the success of RTI in curbing those muster-roll violations in Rajasthan; I've seen examples of it working here in Bombay, in matters ranging from the issue of a ration card to huge land deals. The point about RTI is that it empowers every single citizen in a way that no other law ever has, and if enough people start using it, it has the potential to transform this country.

I realize this is not strictly germane to this discussion, but since Dreze mentioned RTI, I thought I should underline that.

One of the most active and creative users of Maharashtra's existing RTI is going to be speaking about his experiences this week at two different places in Bombay; if you're interested in hearing him (and he's good), send me email and I'll tell you where/when.

More in the next comment.

Dilip D'Souza said...

Annie, a good thought. Why indeed shouldn't such things as EGS be viewed as steps towards being "developed"? Anyone else?

Sunil, one more point about your comment: those political formations you mention will continue to pursue their own narrow interests, and we should not expect any different. The challenge is to use that pursuit itself to make a larger collective aim realizable. Incentive schemes and policies must work that way.

Gautam, thanks for your explanation, and you give me things to think about. I think this is something for all of us to reflect on: India being what it is should expect much more to happen and at a far greater degree of complexity than these countries.

But I have not concluded that free markets are "culpable for maintaining mass impoverishment." I'm simply questioning our approach to the reforms process so far. To me, it seems something is wrong. I suspect that much like in your sentence I quoted above, that "something" is much more complex than just "free markets" or "socialism".

Eswaran, please understand: I have not claimed that people support free markets out of "faith". Some of the free market supporters I know are among the brightest people I know, and I respect that too much to believe "faith" is involved, whatever that means. They came to their beliefs through reason and thinking, much as I believe I came to mine, and I understand and respect that.

What I did say was, when people speak of "the only way", that sounds like religion to me: whether they say it of socialism or free markets.

I'm very wary of people who use language like "the only way", or "there is no alternative." As krishna says, a nation of a billion people is itself is an argument that no one way can work by itself.

Monish Rao, whether I do or not would be easy to find, accept that I am not interested in doing so.

iu said...

Dilip,

Most proponents of free-markets I have met had very well-reasoned, non-ideological arguments for their positions. I suppose you meet different "free-marketers" than I do.

I think that you grossly misrepresent the opinions of those who are pro free markets. From my experience, again, most would not argue that India emulate the policies of the East Asian tigers.

> Their promise was that Indian poverty
> would start to disappear; that
> relatively soon we would not easily see
> the kind of squalor we had got inured
> to in this country.

You state your expectations and then argue that pro free-market policies have not met your expectations. Though my expectations are different (and, in my opinion, more realistic) than yours, it hasn't met those either. Like a few other commenters, I would argue poverty can be eliminated at a higher rate if India implements more pro free-market policies.

Dilip, I find your writing interesting because though I disagree with almost all your opinions, I think it's important to understand your perspective. However, I would be extremely disappointed if this article gets published. It has several straw-man fallacies -- you make sweeping and erroneous generalizations about "free-marketers" and then proceed to argue against the caricature that you construct.

In particular, I cringed everytime I read sentences like: "They do not see that the continuing visibility of poverty is itself a reason to worry about reforms", and "free marketers...will label you accordingly." I am pro free markets and I would not label you. Neither would most "free-marketers" that I've met. It is ironic, however, that you seem to have decided that those who throw labels around are representative of people who argue for free-market policies.

-iu (iu00007@yahoo.com)

Dreamer said...
This comment has been removed by a blog administrator.
Dreamer said...

Dilip,

What is the point in questioning the effectiveness of an economic policy, when it is the implementation that is flawed? Be it free markets or socialism, when the political and bureaucratic machinery that implements the policies is corrupt, indifferent and ignorant, how can one be sure that it is the policies that have failed? Is it not a classic case of sparing the poor carpenter and blaming the tools instead?

Sriram said...

Quote - "And they ask, why aren't our lives changing, even if not so dramatically? Why do I still have to queue for water, or send my kid out to beg and work?"

The whole economic angle aside, Dilip, these lines just smack of condescension and arrogance. The idea that poor people cannot better their lives on their own and have to necessarily wait for some central policy planner to enrich them is very wrong.

You make your money every month, not because someone takes pity on you, but because you provide a service that others need and therefore (willingly) pay for it.

What makes you think that poor people would have no such thing to offer?

If you don't think that way and poor (or rich) people do have something to offer, then they would get paid for it in the free system. With that money, they could buy their water and stop sending their kids to beg.

Do you understand the concept of earning money? If you do, what makes you think only some people can do it and others cannot? Why do you assume poor people can get money only through forced charity?

Sriram said...

Dilip, would it be fair to say that you religiously believe in not religiously believing in anything?

There is nothing wrong in belief, nor is anything provably better about a "mixed" approach.

The issues arise only when the belief tends to be totally blind without any regard to logic or reason. Such people quickly learn to disregard any logical argument against their position.

I can logically argue against this post of yours (as I have done many times before), but I am not sure you will be interested - you seem religiously opposed to rationality!

Anonymous said...

All the man is suggesting is that there is room to revamp our economic policies today. Maybe dab them a little with socialism or make them do a wholly new tango.
And that old retort of -are you religiously inclined against religiously beleiving anything- when someone is challenging any 'only way', cuts no ice.

Abi said...

Following up Dilip's comment on the new powers that the citizens now have through RTI: here is an Outlook profile of Uday Gosain, a software engineer in New Delhi, who, with the help of an NGO (Parivartan, in this case), has been able to achieve so much in such a short time.

Another commenter pointed out that it is the implementation that is at fault, and I believe it is true to a some extent; we, as a socity have not done a good job of creating systems for effective implementation of policy. I believe it is possible for EGS (with a great deal of help from RTI) to succeed. It requires a certain level of vigilance; as long as we have a large number of watchful eyes, the entities behind those eyes are largely irrelevant -- they could be NGOs, the press, or even political parties. If it is political parties, they do stand to gain a lot. Even if the parties are not interested, it still makes a great deal of sense for the press (and NGOs) to take an active interest, simply because EGS is such a grand program in terms of its profile, visibility and, of course, the money involved.

Dilip D'Souza said...

iu, when you say:
Most proponents of free-markets I have met had very well-reasoned, non-ideological arguments for their positions,

how is that different from what I say in my previous comment here:

Some of the free market supporters I know are among the brightest people I know ... They came to their beliefs through reason and thinking, much as I believe I came to mine, and I understand and respect that?

Of course those were my expectations from the reforms. Can you tell me why it is unrealistic to expect that Indian poverty would start to disappear?

Please do point out the straw-man fallacies you find. That's why this article is up here. But do expect that I will defend what I say, if it is worth defending. That's also why this article is up here.

I'm glad to hear that you wouldn't label me. For better or worse, most people I have argued with on these lines -- including but not limited to some on this page -- have indeed fallen back on the labels. There seems to be a belief among them that (as someone else said, I forget who) the label "leftist" is like Bhima's mace -- you can use it and then sit back, thinking your job is done.

Not, you understand, that I mind the labels in the least. But the labels don't answer the concerns.

Finally, I think it is important to understand your perspective too. That too is why this article is up here. So don't be disappointed if this gets published somewhere (where, is another question!).

Dilip D'Souza said...

Dreamer, I think the "implementation is flawed" argument only goes so far. For example, people kept making it about the USSR ("communism is fine, it's the way the USSR implemented it that's the problem"). But if after 70 years all you've produced is misery and this argument, which was the USSR's condition in the mid-80s, I think you've got to start looking at the policy/ideology too.

How do you ensure proper implementation of a policy? I think the policy itself has to take that into account.

Sriram, you accuse me of "condescension and arrogance" because I relate to you questions that people have asked me. Fine, if you like.

But in response to the questions, you say: The idea that poor people cannot better their lives on their own and have to necessarily wait for some central policy planner to enrich them is very wrong.

Tell me, did the middle- and upper-classes, "on their own", suddenly get access to cars and consumer goods and opportunities for entrepreneurship? If so, why did that not happen on the same scale between 1947 and 1991?

The answer, these things happened when our governments since 1991 changed their policies.

So there are people who have asked me, if these policies have changed, if they are visibly changing your lives, why is my life the same?

Reporting this conversation to you is "condescension and arrogance"? Where have I spoken of "forced charity"? Please point me to it.

As for your second comment here, I haven't claimed there is anything wrong with belief. Believe what you like, please. I am saying, I am wary of people who speak of "the only way".

I welcome your arguments against anything I write anywhere. But please try hard to understand that just because I argue back, it doesn't mean I am "religiously opposed to rationality." It means that these problems we are trying to debate are hard ones, with equally reasoned positions on each side. If you think I'm going to roll over and say "You're right" just because you think you offered a cogent argument, you think wrong. And, may I add, short-sightedly.

Sunil said...

Thanks for taking the time to post replies to most comments Dilip.

Amongst other things the EGS can work if the RTI is pushed through. But given past history with the Indian system, I think the only RTI that comes out of the system will be one that is shrouded in bureaucracy, where actually accessing the information will be an exceedingly difficult task.

The EGS should focus on creating an environment which provides employment, by creating an environment for it. Somehow, the way it is being pushed forward, I don't see that happening. But then, I definitely am not saying that it WILL fail.....it might work, and I'll be very happy if it does.

Till then, i'm waiting for the balance between socialism and capitalism that works. I don't think i've seen that yet.

Dilip D'Souza said...

Sunil,

Maharashtra has a RTI that the man I mentioned (who is speaking this week) has been using for all kinds of things. It's not that he has had no problems getting his information, but a creative, dogged user of that law is hard to keep turning away, which is what he is finding. The law even has teeth in the sense that the designated PIO (public information officer) in each department concerned is to be held personally liable -- with the fine coming from his salary -- if the information is not supplied within 30 days.

It's a different matter that these teeth may not often clamp down; it's a different matter too that Maharashtra is considering shutting down the law. The point is that it's there now, and if it is used, it will gather a momentum of its own. More important, if it is used, GoM will find it difficult to repeal it easily.

The difference I see in the RTI is that it empowers not some faceless bureaucrat, but each one of us. But -- an important but -- only if it gets used.

And using it in conjunction with the EGS is the way to make the EGS work as well.

Perhaps this is hopelessly idealistic, I don't know -- but the fact is, there is this powerful tool available to us right now. It's worth using it to see how far it will take us.

Dilip D'Souza said...

I got reminded, offline, of this fine article that covers much of the ground we are discussing here.

iu said...

Dilip,

Your article contains straw-man fallacies because you attribute several opinions and attitudes to "free-marketers" that are hardly universal. You repeatedly construct phrases like "...how free marketers sound" and "...the free marketers object" and "They do/do not..." First, I'd argue that it is tough to generalize the opinions of free-market supporters (they come in different flavors). Second, most free-marketers I've met contradict your characterizations. For instance, I certainly would not object to anybody questioning the reforms process -- I do it myself. It is also incorrect to say that free-marketers are hostile to contrary opinions. Some are and some aren't. I can say the same for nearly every other generalization you make.

So, you paint a caricature of free-marketers as strict ideologues who offer unnuanced, simplistic solutions and respond to contrary opinions by flinging labels around.

> Of course those were my
> expectations from the reforms.
> Can you tell me why it is
> unrealistic to expect that
> Indian poverty would start to
> disappear?

It is not unrealistic to expect that poverty would decline. But it is unrealistic to expect the policies to meet your rather vague and broad standards of poverty reduction.
First, in this article, your metric is the visibility of poverty which is hardly scientific. Second, I did not expect a drastic reduction in poverty 15 years after we have half-heartedly (and I am being generous when I say half) reformed our economic policies.

-iu

Vikrum said...

Dilip,

I just wrote a long response to this article and posted it on my blog.

Best,

Vikrum

Rabin said...

It has been a great pleasure reading this article and the subsequent comments. I agree with Vikrum that the reforms of 1991 was forced due to our debt burdens, i'm sure most of us remember the time tht we had to pledge our gold. The 1991 was a great year for us but since then we have blindly followed the american economic model and are wiping out small businesses from existence. While we would continue to grow we would also continue to loose our immune systems which guard us against the effects of huge changes in the international markets.

In my opinion the world is just shrinking. People from different countries but falling under the same economic background are more able to relate with others of the same background in different countries. So a rich guy in india is more and more able to access things (business or pleasure) that someone from another country but from the same economic background can access. A poor man in India finds similarity with a person of the same economic background across the world, in the abject lack of attention/support received from the authorities in those respective countries.

Free market/capitalism/socialism etc are stuff taht will work only if there is a common consensus. Which is impossible, because everyone is in it for the money. Lets take the case of Mircosoft, it can't be faulted for pushing for the case of monopoly and a not-so-free market, because it is only doing its job in trying to maintain and increase shareholder's wealth. So, in effect most extreme cases of free markets do end up being monopolies and oligopolies with high entry barriers. Time and redundancy are often the correcting factors.

Usually though, history suggests that huge systemic changes are not well thought out processes but forced changes, ie natural correction. The current rise in oil prices is an example. This steep rise is called the 'super spike period' where the prices are expected to even touch $125 per barrel, thereby forcing a reduction in demand. Once demand dies down, the prices are expected to come down. (as per a very popular Goldman Sach's report). Such an increase would literally change the way companies do business, push ahead the cause for alternate fuel and hopefully increase the sale of cycles (and inturn cause an upswing in general health). So whatever we decide call our markets and however we choose to live, there are factors that are seldom under human control that have the final say.

Neelakantan said...

Really? what is the other option? Since its a lot to comment out here, I have put it up on a post at my blog. http://ecophilo.blogspot.com/2005/08/one-way-globalization.html
It took me a while to string it all together!

Dilip D'Souza said...

iu: Fair enough, point taken. I didn't mean to generalize, but I can see that the way I've written this, it seems that way. When I work on this piece further, I will be more careful with my words.

Though I'd still like to say that most people I've had this argument with have flung those labels.

Regarding the poverty reduction: I agree that visibility of poverty is hardly scientific. But look at the other things that are visible, by which we all clearly measure how India is doing: cars, malls, multiplexes, mobile phones ... If these things are vastly more visible than they were before 1991, why shouldn't I also expect poverty to be less visible than it was before 1991?

Sure they are half-hearted, sure it's hard to turn a 45 year mess around. But 15 years is not a small time: again, as I said, it has brought such a dramatic change to the urban landscape. Nobody is saying about that change, "it's only been 15 years!" Why not the same standard for poverty?

Vikrum, thanks; and your response deserves, in turn, a post by itself. Let me see if I can get to that.

Michael Higgins said...

Hi Dilip
Interesting post.
I am struck by the idea of free markets as religion. I wouldn't completely disagree but add that all ideology is religion to some extent. And that people need some kind of ideology (with quasi-religious undertones) to organize their thoughts and to process the multitude of information that comes in to their heads.

So here is the real question: if people are doomed to believe in some kind of nonsense, which nonsense will do them the least harm. I think that people could do a lot worse than believing that freedom works religiously. It is a much better ideology than, "we need to count on the politicians to solve our problems."

But if you want to know why freedom has not lead to prosperity in India yet it is this: freedom isn't just about letting people do what they want, it is also carefully distributing rights to people to define the economic game. The people who are left behind in India are not players in the game yet. The may be sitting on dead capital that doesn't do them and nor anyone else in India any good. This is a real problem, and it shows that there is a real value-added to good government even in a free market.

Dilip D'Souza said...

Michael: Indeed, all ideology is religion to an extent. That's just why I am wary when people go on about "the only way". That kind of rhetoric is worrisome.

The most effective leaders and thinkers (my opinion) are those who understand that you have to marry different aspects of different ideologies in order to make progress.

You say: The people who are left behind in India are not players in the game yet.

That's precisely my point. And my sense is that many of them are getting tired of being told to wait to become players.

anandsharma said...

We have to see what are the chances of RTI Act succeeding in a state like UP Where the Highest political and bueaucratic functionaries are openly shielding and encouraging corruption in land /plots allotments in places like Noida and Lucknow? The people being taken for a ride in these scams are well educated citizens staying in places like Delhi and Lucknow and they continue to be victims of largescale open corruption, the RTI Act not withstanding.How then do we expect EGS to succeed mainly on the strength of RTI,in rural areas like Ballia and Basti,is beyond my comprehension.

Manikandan said...

I had my first headhunt in the curikudos job fair held in 2006. And now i think its time to switch over. Can some one let me know when the job fair starts again.