Freedom

Uber and Governance

Anant Rangaswami tweets:

I love Uber, as much for what it is as what it represents. But here’s the thing: Uber functions because its marketplace is competitive. When it comes to most of the services the government provides, though, the government has a monopoly. The greatest incentive for any organisation to function well comes from competition, and the need to excel in order to survive. In areas that the government has a monopoly, I predict, it will fail—as indeed ours has for 68 years. You cannot change the level of service until you change the incentives.

The Real Issue Regarding The National Anthem

There’s an interesting video that seems to have gone viral on social media showing a bunch of hooligans in a film theatre haranguing (and eventually ejecting) a couple who did not stand when the national anthem was played. Some people on Twitter appear to think that this is an issue of patriotism. Well, no it isn’t. It’s an issue of individual freedom and coercion.

In some jurisdictions in the country, it is compulsory to stand when the national anthem is played. This compulsion by the government is something I object to. People should be free to stand if they feel like; and to not stand if they don’t want to. Your patriotism should not be measured by your empty allegiance to a mere symbol; and in fact, it should be nobody’s business whether you are patriotic or not.

Also, when you watch the video linked to above, consider that the people being unpatriotic are not the ones who didn’t stand for the anthem, but the ones insisting that they should have. The idea of India that I subscribe to is one in which India being a free country means that all its citizens are free from the kind of coercion and goondagardi that we see in that video. The mob in that video pretending to be patriotic—they are traitors in my eyes. Whether they stood for the anthem or not.

In fact, it is a travesty that the theatre management did not intervene on behalf of the two ticket-paying patrons who were forced out of that hall. As for those hooligans, they should have been arrested for creating such a disturbance on someone else’s property.

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By and by, I was a panelist on We The People, Barkha Dutt’s show, at the start of 2008 in which the topic for discussion was exactly this: national symbols, and whether there should be any holy cows. Towards the end of the show, Barkha asked each of her panelists for a response on whether India should have holy cows. My response, about 47:50 into the show:

The only kind of holy cow I believe in is one from which you get a divine steak.

My co-panelist Smriti Irani met me backstage after the show and told me that I’d better be careful about making such jokes about an animal that is the object of reverence for Hindus. I think she was educating me about the dangers of blaspheming publicly, and as such, her post as education minister in a BJP government seems quite apt.

On Winning the Bastiat Prize for Journalism

I was fortunate a few days ago to win the Bastiat Prize for Journalism for the second time. The prize is given annually to a writer whose work serves to “explain, promote and defend the principles of the free society.” I had also won it in 2007, and became the first person to win it twice.

Here’s the speech I delivered on receiving the award:

These are the pieces I won the award for:

The Kim Kardashian Liberals
The Great Redistribution
An Economic Message From God

Your Father Too

So Anupam Kher gets booed at a literary event and calls the audience a “paid audience.” He follows it up by saying that “people have an agenda and cannot handle a chaiwala becoming a PM.”

This is the precise problem with our discourse. Anytime people disagree with you or oppose you, you attack them instead of their argument or their viewpoint. So they are a “paid audience” or they “have an agenda” or they are “ISI/CIA agents” or they are “sickulars” or “bhakts” or “libtards” or aaptards”. And they say, “your father too,” and we all get caught in an endless cycle of abuse and snark, egged on by the echo chambers we build around us. Messy.

As for Kher, he lost his credibility the day he accepted the chairmanship of the censor board all these years ago. If you’re against free expression, you’re against art. Shame on him.

Ban on the Menu Card

Rediff reports:

The Modi government, under fire for rising intolerance and violence related to eating beef, has allegedly disallowed permission for the airing of a documentary on beef-eating practices made by students of Tata Institute of Social Sciences.

The film titled “Caste on the Menu Card”, about the beef eating practices in Maharashtra, was to be screened on Saturday at the Jeevika Asia Livelihood Documentary Festival 2015, in Delhi. However, the makers of the movie say that they were informed by the organisers that they would need a censor certificate.

Firstly, you should note that this is not a protest by some ‘fringe elements’ within the RSS fold, but a decision by the government. So that whole approach of saying ‘Hey, we’re focusing on development, these are fringe elements, nothing to do with us’ won’t work here.

Secondly, you should also note that it was a Congress government that first introduced censorship in India, and over the years have been quite happy to ban books, films, plays and even music albums. So the fault really lies with us. We’ve been tolerating these assaults on free speech for way too long.

It’s never too late to start being intolerant of intolerance.

Oh, and here’s the trailer of the film in question. I don’t know if watching the full film will make me angry, but it is guaranteed to make me hungry.

Trailer: Caste on the Menu Card

On Children

I have good news and I have bad news.

Good news: China has ended its one-child policy.

Bad news: Instead, China will now have a two-child policy.

This is surreal. Just when you thought, ‘Okay, maybe China gets it,’ you find that China doesn’t get it at all. If a one-child policy was bad, a two-child policy is also bad, because the thinking behind it is wrong. Firstly, contrary to what we taught in school, population is not something you need to control. People are a resource, not a problem. Putting an upper limit on people is literally like putting an upper limit on prosperity. We live in a positive-sum world, and on balance, every person brings more value to the world than they consume.

For more on this, read my essay, ‘The Evil of Family Planning’.

Secondly, the state doesn’t own the people that it decides what it should ‘allow’ them to do. But hey, am I so naive as to lecture China on individual rights? I have a better shot at provoking World Peace by singing bhajans at Wagah.

Uber Regulation

Abhinav Singh has a good post up about how the Government of Maharashtra is proposing to regulate Uber. As you’d expect, there are vested interests behind this: the existing taxi industry, which feels threatened by the new operators, as indeed they should, because the new operators are proving more value to consumers. So they go to the government.

As I’d written here, all interventions in the free market amount to a redistribution of wealth from the poor to the rich. Any regulations here will end up as exactly that. The value that consumers would have gained from the unhindered operation of Uber and Ola will be redistributed away to the older taxi operators. You really don’t need to ask what’s in this for the government, do you?

If this makes you angry, do go sign Uber’s petition. I’m usually skeptical of online petitions and candlelight vigils and so on, but this is a petition directly from one of the affected parties, and there is a non-zero probability that it will make a difference.

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An earlier piece on Uber: The Price is Right.

The Fatal Conceit of the Indian Politician

A shorter version of this was published as the 22nd installment of Lighthouse, my monthly column for BLink, a supplement of the Hindu Business Line.

‘I’m not conceited. Conceit is a fault and I have no faults.’ Imagine this quote on an internet meme, alongside a picture of Narendra Modi, looking dapper in that famous pinstripe suit, or maybe a trademark Modi kurta. It would surely get thousands of shares on social media, many from bhakts impressed by the prime minister’s modesty. Don’t rush to share it, though: as one tends to do on the internet, I just misattributed. Those words were not uttered by Modi, or even Oscar Wilde or GB Shaw. The man who said them is former Van Halen singer Dave Lee Roth, with his back against a record machine. But Modi could have said them, could he not?

Please don’t think I am picking on Narendrabhai alone. All politicians are vain. Indeed, one could argue that in politics, vanity is a feature and not a bug. Politicians come to power by selling specific narratives about their excellence; and they can sell it most effectively if they believe it themselves. Success in many fields often begins, comically and ironically, with self-delusion. But politicians have consequences, and there’s nothing comic about that.

One reason that India is still a poor country is the ‘fatal conceit’ of our founding fathers. Jawaharlal Nehru, and his minions and successors, believed that economies were best planned from the top down. An economy is a complex thing, the poor and ignorant masses of India surely could not be trusted to perform this task by themselves, and needed to be directed by wise and benevolent planners. Those who have studied economics or paid attention to history know that this was foolish and wrong.

Economies, like languages, are products of “human action but not human design,” in the words of Adam Ferguson. They function brilliantly on their own, with millions of individuals pursuing their self-interest, and thus increasing the value in the lives of others, for that is the only path to profit. Planning is not only not required, it is an impediment. A central planner can never get a grasp on the huge amount of dispersed knowledge in an economy, and any intervention is bound to lead to a loss in efficiency. This hurts the poor the most: as I illustrated in a previous column, every intervention in a free market amounts to a distribution of wealth from the poor to the rich.

Nehru suffered from a disease that Friedrich Hayek called the Fatal Conceit. His coining of that term was inspired by the following passage in Adam Smith’s The Theory of Moral Sentiments: “The man of system […] is apt to be very wise in his own conceit; and is often so enamoured with the supposed beauty of his own ideal plan of government, that he cannot suffer the smallest deviation from any part of it. He goes on to establish it completely and in all its parts, without any regard either to the great interests, or to the strong prejudices which may oppose it. He seems to imagine that he can arrange the different members of a great society with as much ease as the hand arranges the different pieces upon a chess-board.”

People are not chess pieces, of course, and Nehru and his successors ravaged the economy with their well-intentioned interventions. I won’t recite the litany, but here’s the thing: 68 years after we became independent, 24 after the Soviet Union collapsed, we are still enslaved by a failed philosophy. And we’re still suffering because of the fatal conceit of flawed individuals.

It amuses me sometimes that Modi is considered a right-wing politician. He actually embodies the worst of both left and right. Like his party, and the ecosystem of religious nutjobs that sustains it, he is right-wing on social issues; and left on economic ones. Basically, he is against individual freedom in every domain possible, and thus the exact opposite of me. If you put Modi and me in a test tube, the resultant explosion could blow the earth off its orbit, or at least result in a good rap album. But that is a digression, and it is possible that you have your mouth open because I called him an economic leftist. Well, if a man is to be known by his actions and not his public image, what else can we call him?

I know many economic liberals, bald because of six decades of tearing their hair out, who thought Modi would be a free-market messiah. My ass. Tell me this: exactly what reforms has he carried out that increase our economic freedom? When Modi took over, India was ranked 140 out of 189 countries in the World Bank’s Ease of Doing Business Index: it has since slipped to 142. He has not reformed the labour laws that, for decades, have prevented us from being a manufacturing superpower. The license and inspector raj remains what it was under his predecessors. A litany of what he has not changed would be the same as a litany of what was wrong with our country before he took over.

I have friends in high places who tell me that the system doesn’t allow him to act. But the truth is that Modi suffers from the same fatal conceit that Nehru displayed. He believes the economy needs a top-down manager. He would rather reform a public sector unit than sell it off. When he talks of ‘minimum government and maximum governance,’ as that catchy slogan went, he is speaking of making government more efficient and not at eliminating it entirely from areas where it has no business existing.

His conceit isn’t limited to his economic thinking, though. Look at how the man struts! He may not walk the walk in the sense of governance, but he certainly does in a catwalk sense. Once he was denied a US Visa; now he travels the world meeting the high and mighty. I wonder if he realises, though, that these global leaders give him importance because of the position he occupies, and not the man he is. I suspect he has actually drunk his Kool Aid, and believes the Modi Wave narrative of the last elections. He may be headed for a fall if so.

Look at the numbers from the 2014 general elections again. Our first-past-the-post system made it seem like a wipeout, as the BJP got 6.4 times the seats that Congress did. But they got just 1.6 the vote share of the Congress. It was 31% to 19%, and a 4% swing away from them next time could easily result in a hung parliament. They delivered outlier performances in states like UP, MP and Gujarat, which seem statistically impossible to repeat. And the following things are certain: Since the election, they have not won more supporters than they have lost; the turnout of their supporters is bound to be less the next time around; other parties, clear about what they are up against, will make smarter coalitions to consolidate the non-BJP vote; anti-incumbency will be a factor now that some of the Modi sheen is gone.

Modi behaves like the prime ministership was his destiny and he will win again easily in 2019. But if he doesn’t get his act together, reforming the economy and constraining the lunatic fringe in his party, he could be in for a surprise. India could choose another delusional politician over him, and 2014-2019 could be remembered as The Selfie Years.

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Also read: ‘Lessons From 1975.’

Lessons From 1975

A shorter version of this was published as the 21st installment of Lighthouse, my monthly column for BLink, a supplement of the Hindu Business Line.

In 1975, a Tamilian dressed as a sardar landed up in Ahmedabad Railway Station, in disguise to escape the might of the central government, for whom he was a wanted man. He was met there, and escorted to a safe house, by a 25-year-old who had once sold tea on the platform of that station. Freeze that moment in history – Narendra Modi escorting Subramanian Swamy to his safe house – and contrast it to today. What a long way we have come.

Or have we?

I got the above trivia from Coomi Kapoor’s excellent book, The Emergency: A Personal History. Kapoor was a journalist living in Delhi in those days, and though her book was timed to coincide with the 40th anniversary of the Emergency, it is anyway a timely reminder of the damage that people drunk on power can do, and the threat that such untrammelled power can pose to a nation.

The Emergency began with the filling up of jails. “The number of those in Indira Gandhi’s prisons during the Emergency,” writes Kapoor, “far exceeded the total number jailed during the 1942 Quit India Movement.” This included not just opponents in the opposition parties but also potential ones within her own party plus whoever they damn well felt like. (“The entire Sanskrit department of Delhi University was sent to prison.”) Personal vendettas were quickly settled, and torture was common in the jails. Those close to power were more like despotic rulers than public servants. For example, Kapoor writes, “When an old and respected lawyer of Panipat denounced [Bansi] Lal’s corrupt rule, he was arrested and stripped naked, his face was tarred, and he was dragged all through the streets of the town.” Such behaviour was more rule than exception.

The exploits of Sanjay Gandhi and his coterie were particularly shameful. He wrongly believed that India’s population was a problem rather than a resource, and even more wrongly set about solving it through forced sterilisations. Millions of those took place, and the story of the village of Pipli is particularly illustrative of how they functioned. Hawa Singh, a widower, died there after a botched forced sterilisation, and the villagers refused to have anything more to do with family planning. On hearing that, the government sent “several hundred policemen” who “took up positions around the village.” Shots were fired, and “two women making cowdung cakes outside their huts were mowed down by the bullets.” The men surrendered, and hundreds of them were sterilized.

The press was silenced. Loren Jenkins of Newsweek wrote, “In 10 years of covering the world from Franco’s Spain to Mao’s China, I have never encountered such stringent and all encompassing censorship.” One of the leaders of the opposition, LK Advani, later said that the press “was asked to bend and it chose to crawl.” A permanent (and brutal) dictatorship seemed likely, and we owe much gratitude to the fact that power had made Indira delusional, for she actually called for elections only because she thought she would win. Had she not thought so, she would not have called for them. (Indeed, Sanjay was opposed to the decision.)

To be honest, a political leader does not need to suspend democracy to devastate a country. Even without the Emergency, the vile Indira Gandhi would count as one of the worst leaders in our history. Through a series of disastrous economic policies, many of which her deluded partymen still support, she kept tens of millions of people in poverty, and adversely affected all our lives. There are no counterfactuals, of course, and abstract economic arguments do not have the visceral impact of the kind of stories that Coomi Kapoor’s excellent book is filled with.

Let’s get back to the present. To many, the general elections of last year felt like a landmark event because Modi’s win seemed to mark a final, clean break from everything that post-Independence Congress stood for. However, Modi was not brought to power by a monolithic votebank, but by a collection of disparate groups, all of whom were desperate for change for different reasons. Modi was like a Rorschach test – he stood for whatever you wanted him to stand for, and what you saw in him revealed more about you than about him. Hindutva bhakts saw him as the former RSS pracharak who would finally make India a great Hindu nation; economic liberals saw him as the leader who would finally liberate India from the Leftist policies that had kept us backward all these years; and so on. Some of the expectations from him were contradictory; most were impractical, given the constraints of the way our political economy is structured. But Modi encouraged all of them by discouraging none of them. He didn’t say much on policy issues, stuck to safe bromides, and you never really knew to what extent he supported Hindutva or free markets or yada yada yada. He was strong and silent, and he remained strong partly because he remained silent. You could believe whatever you wanted about him – and because the existing government was so incompetent, you wanted to believe.

If campaigning was like courtship, governance is like marriage. You can’t be delusional about the object of your affection any more: you’re living with the fellow. And while it’s okay if he burps and farts in your presence, it is simply not okay if he beats you up just like the previous guy used to. So a year down the line, how is the Modi government doing?

If you’re an economic liberal like me, Modi has been a disappointment. It is with good reason that people are beginning to refer to this government as UPA 3. Modi has not instituted any far reaching reforms, and the rhetoric of ‘incremental reforms’ does not cut it for me. If a man has gangrene in his legs or cancer in his liver, you do not give him an aspirin and call it incremental reform. ‘Gangrene’ and ‘cancer’ do not need to be managed efficiently, but eliminated brutally. Anyway, this is a subject I’ll elaborate on a future column. For now, I will concede this: Modi’s government is no worse than UPA 2 was. And it’s fair enough to wait out the five years they have been given before passing judgement.

It is in the domain of personal freedoms, though, that Modi has let the country down. Much of this is due to petty vindinctiveness, straight out of the Indira Gandhi playbook. Consider how Teesta Setalvad has been harassed after Modi came to power, with the latest salvo being the cancellation of the license of her NGO. (Why should any organisation need a license from the government anyway? Wasn’t Modi the Messiah supposed to do away with this kind of nonsense?)  Consider the government’s harassment of NGOs like Greenpeace, and the offloading of Greenpeace campaigner Priya Pillai when she was on her way to England because officials felt she would give India a “negative image” there. Go online, search for videos of the recent Patel uprising in Ahmedabad, and see the brutality with which the police crack down on common citizens. (The Gujarat government also banned the mobile internet during this time, as well as Facebook, Twitter and WhatsApp.) Consider all the nonsense the fringe elements on the Hindu right are getting up to, and the silence of the government on these issues – the same silence you would get from Indira very time she was confronted about the antics of her psychopathic son Sanjay.

Modi has not declared Emergency or jailed his opponents, but this approach to power does remind me of 1975, and make me wonder. Many of the prominent political actors of today played small roles in that particular production. Arun Jaitley spent the years of the Emergency in jail. In the hundreds of hours of solitary contemplation that he no doubt had, what did he think about? When the young party worker Narendra Modi guided Subramanian Swamy to his safe house, what did they talk about? Was it about how power always corrupts, the necessity to impose limits on it and the tragedy that politicians in India sought to rule rather than serve? Or did they simply say to each other, “Just wait. Just wait till we are on the other side, and we are the ones in charge.”

I suspect it was the latter. And what a loss that is.

Profit = Philanthropy

This is the 20th installment of Lighthouse, my monthly column for BLink, a supplement of the Hindu Business Line.

Never talk to me about profit,’ Jawaharlal Nehru once said to an industrialist friend of his. ‘It is a dirty word.’

Nehru’s sentiments were understandable in those times, and his sentiments were noble. India had just rid itself of the British, who had come to India ostensibly to do business and had left it impoverished. Nehru, who had played a notable role in the freedom struggle, had spent his formative years in England learning from the Fabian Socialists, as well as from Howard Laski, the Marxist professor at LSE who had a greater influence on modern India than Mahatma Gandhi, through students such as Nehru and VK Krishna Menon. The Soviet Union seemed to be a model to admire, America itself vastly expanded the role of the state after the Great Depression, and the top-down command-and-control economy must have seemed incredibly attractive to Nehru. The center had to hold. The profit motive was evil. Those exploitative capitalists had to be kept in check.

It is not fair to judge Nehru in hindsight, and he was right about other things that mattered. But he was wrong about this. Profit is the secret behind all prosperity. And it is a distrust of the profit motive that has kept this country poor.

The fundamental fallacy that Nehru committed was of looking at the economy as a zero-sum game. By that thinking, if someone is winning, someone else must be losing. If the industrialist makes a profit, someone else is getting exploited. But this is not the way the world works. All trade is a positive-sum game; and indeed, it is not possible for one person alone to make a profit in a transaction.

I am fond of illustrating this by citing what the writer John Stossel calls the Double Thank-You Moment. When you buy a cup of coffee at a Cafe Coffee Day, you say ‘thank you’ when you are handed your cup of coffee. And the cashier says ‘thank you’ when you hand over your money. This double ‘thank-you’ illustrates that both of you benefited from the transaction. Both of you profited.

This is, simply put, the root cause of prosperity. Every single voluntary transaction that takes place makes both parties better off, and increases the sum total of value in the world. Equally, every impediment that anyone places on the ability of consenting adults to trade freely with each other reduces the notional value in the world, and is an impediment to growth. It stands to reason, then, that trade should lead to prosperity, and that economic freedom should be correlated with a nation’s wealth. Does the data bear this out? You bet it does.

First up, I urge you to consider this chart. (Here’s the source.) It shows the wealth of the world as a flat line for centuries, until 1800. And then, boom, the world economy takes off in a spurt that economists call the Hockey Stick of Human Prosperity. It correlates perfectly with the explosion of markets across the world, of double-thank-you moments.

But it doesn’t take off uniformly across countries. Free markets are a necessary condition for prosperity, so let me now draw your attention to another chart. This one, from the Index of Economic Freedom 2015 brought out by the Heritage Foundations, shows a clear correlation between economic freedom and the wealth of nations. The freer you are, the wealthier you tend to be. (Also, the freer you are, the faster you grow.)

Forget the data, you say. Capitalists are exploitative. What about the low wages paid by Walmart? What about sweat shops run by large multinationals in third world countries like Bangladesh, where workers toil jn inhumane conditions? Isn’t that the profit motive at work?

Yes, it is. And I deeply admire Walmart and every company that runs a sweatshop in a poor country. That is because the people who work in Walmart and in those sweatshops do so because it is the best option open to them. They are not fools. They are choosing to work where they do because they deem all other alternatives to be worse, and those evil capitalist behemoths should actually be thanked for actually providing them an option that is better than the best option otherwise available to them. We condescend to those workers when we say they are being exploited. (Indeed, it is possible that we are exploiting them by using them to feed our sanctimony.)

This doesn’t apply to slavery and trafficking, of course, for by free markets I mean markets where consenting adults trade freely under the rule of law. Also, let us not conflate rent-seeking and profit-seeking. Many large companies get together with government to put restrictions on markets so that their market share is protected from competition. Such protectionism hurts the common consumer, and amounts to a redistribution of wealth from the poor at large to rich special-interest groups. Big companies are often the biggest enemies of free markets, and capitalism often unfairly gets a bad name because it is confused with crony capitalism – or ‘crapitalism’ as some call it.

To sum up, the profit motive is not something nefarious, but is actually noble. You can only profit in a free market by improving someone else’s life. And the more you profit, the greater the good you do in the world, the more the value you create. Profit, indeed, is the purest form of philanthropy.

I must admit here the very slight, teeny-weeny possibility that I am being unjust to Nehru. Maybe he had a mischievous glint in his eye when he said that profit was a ‘dirty word’. I can imagine him sidling up to Edwina Mountbatten at a party, gently putting his hand on her waist, and whispering to her, ‘Edwina, my dear, would you like to, ahem, profit with me?’ That certainly could have led to a double thank-you moment.