Price Controls Lead to Shortages and Harm the Poor

This is the 25th installment of The Rationalist, my column for the Times of India.

Indulge me with a thought experiment. One morning the ruler of our country, Dear Leader, decides that India’s poverty is unbearable to him. The people must be made rich. What is a metric of wealth? The automobile! Everyone should have a car! More people will then buy petrol and the economy will recover!

Dear Leader goes on his evening podcast and announces to the nation that henceforth, there will be a price cap on cars. All cars will have to be sold at the very affordable price of Rs 1 lakh only. What will happen?

You don’t need to know economics to answer this. Common sense will do. All manufacturers will stop making cars that cost more than Rs 1 lakh, for why would they sell at a loss? Existing inventory will be disposed of on a first-come-first-serve basis – or in the black market to those privileged with wealth and access. Eventually, there will be no new cars at all.

This seems like a dystopian scenario, but thought experiments can shed light on everyday principles by dressing them up in outrageous garb. The everyday principle here is this: price controls always lead to shortages. And yet, our politicians do not understand this.

The government recently announced that they are planning to put a cap on the prices of some hygiene products. This is a terrible idea. In any competitive market, producers are already driven by competition to sell at the lowest price point they can afford. If you set a price cap that is below this mark, they will have to stop manufacturing. The price cap will not offer any additional benefit to consumers – and will reduce the choices available to them.

How do prices work? Why do price caps hurt? I like to illustrate this with the example of Uber’s surge pricing. This mimics markets, with prices responding in real time to supply and demand. It has also caused much outrage, with users often complaining about Uber’s exploitative pricing during peak hours. Perfect example.

Imagine a miniature Uber world in which, at a specific moment, there are 50 available cars for 100 customers. There’s a mismatch between supply and demand, and Econ 101 tells you that the price should go up. But Dear Leader puts a price cap. What will happen?

Two things. One, the 50 available cars go to customers on a first-come-first serve basis, and 50 customers are left stranded. Some of those who are left stranded may have urgent needs, like catching a flight or going to hospital in an emergency. They would value the ride more. They would be willing to pay more. Some of those who do get cars may have a trivial need, and would gladly not take the trip if the price was too high. (They could use public transport or Netflix-and-chill at home.) First-come-first-serve doesn’t distinguish between the two. A surge price would reflect the scarcity of the ride, and signal its true value.

There is a second effect that is deeper than this allocation effect. A high price sends a signal to the marketplace. It incentivises Uber drivers taking a break to make themselves available. More cars get on the road. More needs get served. Over the long term, the money in driving Ubers might even incentivise people to move from less profitable professions to driving taxis. In a free market, prices carry the information that push people towards deriving the best value from their skills. Price caps stop this information. They perpetuate imbalances between supply and demand, which the market would otherwise sort out.

Whenever a ban on Uber’s surge pricing has been tried out in India, it has led to shortages.  A friend of mine actually missed a flight in Delhi when the government there experimented with it. What if she had a medical emergency at that time?

Another example: A few months ago, the government imposed price caps on stents. As you’d expect, it resulted in shortages, as all advanced stents that cost more than the cap became unavailable. This reduced the choices available to patients. How can this be good?

Economists agree on how prices work the same way physicists agree on the law of gravity. There is no ideological disagreement. Why, then, do politicians keep imposing price caps?

The cynical view is that politicians don’t care about whether price caps work economically, as long as they work politically. Price caps signal compassion. “I care about you,” the politician signals, “and how expensive you find everything.” Voters often do not have the economic literacy to figure out that good intentions often lead to bad outcomes, and policies meant to help the poor can hurt them instead.

It is also possible that our economically illiterate politicians have genuine faith in their powers. They suffer from a ‘God Delusion’. They believe that legislation can change reality. This is delusional. It leads me to wonder, given the scarcity of sensible netas, what would be the value of a good politician?

Farmers, Technology and Freedom of Choice: A Tale of Two Satyagrahas

This is the 23rd installment of The Rationalist, my column for the Times of India.

I had a strange dream last night. I dreamt that the government had passed a law that made using laptops illegal. I would have to write this column by hand. I would also have to leave my home in Mumbai to deliver it in person to my editor in Delhi. I woke up trembling and angry – and realised how Indian farmers feel every single day of their lives.

My column today is a tale of two satyagrahas. Both involve farmers, technology and the freedom of choice. One of them began this month – but first, let us go back to the turn of the millennium.

As the 1990s came to an end, cotton farmers across India were in distress. Pests known as bollworms were ravaging crops across the country. Farmers had to use increasing amounts of pesticide to keep them at bay. The costs of the pesticide and the amount of labour involved made it unviable – and often, the crops would fail anyway.

Then, technology came to the rescue. The farmers heard of Bt Cotton, a genetically modified type of cotton that kept these pests away, and was being used around the world. But they were illegal in India, even though no bad effects had ever been recorded. Well, who cares about ‘illegal’ when it is a matter of life and death?

Farmers in Gujarat got hold of Bt Cotton seeds from the black market and planted them. You’ll never guess what happened next. As 2002 began, all cotton crops in Gujarat failed – except the 10,000 hectares that had Bt Cotton. The government did not care about the failed crops. They cared about the ‘illegal’ ones. They ordered all the Bt Cotton crops to be destroyed.

It was time for a satyagraha – and not just in Gujarat. The late Sharad Joshi, leader of the Shetkari Sanghatana in Maharashtra, took around 10,000 farmers to Gujarat to stand with their fellows there. They sat in the fields of Bt Cotton and basically said, ‘Over our dead bodies.’ ¬Joshi’s point was simple: all other citizens of India have access to the latest technology from all over. They are all empowered with choice. Why should farmers be held back?

The satyagraha was successful. The ban on Bt Cotton was lifted.

There are three things I would like to point out here. One, the lifting of the ban transformed cotton farming in India. Over 90% of Indian farmers now use Bt Cotton. India has become the world’s largest producer of cotton, moving ahead of China. According to agriculture expert Ashok Gulati, India has gained US$ 67 billion in the years since from higher exports and import savings because of Bt Cotton. Most importantly, cotton farmers’ incomes have doubled.

Two, GMO crops have become standard across the world. Around 190 million hectares of GMO crops have been planted worldwide, and GMO foods are accepted in 67 countries. The humanitarian benefits have been massive: Golden Rice, a variety of rice packed with minerals and vitamins, has prevented blindness in countless new-born kids since it was introduced in the Philippines.

Three, despite the fear-mongering of some NGOs, whose existence depends on alarmism, the science behind GMO is settled. No harmful side effects have been noted in all these years, and millions of lives impacted positively. A couple of years ago, over 100 Nobel Laureates signed a petition asserting that GMO foods were safe, and blasting anti-science NGOs that stood in the way of progress. There is scientific consensus on this.

The science may be settled, but the politics is not. The government still bans some types of GMO seeds, such as Bt Brinjal, which was developed by an Indian company called Mahyco, and used successfully in Bangladesh. More crucially, a variety called HT Bt Cotton, which fights weeds, is also banned. Weeding takes up to 15% of a farmer’s time, and often makes farming unviable. Farmers across the world use this variant – 60% of global cotton crops are HT Bt. Indian farmers are so desperate for it that they choose to break the law and buy expensive seeds from the black market – but the government is cracking down. A farmer in Haryana had his crop destroyed by the government in May.

On June 10 this year, a farmer named Lalit Bahale in the Akola District of Maharashtra kicked off a satyagraha by planting banned seeds of HT Bt Cotton and Bt Brinjal. He was soon joined by thousands of farmers. Far from our urban eyes, a heroic fight has begun. Our farmers, already victimised and oppressed by a predatory government in countless ways, are fighting for their right to take charge of their lives.

As this brave struggle unfolds, I am left with a troubling question: All those satyagrahas of the past by our great freedom fighters, what were they for, if all they got us was independence and not freedom?

Trump and Modi are playing a Lose-Lose game

This is the 22nd installment of The Rationalist, my column for the Times of India.

Trade wars are on the rise, and it’s enough to get any nationalist all het up and excited. Earlier this week, Narendra Modi’s government announced that it would start imposing tariffs on 28 US products starting today. This is a response to similar treatment towards us from the US.

There is one thing I would invite you to consider: Trump and Modi are not engaged in a war with each other. Instead, they are waging war on their own people.

Let’s unpack that a bit. Part of the reason Trump came to power is that he provided simple and wrong answers for people’s problems. He responded to the growing jobs crisis in middle America with two explanations: one, foreigners are coming and taking your jobs; two, your jobs are being shipped overseas.

Both explanations are wrong but intuitive, and they worked for Trump. (He is stupid enough that he probably did not create these narratives for votes but actually believes them.) The first of those leads to the demonising of immigrants. The second leads to a demonising of trade. Trump has acted on his rhetoric after becoming president, and a modern US version of our old ‘Indira is India’ slogan might well be, “Trump is Tariff. Tariff is Trump.”

Contrary to the fulminations of the economically illiterate, all tariffs are bad, without exception. Let me illustrate this with an example. Say there is a fictional product called Brump. A local Brump costs Rs 100. Foreign manufacturers appear and offer better Brumps at a cheaper price, say Rs 90. Consumers shift to foreign Brumps.

Manufacturers of local Brumps get angry, and form an interest group. They lobby the government – or bribe it with campaign contributions – to impose a tariff on import of Brumps. The government puts a 20-rupee tariff. The foreign Brumps now cost Rs 110, and people start buying local Brumps again. This is a good thing, right? Local businesses have been helped, and local jobs have been saved.

But this is only the seen effect. The unseen effect of this tariff is that millions of Brump buyers would have saved Rs 10-per-Brump if there were no tariffs. This money would have gone out into the economy, been part of new demand, generated more jobs. Everyone would have been better off, and the overall standard of living would have been higher.

That brings to me to an essential truth about tariffs. Every tariff is a tax on your own people. And every intervention in markets amounts to a distribution of wealth from the people at large to specific interest groups. (In other words, from the poor to the rich.) The costs of this are dispersed and invisible – what is Rs 10 to any of us? – and the benefits are large and worth fighting for: Local manufacturers of Brumps can make crores extra. Much modern politics amounts to manufacturers of Brumps buying politicians to redistribute money from us to them.

There are second-order effects of protectionism as well. When the US imposes tariffs on other countries, those countries may respond by imposing tariffs back. Raw materials for many goods made locally are imported, and as these become expensive, so do those goods. That quintessential American product, the iPhone, uses parts from 43 countries. As local products rise in price because of expensive foreign parts, prices rise, demand goes down, jobs are lost, and everyone is worse off.

Trump keeps talking about how he wants to ‘win’ at trade, but trade is not a zero-sum game. The most misunderstood term in our times is probably ‘trade-deficit’. A country has a trade deficit when it imports more than what it exports, and Trump thinks of that as a bad thing. It is not. I run a trade deficit with my domestic help and my local grocery store. I buy more from them than they do from me. That is fine, because we all benefit. It is a win-win game.

Similarly, trade between countries is really trade between the people of both countries – and people trade with each other because they are both better off. To interfere in that process is to reduce the value created in their lives. It is immoral. To modify a slogan often identified with libertarians like me, ‘Tariffs are Theft.’

These trade wars, thus, carry a touch of the absurd. Any leader who imposes tariffs is imposing a tax on his own people. Just see the chain of events: Trump taxes the American people. In retaliation, Modi taxes the Indian people. Trump raises taxes. Modi raises taxes. Nationalists in both countries cheer. Interests groups in both countries laugh their way to the bank.

What kind of idiocy is this? How long will this lose-lose game continue?

Population Is Not a Problem, but Our Greatest Strength

This is the 21st installment of The Rationalist, my column for the Times of India.

When all political parties agree on something, you know you might have a problem. Giriraj Singh, a minister in Narendra Modi’s new cabinet, tweeted this week that our population control law should become a “movement.” This is something that would find bipartisan support – we are taught from school onwards that India’s population is a big problem, and we need to control it.

This is wrong. Contrary to popular belief, our population is not a problem. It is our greatest strength.

The notion that we should worry about a growing population is an intuitive one. The world has limited resources. People keep increasing. Something’s gotta give.

Robert Malthus made just this point in his 1798 book, An Essay on the Principle of Population. He was worried that our population would grow exponentially while resources would grow arithmetically. As more people entered the workforce, wages would fall and goods would become scarce. Calamity was inevitable.

Malthus’s rationale was so influential that this mode of thinking was soon called ‘Malthusian.’ (It is a pejorative today.) A 20th-century follower of his, Harrison Brown, came up with one of my favourite images on this subject, arguing that a growing population would lead to the earth being “covered completely and to a considerable depth with a writhing mass of human beings, much as a dead cow is covered with a pulsating mass of maggots.”

Another Malthusian, Paul Ehrlich, published a book called The Population Bomb in 1968, which began with the stirring lines, “The battle to feed all of humanity is over. In the 1970s hundreds of millions of people will starve to death in spite of any crash programs embarked upon now.” Ehrlich was, as you’d guess, a big supporter of India’s coercive family planning programs. ““I don’t see,” he wrote, “how India could possibly feed two hundred million more people by 1980.”

None of these fears have come true. A 2007 study by Nicholas Eberstadt called ‘Too Many People?’ found no correlation between population density and poverty. The greater the density of people, the more you’d expect them to fight for resources – and yet, Monaco, which has 40 times the population density of Bangladesh, is doing well for itself. So is Bahrain, which has three times the population density of India.

Not only does population not cause poverty, it makes us more prosperous. The economist Julian Simon pointed out in a 1981 book that through history, whenever there has been a spurt in population, it has coincided with a spurt in productivity. Such as, for example, between Malthus’s time and now. There were around a billion people on earth in 1798, and there are around 7.7 billion today. As you read these words, consider that you are better off than the richest person on the planet then.

Why is this? The answer lies in the title of Simon’s book: The Ultimate Resource. When we speak of resources, we forget that human beings are the finest resource of all. There is no limit to our ingenuity. And we interact with each other in positive-sum ways – every voluntary interactions leaves both people better off, and the amount of value in the world goes up. This is why we want to be part of economic networks that are as large, and as dense, as possible. This is why most people migrate to cities rather than away from them – and why cities are so much richer than towns or villages.

If Malthusians were right, essential commodities like wheat, maize and rice would become relatively scarcer over time, and thus more expensive – but they have actually become much cheaper in real terms. This is thanks to the productivity and creativity of humans, who, in Eberstadt’s words, are “in practice always renewable and in theory entirely inexhaustible.”

The error made by Malthus, Brown and Ehrlich is the same error that our politicians make today, and not just in the context of population: zero-sum thinking. If our population grows and resources stays the same, of course there will be scarcity. But this is never the case. All we need to do to learn this lesson is look at our cities!

This mistaken thinking has had savage humanitarian consequences in India. Think of the unborn millions over the decades because of our brutal family planning policies. How many Tendulkars, Rahmans and Satyajit Rays have we lost? Think of the immoral coercion still carried out on poor people across the country. And finally, think of the condescension of our politicians, asserting that people are India’s problem – but always other people, never themselves.

This arrogance is India’s greatest problem, not our people.

Can Amit Shah do for India what he did for the BJP?

This is the 20th installment of The Rationalist, my column for the Times of India.

Amit Shah’s induction into the union cabinet is such an interesting moment. Even partisans who oppose the BJP, as I do, would admit that Shah is a political genius. Under his leadership, the BJP has become an electoral behemoth in the most complicated political landscape in the world. The big question that now arises is this: can Shah do for India what he did for the BJP?

This raises a perplexing question: in the last five years, as the BJP has flourished, India has languished. And yet, the leadership of both the party and the nation are more or less the same. Then why hasn’t the ability to manage the party translated to governing the country?

I would argue that there are two reasons for this. One, the skills required in those two tasks are different. Two, so are the incentives in play.

Let’s look at the skills first. Managing a party like the BJP is, in some ways, like managing a large multinational company. Shah is a master at top-down planning and micro-management. How he went about winning the 2014 elections, described in detail in Prashant Jha’s book How the BJP Wins, should be a Harvard Business School case study. The book describes how he fixed the BJP’s ground game in Uttar Pradesh, picking teams for 147,000 booths in Uttar Pradesh, monitoring them, and keeping them accountable.

Shah looked at the market segmentation in UP, and hit upon his now famous “60% formula”. He realised he could not deliver the votes of Muslims, Yadavs and Jatavs, who were 40% of the population. So he focussed on wooing the other 60%, including non-Yadav OBCs and non-Jatav Dalits. He carried out versions of these caste reconfigurations across states, and according to Jha, covered “over 5 lakh kilometres” between 2014 and 2017, consolidating market share in every state in this country. He nurtured “a pool of a thousand new OBC and Dalit leaders”, going well beyond the posturing of other parties.

That so many Dalits and OBCs voted for the BJP in 2019 is astonishing. Shah went past Mandal politics, managing to subsume previously antagonistic castes and sub-castes into a broad Hindutva identity. And as the BJP increased its depth, it expanded its breadth as well. What it has done in West Bengal, wiping out the Left and weakening Mamata Banerjee, is jaw-dropping. With hindsight, it may one day seem inevitable, but only a madman could have conceived it, and only a genius could have executed it.

Good man to be Home Minister then, eh? Not quite. A country is not like a large company or even a political party. It is much too complex to be managed from the top down, and a control freak is bound to flounder. The approach needed is very different.

Some tasks of governance, it is true, are tailor-made for efficient managers. Building infrastructure, taking care of roads and power, building toilets (even without an underlying drainage system) and PR campaigns can all be executed by good managers. But the deeper tasks of making an economy flourish require a different approach. They need a light touch, not a heavy hand.

The 20th century is full of cautionary tales that show that economies cannot be centrally planned from the top down. Examples of that ‘fatal conceit’, to use my hero Friedrich Hayek’s term, include the Soviet Union, Mao’s China, and even the lady Modi most reminds me of, Indira Gandhi.

The task of the state, when it comes to the economy, is to administer a strong rule of law, and to make sure it is applied equally. No special favours to cronies or special interest groups. Just unleash the natural creativity of the people, and don’t try to micro-manage.

Sadly, the BJP’s impulse, like that of most governments of the past, is a statist one. India should have a small state that does a few things well. Instead, we have a large state that does many things badly, and acts as a parasite on its people.

As it happens, the few things that we should do well are all right up Shah’s managerial alley. For example, the rule of law is effectively absent in India today, especially for the poor. As Home Minister, Shah could fix this if he applied the same zeal to governing India as he did to growing the BJP. But will he?

And here we come to the question of incentives. What drives Amit Shah: maximising power, or serving the nation? What is good for the country will often coincide with what is good for the party – but not always. When they diverge, which path will Shah choose? So much rests on that.

Lessons from an Ankhon Dekhi Prime Minister

This is the 19th installment of The Rationalist, my column for the Times of India.

A friend of mine was very impressed by the interview Narendra Modi granted last week to Akshay Kumar. ‘Such a charming man, such great work ethic,’ he gushed. ‘He is the kind of uncle I would want my kids to have.’ And then, in the same breath, he asked, ‘How can such a good man be such a bad prime minister?”

I don’t want to be uncharitable and suggest that Modi’s image is entirely manufactured, so let’s take the interview at face value. Let’s also grant Modi his claims about the purity of his neeyat (intentions), and reframe the question this way: when it comes to public policy, why do good intentions often lead to bad outcomes? To attempt an answer, I’ll refer to a story a friend of mine, who knows Modi well, once told me about him. 

Modi was chilling with his friends at home more than a decade ago, and told them an incident from his childhood. His mother was ill once, and the young Narendra was tending to her. The heat was enervating, so the boy went to the switchboard to switch on the fan. But there was no electricity. My friend said that as he told this story, Modi’s eyes filled with tears. Even after all these years, he was moved by the memory.

My friend used this story to make the point that Modi’s vision of the world is experiential. If he experiences something, he understands it. When he became chief minister of Gujarat, he made it his stated mission to get reliable electricity to every part of Gujarat. No doubt this was shaped by the time he flicked a switch as a young boy and the fan did not budge. Similarly, he has given importance to things like roads and cleanliness, since he would have experienced the impact of those as a young man.

My term for him, inspired by Rajat Kapoor’s 2014 film, is ‘the ankhon dekhi prime minister’. At one level, this is a good thing. He sees a problem and works for the rest of his life to solve it. But what of things he cannot experience?

The economy is a complex beast, as is society itself, and beyond a certain level, you need to grasp abstract concepts to understand how the world works. You cannot experience them. For example, spontaneous order, or the idea that society and markets, like language, cannot be centrally directed or planned. Or the positive-sum nature of things, which is the engine of our prosperity: the idea that every transaction is a win-win game, and that for one person to win, another does not have to lose. Or, indeed, respect for individual rights and free speech.

One understands abstract concepts by reading about them, understanding them, applying them to the real world. Modi is not known to be a reader, and this is not his fault. Given his background, it is a near-miracle that he has made it this far. He wasn’t born into a home with a reading culture, and did not have either the resources or the time when he was young to devote to reading. The only way he could learn about the world, thus, was by experiencing it.

There are two lessons here, one for Modi himself and others in his position, and another for everyone.

The lesson in this for Modi is a lesson for anyone who rises to such an important position, even if he is the smartest person in the world. That lesson is to have humility about the bounds of your knowledge, and to surround yourself with experts who can advise you well. Be driven by values and not confidence in your own knowledge. Gather intellectual giants around you, and stand on their shoulders.

Modi did not do this in the case of demonetisation, which he carried out against the advice of every expert he consulted. We all know the damage it caused to the economy.

The other learning from this is for all of us. How do we make sense of the world? By connecting dots. An ankhon-dekhi approach will get us very few dots, and our view of the world will be blurred and incomplete. The best way to gather more dots is reading. The more we read, the better we understand the world, and the better the decisions we take. When we can experience a thousand lives through books, why restrict ourselves to one?

A good man with noble intentions can make bad decisions with horrible consequences. The only way to hedge against this is by staying humble and reading more. So when you finish reading this piece, think of an unread book that you’d like to read today – and read it!

We Must Reclaim Nationalism From the BJP

This is the 18th installment of The Rationalist, my column for the Times of India.

The man who gave us our national anthem, Rabindranath Tagore, once wrote that nationalism was “a great menace.” He went on to say, “It is the particular thing which for years has been at the bottom of India’s troubles.”

Not just India’s, but the world’s: In his book The Open Society and its Enemies, published in 1945 as Adolf Hitler was defeated, Karl Popper ripped into nationalism, with all its “appeals to our tribal instincts, to passion and to prejudice, and to our nostalgic desire to be relieved from the strain of individual responsibility which it attempts to replace by a collective or group responsibility.”

Nationalism is resurgent today, stomping across the globe hand-in-hand with populism. In India, too, it is tearing us apart. But must nationalism always be a bad thing? A provocative new book by the Israeli thinker Yael Tamir argues otherwise.

In her book Why Nationalism, Tamir makes the following arguments. One, nation-states are here to stay. Two, the state needs the nation to be viable. Three, people need nationalism for the sense of community and belonging it gives them. Four, therefore, we need to build a better nationalism, which brings people together instead of driving them apart.

The first point needs no elaboration. We are a globalised world, but we are also trapped by geography and circumstance. “Only 3.3 percent of the world’s population,” Tamir points out, “lives outside their country of birth.” Nutopia, the borderless state dreamed up by John Lennon and Yoko Ono, is not happening anytime soon.

If the only thing that citizens of a state have in common is geographical circumstance, it is not enough. If the state is a necessary construct, a nation is its necessary justification. “Political institutions crave to form long-term political bonding,” writes Tamir, “and for that matter they must create a community that is neither momentary nor meaningless.” Nationalism, she says, “endows the state with intimate feelings linking the past, the present, and the future.”

More pertinently, Tamir argues, people need nationalism. I am a humanist with a belief in individual rights, but Tamir says that this is not enough. “The term ‘human’ is a far too thin mode of delineation,” she writes. “Individuals need to rely on ‘thick identities’ to make their lives meaningful.” This involves a shared past, a common culture and distinctive values.

Tamir also points out that there is a “strong correlation between social class and political preferences.” The privileged elites can afford to be globalists, but those less well off are inevitably drawn to other narratives that enrich their lives. “Rather than seeing nationalism as the last refuge of the scoundrel,” writes Tamir, “we should start thinking of nationalism as the last hope of the needy.”

Tamir’s book bases its arguments on the West, but the argument holds in India as well. In a country with so much poverty, is it any wonder that nationalism is on the rise? The cosmopolitan, globe-trotting elites don’t have daily realities to escape, but how are those less fortunate to find meaning in their lives?

I have one question, though. Why is our nationalism so exclusionary when our nation is so inclusive?

In the nationalism that our ruling party promotes, there are some communities who belong here, and others who don’t. (And even among those who ‘belong’, they exploit divisions.) In their us-vs-them vision of the world, some religions are foreign, some values are foreign, even some culinary traditions are foreign – and therefore frowned upon. But the India I know and love is just the opposite of that.

We embrace influences from all over. Our language, our food, our clothes, our music, our cinema have absorbed so many diverse influences that to pretend they come from a single legit source is absurd. (Even the elegant churidar-kurtas our prime minister wears have an Islamic origin.) As an example, take the recent film Gully Boy: its style of music, the clothes its protagonists wear, even the attitudes in the film would have seemed alien to us a few decades ago. And yet, could there be a truer portrait of young India?

This inclusiveness, this joyous khichdi that we are, is what makes our nation a model for the rest of the world. No nation embraces all other nations as ours does. My India celebrates differences, and I do as well. I wear my kurta with jeans, I listen to ghazals, I eat dhansak and kababs, and I dream in the Indian language called English. This is my nationalism.

Those who try to divide us, therefore, are the true anti-nationals. We must reclaim nationalism from them.

To Escalate or Not? This Is Modi’s Zugzwang Moment

This is the 17th installment of The Rationalist, my column for the Times of India.

One of my favourite English words comes from chess. If it is your turn to move, but any move you make makes your position worse, you are in ‘Zugzwang’. Narendra Modi was in zugzwang after the Pulwama attacks a few days ago—as any Indian prime minister in his place would have been.

An Indian PM, after an attack for which Pakistan is held responsible, has only unsavoury choices in front of him. He is pulled in two opposite directions. One, strategy dictates that he must not escalate. Two, politics dictates that he must.

Let’s unpack that. First, consider the strategic imperatives. Ever since both India and Pakistan became nuclear powers, a conventional war has become next to impossible because of the threat of a nuclear war. If India escalates beyond a point, Pakistan might bring their nuclear weapons into play. Even a limited nuclear war could cause millions of casualties and devastate our economy. Thus, no matter what the provocation, India needs to calibrate its response so that the Pakistan doesn’t take it all the way.

It’s impossible to predict what actions Pakistan might view as sufficient provocation, so India has tended to play it safe. Don’t capture territory, don’t attack military assets, don’t kill civilians. In other words, surgical strikes on alleged terrorist camps is the most we can do.

Given that Pakistan knows that it is irrational for India to react, and our leaders tend to be rational, they can ‘bleed us with a thousand cuts’, as their doctrine states, with impunity. Both in 2001, when our parliament was attacked and the BJP’s Atal Bihari Vajpayee was PM, and in 2008, when Mumbai was attacked and the Congress’s Manmohan Singh was PM, our leaders considered all the options on the table—but were forced to do nothing.

But is doing nothing an option in an election year?

Leave strategy aside and turn to politics. India has been attacked. Forty soldiers have been killed, and the nation is traumatised and baying for blood. It is now politically impossible to not retaliate—especially for a PM who has criticized his predecessor for being weak, and portrayed himself as a 56-inch-chested man of action.

I have no doubt that Modi is a rational man, and knows the possible consequences of escalation. But he also knows the possible consequences of not escalating—he could dilute his brand and lose the elections. Thus, he is forced to act. And after he acts, his Pakistan counterpart will face the same domestic pressure to retaliate, and will have to attack back. And so on till my home in Versova is swallowed up by a nuclear crater, right?

Well, not exactly. There is a way to resolve this paradox. India and Pakistan can both escalate, not via military actions, but via optics.

Modi and Imran Khan, who you’d expect to feel like the loneliest men on earth right now, can find sweet company in each other. Their incentives are aligned. Neither man wants this to turn into a full-fledged war. Both men want to appear macho in front of their domestic constituencies. Both men are masters at building narratives, and have a pliant media that will help them.

Thus, India can carry out a surgical strike and claim it destroyed a camp, killed terrorists, and forced Pakistan to return a braveheart prisoner of war. Pakistan can say India merely destroyed two trees plus a rock, and claim the high moral ground by returning the prisoner after giving him good masala tea. A benign military equilibrium is maintained, and both men come out looking like strong leaders: a win-win game for the PMs that avoids a lose-lose game for their nations. They can give themselves a high-five in private when they meet next, and Imran can whisper to Modi, “You’re a good spinner, bro.”

There is one problem here, though: what if the optics don’t work?

If Modi feels that his public is too sceptical and he needs to do more, he might feel forced to resort to actual military escalation. The fog of politics might obscure the possible consequences. If the resultant Indian military action causes serious damage, Pakistan will have to respond in kind. In the chain of events that then begins, with body bags piling up, neither man may be able to back down. They could end up as prisoners of circumstance—and so could we.

***

Also check out:

Why Modi Must Learn to Play the Game of Chicken With Pakistan—Amit Varma
The Two Pakistans—Episode 79 of The Seen and the Unseen
India in the Nuclear Age—Episode 80 of The Seen and the Unseen

Here Is Why the Indian Voter Is Saddled With Bad Economics

This is the 15th installment of The Rationalist, my column for the Times of India.

It’s election season, and promises are raining down on voters like rose petals on naïve newlyweds. Earlier this week, the Congress party announced a minimum income guarantee for the poor. This Friday, the Modi government released a budget full of sops. As the days go by, the promises will get bolder, and you might feel important that so much attention is being given to you. Well, the joke is on you.

Every election, HL Mencken once said, is “an advance auction sale of stolen goods.” A bunch of competing mafias fight to rule over you for the next five years. You decide who wins, on the basis of who can bribe you better with your own money. This is an absurd situation, which I tried to express in a limerick I wrote for this page a couple of years ago:

POLITICS: A neta who loves currency notes/ Told me what his line of work denotes./ ‘It is kind of funny./ We steal people’s money/And use some of it to buy their votes.’

We’re the dupes here, and we pay far more to keep this circus going than this circus costs. It would be okay if the parties, once they came to power, provided good governance. But voters have given up on that, and now only want patronage and handouts. That leads to one of the biggest problems in Indian politics: We are stuck in an equilibrium where all good politics is bad economics, and vice versa.

For example, the minimum guarantee for the poor is good politics, because the optics are great. It’s basically Garibi Hatao: that slogan made Indira Gandhi a political juggernaut in the 1970s, at the same time that she unleashed a series of economic policies that kept millions of people in garibi for decades longer than they should have been.

This time, the Congress has released no details, and keeping it vague makes sense because I find it hard to see how it can make economic sense. Depending on how they define ‘poor’, how much income they offer and what the cost is, the plan will either be ineffective or unworkable.

The Modi government’s interim budget announced a handout for poor farmers that seemed rather pointless. Given our agricultural distress, offering a poor farmer 500 bucks a month seems almost like mockery.

Such condescending handouts solve nothing. The poor want jobs and opportunities. Those come with growth, which requires structural reforms. Structural reforms don’t sound sexy as election promises. Handouts do.

A classic example is farm loan waivers. We have reached a stage in our politics where every party has to promise them to assuage farmers, who are a strong vote bank everywhere. You can’t blame farmers for wanting them – they are a necessary anaesthetic. But no government has yet made a serious attempt at tackling the root causes of our agricultural crisis.

Why is it that Good Politics in India is always Bad Economics? Let me put forth some possible reasons. One, voters tend to think in zero-sum ways, as if the pie is fixed, and the only way to bring people out of poverty is to redistribute. The truth is that trade is a positive-sum game, and nations can only be lifted out of poverty when the whole pie grows. But this is unintuitive.

Two, Indian politics revolves around identity and patronage. The spoils of power are limited – that is indeed a zero-sum game – so you’re likely to vote for whoever can look after the interests of your in-group rather than care about the economy as a whole.

Three, voters tend to stay uninformed for good reasons, because of what Public Choice economists call Rational Ignorance. A single vote is unlikely to make a difference in an election, so why put in the effort to understand the nuances of economics and governance? Just ask, what is in it for me, and go with whatever seems to be the best answer.

Four, Politicians have a short-term horizon, geared towards winning the next election. A good policy that may take years to play out is unattractive. A policy that will win them votes in the short term is preferable.

Sadly, no Indian party has shown a willingness to aim for the long term. The Congress has produced new Gandhis, but not new ideas. And while the BJP did make some solid promises in 2014, they did not walk that talk, and have proved to be, as Arun Shourie once called them, UPA + Cow. Even the Congress is adopting the cow, in fact, so maybe the BJP will add Temple to that mix?

Benjamin Franklin once said, “Democracy is two wolves and a lamb voting on what to have for lunch.” This election season, my friends, the people of India are on the menu. You have been deveined and deboned, marinated with rhetoric, seasoned with narrative – now enter the oven and vote.

We Live in an Age of Bullshit

A slightly shorter version of this was published as the 14th installment of The Rationalist, my column for the Times of India.

Whenever the pressures of the world get too much for me, I lighten the burden by going over to Donald Trump’s Twitter feed. Trump, the only president who would fail the Turing Test, keeps lashing out at opponents and saying outrageous things, often in ALL-CAPS, the internet version of screaming. It’s wonderfully entertaining, and got even more so when he lashed out at Narendra Modi last week.

Trump said: “I could give you an example where I get along very well with India and Prime Minister Modi. But he is constantly telling me, he built a library in Afghanistan. Library! That’s like five hours of what we spend. And he tells me. He is very smart. We are supposed to say, oh thank you for the library. Don’t know who’s using it in Afghanistan.”

Modi fanbois also tend to be Trump fanbois because they like macho men, and this must have been confusing to them at multiple levels. One, why was Trump lashing out at Modi? Two, if Trump is telling the truth, why does Modi keep boasting about building a library? Three, what library?

After much googling in the PMO, our officials figured that despite having spent over US$ 3 billion in Afghanistan since 2001, we hadn’t built a library. Maybe Trump confused the parliament building with a library – but it was unlikely that Modi would boast to Trump even about that, especially ‘constantly.’ So Trump was lying, right?

No, Trump wasn’t lying, I say. He was bullshitting.

I’m not just dropping slang here. ‘Bullshit’ may appear to be a pejorative, but it has become a technical term after the philosopher Harry Frankfurt published his seminal book, On Bullshit, in 2005. And if we are to understand the likes of Trump, it is important to understand the distinction between ‘bullshit’ and ‘lies’.

A liar, as per Frankfurt, acknowledges the truth, and aims to deceive. For a bullshitter, the truth is irrelevant. Bullshitters aim not to deceive, but are just winging it, saying whatever comes into their head at a given point in time, which may or may not be true. For Trump, everything comes down to how macho he is, and how others are messing around at America’s expense and only he can stop them. His boast about Modi ‘constantly’ talking to him about a library was in this vein. He could also have said that Modi wears ladies underwear, or Modi begged him to open a casino in Lutyen’s Delhi, or Modi wore a suit with his name on it – any relationship that bullshit has with the truth is usually coincidental.

Trump bullshits a lot – and then doubles down on his bullshit once he has released it. For example, the wall that Mexico will pay for. I am sure he was winging it when he first came up with it.

Ironically, his latest target is a master bullshitter himself. When Modi spoke of the first plastic surgery in India being done on Lord Ganesha, or climate change being a consequence of people getting older, he wasn’t lying but bullshitting. He is not educated or knowledgeable enough to know the truth in any of those cases, so it does not matter to him. And it seems not to matter to any of us either.

Politicians can get away with bullshit (and lying) because people don’t care about facts. We tend to form echo chambers with like-minded people, form whatever worldview appeals to us, and shut ourselves off from conflicting views.

Behavioural scientists point to hard-wiring in the brain that strengthens this process. The Confirmation Bias ensures that we only consider facts that agree with our worldview and ignore the rest. The Backfire Effect, worryingly for fact-checkers, ensures that our worldviews actually grow stronger when we are presented with conflicting evidence.

These echo chambers, once formed, tend to grow more and more strident. Experiments by social scientists have found that when people with similar opinions are thrown together in a group, they tend to take decisions more extreme than any one individual would take. (This is known as ‘group polarisation’.) You see this in social media, where discourse is polarised and opposing sides are talking past each other, not to each other, with every individual performing to impress his own side.

When all discourse takes place along tribal lines, rhetoric matters, facts don’t.

Is bullshit a feature or a bug? An entire nation will vote upon it this year, as India goes to the polls. Narendra Modi has focussed entirely on optics and not on performance, betting that once people have formed a narrative inside their heads, facts are irrelevant. Is an A+ in campaigning more important than a F in governance? We will soon find out what the people of India think.