Thinking it Through

Remembering Frédéric Bastiat

This is the 38th installment of my weekly column for Mint, Thinking it Through.

A few days ago, I was fortunate enough to win the 2007 Frédéric Bastiat Prize for Journalism. I picked up a handsome cheque and an engraved candlestick at a ceremony in Manhattan, and reflected that much as I valued the money and would cherish the candlestick, I would have been happier if the writings that made me eligible for this award had been unnecessary. The Bastiat Prize, according to its organizers, is meant for “journalists whose writings wittily and eloquently explain, promote and defend the principles of the free society.” In the India of my dreams, I would not need to do those things.

Frédéric Bastiat was a French essayist who lived in the first half of the 19th century. His ideas, however, are terribly relevant to modern India. Indeed, if his work had been widely read and understood by the men who brought us freedom and shaped our nation after independence, we would not be such a poor country. Virtually every mistake that independent India’s policymakers made in the economic sphere could have been avoided if they had just read his great essay, That Which is Seen, and That Which is Not Seen.

It begins: “In the department of economy, an act, a habit, an institution, a law, gives birth not only to an effect, but to a series of effects. Of these effects, the first only is immediate; it manifests itself simultaneously with its cause—it is seen. The others unfold in succession—they are not seen: it is well for us, if they are foreseen. Between a good and a bad economist this constitutes the whole difference—the one takes account of the visible effect; the other… both of the effects which are seen, and also of those which it is necessary to foresee.”

To illustrate the difference between what is seen (and that a bad economist notices) and what is not seen (that a good economist foresees) Bastiat gives us the parable of the broken window. Imagine that a young boy breaks a shopkeeper’s window. At first onlookers commiserate with the shopkeeper, but then they point out that this is actually good for the economy. After all, the glazier will get 6 francs for repairing the window, and he might spend it on various goods and services, which would benefit the producers of those, and so on.

But this is bad economics. A good economist would also consider the hidden costs of the broken window. Had the shopkeeper not spent 6 francs on repairing the window, he would have spent it on something else, bringing the same benefits to the economy as the glazier’s spending that money. While the glazier’s spending is seen, the spending not done by the shopkeeper is not seen. One man’s loss equals the other man’s gain—and the economy, as a whole, loses the value of the broken window.

This seems commonsensical, doesn’t it? And yet, economists and politicians commit the Broken Window Fallacy all the time, such as when they say war is good for the economy, or when they talk about the economic benefits of Hurricane Katrina or 9/11—or of government spending.

When the government spends money, the bad economist extols the good that the spending does. The good economist sees the price that the taxpayer pays. Bastiat writes: “You compare the nation, perhaps, to a parched tract of land, and the tax to a fertilizing rain. Be it so. But you ought also to ask yourself where are the sources of this rain and whether it is not the tax itself which draws away the moisture from the ground and dries it up?”

Indeed, all government spending carries hidden costs, for not only do taxpayers lose the money that the government forces them to part with, they are also disincentivized from working harder or expanding their businesses. Society is at a loss for this. And yet, India’s economy, since independence, has been based on a massive mai-baap government, growing like a hungry beast at our expense.

Protectionist policies—subsidies, tariffs and various market barriers—are another example of ignoring what is not seen (the cost that consumers bear) for what is seen (the benefit that accrues to producers). To illustrate this, Bastiat wrote the magnificent satire, The Candlemakers’ Petition, in which candlemakers petition the French government for protection against competition from the sun.

When Sonia Gandhi wrote a letter to Manmohan Singh earlier this year warning him that foreign investment would threaten small kirana shops, she was petitioning for candlemakers. Indian newspapers do the same when they oppose foreign investment in media. Every powerful business group or lobby tries to block out the sun, as does the government. And who is left in darkness? We are.

I could go on and on, but Bastiat, the master of the crisp, lucid elucidation, would not approve. So I shall end here. To read Bastiat’s writings, do check out http://bastiat.org. It will all seem so familiar.

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You can browse through all my columns for Mint in my Thinking it Through archives.

The Population Myth

This is the 37th installment of my weekly column for Mint, Thinking it Through.

Government of India websites can be a hoot sometimes. If you visit the website for the department of family welfare, you will find the flashing slogan, “Have fun with one!!! Control population!!!” Had there been a place to leave comments on that site, I would have written, “Have fun with one! Control exclamation marks!”

When I was a schoolkid, I was taught that a key reason for the poverty of countries like India is their population. This is almost considered axiomatic in India today—and in much of the world, in fact. The thinking behind this is simple: there are a limited amount of resources on our planet, and if there are too many people, there won’t be enough resources to go around. We’ll run out of food. We’ll run out of natural resources. We’ll soon run out of land, and there will be “standing room only”. Harrison Brown once worried about the population increasing “until the earth is 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”.

It’s been a while since Brown’s prediction, and the earth isn’t a dead cow yet. If his kind of alarmist thinking was true, we’d have seen two trends over the last few decades: one, population density would be an indicator of poverty, and people would want to migrate away from cities, and not to them. Two, resources would have become scarcer and the quality of life would have gone down wherever populations have risen. In reality, quite the opposite has happened.

A recent study by Nicholas Eberstadt of the American Enterprise Institute, titled ‘Too Many People?’, looks at the impact of population on the world. First, Eberstadt finds no link between population density and poverty: he points out that Monaco, with a population density almost 40 times that of Bangladesh, is doing well for itself. So are Bermuda and Bahrain, which are more “overcrowded” than Bangladesh and India.

Eberstadt’s report also points out that over the last century, the real prices (deflated by the value of manufactured products) of wheat, maize and rice have dipped sharply, as have the real prices of non-renewable resources such as metals. Life expectancy has shot up in this time. Eberstadt concludes that while the natural resources of our planet might be limited, we are “now experiencing a monumental expansion of a different type of resource: human resources. Unlike natural resources, human resources are in practice always renewable and in theory entirely inexhaustible.”

Indeed, these human resources are the most valuable of all. All human beings, if allowed to express their creativity, add more value to the world than they consume. When two people exchange goods or services, both benefit, and more people means more trade. More people also means more specialization and division of labour —one theory holds that England’s industrial revolution was enabled by this.

Economist Julian Simon, in his book The Ultimate Resource, points out that historically, spurts in world population have coincided with leaps in productivity. The first one happened at around a million BC, at the time of the tool-making revolution. The next spurt came at about 10,000 BC, when we began to cultivate the earth. The latest one began about three centuries ago, and continues today, as the growth of technology has led to vastly higher standards of living, and longer lifespans than ever before.

If population growth was undesirable, why would people migrate to cities in such large numbers? In cities, we become part of economic networks that are larger than what we would get in smaller places, with more opportunities, and a greater chance to specialize. Across history, the prosperity of a nation has gone hand in hand with increasing urbanization. India’s cities may have much that is wrong with them—they are congested, polluted and lack all sorts of infrastructure—but still people flood in every day.

Government authorities insult us when they say that India’s problem is too many people. On the contrary, India’s problem is an inept and bloated state. It does not allow free markets that would enable the entrepreneurship and creativity natural to all humans. It has a monopoly on building infrastructure, and has failed utterly, leading to the crises we see in all our major cities, and the absence of roads in the hinterlands that would allow more urban centres to come up. In areas essential to unleashing our “ultimate resource”, such as education and health care, it has constrained private enterprise while itself being incompetent. In short, the cause of India’s poverty is not its people, but its system of government.

But look where the sanctimony comes from!

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You can browse through all my columns for Mint in my Thinking it Through archives.

My thanks to Gautam Bastian for pointing me to the department of family welfare website, and to the cartel for their inputs.

Dear Rahul Gandhi

This is the 36th installment of my weekly column for Mint, Thinking it Through.

Dear Rahul

Congratulations on your recent elevation as general secretary of the Congress party. Yes, I know, it was just a formality, and there’s more to come. Still, it’s a start, and one that you used to make a statement.

Shortly after getting this post, you took a delegation to Manmohan Singh and asked for the National Rural Employment Guarantee Scheme (NREGS) to be extended to all 593 districts of this country. A couple of days later, the Prime Minister announced that extension. With this, you demonstrated your clout in the party, and you also made a gesture of commitment towards the poor people of this country.

I have a question, though. Have you had a chance to look at the reports evaluating the NREGS that have been released recently? One of them, by the Society for Participatory Research in Asia, found that just 6% of the households registered under the scheme actually got 100 days of employment in 2006-07. Another, carried out by the Centre of Environment and Food Security (CEFS) a few months ago, is even more worrying.

“(A)bout 75% of the (NREGS) funds spent in Orissa have been siphoned and pocketed by the government officials,” it reports, “and this loot has been very participatory and organized.” The CEFS could not find “a single case where entries in the job cards are correct and match with the actual number of workdays physically verified with the villagers”. The report concludes: “(O)ut of Rs733 crore spent in Orissa during 2006-7, more than Rs500 crore has been siphoned and pocketed by the government officials of executing agencies.”

These figures are astonishing, for one-third of the money has not been reported as siphoned off. As your father, Rajiv Gandhi, once remarked, only about 15% of government spending on the poor reaches the intended beneficiary. India’s chief justice, K.G. Balakrishnan, recently spoke out against the Public Distribution System, saying that in some states, “not a single grain reaches the common man”.

A common reaction to these findings would be: “Oh, the programmes are OK, it’s the implementation that has been faulty. We just need to fix that, and all will be well.” But Rahul, surely you know that these are not aberrations that can be sorted out with a committee here and an inquiry panel there. This corruption is written into the system itself.

It is in the nature of government to want to increase its power, influence and budgets. This is exacerbated when government servants are unaccountable and tenured, as they effectively are in India. Government servants, like other rational human beings, look to their self-interest first. All their incentives are tailored towards misuse of power, with no safeguards built into the system against it.

Even if you could magically transform every bureaucrat in India into a paragon of honesty, a scheme like the NREGS would still be a mistake. That is because the scheme has a cost: The money spent on it doesn’t come from the heavens, but from your maidservant and your driver and millions of poor people in this country, who may never file returns, but are constantly assailed by hidden taxes.

Leave aside the many ways in which you could spend this money better: solving India’s power shortage, building roads to connect India’s hinterlands so that smaller urban centres can take the load off the big cities, and so on. If you just leave this money with the taxpayers to begin with, they will put it to more productive use than an unaccountable government spending someone else’s money. Also, individuals will have more incentives to work hard if they are taxed less, and businesses will have more resources available for expansion, all of which benefits the economy, raises productivity and creates jobs.

Indeed, if it’s employment you really want to provide, the best way to do so would be to remove the barriers to private enterprise that exist in this country. Put an end to the licence and inspection raj, reform our labour laws, abolish the laws that agricultural land can only be used for agricultural purposes, remove the restrictions on many goods being manufactured by anyone other than “small scale units”, and welcome foreign investment. All of these will provide far more employment than the well-intentioned but ill-conceived NREGS.

Rahul, in the same breath that the media acknowledges you as a future leader of this country, it mocks you for having nothing but your family name as your qualification. Prove us wrong. Reject received wisdom, learn from the lessons of the past 60 years, and convince your party that the key to India’s prosperity lies not in the actions of its government, but in the enterprise of its people. Set them free.

All the best.

Amit

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Also read: My WSJA Op-ED on the subject that appeared today, How Not to Help India’s Rural Poor.

My Op-Ed from two years ago: Good Intentions, Bad Ideas.

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My thanks to Prem Panicker, fellow Warrior Against Wastage, for sending me the reports referred to in this piece.

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You can browse through all my columns for Mint in my Thinking it Through archives.

A Political Game Show

This is the 35th installment of my weekly column for Mint, Thinking it Through.

In the last few days, I have been thinking deeply about how to solve India’s problems. I have interspersed this demanding activity with furious bouts of watching television. One moment I ponder over who I should vote for in the next general elections. The next moment I send an SMS voting for Aneek Dhar in Sa Ra Ga Ma Pa. A moment later I worry about poverty. Then I watch a repeat of Jhalak Dikhla Ja. Thus the moments pass.

After all this, I have come to the conclusion that only television can solve problems. This has been reinforced by some big bloggers, which means I am right. Scott Adams, on the Dilbert Blog, has proposed a new reality show that pits think tanks against one another, with the public getting to vote for the policies they like. Alex Tabarrok, on Marginal Revolution, has suggested a game show called So You Think You Can Be President?, which puts presidential candidates through rigorous and entertaining tests.

I suggest a similar game show for India, tailored to discovering the qualities that matter to Indian voters. Instead of going out to vote at polling booths, which involves arduous physical labour (at least to a desk-bound half-Bengali like me), we should be allowed to vote via SMS and phone calls. The revenues thus generated can go straight into the government’s coffers, and taxes can be abolished. (See, don’t you like this idea already?)

As there are 545 seats to be filled in the Lok Sabha, there can be 1090 regular episodes of this show, which we can call, ahem, Kaun Banega Lok Sabha MP? There will be two episodes per constituency: one for the contenders to flaunt their skills, and another to announce the result. And yes, voting will not be restricted to the residents of a particular constituency alone, for no constituency is an island. (Andaman and Nicobar Islands are many islands, but you know what I mean.) Multiple voting will also not be barred – those who vote the most care the most, and deserve to have more say. Plus, they’re effectively paying our taxes.

Once all the MPs of a state are chosen, there can be a few extra episodes to choose the parliamentary leaders of each party, with the entire country ensuring inner-party democracy. And thus the government will be formed. At four episodes a week – Monday to Thursday, the Kyunki Saas Bhi Kabhi Bahu Thi model – the process of choosing the Lok Sabha will last just over five years, which is the term of a current MP anyway. Only, unlike in the present system, the constitution of the Lok Sabha will change every week. The flux will keep shaky coalition governments on their toes, and revenues should remain healthy.

Anyway, all that is boring. Let’s get to the content. What will the politicians really do in this reality show? I propose that the contenders be put through a number of rounds to weed out unworthies, before the public gets to vote on the final three. These rounds could include:

One, The Chai-Paani Round. One quality an Indian politician must have is the ability to monetize a position of power to maximum effect. (Forgive the jargon, but I don’t like words like ‘bribe’ and ‘corruption’. Very crude.) In this round, the candidates will be given unexpected positions of power for a day, and their takings will be compared at the end of the show. For example, they could all be made clerks at the RTO for a working day. The lowest earners will be eliminated.

Two, The Gunda Raj Round. In this round, one crore rupees will be stuffed into the pocket of each candidate, and they will be dumped in the middle of a violent constituency unknown to them, with their whereabouts made available to all the criminal gangs of that area. (Each candidate will be in a separate place, alone.) The contestants will be judged on how much money they manage to keep with themselves, and the truly talented politicians will no doubt even multiply it. This will test their resourcefulness, diplomacy and alliance-building skills.

Three, The God-Promise Round. In this round, the contestants will make promises to the voters on what they will do for them once they are in power. The producers will calculate the total amount of money these promises will cost. If any candidate’s promises end up costing more than the amount of money raised in that episode by SMSs, he will get disqualified at the start of the result round. If his promises are especially outrageous, he may get a wildcard entry into Kaun Banega Rajya Sabha MP?, which will be telecast on weekends.

Four, The Naach-Gaana Round. We are a song-and-dance nation, and this round might ensure that, unlike in the current system, our leaders have at least one talent to their name. Also, I demand that Anu Malik be one of the judges. My life will be complete if I get to see Manmohan Singh singing “You are My Sonia” in front of Anu Malik. Wouldn’t you like that too?

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You can browse through all my columns for Mint in my Thinking it Through archives.

These Dreams of Flying

This is the 34th installment of my weekly column for Mint, Thinking it Through.

Earlier this week I escorted my aunt from Chandigarh to Delhi, where she was due to catch a flight back to the US. She was in India after many years, and at Chandigarh airport she looked around us and remarked that many of our fellow travellers would probably have travelled in trains a decade ago. I gushed about how competition in the airlines industry had made prices so much more affordable for all of us. Lower prices, more choices, yada yada yada.

Having dropped her off, I made my way back to Mumbai where I came across this poignant news report in London’s Sunday Times:

An Indian entrepreneur has given a new twist to the concept of low-cost airlines. The passengers boarding his Airbus 300 in Delhi do not expect to go anywhere because it never takes off.

All they want is the chance to know what it is like to sit on a plane, listen to announcements and be waited on by stewardesses bustling up and down the aisle.

In a country where 99% of the population have never experienced air travel, the “virtual journeys” of Bahadur Chand Gupta, a retired Indian Airlines engineer, have proved a roaring success.

While flying has become relatively affordable over the last decade, for most people in India it is still a dream. Kudos to Gupta for finding a market in these dreams of flying, but I can’t help thinking that many of his customers could actually take a flight for themselves if the government just got out of the way. How is that? Let me explain.

I flew from Delhi to Mumbai on a GoAir flight that cost me Rs1,985. Out of that, Rs1,485 was taxes to the government, with the airline pocketing just Rs500 of my fare. Indeed, I have bought tickets in the past that have brought the airline in question around Rs100, but the total cost of my ticket has always been more than Rs1,500 because of the taxes. And how much did a ticket to Gupta’s make-believe plane cost? According to the Sunday Times report, “about £2 each”.

If the government did not take its hafta, flying would be within reach of Gupta’s customers, and of most people who travel by trains. Sure, most tickets would cost more than a hundred bucks, but having booked umpteen flights on makemytrip.com, I think it is safe to say that if you booked in advance, you’d be able to fly anywhere in the country for between Rs500 and Rs2,000.

During her visit to India, my aunt was also amazed at the ubiquity of mobile phones. Everyone she met had a mobile, from my parents’ cook to the drivers of autorickshaws we rode on, and so on. They could not have dreamed of owning a landline 10 years ago, and if they were from out of town, they would have made an STD call to their families once a month. Indeed, even middle-class people often had to spend years on a waiting list to be ‘allotted’ a landline in the 1980s. Today, because of competition, most people, at least in cities, can afford mobile phones.

The lesson there is that the more the government removes barriers to trade, the more people benefit. Governments pay lip service to fulfilling the needs of people, but that is something that businesses do best. Any business that fails to satisfy its customers will fail in a truly competitive market. Any need that people have in a free market will be fulfilled by some entrepreneur or the other. The efficiency that competition forces upon these businesses cannot be matched by government, for the incentives of government employees are tailored towards increasing their power, influence and budgets—and nothing else.

The exorbitant taxes that the government takes off airline tickets are effectively a barrier to trade. Such barriers, typically, harm the poor more than the rich. I don’t know what the government does with these taxes, as it does not present us with an itemized account of how it spends our money, but I am certain the private sector can do it better.

The taxes charged on our airline tickets come at a cost. One, they act as a brake on the expansion of the industry, which would serve more customers, provide more quality and employ more people if there were minimal taxes. Two, they take money away from people who would otherwise spend it or save it, and would surely do so to more productive purpose for the economy than an unaccountable government spending someone else’s money.

The state has failed miserably in performing the few tasks that justify its existence, such as providing effective law and order. Instead, it collects a vast amount of hafta from us, most of which is wasted, as Rajiv Gandhi once admitted and none of his successors would have the audacity to deny. It has also hobbled free enterprise, the cost of which is felt by the many people who sit inside Bahadur Chand Gupta’s plane, listening to the announcements, dreaming of flying, waiting to take off.

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You can browse through all my columns for Mint in my Thinking it Through archives.

I got the Sunday Times link via email from Anand Krishnamoorthi. My thanks to the cartel for its inputs—as always.

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Update (October 5): Readers have written in to inform me that a fair chunk of what the airlines list under ‘taxes’ is actually a fuel surcharge that goes to the airlines. That may be so, but aviation fuel in India is heavily taxed, and is consequently much more expensive than in other South-Asian countries. The latest figures I could get hold of were from a year ago, when aviation fuel cost Rs37,000 / kl in India, as opposed to Rs22,383 in Bangkok, Rs21,111 in Singapore, Rs21,427 in Kuala Lampur and so on. Obviously the airlines pass on this extra burden onto the consumers, but it may not have been such a burden in the first place if not for the taxes.

It’s hard to say exactly what percentage of the fuel surcharge can be attributed to the tax on aviation fuel, but I’m guessing that’s a huge factor. Either ways, I stand by my argument.

The Twenty20 Age Begins

This is the 33rd installment of my weekly column for Mint, Thinking it Through.

Monday has long passed, and the immediate elation around India’s victory in the Twenty20 World Cup has abated. Yet, I still feel excited, and certain of the historical significance of this win. In 1975, when the first One Day International (ODI) World Cup took place, it seemed like a tamasha to everyone, a passing fancy. Today, it is a huge deal, and West Indies are inscribed as its first winners. I’m certain that the Twenty20 World Cup will be as important one day, and India will be remembered as its first champions. That’s quite something.

My excitement is not just about India winning. I am as charged up about Twenty20 cricket, though it is a format I was initially suspicious of, being a purist in love with the intricate and elongated dramas of Test cricket. My preconceptions about Twenty20 cricket have been—forgive the cliché, but I can’t resist this one—knocked for a six.

I believed that it was a sloggers’ game, and that bowlers were doomed. That is clearly not true. Bowlers played a key role in every victory in this World Cup, and players like RP Singh, Daniel Vettori, Stuart Clark, Umar Gul and Irfan Pathan (in the final) showed that traditional bowling skills—as opposed to just pitching it full and hoping it doesn’t go for six—are central to this game. And slogging alone isn’t enough to do well—in fact, it’s an invitation to disaster, for canny bowlers will always lure sloggers out, and wickets hurt every team.

In the simplistic view of the cynics—and I was one myself—the three-hour version of cricket has no space for subtleties or nuance. I now disagree. Most other sports are played in shorter spans of time, and a 90-minute game of soccer and a three-set game of tennis have plenty of subtlety and nuance. Cricket has enough drama in its DNA to be enthralling in any span of time, and we got a demonstration of it during this World Cup.

Twenty20 cricket will evolve just as one-day cricket did. In the 1970s and 1980s, cricketers took a similar approach to an ODI as they did to a Test match. (Remember Gavaskar’s 36 not out in 1975, and Boycott and Brearley in the 1979 final?) It took time for players to figure out the game, for captains to develop strategies suited to 50 overs of play, for cricketers to work on skills tailored to this new form. Many of those—the quick singles, the sharp fielding, pacing a chase—transformed Test cricket as well.

Similarly, Twenty20 cricket has a grammar and rhythm of its own, with an increased urgency around each delivery, and players will soon adapt to it, and export those qualities to other forms of the game. There will be more 400-plus scores in one-day cricket, and an individual double-century is surely not far away. The mental framework of our international cricketers has been changed by Twenty20 cricket, and it will impact ODIs and Tests as well.

Contrary to what many expect, though, I don’t see Twenty20 cricket becoming the commercial heart of the international game anytime soon. This is simply because there are more commercial breaks in a one-day match. As long as ODIs have a following, cricket boards will schedule more of those, though that might change if ODIs go the way of Test matches in terms of viewership.

Twenty20 games can have a powerful impact on domestic cricket, though. At the moment domestic cricket, particularly in the subcontinent, has a negligible following. Most of us don’t have the time to watch domestic games, especially as the international calendar is so crowded. Twenty20 cricket makes fewer demands on our time, and domestic Twenty20 tournaments, if well organized and promoted, should draw healthy audiences. That will also expose newer stars to the cricket-watching public.

Speaking of new stars, a big reason why this World Cup was so important for us was that it gave us a snapshot of the future. The decision by the Dravid-Tendulkar-Ganguly trio to withdraw from the tournament was a magnificent one for Indian cricket, as it gave us a chance to see what a young Indian team, without the baggage of the past, would look like. MS Dhoni’s team looked united, confident, devoid of politics and happy together.

That does not mean that we should discard the older players, for we need them in the season ahead, and should persist with them as long as they merit their place. But it does invalidate the argument that we should stick with our legends because the newcomers aren’t good enough. This tournament showed that we have eager, hungry young players waiting their turn, and any seniors who underperform should be shown the door—respectfully, but without regret.

I’m suspicious of false euphoria, and wary that I might fall prey to it myself. But I can’t help thinking that exciting times lie ahead for both India and the game of cricket. What do you think?

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You can browse through all my columns for Mint in my Thinking it Through archives. And while on the subject, also read Do We Really Love Cricket?

Fund Schooling, Not Schools

This is the 32nd installment of my weekly column for Mint, Thinking it Through.

I read a news report a couple of days back that amazed me. It was about a small village named Maji in the Yunnan province of China. The nearest school lies across the Nujiang river. There is no bridge, though a steel cable runs across.

How do the 500 children of this village get to school? The report states, “They fasten themselves to the cable with a metal carabiner and a rope and slide across the 200-metre wide canyon.” The youngest child, A Qia, is four years old, and makes the crossing by herself. A five-year-old named A Pu has been quoted as saying, “I used to dream of having a bridge, but then I learned that my dream was too expensive.”

My column today is not about bridges—not the kind that go across rivers anyway. It is about education. I never had to cross a canyon using a rope and a metal carabiner to get to school, and if the prospect had come up in my privileged home when I was a kid, I would probably have asked my dad if the metal carabiner was chauffeur-driven. I always took education for granted, the same way I took food for granted, and did not have to worry about where my next meal would come from. Much of India is not so lucky.

Poor people want education for their kids desperately and viscerally. They want their children to have a better life than they did, and they know education is the ticket. And for 60 years they have been cheated. The state has promised them quality education, has collected taxes for that purpose, and has failed.

Studies on the state of education in this country confirm what we see around us. A 2005 study of government schools by Pratham, an NGO, found that 35% of schoolkids surveyed between the ages of seven and 14 failed a reading test involving a simple paragraph, and 41% of them could not subtract or divide. A 2006 study found that half the children who enrol in the first standard drop out before reaching the eighth. A 1999 government report stated that just 53% of the accredited public schools in rural North India were engaged in teaching during surprise visits on school days.

The problem here is not one of funding. The government has thrown enormous amounts of money into education, and continues to do so. The problem here is of choice. Most poor parents across the country have no option but to send their kids to government schools, which, because of the way the incentives are aligned, are often dysfunctional.

The way out of this is to put parents in charge of the money that is supposedly being spent on their children’s education. Parents have much more at stake than the state, and are better equipped to take the right decisions for their children. Milton Friedman first proposed a method of enabling this: education vouchers. Under this system, the state does not directly fund schools, but gives school vouchers to parents. Parents use the vouchers to send their kids to a school of their choice, and the school exchanges vouchers in return for cash from the government. As in any other sector, competition then ensures that schools lift their standards and minimize wastage.

This will give optimum results if competition is allowed to flourish. Right now, it isn’t. A 2001 study by the Centre for Civil Society (CCS) found that it takes 14 licences from four authorities to open a private school in Delhi, a process that can either take years or much under-the-table money. Schools must conform to a number of unnecessary parameters such as government-trained teachers and playgrounds of a specified size. Also, bizarrely, private schools are not allowed to operate for a profit—while many work around this by setting up trusts and suchlike, others are simply scared away.

But won’t private schools be expensive? That’s what I would have thought, given the posh urban schools where my friends and I were educated, but the reality is different. Entrepreneurs in the poorest parts of India, in slums and villages, have started cheap schools with bare bones facilities to fulfil what is obviously a raging demand. And studies have shown that, with survival at stake, these schools use money twice as efficiently as government ones.

In 2005, James Tooley and Pauline Dixon did a study that found that 65% of schoolchildren in Hyderabad’s slums attended private schools instead of free government ones. And last year, CCS conducted a study (pdf link) that revealed that 14% of households in Delhi earning less than Rs5,000 per month chose to send their kids to a private school. Their studies showed that even the poorest of the poor, from maids to autorickshaw-drivers to peons, expressed their preferences clearly, even when they could barely afford it.

There is one clear reason for the miserable state of education in this country: the state has funded schools, not schooling. For India’s sake, that must change.

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I had covered much of this territory in my January Op-Ed in the Wall Street Journal Asia, Why India needs school vouchers. For more on school choice, check out Andrew Coulson’s paper, How Markets Affect Quality (pdf link).

Also, my thanks to Shrek for pointing me via email to the China story. I’ve also received many insights about school choice from chatting with Raj Cherubal of CCS and my friend Gautam Bastian. I hope to continue those conversations.

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You can browse through all my columns for Mint in my Thinking it Through archives.

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Update: Check out The Amartya Sen Fallacy.

In Defence of Blogging

This is the 31st installment of my weekly column for Mint, Thinking it Through.

Not a week goes by these days without someone bashing blogs. Last Thursday, the essayist Mukul Kesavan referred disparagingly to how the “masters of blah have migrated to the Republic of Blog”. Just days before that, Robert McCrum wrote in the Observer of how “the democracy of the Web is in danger of becoming a cacophonous nightmare”. The Times of India famously (and ironically?) wrote last year that “no one can beat Indian bloggers when it comes to self-obsessed preaching, gossiping and bitching”.

I write a fairly widely read blog, India Uncut, so let me jump to the defence of blogging. Firstly, all these gentlemen are right—but they nevertheless miss the point, as Theodore Sturgeon could have told them. When Sturgeon, a writer of science fiction, was attacked for the rubbish that came out of that genre, he famously came up with what is known today as Sturgeon’s Revelation: “90% of everything is crud.”

Sturgeon’s point was that most attacks against science fiction used “the worst examples of the field for ammunition”. And while he accepted that 90% of science fiction was rubbish, so was 90% of everything else. If one just looked at the crud component of any field, it would be easy to dismiss anything.

This problem is amplified in blogging’s case. In journalism, for example, there are filters to publishing. Newspapers and magazines have editors who constrain what goes into print, and the limitations of space ensure that a lot of crud gets filtered out.

Blogging, on the other hand, puts the tools of publishing into every individual’s hands. This is tremendously empowering, but it also means that the proportion of crud that gets published is bound to be far higher than in traditional journalism. To judge blogging by the crud is, thus, meaningless.

What about the non-crud? Well, there are so many kinds of non-crud that it’s hard to generalize about them. People blog for different reasons: to filter for interesting content on the Web; to keep an online diary; to keep their friends updated on what they do; to provide different kinds of utilities; to be read by niche audiences they cannot otherwise reach; to push causes they believe in; to comment on what’s going on in the world; and even to act as a watchdog on the supposed watchdogs, big media.

Every reader is likely to find a quality blog that caters to him or her, while journalism, especially in India, increasingly caters to the lowest common denominator. Also, journalists tend to be generalists, and their coverage of specialized subjects is often shallow. In contrast, specialists on every subject blog about their passions, delving into areas and nuances ignored by mainstream media. Economics blogs such as Marginal Revolution and Café Hayek, and the law blog, The Volokh Conspiracy, are excellent examples of this.

Blogging as a medium provides many advantages that journalists and media outlets would do well to consider. One, blogging has immediacy: Reporters are not dependent on the news cycle to get their work out, and can publish it as soon as they write it. Two, blogging provides them flexibility of space. They can blog a single thought in a handful of words without needing to expand it into a publishable piece, or a 6,000-word essay that their newspaper may not have space for.

Three, a blog adds dimensions to a piece, as one can hyperlink within it to other sources of knowledge and argument that enrich the reader’s experience. Four, blogging allows a personal tone that the dictates of a house style in a publication may not. Five, blogging opens you up to a feedback mechanism that newspapers do not provide. I am not just referring to comments, which some high-traffic bloggers avoid because the noise-to-signal ratio gets out of hand, but to the fact that the blogosphere is essentially meritocratic, and rewards excellence and punishes mediocrity virtually in real time.

If bloggers do not provide value to their readers consistently, if they do not respect their readers’ time and write crisply and lucidly, if they treat their blogging as a chore to be dispensed with, they will not be read. The impact on their traffic will be immediate and visible. In newspapers, on the other hand, such real-time feedback from readers hardly exists. For example, if most Mint readers were of the opinion that my weekly column is a waste of space, it would take a lot of time for that opinion to filter in to the editors, if at all. But if it was a blog, there would be no place to hide. The loss in readership would punish me immediately and visibly.

Ouch, I’m out of space. Damn these newspaper columns! I’m off to blog now—would you like to come along?

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You can browse through all my columns for Mint in my Thinking it Through archives. I’ve written on this subject before in the following pieces: Blogs—The New Journalism.” “Generalising About Bloggers.” “Don’t Think in Categories.”

India’s Cops Get Orwellian

This is the 30th installment of my weekly column for Mint, Thinking it Through.

I’m a huge fan of irony, and our world is full of it. Earlier this week, papers released by the National Archives in England revealed that “Special Branch police” had monitored George Orwell’s activities for a decade. In other words, Big Brother had been watching the man who would go on to write 1984. Orwell himself was presumably unaware of it – and yet, all too aware of the nature of Big Brother.

If Orwell were brought back from the dead, I presume he’d chuckle and think how little things have changed. He would certainly have been bemused by happenings in India. A few days ago, Mumbai’s police revealed their plans to install keystroke loggers in Mumbai’s cyber cafes, besides imposing licensing requirements on them.

This is done ostensibly to fight terrorism, and here are the implications for you and me. Whenever we surf from a Mumbai cyber café, everything we type will automatically be captured on record. Our email passwords, every message we type, the sites we visit, the pictures we download: everything will be stored in police records, rendering us, effectively, naked in their eyes.

If we buy stuff online, our credit card details will also get saved. Will these end up getting sold in a black market somewhere? Not unlikely. Much as we like to think of governments as benevolent entities that exist to serve us, in reality they comprise individuals with the same human weaknesses as the rest of us, responding to incentives just as we do. The Mumbai police, like all police in India, consists of underpaid people given excessive powers over others, with little accountability. So how do you expect them to behave?

Unless a policeman’s self-interest is perfectly aligned with the public interest, which is not the case in our system of government, it is inevitable that he will feel tempted to use his power for personal gain. It is equally likely that the police, like any other arm of government, will focus on expanding its power, and increasing its control over people, rather than carrying out its tasks, for which it is not accountable in practice. By insisting that cyber cafes in Mumbai need a license from the police, for example, they have opened up a new under-the-table revenue stream.

The government’s rationale (or rationalization) behind this is familiar and silly. Whenever the government wants to restrict freedom, it invokes security, and cops justify this move under the grounds of fighting terrorism. Well, firstly, at a practical level, the cops won’t have the manpower to scrutinize the massive volume of keystroke logs generated everyday, or to figure out what is terrorist code and what is teenage lingo. Secondly, at a moral level, it is simply wrong to deny people of their privacy in this manner.

Mid Day quoted an unnamed “National Vice President, People Union for Civil Liberty” as justifying these moves by saying that it was ok “[a]s long as personal computers are not being monitored. If monitoring is restricted to public computers, it is in the interest of security.” By this reasoning, why should the cops not place TV cameras in hotel rooms or record every conversation in every taxi and train? After all, terrorists use hotels and public transport. Are you okay with that?

The ultimate expression of a government’s lust for power lies in a term coined by Orwell in 1984: Thoughtcrime. Thoughtcrimes are thoughts that have been criminalised, and if the technology to detect emotions existed, it is not unlikely that the Indian government would ban hatred. Or, at least, hatred of things that it deems should not be hated. A recent Mid Day report describes how various authorities are trying to get communities on Orkut that are against Pratibha Patil removed. They include communities with names like ‘We hate Pratibha Patil’, ‘We don’t like Pratibha Patil’, ‘Pratibha Patil sucks’, and ‘Pratibha Patil — the puppet’.

I am no fan of the lady myself, and have expressed, in an earlier instalment of this column, my distaste for her views favouring compulsary sterilization of people with heriditory diseases, and her delusions about being able to converse with spirits. Columns appearing in big newspapers are harder to censor, but I fail to see why members of Orkut should be barred from expressing similar emotions.

Earlier this month, a computer engineer based in Bangalore was arrested “after he allegedly uploaded a blasphemous matter [sic] about Maratha warrior king Chhatrapati Shivaji” on Orkut. Google, which owns Orkut, reportedly collaborated in the matter, providing the engineer’s IP address to the cops. (It is natural for them to go by the law of the land, according to the land they’re in, but they really should get off their “do no evil” high horse.) Technology, while it enables free expression, also provides mechanisms for its suppression. Don’t expect our government not to use it.

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You can browse through all my columns for Mint in my Thinking it Through archives.

Turbocharging RTI

This is the 29th installment of my weekly column for Mint, Thinking it Through.

I love the Right to Information (RTI) Act. In theory, it gives me back a little bit of the power that the government has taken from me. Governments are supposed to work for us, and it is apt that people who work in government are called public servants. Yet, over the last 60 years, our government has become our lord and master. How does one bring it back to heel?

On paper, the RTI is one way of doing so. Much of the power of government comes from its opaqueness. If you can’t put your finger on what’s going wrong, you can’t hold it accountable. Garbage not being collected from your neighbourhood? You have no idea whom to contact or what action to take. Your ration card is not being given to you? You don’t know who’s withheld it, or if someone else is using it. For virtually any service that the government is supposed to provide, bribes are often necessary, and there’s little you can do.

The RTI changes that. Information is power, and the RTI allows the common citizen access to most information pertaining to government services. A road has been poorly repaired? You can find out which contractor did the job, which officer approved it, and what action is being taken. Sewers haven’t been made in your neighbourhood? You can find out if your local municipality officials are lying about working on it. By exposing the actions of our government officials, we render them accountable for their inaction. That’s the theory of it.

In practice, I think the RTI is a great tool that isn’t within easy reach of everyone. Yes, yes, I know that it has been made quite user-friendly, and I’ve even attended a workshop on how to file RTI applications. It’s simple enough if you want it enough, and if you care deeply about whatever cause you’re chasing down. But the common citizen is unlikely to take the time to use it, even if it is likely to be of some use to him or her. The reason for that is what public choice theorists call rational ignorance—the costs of chasing down such information, in terms of time spent, are generally greater than the benefit to any one person.

Also, with the RTI as it has worked so far, information remains dispersed. Individuals and NGOs get information on subjects that interest them, but by and large it remains inaccessible to the common Joe. As a taxpayer, I would ideally like all information about how my money is being spent available in one central source, which I can access without any effort. I don’t see why I should have to run after it, no matter how easy that running is. It’s my money, after all.

This is where technology can help. Having won the battles to make RTI a reality, some of the NGOs that have worked so hard to make it happen can now take it to the next level. Here’s how I think the Internet can be used as an enabler.

First up, it would be wonderful if there was a central database, perhaps using a wiki interface, where anyone who got public information using RTI could upload that information. That would mean two things. One, if I am curious about something but wouldn’t necessarily chase it down, I can simply check online if the information has already been dug out by someone else. Two, it prevents duplication, as people don’t file for information someone has already dug up, and officers don’t waste time getting similar information again and again. Just browsing through such a resource should provide so much insight about how the government works. The existence of it should keep our babus on their toes.

Secondly, I’d like to see services that make it easier for you or me to file RTI applications. The Rs10 charge for filing an RTI application with the Central government may be nominal, but who’s got the time to file applications? If there was a service attached to this central database that could file an application on my behalf without my having to do anything more than register (once) and fill up an online form, I might feel more motivated to ask for information. And thus, the database of information would build up, and we would be empowered.

I’ve searched online for such services and wikis, but the RTI blogs and forums that exist don’t cut it for me, and consist of nuggets of information instead of constituting a repository. Friends of mine in various NGOs have mulled such a project, but not actually gotten down to it. For the RTI to work, for it to be used to empower the common citizen instead of activists and NGOs, we need such a service, and I hope someone takes the initiative one of these days.

Public limited companies are required to make certain essential information available to their shareholders, and even if they weren’t mandated to do so, the pressures of competition would make them. Our government, a monopoly, feels no such competition; our bureaucrats are entrenched in their lordships. It is time to take charge and show them who’s the boss.

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You can browse through all my columns for Mint in my Thinking it Through archives.