Encouraging Arguments

PPE बाजार और वैश्विक एकजुटता की सीमायें

2020-04-30T19:13:00.001+05:30

by RK Ranjan (Phd Candidate at the Valand Academy of Gotheburg University, Sweden)

कोरोनावायरस के संदर्भ में अगर कोई बात बार-बार दोहराई गयी है तो वह यह कि इस लड़ाई से अगर हमें जीतना है तो हमें एक साथ आना होगा. इस संकट से उबरने के लिए आपसी सहयोग कितना महत्वपूर्ण है, इसको डब्लू एच वो सहित हमारे देश के राजनेताओं ने भी रेखांकित किया है. भारतीय दृष्टिकोण से इस वैश्विक एकजुटता का प्रमाण तब स्पष्ट रूप से सामने आया जब भारत ने दुनिया के कई देशों को हाइड्रोक्सी क्लोरोक्विन (एच सी क्यू ) की आपूर्ति कराई. इस कदम के लिए कई देशों ने भारत के प्रति अपना आभार भी प्रकट किया है. यहां तक कि ब्राज़ील ने अपने आभार में भारत की तुलना हनुमान से कर दी जो कि रामायण के संजीवनी बूटी संस्करण की याद दिलाता है. भारत एच सी क्यू के निर्माण में अग्रणी देशों में से एक है. एच सी क्यू एक सस्ती दवा है जो मलेरिया के इलाज में काफी काम आता है. भारत सरकार के एच सी क्यू को निर्यात करने के निर्णय की काफी आलोचना भी हुई लेकिन सरकार का कहना है के देश में इस दवाई की प्रयाप्त उपलब्धता है. जब कोई संसाधन व्यापक तौर पर उपलब्ध हो तो उसको साझा करने में और वैश्विक सहयोग के बारे में सोचने में अक्सर कोई समस्या नहीं आती है. लेकिन क्या ये उदारता उन संस्धानों के लिए भी संभव है जो प्रचुर मात्रा में उपलब्ध ना हो?

भारत में कोरोनावायरस के संकट ने प्रवासी मजदूरों की पीड़ा को सामने लाया। इतना ही नहीं इस संकट ने यह भी साफ कर दिया कि आर्थिक और सामाजिक संसाधन के हिसाब से समाज के अलग-अलग वर्ग के लिए इस संकट के मायने भी अलग होंगे. इस तरह की असमानताएँ केवल देश के अंदर नहीं बल्कि विश्व स्तर पर भी है. इसलिए जरुरी है कि हम इस पर भी ध्यान रखें कि ये वैश्विक असमानताएँ कोरोनावायरस के संदर्भ में किस प्रकार का रूप ले रही है. दुनिया के सभी 195 देश अपने स्वास्थ्य कर्मचारियों के लिए पर्सनल प्रोटेक्टिव इक्विपमेंट (पी पी ई) उपकरण खरीदने की होड़ में है. पी पी ई खरीदने की यह लड़ाई कहीं से भी बराबरी की लड़ाई नहीं है. भले ही वैश्विक एकजुटता और सहयोग सुनने में अच्छा लगे लेकिन जमीनी सच्चाई यही है की अब दरारें साफ दिखने लगी है. यहाँ तक की जर्मनी और नीदरलेंड जैसे अमीर देशों ने भी अपनी चिंताएं अभिव्यक्त करनी शुरू कर दी है. पी पी ई के अमेरिकी डॉलर में खरीद-फरोख्त होने की वजह से अफ्रीका के कई देशों के लिए मुश्किलें और भी बढ़ गयी है. भारत को भी पी पी ई से जुड़ी सामग्री (जो कि प्रयाप्त मात्रा में भी और अपेक्षित गुणवत्ता वाली भी हो) हासिल करने में काफी दिक्कतें आ रही है. अमेरिका ने शिकायत की है कि उसकी कई कंपनियों को चीन में अपने कारखानों से निर्यात करने में कठिनाइयों का सामना करना पड़ रहा है। इन उभरते दरारों के बावजूद कुछ जगहों से अभी भी 'वैश्विक सहयोग' पर बल दिया जा रहा है. असमानतों की पृष्ठभूमि पर उपजी और सिंचित, सहयोग और साझाकरण की नीति हमारे अस्तित्व को खतरे में डाल सकती है. इसलिए बेहतर यही होगा की हम दुनिया के बाकी हिस्सों से अपनी उम्मीदें कम कर लें.

पहले अपनी जरूरतों को पूरा करने का हवाला देते हुए कई देशों ने महत्वपूर्ण उपकरणों के निर्यात पर गंभीर प्रतिबंध लगाए हैं. वैश्विक एकजुटता को कम करने के साथ इन कदमों ने वैश्विक बाजार में उपकरणों के खरीद-फरोख्त पर भी काफी असर डाला है. ऐसे देश जिनके पास निर्माण की क्षमतायें सीमित हैं या तो वह वो बिलकुल ही निर्माण नहीं कर पर रहे या फिर जितना कर पा रहे हैं वो जरूरत के हिसाब से प्रयाप्त नहीं है. नतीजा ये है कि अपने जरूरतों को पूरा करने के लिए ऐसे सारे देश मुख्य रूप से पूर्वी एशिया के कुछ देशों पर अब निर्भर हैं. न केवल इन देशों से आपूर्ति सीमित है, बल्कि अनिश्चित भी. अगर महामारी का संकट इन देशों में फिर से जोर पकड़ता है तो ये सीमित और अनिश्चित आपूर्ति भी तेजी से सिकुड़ जाएगी.

माँग के दृष्टिकोण से देखा जाये तो जिन देशों में कोविड के मामले तेजी से बढ़ रहे हैं उन्हें इन उपकरणों की तत्काल जरूरत है. लेकिन अनिश्चितता के इस दौर में कमोबेश सारे देश इन उपकरणों को इक्कठा करने में जुड़े हैं. लॉकडाउन हमेशा के लिए नहीं रह सकता और इसलिए लॉकडाउन के पश्चात कोविड के मामले सब जगह बढ़ने का खतरा काफी सच है. आवश्यक उपकरणों की मात्रा का अनुमान लगाने में कठिनाई मामले को और भी बदतर बना देती है. ऐसी पृष्टभूमि में जहाँ इतनी अनिश्चिततायें हो ये स्वभाविक है कि सारे देश किसी भी तरीके से इन उपकरणों को इकठ्ठा करने में लग गए हैं. इस होड़ को होर्डिंग कहना कोई अतिश्योक्ति नहीं होगी.

जरूरतों और अनिश्चितताओं से उपजी माँग और समवर्ती आपूर्ति की कमी ने चिकत्सा सम्बन्धी सामानों की खरीद-फरोख्त को एक जीरो-सम गेम बना दिया है. ऐसे खेल में एक खिलाड़ी के लिए जीतने का एकमात्र तरीका दूसरों को हराना होता है. परिकलपना कीजिये कि दो देशों में लोग मर रहे हैं, और दोनों के पास वे सभी पी पी ई नहीं हैं जिनकी उन्हें आवश्यकता है। ऐसे हालत में देश A में जाने वाला हर PPE जो देश B को नहीं जाता है, वह देश B के चिकित्सा कर्मचारियों को जोखिम में डालता है. इसलिए, देश बी के लिए यही तर्कसंगत है कि वह हर संभव प्रयास करे अधिक से अधिक मात्रा में पी पी ई जुटाने का. और वह ऐसा देश A की कीमत पर ही कर सकता है.

उपकरणों को तेजी से खरीदने के लिए दुनिया भर में सरकारों पर दबाव है। ऐसे हालत में बाजार खरीदने और बेचने वालों का सामान रूप से नहीं होता। बाजार बेचने वालों के मुट्ठी में हो जाता है. बोली लगाने के इस युद्ध में, खरीदार जो ज्यादा से ज्यादा कीमत देने की पेशकश कर सकते हैं, वो सभी के लिए बाजार की कीमतों को बढ़ा देते हैं. यदि प्रत्येक देश और राज्य के पास सामान आर्थिक संसाधनों की मौजूदगी होती तो अलग बात थी. लेकिन मामला वह नहीं है। भारत जैसे देश के लिए, और जिस मात्रा में PPE की जरुरत है, कैलिफोर्निया या न्यूयॉर्क जैसे अमेरिकी राज्यों के खिलाफ लगातार बोली लगाने और जीतने के लिए संघर्ष करेगी, जो एक दूसरे के खिलाफ बोली भी लगा रहे हैं। नतीजन, कई देश या तो आवश्यक मात्रा से कम या अवांछित गुणवत्ता वाली PPE ही प्राप्त कर पायेगी.

कीमत पर प्रतिस्पर्धा एकमात्र समस्या नहीं है जो हाल के दिनों में सामने आई है. जिन देशों के पास नगद में भुगतान करने की क्षमता है या फिर शक्तिशाली हैं वो सारी आपूर्ति अपनी तरफ कर लें यह एक वास्तविक और निरंतर खतरा बन रहेगा. अंतरराष्ट्रीय अनुबंधों को लागू करना, जो कि सबसे अच्छे समय में मुश्किल है, वैश्विक संकट के बीच में लगभग असंभव हो जाता है। यदि स्पैनिश फ्लू की तरह कोविड लंबे समय तक रहता है, तो यह संभव है कि जिन देशों में अधिकांश आपूर्तिकर्ता आधारित हैं, वो चुनेंगे की दुनिया के कौन से देश कोविड की लड़ाई में जीतेंगे और कौन से देश हारेंगे.

भारत जैसे देश के जरुरी है की वो तेज़ी से बदलते बाजार को पहचाने और समझे. हमें यह स्वीकार करना होगा कि कम समय में उच्च गुणवत्ता वाले उपकरण प्राप्त करने का एकमात्र तरीका यह है कि हम अमीर देशों द्वारा पेश की जा रही कीमत को मैच करें. लेकिन सरकार के सीमित संसाधनों को देखते हुए यह कहना उचित होगा कि हम यह बहुत लंबे समय तक नहीं कर सकते. इसलिए, चिकित्सा उपकरणों के घरेलू उत्पादन को रफ़्तार देने की तत्काल आवश्यकता है. इस संदर्भ में परमिट प्रदान करने की प्रक्रिया को तेज करना एक अहम कदम होगा. पंजाब जैसे कुछ राज्यों ने इस संबंध में कुछ अच्छे कदम लिए हैं और अन्य राज्यों को इस पर अमल करना चाहिए. गुणवत्ता की चिंता इस बात से दूर हो सकती ही कि ऐसे हालत में जब अंतर्राष्ट्रीय शिपमेंट पर प्रतिबन्ध है, घरेलू बाजार में राज्य सरकारें बड़े खरीददार के रूप में उभरेंगी जो ये सुनिश्चित करेगा कि बाजार स्वरुप विक्रेता से ज्यादा ख़रीददार तय करे. खैर किसी भी परिस्तिथि में गुणवत्ता की चिंता परमिट देने के रास्ते में नहीं आनी चाहिए. इस दिशा में लिए गए ठोस प्रयासों से मौजूदा कमी तो दूर होगी ही, साथ ही साथ इससे देश को फिस्कल इस्टीमुलुस भी मिलेगा.

बढ़ती मांग और सीमित आपूर्ति से होने वाली परेशानियां वैश्विक एकजुटता के लिए एक बड़ी चुनौती बानी रहेगी. इसका अर्थ यही नहीं है को किसी भी तरह का वैश्विक सहयोग नहीं होगा लेकिन हमारी सभी समस्याओं के समाधान के लिए वैश्विक एकजुटता पर निर्भर होना नासमझी होगी। एक पुरानी कहावत के अनुसार, मदद करने वाले हाथ को खोजने का सबसे अच्छा स्थान आपके खुद की बांह है।

Can global solidarity survive the zero-sum game in the market for PPEs?

2020-04-30T12:05:00.000+05:30

"We are all in it together" – is a common refrain in these troubled times. From local politicians to national leaders to the WHO all have pointed out that we can only overcome this crisis if we all cooperate. From an Indian perspective, nowhere has this sense of global solidarity been more obvious than when shipments of Hydroxy Chloro-Quinine (HCQ) were sent across the world. Many countries conveyed their gratitude with the government of Brazil even invoking the Ramayana, with India playing Hanuman bringing sanjeevani when it was needed most. HCQ is a cheap drug used often in malaria-stricken countries like India. Its widespread availability is why, despite some criticism, the Indian government has maintained that it has sufficient reserves. When supply is not a limiting factor, cooperation and sharing of resources are rarely of major concern. But can this bonhomie extend to resources that are not in abundant supply?

The suffering of great masses of migrant labour across India brought the vulnerability of marginalized groups into sharp focus. As we grapple with the enormity of our domestic problems, we must not be blind-sighted by the potential fallouts of asymmetry in endowments across countries, both economic and otherwise. All of the 195 countries in the world are in competition to procure equipment, particularly Personal Protective Equipment (PPE), to equip their health workers and it is not a fair fight. Fractures in inter-country cooperation are beginning to show up, with even rich countries like Germany and the Netherlands voicing their concerns. Countries in Africa are struggling to source from an international market where prices are denominated in US dollars. India has also faced problems with sourcing materials in the required quantity and of expected quality. The USA has complained that many of its firms are facing difficulties in exporting out of their factories in China. In the face of the emerging acrimony, some have continued to rally global cooperation. But in a situation where cooperation and sharing can jeopardize one's prospect of survival, we would do well to temper our expectations from the rest of the world.

Many any countries have placed severe restrictions on exports of critical equipment citing the need to take care of their own first. These moves, along with undermining global solidarity, have also served to severely restrict supply in the global market. Parts of the world with limited manufacturing capabilities cannot manufacture the required equipment, and even among those who can there are few, if any, that can produce all they need. This has led almost all of them to rely on supplies from a few countries, mostly in East Asia. Not only is the supply from these countries limited, it is also precarious. Any indication of another outbreak in these countries and the supply would shrink very rapidly.

On the demand side, countries that are facing a surge in COVID cases need medical equipment urgently. But the urgency of stocking up before the surge hits is not lost on the other countries. Lockdowns cannot last forever and the inevitability of the spread of the virus in its aftermath means that the urgency of the latter group of countries is not less than the former. The difficulty in predicting the quantity of equipment required makes matter worse. This uncertainty drives countries to build as large a stockpile as they can. The buying patterns that emerge in a situation like this is akin to hoarding.

The urgency and uncertainty that is driving demand and the concurrent lack of supply have made the procurement of essential medical supplies a zero-sum game between states. In such a game the only way for a player to win is for the others to lose. There are no win-win scenarios. If people are dying in two countries, and both of them cannot have all the PPE they need. Then, every PPE that goes to country A, doesn't go to Country B putting country B's medical staff at risk. It would, therefore, make sense for country B to try and get as many PPEs as possible and it can only do that that by denying country A.

Government's across the world are under intense pressure to buy equipment and buy them fast. With a few sellers and many, many desperate buyers, this is a seller's market. In the ensuing bidding war, buyers who can afford to will offer to pay higher and higher prices, driving market prices up for everyone. If every country and state had the same amount of resources, higher willingness to pay would simply signal relative urgency. But that is not the case. An economy the size of India, given the quantity it needs, will struggle to bid and win consistently against US states like California or New York, which are also bidding against each other. Consequently, many of the countries will either end up with less quantity than required or worse, with equipment that will not be of the desired quality.

The competition on price is not the only problem that has emerged in recent times. The ability of some countries to wrest away supplies by either paying in cash, or by abuse of power remains a constant threat. Allegations of international piracy is already showing that enforcing international contracts, which is difficult in the best of times, might turn out to be almost impossible in the middle of a global crisis. If the pandemic lasts for as long as the Spanish Flu did, it is not inconceivable that the countries in which most of the suppliers are based will increasingly get to choose winners and losers.

The need of the hour for a country like India is to recognize the dynamics of this fast-evolving market. We will have to concede that in the short run, the only way to get high-quality equipment will be to match the price being offered by richer countries. But given the limited resources at the government's disposal, this cannot be sustained for too long. Therefore, there is an urgent need to ramp up the domestic capability to produce medical equipment. Hastening the process of providing permits will go a long way in improving domestic manufacturing capabilities. Some states like Punjab, have taken the lead in this regard and others should follow suit. Concerns around quality should be mitigated by the fact that with international shipment severely restricted, the domestic market will have a few large buyers in the form of state governments, creating more of a buyer’s market. In any case, concerns about the quality of the final output should not hinder granting of permissions to firms that are willing to produce the required equipment. Not only will concerted efforts in this direction alleviate the current shortages, it will also create a mechanism for the government to provide some fiscal stimulus to the domestic industry.

The troubles that emanate from the frantic demand and limited supplies will make global solidarity more difficult to sustain. There will still be cooperation: more shipments of medicines, sharing findings on the vaccine and leading countries might even come together to create a new version of the Bretton Woods. The world will rally in our collective fight against the virus but to expect solidarity to be a solution to all our problems will be unwise. As an old saying goes, the best place to find a helping hand is at the end of your own arm.

On Clarity and Credibility in dealing with a Global Pandemic

2020-04-02T00:05:00.000+05:30

India is in a government-enforced lockdown that is harsher than in many other countries. Our streets are being patrolled by the police with instructions to take strict action against people violating protocol. Some chief ministers have threatened to give orders to shoot at sight, others have promised to send violators to jail. Yet, very few are clear on what constitutes a violation and what does not. The list of essential services expands and contracts in response to every crisis that emerges. Kerala recently allowed the sale of alcohol to those with a doctors prescription, Haryana, on the other hand, closed down liquor shops 2 days into the lockdown. These revisions and re-revisions of government guidelines circulate as Whatsapp forwards with varying degrees of accuracy, adding to the confusion, fomenting fear and panic. The lack of clarity among the administration and the public alike is likely to be a most formidable hurdle in India's struggle against the coronavirus.

In the weeks to come, the people of India will be more reliant than ever on the state in its role as coordinator and enforcer. Any loss in the credibility of the government can prove devastating to India's hopes of successfully combating the threat of coronavirus. At its core, the credibility of the state rests on being able to limit opportunistic behavior by any individual or group of individuals. In that regard, the Indian state has not been very effective, even in the best of times. The long record of inefficiency and poor implementation aside, the officials used to making arbitrary decisions while presiding over their fiefdoms, will now be responsible for keeping the country functioning. The few institutional checks and balances and the largely informal private enterprise that helped paper over the cracks will no longer be able to do so as effectively.

As we wade deeper into the crisis precipitated by the SARS-COV 2 virus, the immediate urgency of fighting the virus will give way to the urgency of getting on with our lives, fatigue will set in, tempers will fray and the number of infractions will mount. Our health infrastructure is certainly not equipped for the surge in numbers that is predicted for the next few months, but maybe we can build and buy our way out of it, with some help from the international community. But if our governance structure falters, there will be very few remedies available. To give ourselves a fighting chance, it is imperative to acknowledge the importance of clarity, wherein all actors, government enforcers, and citizens, know what is expected of them in the days to come.

Clarity precedes Credibility

These are unprecedented times and nobody can draw on past experiences to form their expectations of the coming days. This creates a clarity problem that can destabilize any system of governance; the people who are expected to comply are not on the same page as the people who are expected to enforce. The purpose of the big stick of enforcement available to any government is to get people to comply with rules and regulations. But if people do not know what it is that they have to comply with, the stick cannot accomplish much. In fact, it can lead to a situation where any act of enforcement might seem to be arbitrary and therefore erode the trust between people and the government that it is critical in times like these. Which would then lead to even minimal levels of compliance requiring stricter enforcement, creating a vicious cycle which will be tough to break out of.

The spread in the perception of arbitrariness is going to be expedited if the enforcers themselves are unaware of what it is that they are meant to enforce. It took a day too many before the decision of allowing food delivery services to ply in the lockdown made it to local law enforcement. In the meanwhile, delivery boys were harassed, and in some extreme cases, even beaten up. Allegations of these actions being taken to extort money aside, it is not difficult to imagine that the local policemen were merely trying to enforce the lockdown the best they could. With a limited force charged policing millions, sporadic cases of highhandedness may be inevitable, but the lag between the formulation of policy and change in enforcement strategy can make the situation worse than it has to be. Not only will it very likely affect the morale of the people policing our streets, but it would also make it difficult for conscientious members of society to file complaints with the police.

Lack of Clarity Within

Any government is comprised of many individuals constituted in departments, organizations, and committees. One of the key tasks of administration, particularly in a crisis is to ensure that its constituent elements of the government move in sync. Even in these uncertain times, it would be reasonable to expect that plans to cope with the outbreak were made, with detailed instructions for all concerned and that these plans were shared with the responsible authorities. This is particularly true as India was not in the initial line of fire of the virus and the government had some weeks in which these plans should have been put in place. But it does not seem that governments had a detailed plan in place, even for its own branches where it would have been easier to anticipate problems.

Consider the case of the measure where the central government asked public sector banks and undertakings to work with 50% of staff, while still providing all essential services. The trouble with this requirement, besides the extremely short notice in which it was to be carried out, is that not all of these firms need 50% of their staff to provide basic services, some need less, some need more. If they need less, the person in charge of making these decisions in the organization would have to either risk putting more colleagues in harm's way than required or being hauled up for not enforcing orders. If they need more, the problem is even more severe. In either case, the person in charge will have to make harsh decisions, which, might risk insubordination in the not too distant future.

It is unclear if the 50% mandate was meant to avoid confusion, a manifestation of the lack of trust in the decision-making capabilities of the top leadership of these organizations or merely a result of the lack of willingness to give up authority by people at the center of the decision-making matrix. Whatever be the reasons for which the decision was made, it ended up reducing clarity by having two requirements that were not necessarily compatible with each other.

Lack of Clarity Without

The lack of clarity that seems to be dogging the government's machinery from within also extends to the public at large. In the lockdown that has been in force since 23rd March, a common refrain has been that essential goods and services will be available. The big problem has been with the term essential. There was an original list of services that every state government released, but each of those lists has been amended many many times since. The trouble of keeping track of these changes is compounded by the increasing divergence in the positions taken by different state governments. This not only creates problems in identifying what activities people should and should not engage in a particular state but also the possibility of disaffection with people in state A not able to access somethings that people in state B can.

Decentralization has often been touted as a panacea to India's governance problems. We are a diverse country and it is very difficult to come up with one size fits all solution. However, in the present crisis, while de-facto decentralization in implementation decisions is unavoidable, it is very much desirable that 720 districts or 36 states (& UTs) do not make policy independent of each other. A stark example of the problems that arise from the lack of coordination across the country is the migrant labor crisis. It is difficult to ascertain if the trigger for large scale movement of people was any specific policy or lack thereof, but it is almost certain that greater coordination across states would have enabled quicker remedial measures. For now, the problem has been dealt with the sealing of borders and providing food and shelter. But sustained lack of clarity on what these people stuck in no man's land can expect from the coming weeks, will lead another round of attempted exodus. Consistency in policy across states, facilitated by the central government, with minor local changes will not only reduce the strain of keeping up with the policy changes in this rapidly evolving environment but also help state governments coordinate better.

The Way Forward

The basis of an ideal governance structure is the clarity that emanates from classifying actions into good and bad. The people being governed know of this classification. Some of them take good actions due to innate preferences, others follow due to the threat of being caught by the police and still others follow due to the threat of the other people complaining to the police. The police follow their own classification of actions in identifying deviants and punishing them. More than a week into the lockdown these classifications are still not clear.

Should I take food and rations to the nearby slum, would that be a violation of the lockdown? Would my actions increase the danger of the virus spreading? What should the police do? Should they ask me to go home? Should they take the food from me? Should they let me be? If the endgame of the lockdown, as the WHO seems to suggest, is to test more people, should go get tested in a private facility, if I can afford it? Or will I be tested by government officials when the time comes? If making toothpaste is not an essential service, will we not run out of toothpaste soon?

This is an evolving situation and not all measures, counter-measures and their outcomes could have been foreseen by even the most astute observers. The swiftness with which we went from the PM 'asking' for a few weeks of our time to full national lockdown surprised many, but maybe the decision had been delayed to a point where there were few remaining options. It is apparent that irrespective of the policy choice made, there will be many fires that will need to be put out in the weeks and the months to come. This monumental task, if it has to be accomplished without moving to a decidedly authoritarian form of governance, can only be carried out if the government and its people trust each other.

Only clear and honest communication from the government can form the basis of this trust. Information about the state of the country; its finances, capabilities of its health infrastructures, and the expectations from individual citizens will form the bulwark against panic and recklessness. Platitudes and promises that reveal themselves to be hollow, create a trust deficit which foments rumor mills. If the objective of credible governance is to limit opportunistic behavior, the lack of clarity about the world resulting from rumors make this objective ever more elusive.

Many of us will be forced to make very difficult decisions in the times to come. Whether these decisions will back the government's efforts or obstruct them, will in large part, be determined by the information we have about the government's plans. There will still be those for whom the threat of punishment must be maintained, but for most being informed of what we should and should not do, along with the assurance that our near and dear will be taken care of, will suffice. The Indian republic has survived for 7 decades, allegations of weak governance and opportunistic citizens notwithstanding. It is time that the government of India gives reposes faith in its citizens and tells us exactly what they plan to do, and how we can help.

On the Disease and Lockdown Cure

2020-03-30T14:45:00.000+05:30

A crisis of unprecedented proportions is upon us. In the last few weeks, suggestions from experts and requests from governments have been unsuccessful in convincing everyone to take all possible precautions. With ill-considered risky actions by many making it infeasible to rely on individual decision making, governments across the world have imposed very stringent restrictions. The consequent impact on the economy has been very severe. Business is suffering, many millions have lost their jobs and by all accounts, many more will. In India, nowhere has the impact of the lockdown been more apparent and more poignant than in the pictures of unemployed migrant workers walking hundreds of kilometers to get home.

The US President has already called out the possibility of the effect of the lockdown being worse than the disease it is meant to address. Bolsanaro of Brazil has gone even further, stating that a few will die, but most will be unaffected by the virus. The leaders of many other countries though, including India, have acknowledged the economic distress, but have taken the position that the cost of not having a lockdown is too high. Besides creating a unique situation in which the critics of the Indian PM might have the US President in their corner, the immediate consequences of the lockdown across countries have raised the question: if a lockdown was the best response to the pandemic.

Some have argued that maybe it would be better to let the virus claim its victims, fight the war in the hospitals as best we can and let other aspects of life be. This more extreme opposition harks back to UK's stated policy until a few weeks ago. Some others, particularly in India, have argued against the way in which the lockdown was implemented, positing that the government should have given people more warning. This, the claim goes, would have potentially avoided the problems that migrant labor is facing. These are both legitimate concerns. The debate around the questions that they raise will determine the decisions that governments will take, and these decisions will continue to affect our lives long after the passing of the pandemic itself. It is therefore imperative that we address both these suggestions as carefully as possible.

Counterfactual 1: cure worse than the disease

If the case casualty rate (deaths/no. of confirmed cases) seems to be around a relatively low 4%, is it worth taking destroying the lives of so many; pushing many into poverty and starvation? A recession also claims lives, and particularly in the case of poorer countries, the toll can be severe and long-lasting. In order to determine if the lockdown is indeed a better policy than no lockdown for the situation we find ourselves in, we need to evaluate the counterfactual. A caveat that must accompany any such evaluation is that we will have to rely on many assumptions and there is no way to know with certainty 'what could have been'. And the uncertainty will increase as the days pass by, making it even more difficult to hazard a guess about what could have been if there was no lockdown.

Most of the detractors of the lockdown also concede that even without a lockdown it would not have been business as usual. But point out that with the widespread acceptance of some reasonable form of social distancing, the effect of covid19 is not likely to be much worse than a very bad flu season. This implies that hospitals will get a large number of people coming in, but only a small proportion of them will die. In this scenario, even though the number of dead will be quite high, a countrywide lockdown might seem a little excessive given the costs that it imposes. Statistics on the effect of flu from the CDC provide some perspective and lend some credence to this view: each year, in the United States, on average 36,000 people die from flu-related complications and more than 200,000 people are hospitalized from flu-related causes. Even in the 2009 swine flu epidemic which led to almost 60 million infections in the US alone, only 12000 died, and there was no lockdown. Consequently, the economy which was already under tremendous strain did not suffer any significant adverse effects due to the epidemic.

In order to get a more reasonable estimate of how things would have played out without a lockdown, it is pertinent to check if the numbers underlying this proposition stand up to scrutiny:

1) Even if we take the proposed 4% as the true case casualty rate, small proportions do not mean small numbers. If the size of the infected population is large enough, the number of people requiring urgent medical attention will be very large. Therefore, the only way to reduce the number of patients requiring urgent care seems to be to reduce the possibility of getting infected.

2) The comparison of the current outbreak to a very bad flu season misses out a key detail. This virus is not replacing the flu, it is going to supplement it. Increasing the numbers even further. The Swine flu data isn't particularly useful either, as effective antiviral drugs were made available early on leading to far fewer serious cases.

The possibility of affected patients overwhelming hospitals is a nightmare scenario for a country like India. However, some of the consternation in India, particularly in the light of the migrant labor crisis seems to be driven by a low number and low growth rate of the confirmed infections relative to countries suffering the worst of the pandemic. This needs to be put in the context of the rate of testing. As of 27th March, India has conducted only about 19 tests per million people, one of the lowest in the world and very likely the reason behind low confirmed infections. The US provides a prominent example of numbers rising with numbers of tests. This should be of particular concern to a country like India, which already has a very high disease burden along with a weak public health infrastructure. The state of Jharkhand, for instance, has 1 doctor every 8700 people. Increased demand on this structure by a rapid surge in numbers of Covid19 patients will lead to high mortality from other diseases which will not get the required treatment. This will be made infinitely worse if health care workers get affected, reducing the size of the already small pool of medical professionals available to treat any disease, not just covid19. In all of this, the worst affected will be the people with low access to high-quality health care.

These are not new arguments, they have formed the core of the recommendation to flatten the curve. Less severe measures than lockdown were tried in many countries: people were asked to maintain social distance, avoid non-essential travel and self isolate in case of recent international travel or if there were any symptoms. The results were not encouraging. Most of the countries that tried the milder measures in the early days swiftly moved to curtail individual choice. The possibility of huge externalities, with the action of one affecting many others and on the evidence of the indiscretions of many people, the only way to stem to tide seemed to severely restrict movement.

It stands to reason that if the only way that the virus spreads is by people being in close contact, then fewer people being in close contact should slow it down. Yet the numbers of confirmed infections continue to grow. This also implies that in the absence of stringent measures, the virus would have spread even more rapidly. Now, to expect that the economy would have continued to function as it always has in the face of rising infections and possibly deaths is to presume that people have no regard for personal safety. While a few deviants can compromise a large society to the virus, we would need many, many more to keep the wheels of economy running at anywhere close to normal.

An Indian media house recently framed the debate as one between lives and livelihoods, this seems to suggest that the choice is between an economic recession and saving lives. However, if there are no lives, there are can be no livelihoods, if lives are lost, livelihoods will eventually be lost, one way or another. The counterfactual to a lockdown, on the basis of the evidence we have coming in from Italy, Spain and other worst-affected countries, seems to be an economy which might have trudged on for a few weeks before collapsing to a position very close to one it is likely to be in right now, with all its concomitant effects. The economic impact of this non-lockdown slowdown will still be disproportionately high for the underprivileged, with a body count that will likely be much higher.

Counterfactual 2: cure should have been better administered

Pictures of hundreds of thousands of migrant workers from across India have led many to question the urgency with which the shutdown and the subsequent curfew measures were imposed. How is it that despite having had the information for many weeks, the central government went from requesting a self-imposed 'people's curfew' to full lockdown in a matter of 3 days. If the process was more spread out, people were given prior warning we would not have the situation that we face today. Migrants would have made arrangements to either travel to their native states or have explored ways and means of surviving where they were residing.

The urgency of the move, whether stemming from incompetence or other more sinister motives, seems particularly baffling as India did not really have an obvious Wuhan like epicenter of the infection that needed to be insulated from the rest of the country. Further, if so many are in standing and cheek by jowl, did the outcome not beat the purpose of the lockdown. Both of these propositions require careful consideration, particularly because this tragedy is playing out as we speak while the threat of the Coronavirus is still in the future. And if the lockdown is going to be longer than currently stated, similar questions will arise again, very soon.

In order to evaluate these concerns, let us consider a counterfactual in which the shutdown on March 22nd would have been announced 7 days in advance on March 15th. The news would have taken time to trickle down, but in a few days, it is likely that buses and trains would be bursting at their seams. If the mass exodus of migrant labor to (mostly) eastern states around the festivals Diwali/Chhath is anything to go by, 7 days would be inadequate. But these are extraordinary times and maybe arrangements could be made for additional trains and buses to take people to their destination of choice. In this best-case scenario, maybe we would not have had the current crisis. However, even this is not without serious problems:

1) The most obvious problem is the rush in the trains and buses would also provide fertile grounds for the spread of the virus. This seems to suggest that a mere preponement would not have addressed the problem of large numbers of people being in very close contact. In fact, it is possible that in this scenario more people would have chosen to return 'home' due to trains and buses being available. At the moment, it is quite likely that only the most desperate are taking the perilous route home

2) While it is true that India does not have a Wuhan like epicenter, the virus was imported into the country via people returning from other countries. International travel is limited to certain sections of Indian society and is likely to be highly concentrated in large cities or certain prosperous states. Most of the internal migrants would be traveling from these very prosperous parts of the country to poorer parts with weaker health infrastructure. If it is going to be tough for Maharashtra to deal with the surge of Covid cases, it is going to be almost impossible for Bihar. Facilitating travel to the hinterland would spread the infection to the poorest parts of the country and with more people traveling the spread would be faster.

3) In times of rapid change, it would be unreasonable to expect that all information would be available to all decision-makers. It is very likely that many who did not choose to travel in the 7 day moratorium period will subsequently change their minds. Driven either by the continual decrease in economic activity or simply by the desire to be home, around near and dear ones in this time of great danger.

This alternative scenario does not seem to be leading to outcomes that are any better than the one that is currently playing out. Further, the economic impact of the lockdown would not be any less severe in the counterfactual than it currently is. The sight of people cramming into trains might not be as heart-rending as the visual of people walking across state boundaries, but it is not clear that prior intimation of the lockdown would have alleviated the problems we face today. In fact, it might have made things worse. The option to call off the lockdown or to not have had one in the first place would have also likely disproportionately affected the people that are currently suffering the most.

What now?

While historical hypotheticals are useful in guiding future policy decisions, and there will be a time very soon when these questions will have to be asked again. But very rarely can the clock be turned back and insights gained be used to address the problem at hand. What might still help address the current problem, if the argument in favor of lockdown is persuasive enough, is setting up temporary camps with provisions of food and water and more importantly, testing. Once it is established that the person carries no risk, arrangements for travel can be made via trains to the capitals of their respective states. These arrangements must be made by the central government to avoid any inter-state haggling. Once in their state capitals, state governments can make arrangements for people to get back home.

The hurried decision on behalf of some state governments to arrange for buses without adequate measure to test the ones traveling might come back to haunt the government. But it is not without cause, for most of us the pictures and videos are heartbreaking, for elected politicians they can be career-ending. In fact, as the crisis unfolds, the central government seems to be withdrawing many of its initial curbs. Apart from the lack of administrative capacity, it is tough to understand this worst of both worlds approach: we suffer the worst of the lockdown, as the virus continues to spread and will eventually bring more hardships, economic and otherwise. An oft-repeated statement is recent times is that in the fight against Coronavirus, a society is only as strong as its weakest link. The way forward is to strengthen the weakest link and try as best we can to fortify them against starvation and the risk of being infected.

A friend recently pointed out that societies tend to pass down stories of past calamities to make sure that the next generation is prepared. In government, that institutional memory is codified in the idiom; look back, move forward. In the face of any abnormal circumstances, find previous instances of similar problems and draw on the experience of people who lived through times. In the present crisis, I believe our collective societal memory has failed us. Governments and citizens alike are ill-equipped and ill-prepared to deal with this crisis. In times like these, it is best to remember that there no good outcomes, only bad and very bad ones. Winston Churchill, after leading the UK to victory in WWII, lost the subsequent election. In this global war against an unseen enemy, the leader who leads their people to victory may not end up being the most popular one, history though, will remember.

Thoughts and Predictions from March 18th, 2020

On Decision Making in a Global Pandemic

2020-03-25T23:56:00.003+05:30

Until January 2020, anthropogenic climate change was the most clear and present danger facing human civilization. We were told we had to act soon and we had to act collectively to avoid the worst effects of increasing global temperatures, and by all accounts, we still have to. All the concerns around decision making at different levels, from individual to inter-governmental, that have fuelled the climate change debate have been brought into sharper focus by the unfolding Corona Virus pandemic. The questions are similar, but the timeline is much more compressed.

What you or your government does or does not do today has an impact today, not 25 years into the future. Predictions can be substantiated or be shown to be worthless in a matter of days. And the decisions which rely on and simultaneously impact these predictions have to be made in an environment that is constantly evolving. Uncertainty abounds and the need to establish paradigms of sound decision making has scarcely ever been as urgent as it is today. This makes it imperative to revisit the basic, time tested principles of incentives and tradeoffs that underlie the choices we make.

Context

As recently as a week ago, Coronavirus seemed a distant concern that only paranoid bothered with.

In fact, on the 18th of March, I had received an email from an American colleague with the subject line: "While the world panics, India seems to be doing just fine. Yes?". And it did indeed look like we were doing fine. The confirmed case numbers were very low, governments had not taken any directed measures and while the university I work at had suspended classes, there was more of a holiday mood all around. But to anyone looking at the numbers more carefully, the prognosis was not very bright. I had responded to my colleague's question with a doom and gloom prediction (which I do not think it would be wise to share at this point in time) half hoping for some directives from the government.

On 20th March we got the first clear sign of government action. The Prime Minister asked all Indians to observe a 'people's curfew' on 22nd March from 0700 hrs to 2100 hrs. He also asked everyone to engage in a collective show of solidarity with the women and men at the frontline of the crisis by clapping or clanging plates for 5 mins at 1700 hrs. Many praised the PM's initiative to unite the country and rekindle the spirit of lending a hand like the wars of 65 and 71. Many others lamented the gesture as a case of too little, too late, with particular consternation at the over-enthusiastic groups of people who took their show of solidarity to the streets or worse, celebrated their contribution to the nation's cause by having a post-curfew party.

On the day of the people's curfew, many state governments announced lockdowns, taking many by surprise. Since then a nation-wide 21 days curfew has been declared and the government machinery which until then seemed intent on avoiding panic sprung into action. Though it still seemed incapable of grasping the magnitude of the challenge before them, possibly handicapped by the old dictum of the British system of bureaucracy: lots of things should be done, but nothing should be done for the first time.

Individual's decision problem

As a species that evolved to survive the African savanna, we tend to seek comfort in groups. This instinct serves us well in times of danger. But congregating in groups is exactly what we have been asked no to do in order to limit the spread of the virus. So before we get into the nitty-gritty of the tough decisions that individuals have to make it is important to concede that the present crisis challenges ingrained habits and the road ahead is going to be very difficult.

The WHO guidelines on what is expected of individuals are pretty clear, however, they are not straightforward to adhere to. For instance, it is almost impossible to not touch your face or keep away from surfaces that might have been touched by others. Hence, we had more the more severe, but easier to implement measure of quarantining people. The severity of the quarantine was sequentially increased from being initially restricted to high-risk cases to a generalized lockdown. The increase in severity of the measures has at least partly driven by the inability or unwillingness of individuals to adhere by the less severe ones.

Why is it that even in the face of a demonstrable threat, people have not taken adequate precautions: violated quarantine, traveled long-distance, even partied? The choice boils down to the individual perception of the opportunity cost of being locked indoors. For instance, if none of my friends have to go to the office, more people can join my party, increasing its payoff and consequently increasing the opportunity cost of maintaining quarantine. On the other hand, the opportunity cost of partying is the increase in the probability of the individual getting infected with a deadly virus due to attending a party. But before we pontificate on the obviousness of choosing to avoid a party in these times, consider that on average 10 people die every day on the railway tracks of Mumbai's suburban railway. Our subjective perception is not very well tuned into evaluating the probability of our own mortality, leading to many flawed decisions. We will revisit this problem of errors in estimation in the next section.

Further, it is obvious that the impact of the decisions made by individuals is not limited to the decision-makers. If a person had increased their risk of infection, they have joined the chain of infection, becoming a potential vector that increases the probability of others being infected. This (negative) externality whereby the choices of an individual affect others; complicates decision even more as the social cost of an action, say organizing a party, is much higher than its personal cost. The standard prediction of an introduction to economics course in such a scenario would be that people will over-engage in such activities. Climate activists have been pointing out a similar problem, where individuals consume more fossil fuel than is socially optimal as the cost they pay individually does not reflect the cost their decision imposes on the entire society.

So, the deck is stacked against us (1) we need to do things that go against our basic instincts (2) we seem to have limited ability to gauge the cost of an activity in terms of probability of mortality (3) even if we can take our own mortality into consideration, our decisions impose costs on society that are difficult to estimate. It is for these reasons that governments across the world, given the urgency of the situation have now started introducing the extraneous cost of fines and/or punishment to get people to comply. From the UK to Germany to India, law enforcement agencies are being empowered to make sure that people comply with lockdowns. We have forfeited our freedom to make independent decisions and in the process demonstrated our inability to deal with immediate and urgent threats as individuals.

The way forward

France has its army policing the streets of Paris and this might very soon be a reality for the big cities in India. But while their presence will be deterrent, it will not completely eliminate the possibility of individuals violating the lockdown. They are not omnipresent and there will be opportunities that can be exploited by sufficient motivated individuals: those for whom the opportunity cost of social isolation is very high.

Now, particularly in a poor country like India, there is going to be a very large group of daily wage earners for whom the cost of a lockdown is going to be very extreme. As we get deeper into the lockdown, even people with monetary resources will start running out of food. The arrangements that governments are making might help some, but if the initial reports are anything to go by, there is insufficient state capacity to provide food materials to millions of people. If the lockdown extends for any longer than the current 21 days, well, we might be getting too ahead of ourselves with that hypothetical. But if the choice is between increasing the probability of getting infected and starvation, it is not too difficult to imagine what even the most level headed amongst us would choose to do.

For now, it is imperative to recognize the failings in decision making that led us to this situation and make amends, to the extent that we can. Our estimations of incentives and tradeoffs depend on the assumptions we about the repercussions of a decision, so it is relevant to identify the ways in which they can go wrong. Consider the following situation: person A is in a cave, A's decision to leave the case depends on whether there is a tiger outside the cave. There are two possible kinds of errors that A can make: (1) assume that there is a tiger outside the cave when there isn't one (2) assume that there is no tiger when there is one. A reasonable argument can be made that error (2) is far more dangerous. And therefore it is very likely that we evolved to avoid making the (2) type of error, erring more on the side of being cautious than cavalier. While that may be true of the species generally, in our tendency to commit (2) errors, we are likely distributed over a spectrum ranging from extreme paranoia to extreme risk-taking. This is why even under normal everyday circumstances we observe a disparate range of responses to the same situation. The same tendency that makes someone a risk-taking entrepreneur, also makes them take more risky decisions in times like these.

In addition to the extreme risk-takers, there is also the fact that modern civilization has created an environment in which (2) type errors are not as risky as they would have been in times gone by. This is not a critique the advances that we have made in modern medicine, engineering, and governance structures, it is merely to point out that by reducing the cost of errors we have made people more likely to make errors even in times when the cost is likely to be very high. And while this is more true in the richer countries, the well off in the global south has not been immune to these changes. In the last few days, there were exhortations by the ones in the know to their near and dear ones to buy basic food items. But in times of Amazon pantry and Bigbasket, it is so difficult for people to imagine food shortages, that many ignored the advice, only to find themselves in a perilous situation with the implementation of the lockdown. It seems that paradoxically, the progress of human civilization might have created an environment that endangered its further progress.

How do we address this? Possibly the best way forward is to at least in the current scenario: (a) try to consciously move toward the paranoid end of the scale (b) try to maximize considerations of social costs of your actions by thinking of people around you who your actions might immediately impact. Listen to interviews of experts who have been shouting their lungs out for the last 2 months (an example: https://www.youtube.com/watch?v=dcJDpV-igjs). With the proliferation of the internet, there seems to have been a growing distaste for experts, people who have dedicated many years to understanding and addressing a particular problem. Now may not be the best time to undermine the importance and relevance of knowledge accumulated by the experts. Listen to the stories coming in from Italy and Spain imploring the rest of the world to not make the kind of mistake they made.

Can the experts be wrong? Of course, the increasing temperatures might yet drive the virus away or maybe the threat was overstated. While no one can guarantee with absolute certainty that the experts have not committed an error of type (1): they have said there is a tiger, when there isn't. And if that is the case, we will find out soon enough. But, if they are right and we commit an error of type (2), the consequences might be too catastrophic to consider.

Stay at home, stay safe.

On the Gift of Time

2017-02-14T08:23:00.002+05:30

Masroof zamana kyun mujhpe,

Waqt apna barbaad kare?

-Kabhi Kabhi (1976)

(Why should this busy world waste its time on me?)

Premise

24 hours in a day, 7 days in a week and 52 weeks in a year. In a world increasingly beset by inequalities, time is an equal opportunity provider. It does not care if you are rich or poor, party-animal or recluse, slacker or workaholic. Warren Buffet, Elon Musk and I, all get the same amount of time. There is no new technology, no app, that can (yet?) increase the time available to us. There is however plenty that modern technology has done to place increasing demands on our time. The choice of things to do available to anyone with a smart phone is enormous: from playing candy crush to writing a book; offering almost endless possibilities to amuse and entertain ourselves. All these possibilities make it very difficult to value time.

A commonly used measure of value is money. The money value of time suggests that the time of a high-flying corporate executive is much more valuable than of a retiree. But the retiree could spend his time watching a movie instead of indulging his/her grandchild. To the extent that our individual valuations are affected by options available, in recent times the premium on everyones time has gone through the roof. There is always something 'better' that we could be doing, learning, being more productive, watching a movie, playing a game, browsing Facebook. 15 years ago, if there was no good show on TV at 6pm in the evening, the most common way to pass-time was to go meet friends (real people, not the show). Today, they could just look up re-runs of friends (the show).

People and Time

Spending time with people is messy business. In some case the complaints never seem to end, in others unbounded enthusiasm and zest for living seem to be based on distorted sense of reality. Either experience may trigger a negative evaluations of our own lives. People can also be terribly boring, not all of them funny and almost no one seems to get the idea that timing is the essence of humor. Then there are the troubles of trying to figure out what is appropriate and what is not, leading to many an awkward silence. There are those insufferable know-it-alls, the ones who just cannot stop arguing over trivial matters, the ideologues and if you have spent any time in the US recently, those who cant stop talking about trump. People also seem to have this tendency to impose negative externalities; shrill voice, second hand smoke, body odor, farts, grumbling stomach sounds. Spending time with people also imposes compromises. Its Tuesday and the special at this Chinese place is always great, but no one else seems to like it and so the Thai place it is.

All of this is made infinitely worse by the possibilities offered by a computer. The comic timing of all the characters in (your show/movie/game of choice) is always spot on. They do not bore you with their problems in life and even when they do, the drama is exquisitely scripted. You can eat anything you like (and can pay for) while watching them and there are no awkward silences. And if a show is too preachy, or a movie is too slow or a game is not engaging enough, its not much effort to change to a different one. You could also choose to be productive instead, why bother with characters when you can gorge on knowledge. Sate your curiosity with something that places no demands on you. You can still eat anything you like (and can pay for), zone out as frequently as you like and wikipedia still lets you click your way through millions of pages of information. Better still you could use the time to make sure that you do better at your job, write a better academic paper, get your PhD quicker. In fact, given how difficult and frustrating it is to spend some time with another human-being compared to the alternatives, it is astonishing to think that we evolved as social creatures.

The gift of time

By now this may seem like another bleak prognosis of the impact of technology on human society. But I am trying to address a much more important question: What is a good valentine's day gift? Is a bouquet of roses the best expression of your love? Or if you are the sort who does not restrict their celebration of valentines day to romantic love, how expensive should a greeting card for your mother be to adequately convey your love for her? Maybe it should it a sari this time, given that you have started earning. Or maybe given your recent wanderlust, a package tour to (fill in a fun/interesting place). How about your friends? A message on the Whatsapp group should be enough. To the really special ones, maybe a pm on Facebook, maybe even an email if its been a while.

In fact these concerns are not specific to valentine's day. We frequently struggle with the general problem of valuing relationships. How do we convey to someone that we value them and conversely, how to we figure out how much others values us? My contention is that only reasonable way to convey how much we value a relationship is with time. No amount of money or hard-work will make 1 hour of time less than 1 hour of time. This is specially true today when there is so much else that we could be doing with our time. Every moment spent talking to someone is time that could have been spent watching your favorite show or learning how to program better or working towards that big promotion.

A rich/spendthrift partner or spouse maybe able to splurge on trip. Does that mean that they value you more that someone who is poorer/stingier? Is the friend who gets you a job a better friend than the one who is struggling to hold onto his own? On the other hand; we all have time, we all have fixed amounts of it and it has become more valuable to everyone given the choices that we have today. Time offers a better way to both convey how much we value someone and to figure out how much someone values us.

The uncle who spent hours indulging you, the mother who gets up an hour early to make the breakfast you like, the father who spends his evening teaching you how to play cricket properly, the friend who finds time for a call, the sibling who suffers your long stories are the people who are more likely to value you and the relationship you share with them. We are all difficult people to spend time with and its tempting to sit by your computer browsing through valentines day catalogs to find gifts to give away. But this valentine's day gift some time to the people you love, see how that goes.

PS: In fact sometimes how much we value a relationship maybe determined by the time we spend on it. Like any precious resource, there is always risks related to investment of time. But the payoffs maybe high, how much of risk taker are you?

On the weak Indian state and Demonetization

2016-11-23T18:13:00.001+05:30

In recent times, the current Indian PM seems to have become a proxy for the state for both his supporters and detractors. While such a simplification might be useful for the rhetoric used by both the sides, it does little to hide the fact that despite being used often, the concept of the ‘state' remains nebulous in India. When negotiating compensation for acquired land, PSU officials (even those from private firms in some instances) are presumed to be state actors. While on the other hand, our movies have been telling us for years that the ineffectiveness of our police is down to the ‘system’ (a common pseudonym for the state) being flawed, implying that the police is somehow separate from the state.

The many discussions on what the state is, its constituent elements and the many forces and counter-forces within it, can at times obfuscate the reality of the Indian state being very weak. The limitations of state capacity are apparent in its inability to ensure that teachers turn up at government schools and that doctors are present at health care centers. The state struggles to provide basic amenities like roads and electricity despite spending huge amounts of money on grandiose projects. This sorry state of affairs in the country has far too often been blamed on the lack of willingness of behalf of the state. But as I have argued before (refer On Tolerance: Intention and Verification), assuming mal-intent where ineptitude is more obvious is more an indulgence for our love of gossip than an exercise of our logical faculties.

If the state lacks the capacity to implement, what good are policies, irrespective of the intent behind them. This creates a conundrum for a government democratically elected on the promises of better governance and crackdown against corruption. Corruption is endemic due to poor governance structures and governance is poor due to corruption. A vicious circle ensues, which (even if the government has good intentions) is almost impossible to break. In this vacuum of policy options before the government, enter demonetization.

Fiat currency works purely on trust. I accept a Rs. 100 note because I am certain that when I give it to someone else, he/she too will accept and value it at Rs. 100. The problems of counterfeiting aside, this system of trust works because the state (central bank) provides a guarantee that even if no one else honors a currency note, the central bank will. Therefore, if the state revokes this guarantee for some currency denominations, the trust that underpins its acceptance breaks down. Therefore demonetization offers a the government with a policy alternative which does not rely on the state’s enforcement capacity. The act of announcing the strategy (withdrawing the central bank guarantee) ensures that it will be enforced (at least in the medium run).

Does any of this imply that demonetization is a good policy initiative? No, it does not, that’s an empirical question. This article merely offers a view on how this could be one of the few enforceable/implementable policy decisions that are available to a weak state. As for whether it will achieve its stated goals, or if it will cause more harm than good, that is a discussion for another day.

On Tolerance: Intention and Verification

2015-12-17T19:45:00.005+05:30

There has been a spate of untoward incidents that have caused astute analysts to question everything in Indian society; from its social mores to the intentions of its elected government. Accomplished authors are returning awards, famous media persons are crying them selves hoarse, news-apps (they are the closest I can get to figuring out whats in Indian newspapers these days) are full of opinions and counter-opinions on the existential crisis that faces the country today. Mob-lynching, ‘Inking’ faces, even targeted killings of supposedly blasphemous writers. These are dangerous times we are told, intolerance is on the rise in India.

The dire assessments may seem reasonable to some, given recent events. To others it may seem that the pitch of protestations is not high enough, ‘secularity’ of the country is under threat and the apocalypse is nigh. But despite all the signs that the seals of hell are being broken, there are still those who are are celebrating the recent turn of events. Whatever else the general elections of 2014 might have accomplished, it succeeded in polarising the political spectrum in the country like never before. There is name-calling, mud-slinging, grandiose claims of knowledge about internal machinations of the other side, their ulterior motives and then more name-calling and mud-slinging. There is plenty of excitement there, enough for the news to qualify as a masala-sitcom for the politically inclined. If however, your ideological inclinations are less certain or dedication to the subtle art of classifying and categorising political views not obsessive, you might find that the reportage is not very helpful. The fear mongering inherent in playing up the motivations for a crime (communal instead of murder) surely makes for good drama, but it hardly serves the purpose of informing the public (startling headlines are moderated by usage of words like ‘alleged’ in the body of the article) or of holding the government responsible (for ensuring law and order instead of their clarifying their ideological positions).

This inordinate focus on the motivations of the criminal or the Government is not a mere an annoyance, its disingenuous and has it has real consequences. It encourages identification with factions, fosters perverse reasoning and inhibits any real analysis on what needs to be done to improve the situation. Consider the following bit of news, according to National Crime Records Bureau 2014 data, the charge-sheeting rate in crimes committed against Dalits is 92.3%, while the conviction rate is 28.8%. This piece of data can be interpreted in multiple ways, but the most obvious inference of a dismal conviction rate must be ineptitude of the police. Now, it may be the case that that many in the police are casteist bigots or it could be because they work hand in glove with the perpetrators of the crime, it may even be due to many senior members of state governments forcing the police to do their bidding. But in espousing these causes, there is an implicit assumption that the police are adequately trained to do their job and that they are well versed with the laws they are charged with upholding. If only the ‘system’ would let them, they would rid the country of crime in a matter of days. Neither of these implicit assumptions stand up to scrutiny.

The police are not trained well, they are unaware of basic investigative techniques and are sloppy when it comes to gathering evidence. Many judges have reprimanded the police for their inability to conduct an investigation and build a case. Cops routinely flout laws (and all norms of decency): suspects get beaten up, many complainants are harassed and alleged perpetrators of crime heckled at the whims of the local police. In claiming that the ineptitude of the police is a matter of choice (bigotry or doing favours for political masters), the lack of policing capacity goes unquestioned and with it go the calls for for better training and/or recruitment of better qualified candidates. The reality of the lack of state capacity in enforcing the rule of law is buried under the avalanche of allegations concerning the ideology of the incumbent government.

The implicit acceptance of this limited state capacity is showcased in previous instances of governments deciding against taking on perceived public anger: books have been banned, authors/painters have been asked to leave the country or not to enter it, goons burning books have been let off the hook etc.. All acts of governments concerned about not being able to deal with ramifications of dismissing demands that trampled on the constitutional rights of its citizens. The history of modern Indian republic is littered with instances of governments being eager to defend the right to be offended. If that is the case, how are any of the recent events a shock to us. We have implicitly (or explicitly in some cases) accepted the idea that mobs will violently protest if their demands are not met. Do we then have any right to be surprised when the law is broken by people who think they have been left behind in the race to get governments to acquiesce to their wishes?

None of this is to suggest that any government should let be let off the hook, although it may seem so to some. It is small attempt to sieve out the noise from the continuing outrage, my illustration of what a more reasoned debate would look like. While having a government that responds to questions asked of it is our right, asking the right questions is our duty. We spend too much effort inferring and ascribing intentions and too little in keeping tabs on things that can be observed. Claims about intent can be easily dismissed with counter claims, neither of which are verifiable with certainty. Observed and verifiable outcomes on the other hand are tougher to put a spin on. So when we say we want a more tolerant country, what we must ask for is a country with better enforcement of law and order as prescribed by our constitution.

On Measurement problems in Education

2012-02-20T02:08:00.001+05:30

This piece had been languishing for 3 years. Not particularly insightful, but I need to move on to things I find more interesting at the moment.

The ability to think describes existence; it determines thoughts, actions, participation in society, view of self and of the world. Education is the process that develops perspectives, imparts tools and provides frameworks that are needed for an individual to develop and regulate their abilities. Amartya Sen calls it an enabling factor, though even this rather broad description does not do justice to the central importance that education holds in the world that we live in.

These insights on the importance of education are nothing new and have been acknowledged for very many ages. Hence, universities and schools developed to formalize the methods and mechanisms used to impart education. However, while institutionalization of education is not a modern creation; the interaction between the institution and an individual desirous of getting a education through the market is. Herein lies the construct (primarily with reference to higher education) that shall be presently the object of attention.

Economists and other social scientists often emphasize the role of 'information asymmetry' in workings of the market. The concept is very simple: information about quality of the commodity or service being supplied to potential customers is private to the producer, or at least it is not available for public consumption. It for this reason that firms (or individuals) go to great lengths to provide assurances of quality to their prospective customers. The financial sector attempts to resolve such problems through credit rating agencies; manufacturing and processing sectors by creating benchmark certifications and offering replacement warranties.

Aside: The limitations of private provisioning of such information were exposed during the economic crisis of 2008. The contradictions built into the credit rating mechanism became apparent showing how the sytem could be rigged. Such privately owned rating services are usually paid for by the supplier (directly or indirectly) and thereby the ratings can hardly ever be expected to be based on a fair assessment.

The provision for education in a modern economy, suffers from problems of a similar nature. In societies where the university system has matured over a long period of time (which is not to say that they dont have serious problems of their own), the quality is signaled by perceptions associated with individual institutes or universities. However, in relatively younger systems of education, with new institutions coming up everyday, consumer (students) decisions have to made without the luxury of being able to rely on years of historical performance as measures of quality. Therefore developing mechanisms to convey quality are of far greater importance. To further complicate matters, such markets are characterised by a demand-supply mismatch, whereby there are many applicants than there are positions. So not only do potential consumers suffer from information asymmetry, the intense competition for places might mean that most might not have a real choice in where they get their education from. Given this situation and the importance of education the onus of resolving this issue usually falls with the state.

The state in its attempts to assure quality is likely to create some system of regulation. In India, there state funded accreditation agencies, along with licensing authorities who are responsible for ensuring the quality of education institutions. Given the enormous demand for education there are plenty of private entrepreneurs willing to set up schools and colleges. But a license-permit regulatory system makes these entrepreneurs potential targets for rent seeking as also potential sources of future employment to be cultivated by bureaucrats at the agencies. The problems are akin to the general malaise that afflicted the pre-liberalisation Indian economy.

While licensing institutions leads to graft and nepotism, accrediting and rating educational institutions comes with its own set of problems. The process of imparting education does not lend itself well to evaluation. It is almost impossible to generate a list of criteria that can be objectively measured for purpose of evaluation. Education is what would be called a complex process, where following the same recipe twice may not result in the same dish. There are no detailed blueprint of a method that can ensure a high level of learning. Whats worse is there are no concrete outcomes of the process that can be measured. There are many proxies: placements, salary, alumni network. But measuring these is confusing being 'successful' for being educated. Is someone who became a high school teacher any less educated than an investment banker? This serves to show that the measurement problems in education production process further complicate the problems arising from information asymmetry.

On my attempts at poetry

2011-11-21T17:08:00.001+05:30

Strange as it may sound to people who have known me for any length of time, over the last one year or so, I have been able to pen down a few short compositions that vaguely resemble poems. While very crude and hardly works of any literary value, it is a personal milestone that I thought of sharing.

My first poem, penned (rather typed) after meeting an old friend for the last time:

Just for a brief moment in time,
Fires were rekindled,
Passions reignited,
No dreams of the past resurrected,
No glorious future imagined,
In that lover's eternal last kiss,
I was alive again and so were you,
Just for a brief moment in time.

The most recent one, born out of sheer boredom (and inspired by Rudyard Kipling's excellent 'if'):

If you no longer feel awed by the sight of waves crashing on the shore,
If you cannot see the wonder in the eyes of a kid,
or the beauty in dew covered grass,

If you sit among friends and still feel lonely,
If you cannot muster the effort to call up an old friend,
or listen to the ramblings of a troubled brother,

If at 25 you find yourself longing for another chance at life,

If you cannot look at your past and smile at it,

or find it hard to imagine a future for yourself,

Yours is a world with nothing in it...

On the Rebels with a Cause

2011-08-19T22:58:00.003+05:30

Late in the night yesterday, I was having a debate with my father on the anti-corruption protests led by Anna Hazare sweeping through India. My contention being that the Jan Lok Pal Bill being advocated by Anna and his team is inimical to the interests of the society at large. Earlier today, after initiating a conversation on the issue at my work place I ended up being pillared for not supporting Anna.

There are many arguments that can be made against the creation of an unelected body overseeing the operations of all branches of government and the statute governing which, the civil society in general and Anna group in particular claims should be dictated by them to the parliament. I stand by the arguments that I have made in this regard over the past month or so and agree with most that I have heard from others who have similar reservations. But this post is not about these arguments, for today evening I saw something that has made me realise that these protests are not about what I thought they were.

As a young boy I rued being born in an age when my country had already won her independence. Despite being inspired by reading about the great acts of freedom fighters, there were no britishers for me to fight against. In fact my generation witnessed growth and increase in prosperity which historians tell us is unprecedented in the recorded history of the country. There was a feeling of being a rebel without a cause in those days, which I have since found was shared by many of my age.

I did take up cudgels when I eventually did come across something worth fighting for. I fought for having free and fair student elections, against homework, against stereotypes held my teachers and my fellow students, among others. But for the odd exception I found that it is difficult to garner support in a fight against the establishment. People are willing to (grudgingly) admire a rebel, but not to stand beside him. A similar claim was famously made by Nana Patekar in the iconic movie Krantiveer (http://www.youtube.com/watch?v=u-DNavQ5l9w).

Eventually I discovered that I did not have the stomach for such struggles, it requires too much effort, its too lonely, you can never please everyone and more often that not they dont have happy endings like in the movies. I retired to a more convenient life of relative comfort. In fact now I think I have become one of the arm chair critics that I used to detest so much, once upon a time.

Then again, most of us are arm chair critics, aren't we?

But the events of today evening have forced me, despite myself, to think beyond criticism. During a protest march of roughly 100 people, I saw a group of old ladies, most of whom I am guessing were troubled by arthritis, waving the Indian tricolor and shouting patriotic slogans and those in support of Anna, as enthusiastically as the younger participants. On route of the march were a group of 4 hooligans, who shared a thunderous round of laughter at the expense of the protestors. They were left alone and their mockery went unchallenged as I guess most of the well meaning folk thought it better than to waste their time with these rowdy boys. But the old ladies did not give in to any such considerations, they rounded up the 4 boys and gave a rousing lecture on why all this is for them. So that, when someday when they take their kids to a government hospital, they clerk will not turn them away with empty beds, someday they will have the freedom to drive to roads that are not riddled with potholes, someday they can ask for their rights with dignity and honour. As it all this was not enough, the boys hung their heads in shame through most of the monologue (although initially they had tried to run away from and later shoo away the ladies). They apologised, took the flags that they were offered and joined in. Now, I know these boys. There usual lair is the ground I used to football in and never ever have I seen them conform to any norms of civility.

In that moment I realised, maybe a little too late, that this movement is not about Anna or the Jan Lok Pal Bill. Anna is the focal point around which the movement has gathered steam, but all movements need leaders. Jan Lok Pal Bill might be Anna's agenda, but that is immaterial. What got these old ladies to leave the comfort of their homes, was not any undying love for Anna (not that it would have played a part), but the want to create a better society.

Everybody in this country, at some point or the other has seen the ugly face of corruption, but so far, their indignation was hidden beneath the, by now famous, 'chalta hai' (anything goes) attitude. But this movement gives them hope that things do not always have to be this way. Maybe this movement will fail. Maybe this time agenda will trump the desire for real change for the better. But power of knowledge cannot be undone.

As I sit in the comfort of my room, I can hear the chants outside. As the blue billion rises, will I (and you) still be warming our chairs?

On a Bunch of Problems

2011-08-01T16:26:00.003+05:30

I wish to start this piece thanking the poor souls who have read my blog posts over the last couple of months. The stats available on blogger say that this blog has been viewed 290 times in the last one month (accounting for repeat views that should give us a reader base of about 30 people). Not a very impressive number, but enough to keep my hopes up. As one of my school teachers reminded me the other day, in the days gone by when driven by the romanticism of being a rebel, the energy that having a slim frame more often than not endows one with and naivete of a 16 year old; I would tell anyone who was willing to listen that - All it takes is small spark inside one individual, the rest will follow!

But times have moved on and though things dont look as simple as igniting a spark inside one individual, I still consider it a goal worth of aspiring for. While the goals might be praiseworthy, I realise that my writings suffer from a worsening short term memory, lack of energy and remnants of mild dyslexia. For these and other issues that you might have observed with these posts, I apologize..

A particular incident, thinking about which has consumed most of my waking hours this past weekend, concerned admission interviews at my current place of work. I had been asked to be part of an admission board which conduct admission interviews; though why someone who has barely taken7-8 classes be accorded such a privilege is beyond the realm of my understanding.

My opinions on being an interviewer was for a long time predicated on experience gleaned from the times when I was the interviewee and I had arrived at the conclusion that taking an interview would be a lot of fun. After having been part of three such admission interview board remains unchanged - taking an interview is a lot of fun. Though I am not sure but I think the release of endorphins is caused by the sadist inside me, or maybe by a feeling of gratification brought about by putting others through what I had been through or maybe it is the knowledge of the power that you command sitting across the table. However, irrespective of the source, I have found conducting interviews to be a very joyous experience.

This time however, I came across a student who woke my conscience, rather rudely too, from the stupor that it has fallen into off late. Visually he wasn't much, as unremarkable as they come, but rarely have I seen someone be so tense and calm at the same time. The first sign of trouble was signaled by his silence following the usual - please introduce yourself request. It was followed by a half hearted attempt by him to partially cover his face with sweaty and trembling hands.

I sat there, across the table (with the chair person of this 2 person board sitting next to me), transfixed, unable to figure out what to so next. My colleague, who was apparently not so afflicted, continued his investigations and discovered that the boy had travelled for 2 days, on foot, car, bus and train to get to delhi from his small town somewhere in the great hinterland of India. He was tired, could not converse in english and had not known how to prepare for this interview as no one he knew had ever taken an interview. All of these answers came from behind the thin, sweaty and shivering hand that had created an inadequate veil almost as if to shield himself from us.

He was taut like a drawn bow string during the course of the interview, which lasted not more than 7-8 mins. He left dejected with our brief interaction, but did not seem disappointed, maybe he knew what would happen. I on the other hand, reflect on the incident with a lot of disappointment.

Did I pity the boy? Maybe. Did he pity me? Maybe. Should either of us pity each other or should we carry on reveling in the possibilities that our society offers for such interactions..

On Changing the World

2011-07-25T15:20:00.002+05:30

I spent close to a year of my life in tilburg studying at Universiteit van Tilburg; mostly watching documentaries and sitcoms, reading up random articles on wikipedia and cooking. I studied when I absolutely had to in order to pass an exam and rarely ever ventured out. So while it was a satisfactory endeavor intellectually, it lacked a wholesome experience, possibly due to lack of adequate social interaction. Even so, during one of the few social gatherings that I partook in, I was reminded and very powerfully so, of the one(many) thing(s) that I wanted to accomplish when I was younger.

The relevant part of the conversation, which involved my good friends - Jesus and Chiara - so transpired (its been paraphrased):

Me: Why did you choose to study economics? (I think this question was borne out of exasperation brought about by realization of the futility of studying the subject)

Chiara: My reason is stupid..

Jesus: Come on Chiara, we were all younger and dumber when we decided. Spit it out..

Chiara: I wanted to change the world....

And then it struck me how often I wanted to change the world when I was younger. I had promised myself that I will never give homework (if I ever became I teacher), fight to abolish exams, dispose of corruption, design the first car to run on water, decipher the theory of everything etc etc..At the point in time when I dreamt up each of these ways in which to change the world, they seemed plausible, even possible. Juvenile and naive as it may seem but for those brief moments (or in some cases not so brief) I genuinely believed that I could accomplish them. Even when I realized that I couldnt put my plans into practice at that time, they were not shelved, but put on the things to do list. Over the years the list grew longer and though doubt and pragmatism were diminishing the value of the list in my consciousness, it still warmed my heart to know that there is so much out there for me to do..But the advance of time and wisdom (as some would have you believe it is) cannot be denied and the list was inevitably lost, residing only in the sub conscious memory centre of the brain.

Why is it that Chiara thought that 'Changing the World' was no longer a rational reason to choose a subject to study? What is it about us that makes conformists out of even the most devout rebels? Does our risk aversion grow over time?

I made a choice soon after leaving school, when I was about to enter college that the days of rebelling and fighting for what I thought was right are behind me. Those days haven't returned since and I think my life is much the poorer for it; for though I might not have made any real difference to anything around me, there is no elixir stronger than hope and no aphrodisiac stronger than a wish to change the world.

On Communication Skills and 'Porn Movies'

2011-07-21T14:30:00.001+05:30

For some strange reason, the people in charge at my current place of work place an inordinately high importance on improving the communication skills of their students. Therefore, not only do the students have to endure a course in English/Communication Skills and a course in Foreign Language (German - a compulsory optional subject being the only language offered of the six listed in the course structure), but also a weekly class on 'Extra-Curricular Activities', where they are expected to hone their ability to communicate under the able guidance of their core subject (as opposed to english or communication skills) teachers.

And so it transpired that I was asked to conduct a Group Discussion in the 'Extra Curricular Activities' class scheduled for 12:25 pm every Thursday. There were to be two topics, one subject (in my case economics) related and the other I was free to choose. Despite being informed of this onerous task moments before entering a room full of students miffed at loosing out on an extended lunch break, I said a small prayer thanking my 17 year old self for ensuring that I did not have to come to this place as an undergraduate before proceeding.

I introduced myself to the class and told them that their topic for discussion today would be - The Changing Face of Indian Cinema. I thought given all the talk surrounding 'Delhi Belly', the students would have strong opinions about something like this and might therefore be more inclined to participate in a discussion. However, my faculty colleagues seemed to think otherwise, or at least that is what their looks of absolute horror and disgust conveyed. But the arrow had been fired and the discussion had begun.

I spent the first few minutes to figure it out, though I could not imagine the problem that anyone would have with a discussion on this issue. But then I heard it (from the students) and watched with a sinking feeling the look of horror and disgust return to the face of my colleagues.

The discussion had somehow meandered its way to the question of how realistic is the portrayal of foul mouthed youth who talks in expletives with some prepositions and conjunctions used to maintain the stream of thought. From there it was only a small distance to the dreaded P-word; 'Porn Movies' as they called it. The discussion had gone to a place where our elders (teachers or otherwise) fear to tread and so had to be killed and it was with short crisp announcement - "We are done with this topic"! (not by me of course)

While not entirely relevant to the topic at hand, I found their short descriptions of lack of realism in porn and hypocrisy that surrounds it well thought out and articulated. It was probably the first time in the last few weeks that I had seen these students speaking up and in the process disclosing a side to their personalities that I will never get to see in a classroom setting.

For all the cynicism I had about having such a class, I came out of it thinking that the given constraints that we operate with, its a wonderful opportunity to accomplish one of the primary goals of education - to help develop and open young minds to arguments and discussions, to foster a world view that is arrived at by observation, thinking and analyzing.

I was of course chastised later on for having such 'liberal' views and asked to come up with ways of making the session more interactive and meaningful for the students - Make them talk about global warming and growth and development of India, talking about movies never did anyone any good.

(mind you while referring to what transpired in the class later on, the p-word was replaced, 'you know what they were talking about')

On India and Indianess

2011-07-18T14:24:00.002+05:30

Dr. Devdutt Patnaik explains how our world view here in India is different from the west. He uses mythology as an exposition for the idea, in the process illuminating how, stories, rituals and symbols are simultaneously both the result and cause of our conception of the world around us..

On bombs and bombay

2011-07-14T15:24:00.005+05:30

So bombay (or mumbai if you please) has become a victim of terror attacks yet again. On July 13, 2011, three explosions killed an estimated 30 people, injuring many more. The bombs went off in the evening rush hour and two of the three locations were khau gallis (food streets).

The prime suspect so far is lashkar-e-taiba from across the border and its Indian accomplice indian mujahideen. At the expense of repeating what scores have asked before me, what can motivate such depravity in men? Can any such inquiry ever be successful?

Are these men, as alfred (batman's butler) said, just plain evil? If so, isnt it frightening that we have so many evil men? Or is it that biological evolution has fallen behind the technological one, giving who are more or less still competitive apes, the power to destroy the world? Or is it religion? Maybe it is something more basic, like identity. Or maybe the modern is giving rise to a generation of men and women who dont know what to do with their lives, suffering from a lack of identity, with no sense of self and purpose, maybe in these acts of wanton violence (in the name of religion, nationalism, regionalism etc) they find their salvation?

I am rambling now, not sure if this even makes sense anymore..

On Arguments and Conformity in Education

2011-07-11T12:16:00.001+05:30

I dont know about the experiences others had in school, but I got the impression that raising uncomfortable questions is never advisable for someone who wants to stay in the teacher's good books. Is it that as a society we prefer not to have our youngest members think too much? Or is it that the collective conscious of human society is a control freak, relying on controlling the range of our thoughts to preserve the current social structure, with its hierarchy and power structures? Or is it that restricting the things about which a modern student thinks is made necessary by the now vast treasure trove of knowledge gained by us over time, which has lead to modern curriculum being so vast and extensive that the opportunity cost of any digression is very high?

I now stand on the other side of the table. Now I have to decide what sort of a teacher do i want to be.

What should be the role of a teacher in the development of a student? Should/Can it be impressed upon students that books are the real sources of knowledge and the role of a teacher is to help in the process of reading and understanding them? How does one encourage students so used to being spoon fed chapters/topics for all their life to educate themselves? How should the diversity of intellectual capability in class be dealt with? Can students ever get over the sense of hierarchy that permeates our existence and not judge themselves with respect to others and learn for the sake of learning?

These and many other questions are yet unanswered..Any ideas?

On the Matter of Corruption

2011-07-07T15:45:00.002+05:30

There is a lot to be said about how and why arguments are stifled or at the very least, not encouraged in social groups cutting across time, space and political boundaries. However, before the discourse on the dynamics of change is taken any further, I would like to say something about an issue that has been hogging the headlines in India lately - Corruption.

The New Oxford American Dictionary defines corruption as:
dishonest or fraudulent conduct by those in power, typically involving bribery

I would venture to suggest that this definition is reasonably concise and accurate and conveys what most people would understand by the term. However, it is also suitably vague. It is difficult to fathom how it can be used to isolate individual cases of corruption without having to rely on our fair judgement.

Would landing a job or a contract through your 'network' be construed a corrupt practice? The bribe in the this case being non-monetary bonds of social contracts that friends or family members are bound by..

Even more difficult is conjecturing on the factors that foster corruption. Although here in India, with most people having had multiple encounters with corrupt officials, there is simple explanation that is oft repeated, that of poor wage rates leading to corruption.

Yesterday, while talking about the state of the law enforcement agencies in India, inevitably the question of corruption came up. A lawyer friend of mine, like countless many have done before him, suggested that corruption is rampant in lower levels of the police as the constables and inspectors are not paid as well as they should be.

Extending this logic would imply that the private security guards stationed outside so many office blocks and residential apartments, who are paid even lesser, should be more corrupt. And should be expected to demand for extra money (over and above his wages) from individual house owners/employees to ensure that their cars arent stolen. Police constables dont have better qualifications than most private security guards and cant therefore claim to be underpaid with respect to their skill sets. Infact they are very well taken care of by the government, never having to fear loosing their jobs or paying medical bills etc..

I think that they are corrupt because they can be. If there was a way for me to get an FIR registered without meeting with a constable and therefore be required to pay a bribe, the incidence of demand for bribes would reduce. The same would hold, if government jobs were not granted forever, or if the lower levels of the judiciary were in not as derelict a state as it is in..

As to the question of money (wealth as opposed to income), i think it is probably the only commodity to which law of diminishing marginal utility doesnt not apply.

What do you think?

On Encouraging Arguments

2011-07-04T14:41:00.000+05:30

Its been a long time coming and maybe this should have been the first post. So here it goes:

It seems obvious to me that the ability and willingness to question and articulate them; to search for their answers and disseminate them comprise one of the fundamental forces that have and continue to shape human society. Fueled by curiosity and sustained by the breadth of the mental faculties of man, argumentative men and women have challenged the status quo, maintained checks and balances on power wielders and perhaps most importantly, have been the source of that most essential ingredient of change, ideas.

Why is it so that cultures through the ages have created mechanisms to stifle dissenters? Languages have so developed that arguments or their synonyms have distinctive negative connotations? Why has human society not been able to internalize change?

Nation States : the paradox of globalisation

2010-09-28T20:47:00.000+05:30

Curiosity and the pursuit for knowledge are the bulwarks of modern science. The scientific journey so far has yielded tremendous insights; from the specifications of the early universe to genetically modified plants. However, a precise understanding of human society remains elusive. This is despite the fact that just a few hundred generations cover humanity’s attempts to create order, beauty and happiness on the face of the earth; the first humans walked out of Africa only seventy or eighty thousand years ago. At the very least this means that the tale of human civilization has been one of incredible drama and the biggest ideas.

Understanding and explaining human society is a fascinating endeavor; it would be however, to put it mildly, an ambitious target for this paper. Therefore, the aims of this paper will be rather modest and limited to some specific aspects of the society. The attempt will be to evaluate the affect of globalization and the rise of supranational corporations on the pre-eminence of nation states as the highest level of aggregation of society. In order to briefly illustrate the importance of such a study, it might be useful to consider a specific implication of globalization. While precise definitions shall be elaborated later, in layman terms globalization is understood to imply increased inter-national interactions. However, by enabling the birth and growth of supra-national entities it might undermine the necessity and importance of nation states, which are axiomatically the essence of any inter-national interactions.

Each one of the three primary constructs mentioned are very vast and the subject of immense amount of work and literature. Thus, given the limitations of space most of the arguments and analysis in this paper would be drawn from or at least based on the works of great people who have studied the area is much greater detail. The effort will be to define the key concepts of state, globalization and supranational entities; explore the relationships between them; evaluate them in the context of current observations and eventually draw some positive inferences.

1. The Prelude

The systemic evaluation of any system, man-made or otherwise, requires a well-defined framework. Given the complexities and the dynamic nature of the human society, there is no dearth of ideologies and accompanying frameworks in the social sciences. All of them have their own way of categorizing social formations and their own specifications of the relationships that exist in and across them. As in most cases, the most satisfactory description is obtained by combining the best features of many different theories.

The inherent features or qualities of a system can be better appreciated if the forces that combine to create it are known and understood. In this case, these would be the fundamental organizing forces of society; economic, political and cultural (religious)¹. Almost all other forces can be identified as being a manifestation of one of the fundamental forces. While force is not a term usually used when referring to society, it provides a functional context for this description, although referring to them as different realms or domains would hardly effect the implications of the arguments. However, it is not always possible to clearly demarcate the boundaries and the differences among the three forces. They tend to fuse into each other with significant overlaps.

The interplay of the organizing forces leads to social formations that can be characterized as unstable equilibria. Further, these equilibria are characterized by a complex dialectical relationship between the social formation and the causal forces, and among the forces themselves. The relationship and the power to influence are reciprocal, so as the forces mould social formations, the formations also affect the forces. The society therefore would experience constant changes, where contradictions emerge and dissipate cyclically. When the internal contradictions become irreconcilable, the equilibria would fail and new one would emerge which adjusts way for the change in the nature and direction of the fundamental forces.

In every new equilibria, the balance of power is likely to shift and one of the fundamental forces is likely to take precedence. In the modern society, it is not be unreasonable to say that economic considerations and logic should be accorded a central position (just as political in feudal societies and cultural kinship in tribal societies). The capitalist system, with its rationality of profit maximization, is therefore not just a name for the system of market place interactions, but rather the centrality of capital and its growth is inherent even in institutions and beliefs that lie outside the ambit of the market. This implies the presence of a capitalist regime². Consequently, all theoretical constructs, like nation states and supranational corporations, will be evaluated in the framework of a capitalist society.

2. Definitions

2.1 Nation State

The concept of nation states, although all pervasive can be tough to grasp, especially because the terms nation and state are used interchangeably. However, while epistemological details are hard to come by, there are differences in the connotations of the two terms. Nation refers to a geographic entity whose identity and existence is derived from the acknowledgement of its existence by other nations. State on the other hand is the functional manifestation of the concept of nation. State power however is not exclusive to modern nations, so to distinguish modern states from older systems, the term nation state is preferred.

Theoretical definitions of the nation state are very useful from a strictly academic viewpoint and do serve the general purpose of encapsulating the observed properties of institutions that exist today, but they are too complicated to be useful when evaluating the functioning of nation states. For this purpose it is more advantageous to define nation states as biological sciences define life; by elaborating its salient features and characteristics. But to gain more precision, general appeal has to be sacrificed and many of the existing institutions have to be excluded from the scope of the definition. Thus only expected characteristics of democratic constitutional welfare states will be taken into consideration in developing this functional definition:

· A state enacted policy is binding on all its citizens. Even the exceptions to the policy are described by the state³.

· States derive their legitimacy by being the representatives of the citizens and thereby are expected to act to secure their welfare. The notions of fairness and justice are expected to be important guiding principles of governance.

· The power of governance is concentrated in the state officials, although powers are not given to individuals but to positions that individuals occupy.

· As a corollary, concentrations of power outside the state can derive legitimacy of their own and therefore threaten the internal stability of a nation. The state is therefore likely to act to prevent such an eventuality.

· The legitimacy of most other intra-state and inter-state actors is derived from the state. It implies that if need be, their rights can be taken away⁴.

· The right to legal violence and relations across states is the sole preserve of the modern state.

At this point it might be useful to draw an analogy to clarify the characteristics of a state mentioned above. If a nation is a very large hotel, the hotel management is the state. The brief of the management is to maintain and provide services that cannot be otherwise provided for by individual action. The management also imposes rules on the residents, however, transactions among the residents is mostly left to the devices of the concerned individuals, although the ambit of these transactions is defined by the rules of the hotel.

To distinguish between the state and non-state actors, the individuals in the hotel that are not a part of the management would be non-state actors, all of whom are interested in their material well being. If the hotel residents are part of a capitalist society, as is expected of them, they are concerned about increasing the amount of capital available for consumption and reinvestment.

While this simple illustration is a mere caricature of the real world, it does provide a fair overview of the characteristics, functions and responsibilities of a modern nation state. Other features of the nation state will be posited as arguments are developed in paper.

2.2 Globalization

Globalization is a phenomenon as opposed to an institution. It is, however, defined by interactions between institutions. While, it creates new institutions and empowers them, it also weakens some other institutions. It is difficult to come up with a concrete definition of this phenomenon. So, as opposed to nation states whose expected characteristics are defined by the constitutions from which they derive the legitimacy of their existence, globalization can only be defined as it is observed.

Globalization can take various forms; at its essence it is integration of institutions and individuals across nations, at a global scale. While it is reasonable to describe these interactions as international, the participants are not limited to states, thereby limiting the efficacy of such a definition.

The specific type of globalization that is observed today is more or less what would be expected from integration in a capitalist setup. Its underlying logic, that of increasing reach and size to increase profits is concurrent with that of capitalist systems in general. Therefore, the most important features of the phenomenon are economic in nature. It is prudent here to distinguish between integration and cooperation. Globalization does not imply the later, while the former is possibly its most important consequence. Moreover, the integration mentioned here refers mostly to market integration, leading to a free flow of goods and services across national borders.

To draw on the analogy mentioned earlier, globalization would mean that the hotel described earlier would open its gates to goods and products produced by the residents of other hotels and simultaneously also allow its own residents to send their produce to other hotels. Changing dynamics of production might also require these hotels to start having an open door policy for potential residents.

2.3 Supra-national Entities

In common parlance the term multi-national corporations is used for production firms that operate across national borders. However, the term reveals an implicit acceptance of the hegemony of the state. The terms, a supra-national on the other hand implies that these entities are above state power. As will be argued, it is very likely that the first supra-national entities will be corporations with global markets. Market integration in the absence of cooperation and cohesion among states brought about by globalization, will enable these giants to grow exponentially unfettered by state regulations and taxes.

The supra-national corporations are likely to be driven by a strong profit motive. This is a moot point, but an important one nonetheless, as it is contradicts the directives of a welfare state. In the hotel example a supra-national corporation could be a laundry service provider, which started life in one hotel but now supplies its services to all hotels. It is likely to have greater resources that any one hotel and given the importance of services can afford to play truant.

3. The Postulate

In pre-capitalist orders, it is difficult to discern any distinctive division between realms of the society directly concerned with either politics or economics. In this regard the major difference in the capitalist system is that there are formal boundaries that restrict or exclude the exercise of state power over organization or direction or distribution of production. The modern nation state has given up some of its powers to individuals (and organizations formed by them) and it maintains a symbiotic relationship with the economic sphere, i.e. Physical and social undertakings necessary for survival and material well-being.

The basis of this symbiotic relationship is being threatened by the changes brought about by globalization. That concentration of power in non-state actors brought about by corporate capitalism is a threat to democratic nation-states is not a new idea. The urgency of the situation can be better appreciated in the context of global corporate capitalism.

The nation states have very little say in or control over the new global financial system. Enormous amounts of money, commonly called ‘hot money’ moves across national boundaries looking for the best returns. The sheer size of these ventures makes it impossible to regulate them. Moreover, not only is it difficult to regulate these supra-national corporations, it is not yet clear if it is desirable to do so.

To summarize, the basic postulate is that mammoth corporations brought into existence by globalization threaten or at least will threaten the integrity, the need for and indeed the very existence of nation states.

Moving forward, the restricted role of the state in a capitalist regime and key characteristics of its symbiotic relationship with the productive sphere will be elaborated. Following this, the changing nature of capitalist firms will be put in a global context with specific reference to ‘hot money’. Following these expositions recent examples will be posited to depict the nature of the challenges posed to nation states.

4. Role of the State and its Symbiotic existence

The nature of state power has changed over time. While the changes have been multi-faceted, the most notable has been the withdrawal of state from the productive sphere of the society. The productive sphere is a reference to the pursuit of material well-being or in crude terms business. The days of massive state owned monopolies are passé and liberalization has been the buzzword in policy circles for some time now. In the modern capitalist society, even though the hand of the state is generally exercised on behalf of the regime of capital, its active participation is limited to market failures and maintaining the edifice within which firms (and individuals) carry out their business.

The lack of a distinctive productive sphere separate from the state in pre-capitalist societies has been noted before. As the state gradually yielded its control over businesses, a new partially autonomous republic of commerce and production emerged with national boundaries. This had profound implications for the internal balance of power within nations. The state lost its right of direct access to surplus, the right to tax notwithstanding. The surplus became the private property of the individuals that owned the factors of production used to generate it. The power to tax is much striped down version of the kind of power enjoyed by states in pre-capitalist societies. In feudal societies production was carried out in the name of the political head; even the part of the produce that was left with the producer was not his private property. Taxation however presupposes the existence of a working economy outside the state apparatus and the right over the surplus is inverted, it belongs to the producer who then decides to part with it in accordance with the laws of the land.

The productive sphere has even taken over some tasks that are not necessarily economic by nature. The organization of the labor force, control over flow of goods and distributional powers are all tasks usually attributed to a government but in a modern society is performed by non-state entities, primarily business firms. The central organizing economic structure of a society is driven by the logic of capitalist production and lorded over by the firms that implement it.

The state retains direct access to the means of violence and probably more importantly moral authority. It also provides important provisions of law, military, public works, infrastructure etc. It may seem that states still retain a lot of their old power, however, most of these are economic functions necessary to provide inputs for the capitalist structure to sustain itself (for capital to grow). For example, public works, like roads, railways etc, serve the most useful function of nationalization of losses. These undertakings are financed by public money as the returns are low and they are not likely to be taken up by privately owned firms. However, the benefits accrue as much to the non-participants as to the public that financed the project.

Thus, the functions of a state have been limited in a capitalist society. The state apparatus has to rely on the productive sphere of the society for the nourishment of its revenues. Such is the functional dependence that it is in the self-interest of states to support and advance the accumulation of capital. Although the regime of capital exercises an active and overbearing influence on the workings of the state, it is not unreasonable to mention that the M-C-M’ logic circuit of capitalism would fail without state acting as a mediator and arbiter to maintain the rule of law. It is a highly unstable symbiotic relationship, which relies on the relative size of the actors. The size considerations here is that if the firms are small and numerous, they need the state to play the role described earlier. On the other hand, if the firms are huge and few in numbers, the symbiosis would be seriously threatened. Few big firms would control all revenues and might even be in a position to take over last vestiges of state power.

All of this is not to say that state does not act in public interest. That would not be a tenable position in a democratic society. Rather, it is likely that at least perceived public interests coincide with the demands of the productive sphere.

In this respect, it is also prudent to examine the mechanism by which demands of the economic sphere is placed on the state. If public interests and the demands coincide, then the choice is not difficult. However, in the complicated economic system of today indentifying such concurrence is very difficult, moreover the ramifications vary over time ranges that economists call short and long run. Whatever be the level of concurrence between the needs of the business class and the public good, the owners of means of production are very important for a capitalist society. The material well being of the society as a whole increases as M-C-M’⁵circuit elongates and produces ever more returns. In more practical terms, firms provide employment; they produce goods that are used by the public and they are considered the source of the economic health of a society.

For the M-C-M’ circuit to expand, the owners of capital will have to reinvest. Without reinvestment, growth peters out and the economy will stagnate. Further, the pre-requisite for investment is what is called business confidence⁶. If the business (producer) community does not have enough confidence in the policies of the state, they will not invest. Given the importance of investment, low business confidence is usually an unacceptable situation. Thus giving the productive sphere its greatest bargaining card. They can thereby force the state to ensure the right investment climate is made available.

The drawback of this mechanism is the inherent contradictions in the logic of capitalism. The effort to increase profits, by increasing prices and reducing wages, inevitably leads to overproduction related problems (usually recessions).

Full employment an important expectation from the productive sphere, would never be in the favor of the capitalist setup. But the major conclusion from this is that, despite the state being the sole source of moral authority, it cannot make the moral decision to act in public welfare. This aspect will be explored fully in the examples taken up later.

The state is, therefore as subservient to the logic of capitalism as any other institution of the society. In its symbiotic relationship with the productive sector it has the bad end of the deal, almost like an old banyan tree riddled with massive creepers. It can be inferred in the light of these arguments that the logic of capitalism points to a society that would not need a state or at the very least states would end up being like monarchs of present day UK and the Netherlands. What remains to be seen is how this will change will materialize.

5. The productive sphere – Firms, capital and globalization

5.1 Firms

In the typical description of a capitalist society, firms are the focus of attention. Firms are the social entities that produce goods and services. The owners of firms are also owner of the means of production employed in the production process, although in most modern legal systems they don’t have ownership rights over labor. The individuals, who do not own any capital, rent out their labor to firm owners. It is firms that perform the tasks attributed to the productive sphere in the previous section. It is therefore reasonable to start any study of the changes in the capitalist system by evaluating the change in the nature of firms.

Small and numerous firms marked the early phase of the capitalist regime. As opposed to largely state intervention in the mercantilist era, these firms were relatively independent of state intervention and served their part of the symbiotic relationship. The relatively small size of each individual firm ensured close to perfect competition and thereby little market power, not only in the market space but also in the quest to determine power share between state and the productive sphere. As a single firm could not consciously change the pattern of goods/services distribution or the shape of the market, the collective bargaining power of the businesses was very limited. Further, small firms meant small revenues per firm and little financial might, implying that the state with its large reserves drawn from many firms and individuals was much more in control.

Over a few short decades, the surpluses generated by these small firms grew and the era of monopoly capitalism started. Strangely enough, the first monopolies were brought into existence by state legislation. As a consequence, while the interests of some groups were realized, possibly even the individuals who were a part of the state apparatus; the supremacy of state power was threatened. Lesser firms meant greater market power and financial might. It also reduced the spread of the resources available to the state; fewer firms in the market also encourage collusion and cartelization. The question of the power yielded by monopoly institutions in society has been a disputed area among social scientists for some time now. In 1942, J. Schumpeter in his Capitalism, Socialism and Democracy⁷, mounted a very aggressive defense of monopoly capitalism⁷. The gist of his arguments is that monopoly capitalism is a result of natural progression in capitalist societies. The relative merits and demerits of this form of capitalist enterprise can be argued, but for the purpose of this paper it would suffice to point out that this massive change in the size distribution of firms altered the relationship between state power and the influence of the productive sphere.

This marked a notable change in the social order. The European mercantilist firms, that dominated most parts of the world from 1500-1850s, although privately and operated on capitalist principle of capital accumulation were still manifestations of state power. They drew their legitimacy from the state. In essence political sanction was required for economic exploitation. The order of priority of the two logics was reversed at the dawn of monopoly capitalism.

5.2 Capital

As the name suggests, capital is at the centre of the logic capitalism. There are many theories as what led to this particular social formation where capital accumulation takes precedence over almost all other considerations. Most of them deal with is power to uplift the standard of living of the people in the society, average global incomes have gone up by the order of 1000s in the last century and a half. Its strength was beautifully explained by Adam Smith ‘invisible hand’ – all people working in self –interest leads to improvements in lives of all member of society. Despite the elegant expression, the invisible does fail often enough and probably the greatest achievement of capitalist society has been innovation and rapid advances in technology made in the previous century.

Defining capital is a difficult proposition as it means different things in different contexts; here the economic meaning should suffice. Capital refers to all factors of production except labor, which is a human input. In a monetized society, most other factors can be bought in the market and hence capital usually refers to money capital.

The logic of capitalism rationally economizes to enhance capital accumulation. The capital accumulated is re-invested to increase its value. The natural progression mentioned by J. Schumpeter (1942) stems from this idea. If enough capital is invested the returns will be very high, which would then imply the need for larger places to invest. So either, the small firms that existed in early capitalism folded up due to lack of competitiveness or acted consciously to consolidated the market by mergers and acquisitions. It is tough to say if the critical amount of capital required to kickstart the process of was arrived at by simple accumulation in small firms or was helped by the creation of state owned monopolies.

The greatest direct manifestation of the idea of capital accumulation is the modern day financial sector. The product of this industry is ways, means and ideas of accumulating money capital. It also seems to be a result of natural progression, with the massive amounts of money available with the monopoly firms, simple banking methods of safekeeping would have been no longer useful. Today the global financial system is gargantuan web, capable of grinding the world economy to a halt of something goes wrong.

With such large amounts of money available, mega investments are the order of the day. This ‘hot money’, which roves around the world looking for the best possible returns has been the cause for great concerns among national governments across the world. It can ruin the economy of a nation by altering the business confidence of other investors, starve a country to death by refusing to lend money or even transform the lives of many millions in very short spans of time. The thing with money capital and therefore with ‘hot-money’ is that it does not have any national allegiances. It does not belong to any nation state or owned by any individual, it is a monster without a body. The web of ownership behind these capital rich firms is so complicated that it is almost impossible to figure out without compromising the integrity of the whole system.

The logic of capital accumulation as exercised by financial institutions has two major characteristics. Firstly, it is not based on any product with any functional use. There is no material good created by the capital that does the rounds in financial circles. So the accumulation stems from difference in valuation. Secondly, capital attracts capital. So the tendency to have monopoly institutions is built into the system here too. Monopoly financial institutions are even more threatening to the power of the state, as they cannot be regulated without affecting the valuation of their money capital assets. In case the valuation falls, the state in attempting to cut the firm to size could end bankrupting the nation.

5.3 Globalization

The inevitability of globalization and the integration of markets stems from the same underlying logic that gives rise to monopoly markets and massive financial institutions. All social formations have in-built unifying pressures, although the strength may vary. In capitalism this force of agglomeration is reinforced by the need to invest capital on an ever-increasing scale.

The need to find new sources of raw materials and markets led to the mercantilist age. In the capitalist phase, while the functions remain the same, but the scale is even larger and perhaps more importantly, new markets don’t have to be won over by force. The mercantilist phase saw the first multi-national corporations, but these firms as noted earlier shared strong allegiances with the state. The capitalist globalization phase has seen the rise of supra-national firms.

In a globalised world, capital, that arises within nations and exists originally as it has state sanction, become increasingly capable of defying or of existing above the state. The network of goods, services and capital flows that form the skeleton of global capitalism does not recognize national boundaries as impediments. It operates in accordance with its own logic (that of capitalism), with scant regard for the concerns of nation states. The sheer size of the network, the value of its produce and the amount of money involved makes it capable of eluding all constraints of state boundaries and power⁸.

6. Frictions Substantiated

So far the frictions in the capitalist regime have been described, mostly theoretically. The society, however, does not only exist in theory, there are empirical examples that fit the pattern that has been developed so far. Providing conclusive evidence for any framework of society is almost impossible. The best that can be done is to try check if fit is close enough for the postulate to be useful. The other unfortunate part is that, checking all the observed events would require enormous resources. So while arguing by examples is not the perfect method, it is the only one feasible.

The examples mentioned will correspond to the characteristics of the nation state stated in 2.1. While the results in the examples are a subject of empirical observations the arguments used to explain them will be the ones that have been developed in this paper.

· Globalization and binding policy – The footprints of Supra-national corporations are almost by definition across national boundaries. Unlike citizens they don’t hold passports to prove their citizenship. International corporate law is separate that deals with the problems that such entities pose for states and the implement of laws enacted by them.

With a global presence, means no single nation can claim to have its policy to be binding on such entities. A striking example of this was the case of Union Carbide in Bhopal, India in 1984. The policies to be followed were clearly laid out, so was the judicial procedure to be followed in case of a mishap. Thousands died the day methyl iso-cyanide leaked from the tanks of the Union Carbide factory. Close to 26 years have passed and despite repeated attempts by the courts and international NGOs, no one has been convicted. The Government of India paid the compensation to the victims. This is an example from the days when the Indian economy was relatively closed and foreign investment required a slew of permits from the state. Today the problems would be much worse.

· Welfare State – Most constitutions mandate that the state should act to increase the welfare of the citizens of the nation. The recent global recession and the response of states all over the world brought out the dichotomy in the situation very well.

The faulty processes adopted by large global financial institutions brought about the financial crisis. To start with, the crisis spread as quickly as it did because of the nature of global capital. Bad instruments spread throughout the global financial system network crippling economies worldwide and drastically reducing the amount of the money capital available in the system. The drastic fall in asset valuation was caused by a collapse in business confidence. It left many millions unemployed; savings of many others were destroyed overnight. The ability of banks to give out credit was hampered, which in turn adversely affected the consumption and production patterns.

The scale of the problem necessitated, nations across the world act cooperatively to control the damage and put the lives of millions back on track. Free market principles would imply that unsuccessful ventures have to collapse for new ones to emerge, so the financial system should have been abandoned. Instead, the US government, beset with a large trade and budget deficit pumped in billions if dollars to keep the firma afloat.

Prima Facie this makes little sense, as such actions by the state encourage future risk taking by the firms on the promise that any future losses would also be socialized by imposing the costs on citizens. However, as noted earlier, the existence of the state itself is incumbent on the presence of functioning and health economy run on capitalist principles. Further, the collapse of the global financial system would have been a body blow to the very basis of modern economy. Apart from convulsions that this would bring about in the current world order, it would also directly affect the individuals across the globe.

In this case, the welfare function of the state thus implies that the state should act to support the reckless activities of the financial firms. Not only does this signify the centrality of capital accumulation in the modern, it is also as plain an example of the subordination of state power as is possible.

There exist many other instances where this true hierarchy in the state-business relationship is visible. The fiscal policies of nation states are guided by the concerns of the supra-national investors. This is not just to attract investment in physical infrastructure development, but also to ensure a steady supply of credit when it is needed. Most nation states borrow heavily from global financial network; nation states are even rated on their credit worthiness. It is therefore imperative that states surrender at least part of their sovereignty to make sure they don’t end up in a situation like the one Greece faces today. Interestingly, while these financial concerns have the power to modify state policy, it is not liable for any damages if anything goes wrong.

· Geo-political behavior – Typically geo-political decisions, interactions and behavior is a characteristic trait of nation states. But with firms being both buyer and seller; operating across international boundaries, this preserve of state power was bound to be breached. In the global society, firms from across continent can affect dramatically affect political outcomes by supplying resources. The diamond trade in parts of western Africa was used to finance the rebel uprisings. An Australian oil company negotiating and then buying oil/gas from Somalian rebels can dramatically shift the balance of power inside the country.

The negotiations for global trade in WTO are also guided by geo-political concerns of businesses more that individuals. For example, despite the stance of the Dutch government at the WTO meet it is tough to imagine that a Dutch citizen would object to suspensions of intellectual property rights in case of medicines for lethal diseases. This radically lowers prices and enables a much larger proportion of affected patients to avail its benefits.

· Right to legal violence and concentration of power – For more that a decade now the words of wisdom in development economics has been that, states are no good at business. So nation states all over the world with have or are beginning to withdraw from the productive sphere. This restricts the income options available to the state, as also practically mandating that parallel centers of power with greater economic will emerge.

While this is difficult to imagine in relatively large states, in smaller countries it is already the case. Large swathes of South America, Africa were carved up by firms based in other countries. There have been instances where the elected government has been overthrown to ensure the interests of the firm are protected.

This issue can become even more serious if the state willingly gives up its right to legal violence. An example of this was observed in the recent black-water scandal, were the government of the USA hired private contractors to carry out jobs usually restricted for the military of a country. Despite, the hue and cry that followed the expose, reports continue to pour in that the US continues to use private contractors.

7.Conclusion

There are many other aspects of this observed paradigm shift, but covering all of them is beyond the reach of this paper. Even this rather limited evaluation of the nature of the relationship between the states and the productive illuminates some very striking characteristics. Firstly, it shows the primacy of the logic of capital accumulation in the modern society. Secondly, the logic of capitalism does not seem to require a state like institution. It could very well do without it. Thirdly, the disappearance of the state seems to stem from the logical progression of capitalist societies. Lastly, the mechanism for this change in guard will in all likelihood have its origins in the phenomena of globalization.

The disappearance of the state does not need any normative analysis at this stage. It is difficult to predict the nature of the institutions that will grow in its place and thus almost impossible to say if it will be for the better or vice versa.

Bibliography

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