Enough of preamble. Let’s get down to the point I have in mind. As the title suggests, it’s about the recent turn of events. First, Dr.Subramaniyan Swamy, a man I respect wholeheartedly for more than one reason (getting a publication in Econometrica as a M.Stat student for example) and have no qualms in admitting the same, wrote this in DNA on July 14,2011. It has been removed from the DNA website subsequently. Amongst many controversial things that he wrote, he proposed the following things to wipe out Islamic terrorism -

But still, if any Muslim does so acknowledge his or her Hindu legacy, then we Hindus can accept him or her as a part of the Brihad Hindu Samaj, which is Hindustan. India that is Bharat that is Hindustan is a nation of Hindus and others whose ancestors are Hindus. Even Parsis and Jews in India have Hindu ancestors. Others, who refuse to so acknowledge or those foreigners who become Indian citizens by registration can remain in India, but should not have voting rights (which means they cannot be elected representatives).

Applying these principles, I advocate the following strategy to negate the political goals of Islamic terrorism in India, provided the Muslim community fail to condemn these goals and call them un-Islamic:
Goal 2: Blast our temples and kill Hindu devotees.

Strategy: Remove the masjid in Kashi Vishwanath temple complex, and 300 others in other sites as a tit-for-tat.

Goal 3: Make India into Darul Islam.

Strategy: Implement Uniform Civil Code, make Sanskrit learning compulsory and singing of Vande Mataram mandatory, and declare India as Hindu Rashtra in which only those non-Hindus can vote if they proudly acknowledge that their ancestors are Hindus. Re-name India as Hindustan as a nation of Hindus and those whose ancestors are Hindus.

Now, if you are appalled after reading this, in case you haven’t done so before, then allow me to continue the story.
Apart from being censured all over internet for the article, Dr.Swamy sort of committed an own-goal there by opening a door for himself to be prosecuted for hate-speech. And that’s exactly what happened. A case was filed against Dr.Swamy by various organizations and he was quizzed by Delhi Police for writing an inflammatory article.

And this set a new wave of criticism on Twitter, FB and other social media saying that Dr.Swamy was well within his rights to write that article and a case being filed against him and the authorities entertaining the case just go on to show how weak our norms of freedom of expression actually are.

Now, there is a fundamental problem with this position. The first question is what are the most reasonable norms of free-speech we can have and then does Swamy’s article pass the test? Before we proceed, it is important that we agree on the basic principle that some limits on freedom of speech are necessary. If one takes a position that speech is no action and hence no speech should be curbed then all I say henceforth is irrelevant. I do not subscribe to that thought for reasons that one cannot delve into here.

This Stanford webpage is a short and reasonably detailed discussion on Freedom-of-Speech. The author of this essay mainly discusses Mill’s harm principle in light of freedom of expression and also Feinberg’s offence principle. John Stuart Mill is probably the most influential liberal philosophers we have had in a long time and he has shaped the way we think about freedom of speech today. His essay book called “On Liberty” is a must-read for those who wish to explore it. It’s a terribly complicated book and I had a horrible time reading the first two essays of it. But, without a doubt, no understanding of freedom-of-speech is complete without Mill’s essays. According to Mill,

If all mankind minus one were of one opinion, and only one person were of the contrary opinion, mankind would be no more justified in silencing that one person than he, if he had the power, would be justified in silencing mankind.

the only purpose for which power can be rightfully exercised over any member of a civilized community, against his will, is to prevent harm to others.

Mill then indulges in a detailed discussion on what he means by “harm”. But, to cut the long story short, it is still debatable whether Mill advocates state intervention to curtail hate-speeches at all. The principal argument is that most hate-speeches incite people to commit violence or atrocities of some sort. And so, if one were to regulate hate-speeches that would essentially mean that they are limiting free-speech in order to prevent crimes that might occur but have no certainty. This is a very reasonable position in my opinion. Interestingly, here’s something from the Stanford web-page-

George Kateb (1996), however, has made an interesting argument that runs as follows. If we want to limit speech because of harm then we will have to ban a lot of political speech. Most of it is useless, a lot of it is offensive, and some of it causes harm because it is deceitful, and because it is aimed at discrediting specific groups. It also undermines democratic citizenship and stirs up nationalism and jingoism, which results in harm to citizens of other countries. Even worse than political discourse, according to Kateb, is religious speech; he claims that a lot of religious speech is hateful, useless, dishonest, and ferments war, bigotry and fundamentalism. It also creates bad self-image and feelings of guilt that can haunt persons throughout their lives. Pornography and hate speech, he claims, cause nowhere near as much harm as political and religious speech. His conclusion is that we do not want to ban these forms of speech and the harm principle, therefore, casts its net too far. Kateb’s solution is to abandon the principle in favor of almost unlimited speech.

Essentially, Mill’s argument itself is criticized for being too broad in the sense that it can hardly limit any speech even though a lot of it can eventually harm people. And also, it is narrow in the sense that with harm one can have even psychological harm and then it is rather impossible to ascertain whether a certain speech does cause harm or not.

The next principle that is often used is the “Offence principle” which states that speech should be limited if it is offensive. This is the norm that is exercised in most societies and in India people have a notoriously low pain-tolerance when it comes to psychological pains, thereby curbing the freedom-of-expression considerably. But that’s a problem of the decision-makers as to which claims of someone taking an offence pass the test and which ones don’t. As far as I am concerned, it is hard to imagine a more sensible criterion of freedom of expression.

Why? Because by harm if we mean physical harm then proposals to ban Muslims from getting education can also be viewed as fair. A large part of discrimination is psychological. Making a dalit have a separate water tank for himself does not cause any physical harm to him but is detestable nonetheless. Thus, any reasonable position on freedom of speech should include harms that are beyond physical harms.

But then there’s a problem. No philosopher will ever give an unqualified definition of freedom of expression and will always acknowledge the subjectivity involved in deciding whether to limit a certain form of expression or not. But, most (NOT ALL) e-philosophers are formed through Wikipedia and it creates a very precarious situation for them to accept nuances involved in deciding whether a particular form of expression violates the principles of freedom-of-expression or not. This is so because the most common approach about social commentary on the internet is through reductionism.

Digression apart, if we take subjectivity into account then there’s only one thing that needs to be decided here. That is, whether Swamy’s article can be considered as extremely offensive or not. We can split hairs here and say that this is not offensive. But, a proposal of persecuting a community by forcing it to acknowledge its “Hindu” origins and disenfranchising them should they fail to do so, or bringing down a mosque to counter terrorists seems grossly offensive to me. Moreover, it does not seem to be written without any other motive except for radicalizing the borderling-radicals and fueling social division. Neither would be wrong to say that such ideas, if implemented, would cause no physical harms to Muslims but would certainly be traumatising. Hence, in my opinion this can most certainly be considered as most offensive or even a hate-speech if you like.

Thus, I stand convinced, that Dr.Swamy, a proven intellectual of supreme ability, an ex-Harvard faculty, a Paul Samuelson student, and a man who possesses many other accolades for his intellectual prowess, must, unfortunately, face some penalty for the article. Jail? Probably not.

December 20, 1978: Two Hindus, Devendra Nath Pandey and Bhola Nath Pandey hijacked Indian Airlines flight IC-410. They demanded the immediate release of Indian National Congress party leader Indira Gandhi who was imprisoned at that time on the charges of fraud and misconduct. Later, they were awarded with party tickets for this act by the Indira Gandhi government in 1980 such that Devendra Nath Pandey rose to become a minister in the government of most populous state of India, Uttar Pradesh. This case was also mentioned by Jarnail Singh Bhindrawale to justify his claim regarding the hypocrisy of the Indian government.

This intrigued me further and I searched a bit more. Here’s more on the heroes of that story.

I will leave you with a quote from this book by Devendra Nath Pandey on the hijack incident-

“Yeh to deewanagi thi. Gandhi family ke liye deewanagi ki had tak samarpan tha” (It was an obsession and devotion to the Gandhi family”) Also, hijacking was not mentioned a crime then.

Marvelous!

The purpose of this post is to narrate a sweet incident I witnessed a few days after he won the Nobel. I attended a Champagne session to celebrate this achievement where one of his students (unfortunately I don’t know her name) gave a small little talk about his work.

Apparently, Sargent was asked a few months ago about a question on Financial Crisis and some policy action to be taken. Sargent answered, “That is a question to be resolved by the model and the data”

When a Nobel laureate is that humble in admitting that economics is far harder than what may seem and most questions don’t have “obvious” answers as many bloggers and journalists think, maybe there’s some food for thought for those who think before they speak. For many Indian policy bloggers/journalists of course, these rules of humility do not apply.

One thing is clear that a healthy democracy is hard to come by. However rosier it sounds when compared with an autocracy or a colony, it is not easy to practice. It takes everyone to play a role: citizens, press, houses of parliament, executive, judiciary, police – everyone. You cannot ignore your role for decades and then suddenly wake up, and since the situation is really bad, justify an extreme solution. A solution which fails to attack the roots of the problem, fails to be a long-term solution. Moreover, it may create an impression of a ‘victory’, while all it has offered is a superficial, temporary patch-up.

Going back to what I wrote in April, many questions remain unanswered. It would serve us well to not forget them.

Some notable comments included how ‘Team Anna’ is ‘using’ the media – kudos to them! I do not see what is wrong with a social movement using media to its fullest advantage. Though there could still be a debate whether Anna Hazare’s methods were democratic, the lawyer in Pranab Mukherjee was suddenly reminded of the laws of the land and warned Anna against breaking them. As ‘Team Anna’ argued for details like bringing the PM under the purview of Lokpal, some editorials and blogs tried to take a 30,000-feet view and argued against the whole idea – though varying in their style and argument (1, 2, 3, 4, 5, 6.) Arundhati Roy picked up her pen to write against Lokpal, and took it one step too far as she proposed a conspiracy theory. The editor of the Open Magazine tried to focus on Anna’s personality and his past, and reminded me of the ‘you-cannot-lynch-the-‘sinner’-if-you-are-not-pure’ story. While Kiran Bedi and Ramachandra Guha briefly talked about deteriorating state of the democracy over many decades, most shied away from speaking about it. Karan Thapar tried taking a high intellectual ground by stating that people would find it difficult to understand his stand (if only there was one!) and talking about age-old points and details in the bill in a fluffy language. Nandan Nilekani took a balanced stand – and then lost ground by saying his admiration for politicians has gone up. Well, he did state that Lokpal can be just one of many solutions, if at all. More than admitting the roots of the problem and attacking the government that it has now lost the moral high ground to claim the supremacy of the parliament, Dr. Abhay Bang suggested a few solutions like decentralization of power. As I continued to search for more discussion of the very idea of Lokpal – the philosophy and ideology, and not just the details of the bill (which can be continually improved) – the website dedicated to the movement (IndiaAgainstCorruption.org) failed to help. Then I turned to Arvind Kejriwal – the young, dynamic face of the anti-corruption movement, an ex-IRS officer, a Magsaysay Award Winner. His speech delivered at IIT Madras – just two weeks before Anna’s fast began – represents what is lacking in this ‘fight-against-corruption’.

He started out by quoting the Jan-Lokpal Bill as “Anna’s Lokpal Bill”; and that “people believe that whatever Anna is saying is right, and whatever the Government is saying is wrong.” I find this idol-centric view disturbing. Addressing the “why’s” of a Lokpal, all he did was to cash on people’s anger about the corruption and state how the current institutions – the CBIs, the CVCs – are not independent and powerful enough. (This should have been a clue!). He wants a Lokpal on the same lines of Hongkong’s ICAC. Anecdotes – that too from a different country in a different era – cannot be an argument. (Otherwise, what about Mao’s Red Brigade wiping out corruption once and for all? That didn’t work!).

Kejriwal argued for a watchdog over ALL of the bureaucracy – all 1.25 crore government employees. Not only that it is not practical, it is not how the system is supposed to work. We will end up creating another huge piece of bureaucracy and it cannot be a long-term solution.

While arguing to bring PM under Lokpal’s purview, Kejriwal said “I dread if tomorrow Madhu Koda becomes PM” and “the security of the country will be in danger”. He went on to say how some 150 of our MPs had criminal charges against them. I expected – at the very least – an honest admission that it was us – the voters – who let such criminals be elected, but I was disappointed. Our MPs come from within us, and nowhere else. By voting irresponsibly or not voting at all, we let them get into the parliament. When will we realize that we are also at fault?

Then Kejriwal took up the argument against the claim that “Lokpal will be a parallel government”. To counter it, he gave examples of independent agencies (CAG, NHRC, CVC, CIC) and how they are not termed as parallel government, and said “why can’t we have one more independent agency?”. Just a few minutes back, he had argued for a Lokpal saying that there was no independent agency. If we do have so many agencies, it is clear that we have failed to make them work. Maybe we should first work on making them independent and powerful.

Further, he tried to counter the point that “Lokpal is too powerful and will sit on everyone’s head.” He gave the example of how an ordinary income tax officer can check PM’s records and we don’t say “he sits on PM’s head”. Well, that officer has only that one power, nothing more. But the Lokpal is being given powers of the judiciary, the investigator, the police and the prosecutor! It IS too much power, and then it does come out as a parallel government.

I continued to listen to him only to be bombarded with more naïve points. He put forth a plan to “go to villages and educate them about the Jan-Lokpal Bill” – in 9 days flat! I wish it were that easy. The 9-day education was to be followed by 6 days of evening candle marches and mass-burning of government’s version of the bill. Nothing wrong, but nothing effective. He urged the audience to change the country – like Egyptians throwing off their government! I would like to understand how one can compare the two. When he appeals to everyone to take a week off for the country, I hope we do not forget the fight after that week is over. I do not see where the direction of this ‘movement’ is, who is providing the ideological leadership, what is the long term solution, and whether we are willing to accept the blame that we did not play our part in the democratic process.

Disturbingly, I am not imagining all of this. Kejriwal adds that ‘we cannot fail this time, we don’t know when we will get next chance – maybe after a few more decades’. To me, that is precisely the mistake. Democracy is a process, not a week-long fest. If we are going to continue not playing our role and hoping for another ‘Team Anna’ to take a stand after every few decades, we haven’t learned what democracy is.

Sadly, even this was not the most disturbing piece. Kejriwal, in the hottest part of his speech, put forth a plan for 15th of August – to switch off the lights for one hour, “because this independence and democracy have given us nothing but darkness!!”

Please take a moment to read that again. Does our generation even know how we achieved the independence? Do we even know the darkness that prevailed before the independence and democracy? And how entitled do we feel!! What did WE do to make this democracy successful? What did WE do to carry on the legacy of our freedom fighters? We have NO right to say that the independence gave us only darkness. We clearly do not understand our responsibilities. I am sad and concerned.

I hope we can still make it right.

Mandar Gadre.

In the arena of economic policy making, there’s that golden rule – You can’t make all the people happy. Given this binding constraint, it’s natural for the birds of the same feather to flock together. Any debates over any economic policy take the shape of Us vs Them, with “experts” belonging to various ideological stance taking potshots at each other. Redistributive policies are particularly problematic in this regard. Any proponent of them is termed as “Marxist”, “Socialist” and any opponent is called a “Ruthless Capitalist”.

At this moment, it would be a good idea to take a step back and think why redistributive policies exist and what they strive for. To do so, we must acknowledge the fact that many developing democracies are ridden with problems of crony capitalism (scams, corruptions, underhand dealings etc) due to the fact that politicians are not very accountable. People do not expect politicians to do much and politicians oblige without retribution. The weakest section of the society makes only marginal progress over the years and the development as a whole is highly inequitable. This is often termed as a bad equilibrium by economists.

 (An example of a bad equilibrium would be Indian football. Good players don’t take it up as a profession as there is not much money. So, a lot of talent is lost. Therefore, with the limited talent it’s hard to attract a lot of money. So there’s a less money. And it goes on.) To get out these bad equilibria, the economies need a big push, some kind of a shock that will induce a transition. Similarly, people are stuck in a bad equilibrium of poor education, income awareness and stunted overall growth leading to poverty, and the cycle goes on. It is really naive to suggest that democratic elections can solve this problem and that India has a strong electoral system where such grievances can be addressed. In this paper, Jessica Gottleib, a Political Science PhD candidate, has demonstrated (using Mali as a case) that democracies fail when voters are less likely to control politicians and that political elites are likely to collude. As she says, “I argue in this paper that democratic failure in developing countries is evidence of a bad equilibrium where voters expect little of politicians and governments perform poorly without retribution.”

This is so true in India’s case that it does not even merit a discussion. Therefore, we need some push for us to set on a path of transition to a good equilibrium. In a good equilibrium, people will consume more and be more educated. This cannot be achieved overnight. The concept behind subsidised food, NREGA, cash/kind transfers, free education is that with these subsidies the poor will tend to educate and provide better nutrition to their children and the society will eventually reap its benefits.

Any redistributive policy essentially means we tax the rich and transfer the revenue to the poor. Let us not get into the ethical foundations of redistribution for now. Let us only first see why it could be beneficial for the society to have such policies. Needless to say that it is common-sense economics but still many people seem to “forget” it. Typically in most countries, number of poor people significantly outnumbers the rich. So, let us consider a test economy that has one rich guy and four poor guys. The rich guy earns 100 rupees per day and the poor guys earn 10 rupees per day. The poor guys can only buy food worth 1000 calories with their 10 rupees and require 1500 to survive. The rich guy consumers 2000 a day (by spending 20 rupees) and spends some money on his luxuries. Now, if you take 10 rupees from the rich guy and distribute it to the poor equally then each person gets 2.5 rupees with which he buys food worth 250 calories. Given that the rich person’s income is now at 90 rupees it is very likely that he will still choose to spend 20 on food and cut down on his luxuries. That means that society’s calories consumption now is at 7000 calories starting from the initial 6000. Clearly, on this front there is an improvement. The only issue to be seen is how much worse-off the rich guy is by cutting down on his luxuries or savings. But it is very likely that the disutility caused to the rich guy by cutting on his luxuries will be significantly lesser than the gain in satisfaction that the poor people derive by starving a lot less.

Of course, the example above is very simplistic but this is the central concept that redistributive policies rest on. However, there are ethical considerations to this problem too. For example, how much of a proportion of income should or could the government take from the rich to be given to the poor? What is a ethically correct? It is extremely hard to answer these questions. There cannot be any magic number. But practically, the Government, no matter how populist it is, cannot really expropriate the rich beyond a point because extremely high tax rates are known to induce strong disincentives for working. The industrious and entrepreneurial people of the society are not likely to take up such activities when the tax rates are very high. Therefore, it is in Government’s interest to not harm these people beyond a certain extent as generation of wealth in a society rests critically on them.

And then, you have the king-of-all-nonsense-criticisms. Inflation! This is particularly popular amongst the “hey, I can talk about economic policy too” kind of people. Firstly, if you look at the above example it is conceivable that since the demand for food products will increase, we are likely to face inflation. But then, is it a bad thing from society’s perspective? In fact, this could even be taken as a success of the policy that overall consumption of the essential commodities is now higher. But more importantly, there is absolutely no empirical evidence to support this claim. Those suggesting that Consumer Price Index rose after NREGA came need to take a course in causality. A simple correlation does not establish any causation. In fact, as Paul Krugman shows, decline in overall grain production is most likely to be culprit. Overall, there is about a 5 percent decline in production. And an estimate of price-elasticities by the USDA shows that it takes about 25 percent rise in price for a 1 percent fall in consumption. Given that global consumption must fall by 5 percent, it warrants a 125% increase in food prices from the US estimates. Naturally, the estimates will vary according to country but it is enough to realize what a 5% decline in production can do to your prices.

However, there is one aspect where I am not very comfortable with redistributive policies. That is their impact on long-run. As shown in this paper by Das and Ghate, redistributive policies unambiguously reduce growth in the long-run. While it is true that growth is not the parameter on which the success of these policies should be measured, what it does establish is that you choose to not make your pie as large as it could have been otherwise. We need to see if the societies with better redistributive policies result in more egalitarian societies with better nutrition, education and overall well-being. While many developed nations do show these traits, it is the causality that is in consideration here. Whether high growth facilitates stronger redistributive policies and more egalitarian societies or more egalitarian societies achieve higher levels of overall well-being is an open question.

But, what is obvious is that the case for redistributive policies is absolutely not as weak as the pseudo-analysts want us to believe. There is, in fact, a strong case for those and we need to acknowledge that. But for the netizens active on twitter, facebook etc, the work of mainstream academic economists in Indian context is largely inaccessible unlike in the US where many great economists like Krugman, Mankiw, Beker blog regularly. I hope great Indian economists too drive the pseudo-economists out of the market and we have a healthy, constructive and fruitful debate on economic policy on public forums. That will pave way for policies that will build the future.

Shiela Dixit was facing a seemingly uphill task. In spite of all her achievements, she represented a party that is perceived to be weak on terrorism. Congress, the opposition has been claiming since the pre-historic times, caters to the minorities through vote-bank politics resulting in marginalizing the majority. Apparently, Congress’ agenda to go soft on Islamic terrorism is one of the major reasons why we have had to face rampant terrorist attacks in the recent times. The atmosphere had heated up. Post 26/11 wave of protests and patriotism had traveled to Delhi. As usual, Manmohan Singh was silent. The picture was grim for the Congress. But, against all odds, Shiela’s agenda of development thrived. She earned a landslide victory in Delhi. BJP was wiped out. Rajnath Singh was clenching his fists yet again.

That brings me to the question, how much of truth is there in any of the allegations of the opposition against Congress’ performance in counter-terrorism? In spite of my distaste for the G family, I thought it worthwhile to explore the trend of civilian casualties in terrorist attacks over the years.

Here’s a graph of casualties against year. The graph has the total number of casualties (civilian and security forces), the casualties due to left-wing extremism (which was not much in vogue till as late as 2002-03),civilian casualties with and without the left-wing extremism. Detailed data for the “welfarist” activities of the Naxalites isn’t easily available to the best of my knowledge. However, this place gives a good break-up of how different franchise of Naxals have carried out their activities during 2002-09.

Source:South Asia Terrorism Portal
Please note that I have simply multiplied the current figures for year 2011 by two to get the forecast for total number if casualties in 2011. Obviously, all the caveats apply.

Incredible! Isn’t it? In spite of having Shivraj Patil in charge for 2004-08, UPA actually has lesser number of civilian casualties than NDA.

This was completely unexpected for me. If you look at the civilian casualties, which have a rather steady downward trend, it’s obvious to see that the number has mostly remained constant since 2004 and has declined a bit post 2009. The latter, according to me, is Chidambaram’s success. More so because there’s a sudden surge in the left-wing menace during that period and yet the downward trend has established itself to the point that there’s almost a convergence between total civilian casualties and civilian casualties due to left-wing extremism. In fact, whatever that comes from this point onwards essentially indicates that any place where UPA’s shortcomings are exposed in combating terrorism, it belongs to Mr.Shivraj Patil’s tenure and as soon as Chidambaram era kicks in, UPA seems to be doing just as well or probably better.

Significantly, the 1999-2004 era shows that NDA’s performance in curbing terrorism is not as splendid as they often advertise. The best year for NDA was 2002, ironically. The number of civilian casualties in 2002 is 1174 to be precise. The worst year for UPA-II is 2006 and the number of civilian casualties in 2006 is 1118!! The average number of casualties during the NDA regime is also much higher than the UPA regime. I do not wish to doubt the noble intentions of the Rath-yatra king Advani in implementing the harshest measures to ensure that civilians are safe. But somehow, what took place on ground is not highly consistent with his intentions.

One of the most evident failures of UPA-I is in their inability in bringing down the rate of casualties after taking over in 2004. Post the downward trend that existed for some time, the number has largely remained constant from 2004-08 and that’s a long period in office to implement programmes and to achieve desired results. But as I said before, as soon as Mr.Chidambaram arrives, everything seems to be falling in place. After all, who installed the incompetent Shivraj Patil and persisted with him for so long is anybody’s guess.

In the same spirit, NDA deserves credit for bringing the number down from 2000 to 2004. I would ignore the increase in number from 1999 to 2000 because it was the first year in office for a full-strength NDA.

Another point where NDA clearly outscores UPA is the number of terrorists that each regime eradicated. Here’s a graph of terrorist casualties, year-wise. The peak in 2000 must be due to Kargil.

There is one problem though with using the number of terrorists killed as a measure of success. Governments, with the help of police, have had the tendency to label some innocents as terrorists, especially so in Kashmir. It is very difficult, if not impossible, to find this out from the data but a conspicuous rise in the number of terrorists killed during the NDA tenure might have something more to it.

Lastly, another very interesting or rather most interesting point according to me would be the number of Islamic terrorist incidents and deaths and injuries due to them in India (JnK and NE are excluded). Logic behind this is two-fold. External threats means largely Islamic terrorism. Secondly, many-a-times, groups like SIMI carry out small-scale bomb-blasts which do not cause as many deaths but injure many. The primary motive behind those blasts is to instill fear and terror amongst citizens. Therefore, we would have a reasonably good picture of how the two governments have fared by comparing these indicators. I have presented two pictures below and they are self-explanatory.

Source: South Asia Terrorism Portal

Although the number of civilian casualties (based on the first graph) during UPA’s tenure is lesser, the frequency of incidents and injuries afflicted is far too high during UPA-I. NDA did a far better job. But then again, once you incorporate the Shivraj Patil factor I don’t think there’s much to choose.

The more I write about it, the more I am convinced that this should be a nice, clean and neat research paper by an econometrician and a blog cannot do much justice to this problem, like many other problems. However, at least the birds eye view gives the impression that BJP’s claims of Congress being ineffective in tackling terrorism or BJP being super-efficient in curbing the terrorist activities seem to be largely accurate as far as UPA-I is concerned. But as soon as we move to Chidambaram as the HM, UPA actually fares better than NDA. The places where NDA scores above UPA are -
1) Frequency of incidents
2) Number of terrorists killed.

Important as these factors are, UPA too scores above NDA at some places. Some of them are
1) Number of civilian casualties has never been above the 2003 figure. It has largely maintained its downward trend in spite of the surge in left-wing extremism.
2) Post Chidambaram, the frequency of incidents has reduced significantly, and as of today, it’s the lowest since 1994.

Much of Congress’ failures can be attributed to a single man – Shivraj Patil. In fact, post his appointment the sharp increase in the frequency of terrorist incidents and also a moderate increase in the civilian casualties could possibly have a lot darker story to it. I would like to assume the contrary but the graphs are staring at me in the face and telling only one thing. For the time being, I would simply label it as gross incompetence. Unsurprisingly though, he was a man chosen by the lady.

BJP, like always, simply targeted Congress at the wrong point. As an auto-wallah once told me in Delhi, before the election, “Yeh log kya baat kar rahe hai, inke waqt kya mehengai nahi badhi kya?” Inflation is probably not the issues where BJP separates itself from Congress. It’s ironic that an auto-driver knows this but not the Jaitleys and the Advanis.

Congress is very very lucky to have BJP in the opposition. It is we, the people, that are unfortunate.

When the two-hour atrocity on my brain ended I was just thinking what exactly has brought us to this situation? A good comedy film comes in about every five-six years. The case of serious intellectual films is even worse. And if we are talking about TV serials, where once, as kids, we saw Malgudi Days, Bharat Ek Khoj, Tenali Rama, Chanakya and such serials, now we are watching the Kyunkis, Kkkussums and all such stuff.

The best analogy for this problem is, I think, in the paper for which George Akerlof got the Nobel Prize in Economics. The paper’s called The Market for Lemons. It’s a very very simple paper. Simple to the point that some people would even want to conclude that “if one can get a Nobel for this sort of stuff then even I can get one”. My best wishes are always with them of course.

The concept of the paper is very simple. A market for lemons is a market for used cars in the US. Typically, when you go to sell a car, you have more information than the buyer of the car. If, for a moment, we assume that a buyer cannot possibly verify the quality of the car that the seller would claim then it is natural that the buyer would quote a price that would be near about the average price of the used cars in the market. Now, those sellers whose cars are worth more than the average price because they’ve maintained it well or whatever would rather not enter the market, wait for the car to deteriorate and then enter at a later point of time. In the process, the average quality of the cars has reduced as the good sellers have opted out and hence the average price would also take a downward dip. This would instigate some more sellers with reasonably good used cars to take their cars out and that would drive the price even down. The process, in the extreme case, would go on indefinitely and eventually there will not be any buyers/sellers left in the market.

Needless to say that this is a very perverse depiction of the car market where it’s assumed that the buyer is not in a position to infer anything about the quality to correctly. But the conclusion too is equally extreme – the market breaks down. In reality, we end up at some intermediate point.

You might be wondering what exactly does this have to do with the movies and serials that I talked about in the opening of the post. According to me, the reason why we are being fed garbage after garbage, the reason why Shah Rukh Khan still dares producing movies, the reason why Tushar Kapoor hasn’t quit his “acting career” is all there in the market for lemons.

When Ekta Kapoor started bombarding us with putrid trash of the Saas-Bahu world, the good audience went away. We were left with the kind of audience that would watch those serials. That somehow wasn’t insignificant in number. So, more and more people started producing the crappy stuff as the average quality of the serials that the new audience demanded was of that level. Also, it took far less effort to produce that. And the process goes on.

At this point, a reader is perfectly justified in thinking of yours truly as a snob who thinks that he is wiser/smarter than all those people who watch the prime-time serials. It is absolutely right in questioning what right or logic do I have in hinting that the prime-time TV serials are meant for the brain-deprived. My response would be that I am not being that harsh on the Ekta Kapoor kind of material. I do not have any problem in accepting that thousands of really smart people are actually watching that “Saas-Bahu” stuff with keen interest. I find it unlikely but I don’t think that’s a point worth quibbling. All I feel is that given that there was an audience for serials like Malgudi Days fifteen-twenty years ago, I find it extremely hard to believe that that audience solely belonged to the generation that does not exist anymore. I simply think that the market for poignant, introspective, subtle, simple and forceful TV serials and movies is absent today from the demand side in a way that the Market for Lemons has made the demand side wary of experimenting.

After Sarabhai vs Sarabhai, I thought that maybe the era of good Hindi sitcoms has revived. I tried countless comedies only to realize that CID is probably the only hope for a Hindi sitcom. The result is that I no longer turn my TV on for days as there’s nothing much to watch.

At this moment, we are at a point where many writers and directors who have largely indulged in serious content choose to rather distance themselves than to sell off. Some supply as per the “demand” due to various reasons such as selling-off or simply because of their need to meet the expenses.

I don’t think that people’s tastes have been altered systematically in such a way as to make them like the Saas-Bahu stuff. It is of course reasonable to assume that at least a proportion of “good” audience has been metamorphosed into the “Saas-Bahu” audience. I just think that the market for lemons has actively played a hand here in turning the audience for serious stuff away.

What’s the solution here? Well, I don’t think it’s any bit fair to assume the audience wanting to watch stuff with meat on the TV to stage “slutwalk” kind of rallies and protests. The onus is fully on the supply side. Give us the good stuff and I am sure the audience will come.

But the issue is the Anna-Baba hyphenation. Do we like Ind-Pak hyphenation? How would Sachin Tendulkar feel upon reading Sachin-Venky-Sreenath as some great players of the 90s? Would AB Vajpyaee ever be able to digest it if someone were to write something like “Vajpayee-Singh type of PMs are ever reticent”? Then why not apply the same yardstick to Anna?

Baba Ramdev is a yogic guru who has managed to make a fool of himself thanks to his ludicrous ideas of solving social problems. It is not anyone else but he himself who is solely responsible for the mockery that he has been subjected to lately. At the same time, he is phenomenal when it comes to Yoga and Pranayama. Thousands of well-educated people are his followers. He does not preach astrology. He preaches only Yoga and millions have benefited through it. So those deriding Baba-The Yogi, can continue to do so without ever realizing how outrageously stupid they sound in declaring that thousands of highly-placed managers, engineers and others, who are Ramdev’s followers, are in fact stupid and it is them who possess the knowledge to separate the wheat from chaff. Equally, he has no experience whatsoever in dealing with the corrupt leaders of the country that run across all the parties in equal measure. He should, in the very first place, have not taken up the issue at all. Like Sri Sri Ravi Shankar, he should simply have played a silent-supporter only supporting the cause and let the experts decide on the means.

Mr.Anna Hazare is not an expert on this either. However, on a scale of one to ten, if Baba is at two then Anna is at eight. And I can’t think of anyone even at seven, forget about nine of ten. He is most certainly not perfect. He does not have the political acumen or intellectual depth to draft the constitution of India. For that reason, he should never be entrusted with the responsibility of drafting a legislation. Agreed completely. But the problem is two-fold. The government simply does not want a law that would in any way, impinge upon their right-to-corruption. Government has transcended into an Orwellian world where it can practically achieve any outcome it wishes to. Akin to dropping cash-bags from helicopter, it gave loan-waiver at the expense of taxpayers. It indulged in other various policies that breed incompetence and corruption. It indulged in crony capitalism. And while all this was going on, in the name of secularism and free press, it tagged the fourth estate of democracy along with it. If this cobweb of disgusting leaders, scams of growing order day after day with Antonia Maino and her son Rahul Vinci the largest beneficiaries in all, somebody has to shackle the order. If there is hope it lies in the common man. Illusions of revolution are not to be realized. We are too big too fail. And for the same reason, too organized to be challenged.

In these circumstances, people cling on to hope. They make a Sun out of the moon, without realizing that it’s not the moon that shines all by itself. But that’s irrelevant. The fact that it shines in the dark is enough. Anna is the moon in this dark age. The reason is simple. The man is absolutely clean. All his accounts are open for all to check. And he has more experience than anyone in taking the corrupt leaders head-on and make a difference. Yes, make a difference! I have often come across naive-suggestions by various “policy experts” on twitter and other such forums educating how “voting them out will achieve the desired outcome and protests are unnecessary” and other such tripe. Such arguments are like the nutcase libertarian free-market arguments. Just the way economists have understood beyond any reasonable doubt that many-a-times, government intervention in a market corrects for some issues, political scientists too have realized the trap of uneducated voters electing bad leaders. It is conceivable that “experts” arguing for “voting them out” probably have very little, if any, connection with ground. A two-day trip in any rural part of India would expose how the elections actually take place. Moreover, with Police, probably the most debauched institution in India, at the mercy of the state and centre machinery, the government has the power to silence any democratic force. Coupled with that, the fact that these atrocious politicians often disburse direct-cash to voters to lure them. Since the poor outnumber the rich and the rich typically can’t make it to the elections because of “busy schedule”, the election is a big farce. In fact, the concept of Tyranny of the majority says the very same thing. I met a couple last month who have some land near Pune. They are being pressurized by political leader to sell it at 30% of the market prize. They were threatened to face the consequences otherwise. The leader who pressurized them would then dole out gifts for the poor. Are the experts going to advocate risking one’s life for this “noble cause”? Or are they living under the illusion that you can vote them out? Isn’t it an obvious case of the “Tyranny of the majority”? The next step, the experts will advise contesting elections. Then when you cite the finances reason, they’ll say earn money. And we come back to square one.

Some people will raise objections about Anna’s virtues too. But, truth is not so easy to find out in reality. Reading some non-sensical articles on internet where some “investigative journalist” claims to have found corruption in Anna’s trust is too superficial and often a naive approach. And why do I say this with so much of confidence? Because I have had the fortune of seeing the man very closely. And of what relevance or trust is an anecdotal evidence like this? Probably nothing for the cynics. But for those who are open-minded there’s plenty to look at. Anna’s trust for example, does not come under the purview of “Right to Information” act. It is NOT a public trust. However, Anna was the one who went on a public agitation against the Maharashtra Government in 2004 for the introduction of the RTI act in Maharashtra. The result was the RTI act that was introduced in Maharashtra in 2005. Anna, and other committee members, stressed upon the need of having zonal commissioners for RTI appeals for the convenience of the common man. The then CM Vilasrao Deshmukh agreed and Maharashtra, till date, is the only state which has a decentralized arrangement of this sort. Keeping his own role in introducing RTI in mind, Anna has followed RTI in his trust where anyone is free to seek any information. This is just an example to show the integrity of a man.

Anna Hazare was a truck driver in the army. In the war of 1965, he was with two of his colleagues who died in front of him. A person like me, in that situation, would have thanked the Almighty, for saving my life. Anna, on the other hand, first cursed God for not taking him away. Then, he thought to himself that God must have had something bigger in his mind for which he saved Anna. Now, the cynics and the intellectuals might find this laughable. They sure will. But it is not the cynics who make a difference. Neither do the intellectuals. It is the men with silly little hopes, beliefs and a shade of insanity that make the difference.

Anna decided to devote his life to social service upon his return from Army. He came back to Ralegan Sidhhi (henceforth Ralegan). He abandoned his house and started living in a temple. His mother used to live in his house and come to meet him but Anna never went to his house. For Diwali, his mother would get sweets for him at the temple. Anna would not go home.

When Anna went to Ralegan, the village was full of vices of all sorts. Alcohol, corruption, fights. Anna launched a campaign against alcohol. Today, Ralegan is alcohol-free for all practical purposes. That Daru-bandi changed lives of women in the village forever. Ralegan is in Ahmednagar district. It has a serious problems of irrigation that plagued the largely agricultural economy of the village. Anna designed and implemented a project of Panlot Kshetra for irrigation that solved the village’s irrigation problems completely.

Anna initiated collective farming in the village that is running successfully even now. Anna started a school only for children who fail repeatedly. Students from across the state come to that school and benefit.

While Anna was doing all this on a local level, Anna launched his first campaign against the Pawar government in early nineties. Anna does not have media. He does not have money. All he possesses is a suitcase and a few rupees. His only weapon is his fast. A weapon that Mahatma Gandhi used. When he used that against Pawar and Congress, the Congress labeled him as an RSS agent. Deja vu? A few years later, BJP-SS govt came in power and Anna went on a fast against them. This time, BJP-SS labeled him as a Congress agent. He persisted with his fight in spite of these allegations. He marched on. Achieved some success, some failures. But the man has always taken the state-machinery, all by himself.

He exposed the multi-crore Telgi scam. He exposed the scam in Maharashtra’s health-ministry. He fought for RTI. And he is still fighting for many other things. Whether what he is fighting for right now is worth it? Or is it principally correct to establish an all-powerful-superpower LokPal? I don’t know. Probably not. But, he is not a man who knows nothing. He is shrewd. He knows that when you ask for a mile the government gives an inch. I don’t think even he is expecting to get all that he’s asking for.

He is a seasoned anti-corruption crusader. It is very hard to measure the success of his campaigns. Whether he has managed to curb the growth of corruption in Maharashtra? Perhaps not. But he has raised a voice. And in some ways, he has probably reduced corruption. And most importantly, much in tune with most of the netizens, underneath all the fight is nationalism and not some nihilistic Maoist, romantic pro-poor rant that he is indulging in.

The man has a face that all the parties equally dread for they know the power behind it. He has the integrity, the character and most importantly the experience to fight the corrupt politicians. If there is something that he lacks it’s the support of people, the people who will stand behind Anna, the people who will stand as a barricade before Anna should the government wish to bulldoze the force. He lacks the force of genuine intellectuals, the intellectuals who wish to work for a better, stronger and a stable India, the intellectuals who have the acumen for drafting legislations, fighting it out in the court and creating a strong intellectual face for the movement. The movement needs them all. And at the face of the movement, is the man with strongest character, integrity and determination.

This is not the time for claptrap on questioning Anna’s integrity. It’s the time to ensure that the force prevails. It is the force of the strong leaders, their intellectual front at the back and the others that show the numbers to scare those who wish to crush them, that can destroy the Italian connection, the Mafia Raj, the Maino-kingdom, the Quattrochi den.

The author is apparently disturbed by the spate of suicides by dalit students at various leading academic institutions. While the author does not entirely dismiss the possibility of discrimination by what he calls as the “elite faculty” he is essentially saying that the underprivileged are left to fend on their own and that they feel intimidated by their better educated peers. To quote him,

The indifference of the faculty, most of whom come from a privileged class and caste background, adds insult to injury. Discrimination, both subtle and not-so-subtle, continues to plague their career and life. The focus of university programmes on the elite and the blindness of the faculty to the need for additional support to students from disadvantaged backgrounds often seal their fate.

This is bizarre to be honest. In IITs students minority students have a one-year preparatory course which is intended to strengthen their basic concepts so that they come on equal grounds. Professors in IITs typically don’t fail students that often. Without putting in much of an effort one can easily scrape through with poor grades. Yet, if these students are not even able to manage that whose fault is it? What are the faculty expected to do? Go to their rooms and sit with them?

The problem is, this argument is not new. That the upper-caste professors discriminate against the lower caste students is a done-to-death. Not that this requires a serious attention but I will try to settle it once through some evidence from empirical economics and what the authors have to say.

Empirical economics research has progressed significantly over the past three decades or so. And that’s a very unfortunate development for the intellectually bankrupt clan as empirical economics can question the propagandists by appealing to science and that becomes exceedingly hard to refute.

When I was new to the field of economics (not that I am an expert at it now or anything) a bunch of people were discussing how reservations was the need of the time. One of the central arguments was that elite upper caste professors were discriminating against the lower caste students at elite institutions of India like IIMs and IITs based on this paper. The paper attempts to do the following -

It finds the effect of caste, CGPA, college background, gender and a host of other factors on the kind of job offers that people get through campus placements. The case in study here is IIM Bangalore. It was found that caste doesn’t matter and CGPA is one of the most important criteria for the placements. The paper also finds he effect of caste, college marks, gender etc. on CGPA and there caste was found to be statistically significant i.e. two people with similar attributes otherwise would differ significantly in their GPA if one of them belonged to SC/ST and the other to General. The reason for this, as explained in the paper, will be highlighted later on.

A lot of scientific jargon was used and I was shunned into silence. In a nutshell, I was told this –

Even after controlling for (scientific term meaning that keeping the other factors constant) college marks, background etc. SC/ST students seemed to have a significantly lower CGPA than the general category student. This suggests a possible discrimination by the upper caste professors against the lower caste students.

My common sense, honest understanding of the world around me and experiences at one elite institution naturally prevented me from agreeing to that claim but I lacked the arsenal to combat that claim. It seemed obviously false to me but I just couldn’t prove them wrong, mainly because I didn’t know any econometrics whatsoever then.

A few months later I did a first course in econometrics. Then I read the same paper. It was unbelievable to see the extent to which intellectual dishonesty could dictate people to lie and distort a third party research just to sell stories that they like to sell.

This is what the paper has to say about this phenomenon of the observed difference –

The determinants of GPA are given in Table 3 (p 48). As expected, the strongest determinant of academic performance in the IIM is prior academic performance, here measured by college marks, normalised to a 4-point scale. Regression analysis confirms the finding mentioned above that SC/STs get lower first-year GPAs than general category students, even controlling for college marks. This suggests that, unsurprisingly, college marks do not fully measure academic ability. SC/ST students were, on average, academically weaker than those in the general category with the same college scores.

Beat that! How different it is from the interpretation that I was told an year and a half ago. Even more importantly, IIMs did not provide the data on CAT scores which are used for admissions to IIMs. It is common knowledge that most SC/ST students get through IIMs using a quota and hence, the real difference in ability as far as the performance in IIMs is concerned can only be captured using the CAT data. In the absence of the CAT scores, some of the existing difference between the abilities is naturally captured by the caste and hence we get a result that caste seems to matter in CGPA. A more honest approach in examining the possible existence of such a discrimination would be to introduce the CAT scores and then see the effect of caste. That would be a good point to start with. But then, who on earth has that time? And then, even if one has the time, putting in that effort has a serious risk of digging your own grave and the propagandists’ risk aversion towards it is not a matter of surprise.

This is a classic case of what’s commonly known in econometrics as omitted variable bias and is taught in typically first half of the introductory econometrics course. That my good friends didn’t have the time to think about this doesn’t surprise me one bit.

Later, I took up the same task as part of my term paper and repeated with the IIT Kharagpur data on about 600 students. My results matched exactly with the Chakravorty and Somanathan paper discussed above. Here too, caste seemed to be significant in the determinants of CGPA even after controlling for 10th and 12th marks and a host of other things. Again, I didn’t have the data on IIT-JEE entrance scores and much like in that paper, again an intellectual tried to put it down my throat that this suggested a possible discrimination. When I pointed out the fact that SC/ST cutoffs are 40% lower than General category cutoffs in the IIT-JEE and hence a significant difference of abilities arises at the entering point I was dismissed by saying that it was my hypothesis. What exactly was my hypothesis is still not clear to me but what is clear is the overwhelming presence of intellectual bankruptcy and dishonesty calling it the need of the hour to challenge interpretations and distortions of this kind which propagandists attempt.

Such distortions also create an opening for the skeptics to dismiss statistics and econometrics altogether with stuff like, “There are lies, there are white lies and there are statistics”. This is just not true anymore where science has progressed significantly. Propagandists have been taken care of to a great extent in the academia. This paper above is an apt rejoinder to all the proponents of discrimination in elite job market. But, this paper can’t stop the propagandists from fooling people like the way I was tried to be fooled about an year and a half ago. I was lucky to be in the field. For those who’re not, I would say just trust your common sense first. There are not white lies, there are just plain and simple lies which should only be ignored.

Update: Apologies for the wrong url in the Hindu article by Prof.Jacob. Amended.

1 – Cash transfers worldwide are used as compliments to existing infrastructure and not substitutes. For example, in Brazil basic healthcare is provided by the government and people use cash for other purposes. So, in India unless the government does so there’s no point of using cash transfers. That is, the Government of India can think of cash transfers only after it provides the basic healthcare, educational facilities. Government can not hope that private players will fill that gap and it can merely distribute cash and the people will get the services.

2- Targeting the poor is extremely difficult. The problem is government’s inability to find a foolproof way of identifying and helping only the deserving. Therefore, either we will end up paying a lot more people than the really poor ones or we’ll leave a lot of poors untapped. In fact, we can have both the problems together.

3 – The last point is more of a paternalistic nature. Dreze says that people might spend cash on other things that the govt. does not intend to. In kind transfers offer a better alternative. People are not wise enough to spend the cash in the “right” manner and government must play a role of moral police of some sort. Inducing people to make the right choices is rather difficult and in-kind transfers could perform better in that sense.

There is some merit in all three points. But what appalls me is the fact that in spite of being an economsit, Jean Dreze did not bother looking up the literature for this. Let me take up the first point. The concept of it being a compliment and not a substitute is by no means a rule. Just because this is how it has happened in Mexico does not necessarily mean it’s the only correct way of running a conditional cash transfer scheme. Suppose my servant needs shelter that will cost me 100 rupees to build and I have to pay him additional 100 as a salary. It’s equivalent to me paying him 200 rupees and him getting the shelter built through some other source.

That said, there is some logic in this point. Investments in healthcare are huge and it is questionable as to whether the government can just hand out cash notes to the poor and a private party will see enough money to be made in this market and will fill the gap. This point is not obvious and I have not been able to find good empirical evidence about whether cash-transfers result in lesser provision of public good or not. There seem to be some papers that point out that cash-transfers result in lesser investment in public goods but they don’t seem very convincing. Personally, I too believe that government should take care of major healthcare like Europe but there’s no solid logic to back it up. And this aspect remains limited to healthcare. Education for example is an area which would go as a basic necessity today and going by the US vs Europe comparison, inviting private players seems to serve the US better.

When it comes to targeting, I fail to see a welfarist scheme aimed at poor in India that could escape this problem. Right from issuing the BPL cards to PDS, rationing or any other scheme has suffered from the vices of well-off people claiming to be poor. I have personally seen sons of wealthy businessmen claim a merit-cum-means scholarship at my undergraduate institute.

Now, let us look at the last point where Dreze raises paternalistic concerns. To me, this is a perfectly valid point. Acorn from National Interest has attacked Dreze’s article mainly about this point. To quote Acorn –

Basic economics will tell you that because cash is most fungible, if you give them cash, the question itself is redundant. If they prefer food they’ll buy food. If they prefer arrack they’ll buy arrack. Neither Jean Dreze nor the National Advisory Council, nor indeed the Government of India has any business dictating what an Indian ought to do with his or her income. Only ‘development economists’ of the dubious sort can think that development is possible when hundreds of millions of adult citizens have the right to vote and procreate but not to decide what to do with their money.

Just because the government gives this money doesn’t mean it can override the individual’s freedom to choose. Neither the government, nor the taxpayer whose money is transferred can deprive the recipient of her freedom.

I have come across countless arguments of individual freedom like these that are at best naive and foolish in reality. The problem is, Acorn scorns at Dr.Dreze for Dreze thinks that people might not spend the cash wisely. This is where a lot of free marketers jump in and say stuff like, “It’s up to an individual how (s)he might want to spend their income. It’s not government’s business” etc. And this precisely the reason why advanced economics exists.

First of all, I fail to get the “just because” qualification. How can one sensibly talk of “freedom” to spend the money that you have NOT earned yourself and are being GIFTED by some benevolent entity with a specific objective? Governments have a specific purpose in this case. One of the central ideas of economics is to provide right incentives for people. Talking about pure economics, government’s role is to maximise social welfare while an individual’s role is to maximise individual welfare. Therefore, whenever the two are not aligned (and often they won’t be) the government will step in to create the right incentives for an individual to make choices that will maximise the social welfare. So, exactly how is it morally repugnant for the government to provide a transfer in goods rather than in cash if it thinks that it provides the right incentives for the people? Take the following case for example.

Government of India is actively encouraging the use of LPG in villages. Indian villages are typically male-dominated where, how the income is to be spent is typically dictated by the male members of the family. Now, it is observed that there are a number of households that have Tata Sky but not LPG. They do not want to replace the old Chullahs with the modern day LPG. The chullahs are well-known to affect respiratory systems of the women but the men don’t care as much as they should. So, if the Government of India tomorrow decides to gift free-LPG connection for one month and LPG stoves to all such households isn’t that a wiser thing? And are people making the best use of their endowments?

In fact, it is at best naive to think that peoples’ preferences are time-consistent. Take another case. A person is a heavy smoker. So, today a man will choose to smoke with the cash he is gifted and might regret doing the same after ten years. And governments exist for this reason as well. There is enough evidence on this aspect of time-inconsistency too but the problem is it takes some efforts to read and understand.

Also, it’s extremely hard to miss the obvious point that individual freedom might not be aligned when there are four individuals in a family. The child might just want to use the cash for going and smoking bidis. The dad wants it for his alcohol. Mom wants it for groceris. And government wants it for child’s education which is going to be beneficial for the child in the long run but he is just not wise enough at this age. And his age also prevents us from using the freedom trump card.

The crux of the matter is Jean Dreze is on a strong footing when he raises paternalistic concerns against the Conditional Cash Transfer program. Dismissing those concerns citing individual freedom is extremely amateurish. Had it not been for the same, empiricists would not have spent years exploring whether the paternalistic argument actually stands the test of econometrics. He says,

Incidentally, there is no evidence that scholarships — that is, conditional cash transfers — work better than “conditional kind transfers” like school meals or free bicycles for girls who complete Class 8. In fact, I submit that the latter would win hands down in any sensible and sensitive evaluation of the two approaches.

But the problem is there is evidence. And as it turns out, the evidence so far is against Jean Dreze. It is in fact unfortunate to see Jean Dreze, an editor of Journal of Development Economics, claim that there is no evidence in support of cash transfers. In this paper by Cunha et al titled “Testing Paternalism” they specifically evaluate this point. The paper says –

Welfare programs are often implemented in-kind to promote outcomes that might not be realized under cash transfers. This paper uses a randomized controlled trial of a governmental food assistance program to test whether this form of paternalism is necessary, comparing precisely measured consumption and health outcomes under both in-kind food and cash transfers. Importantly, households do not indulge in the consumption of vices when handed cash. Furthermore, there is little evidence that the in-kind food transfer induced more food to be consumed than did an equal-valued cash transfer. This result is partly explained by the fact that the in-kind transfer was infra-marginal in terms of total food. However, the in-kind basket contained 10 individual items, and these transfers indeed altered the types of food consumed for some households. While this distorting effect of in-kind transfers must be a motivation for paternalism, households receiving cash
consumed different, but equally nutritious foods. Finally, there were few di¤erences in child nutritional intakes, and no differences in child height, weight, sickness, or anemia prevalence. While other justi…cations for in-kind transfers may certainly apply, there is minimal evidence supporting the paternalistic one in this context.

There is another paper by Skoufias et al which addresses the same issue and they too conclude that peoples’ consumption does not differ with in-cash and in-kind transfer. So, the paternalistic concerns do not stand the evidence of econometric analysis.

However, there are numerous “experts” who also criticize such policies citing inflation concerns. Please note the criticize part. It is perfectly understandable if someone says that NREGA will cause some inflation but I am fine with it. I have seen some people suggest NREGA as a major cause for inflation. In presence of significant global commodities supply shock that’s gotten inflation souring everywhere and induced even non-agricultural economists like Paul Krugman to write about it, I find criticisms of these policies mindboggling. I have written in the past about Krugman’s view on food-prices. The point is whether NREGA is a cause of inflation or not must be addressed empirically and not through your microeconomics 101 demand supply curves. And there too, correlations like “Consumer Price Index” rising post-NREGA say nothing. Correlation is not causation. However, if inflation worries these experts so much then they should be on the side of Dreze. This paper by Cunha et.al. says that there is enough empirical evidence of cash transfers causing significant price-inflation as compared to kind-transfers. That said, as Atanu Dey points out, that in spite of inflation, you do achieve a certain amount of redistribution by raising the real income of the people participating in NREGA. In my view, NREGA or Cash-transfer might cause inflation. But in a one-percent rise in inflation, I am not sure how much is a causal contribution by schemes like NREGA. My guess is NREGA would come significantly below worldwide commodities production decline, oil price shocks, economy coming out of recession etc. And I am perfectly happy with a two percent inflation above the natural inflation rate if it is achieving good redistribution.

Therefore, with all due respect, I largely differ with Dreze thanks to the evidence that highlights that paternalistic concerns don’t matter and cash-transfers do just as good.