Sunday, September 1, 2013

Dropped call

As the world’s largest democracy attempt to grapple with the problems of its own creation, one has to wonder if the last decade was yet another failed start. From its recent independent beginnings, its incompetent leaders consistently made bad policies – from soft socialism to fully planned societies, with the hope that failed policies elsewhere will work in India. It should be clear by now, that they do not.

Three primary vectors have always held the country back. First, its political elite, with compassion clearly worn on the long sleeves of their home made garments, have always been corrupt – top down. Such a corrupt system simply cannot make optimal policies and a country that claims to be a democracy goes to the poll, mesmerized by a few last names as if it is in some sort of hypnotic trance, and keep electing the same corrupt and incompetent bunch. And second, the one-sided education handed out to the politicians from a few choice institutions in Europe, have sufficiently brain washed even those who may have wanted to do something good. And, finally – a disconnected set of kingdoms, packed into a country for the convenience of the World, still hoards endemic discrimination across classes, regions and sexes.

Central planning does not work, markets do. This simple idea is yet to penetrate those technocrats in charge, still burning the midnight oil to optimize resource allocation and to engineer optimal growth, as if they are the only ones who know how to drive a ship with over 1 billion people to their certain heavenly destiny. The basic idea that past performance is no indication of the future has never been explained to the entire country, that seems to cling to its illustrious past, as if godly intervention will return it to its past glory. It will not.

The prescriptions are simple – open markets, trade freely, shed cronyism, punish corruption and implement a true democracy. Opening markets means clear and consistent implementation of rules – those regulating market failures such as monopolies and those implementing fair taxation and minimal subsidies. Trading freely means it has to get stronger in areas of comparative advantages and not drive its educated populace to industries of fleeting cost advantages, afforded by a protected currency. Shedding cronyism means that it creates organizations that compete on merit and intellectual property and not those manufacturing profits by connections and handouts. Punishing corruption means that it has to get tougher on white collar crime and use powerful disincentives to remove this issue that is eating into its core. And, implementing a true democracy means that the system is able to understand available choices and elect representatives who are the best leaders, irrespective of where they come from and what their last names are.

It is a long shot.