Modi govt has lost farm laws battle, now raising Sikh separatist bogey will be a grave error

Shekhar Gupta in The Print

 

Protests over the three farm reform laws are well into the third month now. There are six key facts, or facts as we see them, that we can list here:

1. The farm laws, by and large, are good for the farmers and India. At various points of time, most major political parties and leaders have wanted these changes. However, many of you might still disagree. But then, this is an opinion piece. I explained it in detail in this, Episode 571 of #CutTheClutter.

2. Whether the laws are good or bad for the farmer no longer matters. In a democracy, all that matters is what people affected by a policy change believe — in this case, the farmers of the northern states. Facts don’t matter if you’ve failed to convince them.

3. The Modi government is right when it says this is no longer about the farm laws. Because nobody is talking about MSP, subsidies, mandis and so on. Then what’s it about?

4. The short answer is, it is about politics. And why not? There is no democracy without politics. When the UPA was in power, the BJP opposed all its good ideas, from the India-US nuclear deal to FDI in insurance and pension. Now it’s implementing the same policies at the rate of, say, 6X.

5. As far as the farm laws are concerned, the Modi government has already lost the battle. Again, you can disagree. But this is my opinion. And I will make my case.

6. Finally, the Modi government has two choices. It can let it fester, expand into a larger political war. Or it can cut its losses and, as the Americans say, get off the kerb.

Here is the evidence that lets us say that the Modi government has lost the battle for these farm laws.

First of all, there is the unilateral offer of an 18-month deferral to implementing the laws. Count 18 months from now, you will be left with only another 18 before the 2024 general elections.

You see even a Modi-Shah BJP is unlikely to risk reopening this front at that point. In fact, the bellwether heartland state elections, Madhya Pradesh, Chhattisgarh and Rajasthan, will be exactly 12 months away. Two of them have strong Congress incumbents and in the third, the BJP has bought and stolen power. Nobody’s risking losing these to make their point over farm reforms. These laws, then, are as bad as dead in the water.

Again, unilaterally, the government has already made a commitment of continuing with Minimum Support Price (MSP), although there is nothing in the laws saying it will be taken away. With so much already given away, the battle over the farm laws is lost.

The Modi government’s challenge now is to buy normalcy without making it look like a defeat. We know that it got away with one such, with the new land acquisition law. But that issue was still confined to Parliament. This is on the streets, highway choke-points, and in the expanse of wheat and paddy all around Delhi. This can spread. If the government retreats in surrender, this issue may close, but politics will rage. And why not? What is democracy but competitive politics, brutal, fair and fun? The next targets will then be other reform measures, from the new labour laws to the public listing of LIC.

What are the errors, or blunders, that brought India’s most powerful government in 35 years here? I shall list five:

1. Bringing in these laws through the ordinance route was a blunder. I speak from 20/20 hindsight, but then I am a commentator, not a political leader. To usher in the promise of sweeping change affecting the lives of more than half a billion people, the correct way would have been to market the ideas first. We don’t know if Narendra Modi now regrets not having prepared the ground for it. But the fact is, people at the mass level would be suspicious of such change through ordinances. Especially if you aren’t talking to them.

2. The manner in which the laws were pushed through Rajya Sabha added to these suspicions. This needed better parliamentary craft than the blunt use of vocal chords. This helped fan the fire, or spread the ‘hawa’ that something terrible was being forced down the surplus-producing farmers’ throats.

3. The party was riding far too high on its majority to care about allies and friends. If it had taken them along respectfully, the passage through Rajya Sabha wouldn’t have been so ungainly. At least the Akalis should never have been lost. But, as we’ve said before, this BJP does not understand Punjab or the Sikhs.

4. It also underestimated the frustration among the Jats of Haryana and western Uttar Pradesh, disempowered by the Modi-Shah politics. The senior-most Jat leaders in the Modi council of ministers are both inconsequential ministers of state. One is from distant Barmer in Rajasthan. The most visible of them, Sanjeev Balyan, won from Muzaffarnagar, where the big pro-Tikait mahapanchayat was held. In Haryana, the BJP has no Jat who counts. On the contrary, it found the marginalisation of Jat power as its big achievement. It refused to learn even from statewide, violent Jat agitations for reservations. The anger then was rooted in political marginalisation, as it is now. Ask why the BJP’s Jat ally Dushyant Chautala, or any of its Jat MPs/MLAs in UP, especially Balyan, are not on the ground, marketing these reforms? They wouldn’t dare.

5. The BJP conceded too much, too soon, unilaterally in the negotiations. It doesn’t have much more to give now. And the farm leaders have conceded nothing. 

In conclusion, where does the Modi government go from here? One approach could be to tire the farmers out. On all evidence, that is not about to happen. Rabi harvest in April is still nearly 75 days away, and with much work done by mechanical harvesters and migrant workers, families would be quite capable of keeping the pickets full.

The next expectation would be that the Jats would ultimately make a deal. This is plausible. Note the key difference between Singhu and Ghazipur. In the first, no politician can even go for a selfie. Ask Ravneet Singh Bittu of the Congress, who was turned out unceremoniously. But everybody can go to Ghazipur and be photographed hugging Tikait. The Congress, Left, RLD, RJD, AAP, all of them. Even Sukhbir Singh Badal comes to Ghazipur, instead of Singhu to meet his fellow Sikhs from Punjab. Wherever there is politics and politicians, conflict resolution is possible. But what happens if this becomes a reality?

This will leave India and the Modi government with the most dangerous outcome of all. It will corner the Sikhs of Punjab. Already, the lousy barricading visuals and government’s prickly response to something as trivial as some celebrity tweets is threatening to redefine the issue from farm laws to national unity. The Modi government will err gravely if it changes the headline from farm protests to Sikh separatism.

This crisis requires political sophistication and governance skills. This BJP has neither. It has, instead, political skills and governance by clout, riding an all-conquering election-winning machine. It is the party’s inability to accept the realities of Indian politics and appreciate the limitations of a parliamentary majority that brought it here.

Does it have the smarts and sagacity to negotiate its way out of it? We can’t say. But we hope it does. Because the last thing India needs is to start another war for national unity. You would be nuts to reopen an issue in Punjab we all closed and buried by 1993.

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The GameStop affair is like tulip mania on steroids

It’s eerily similar to the 17th-century Dutch bubble, but with the self-organising potential of the internet added to the mix writes Dan Davies in The Guardian

  

Towards the end of 1636, there was an outbreak of bubonic plague in the Netherlands. The concept of a lockdown was not really established at the time, but merchant trade slowed to a trickle. Idle young men in the town of Haarlem gathered in taverns, and looked for amusement in one of the few commodities still trading – contracts for the delivery of flower bulbs the following spring. What ensued is often regarded as the first financial bubble in recorded history – the “tulip mania”.

Nearly 400 years later, something similar has happened in the US stock market. This week, the share price of a company called GameStop – an unexceptional retailer that appears to have been surprised and confused by the whole episode – became the battleground between some of the biggest names in finance and a few hundred bored (mostly) bros exchanging messages on the WallStreetBets forum, part of the sprawling discussion site Reddit. 

The rubble is still bouncing in this particular episode, but the broad shape of what’s happened is not unfamiliar. Reasoning that a business model based on selling video game DVDs through shopping malls might not have very bright prospects, several of New York’s finest hedge funds bet against GameStop’s share price. The Reddit crowd appears to have decided that this was unfair and that they should fight back on behalf of gamers. They took the opposite side of the trade and pushed the price up, using derivatives and brokerage credit in surprisingly sophisticated ways to maximise their firepower.

To everyone’s surprise, the crowd won; the hedge funds’ risk management processes kicked in, and they were forced to buy back their negative positions, pushing the price even higher. But the stock exchanges have always frowned on this sort of concerted action, and on the use of leverage to manipulate the market. The sheer volume of orders had also grown well beyond the capacity of the small, fee-free brokerages favoured by the WallStreetBets crowd. Credit lines were pulled, accounts were frozen and the retail crowd were forced to sell; yesterday the price gave back a large proportion of its gains.

To people who know a lot about stock exchange regulation and securities settlement, this outcome was quite inevitable – it’s part of the reason why things like this don’t happen every day. To a lot of American Redditors, though, it was a surprising introduction to the complexity of financial markets, taking place in circumstances almost perfectly designed to convince them that the system is rigged for the benefit of big money.

Corners, bear raids and squeezes, in the industry jargon, have been around for as long as stock markets – in fact, as British hedge fund legend Paul Marshall points out in his book Ten and a Half Lessons From Experience something very similar happened last year at the start of the coronavirus lockdown, centred on a suddenly unemployed sports bookmaker called Dave Portnoy. But the GameStop affair exhibits some surprising new features.

Most importantly, it was a largely self-organising phenomenon. For most of stock market history, orchestrating a pool of people to manipulate markets has been something only the most skilful could achieve. Some of the finest buildings in New York were erected on the proceeds of this rare talent, before it was made illegal. The idea that such a pool could coalesce so quickly and without any obvious sign of a single controlling mind is brand new and ought to worry us a bit. 

And although some of the claims made by contributors to WallStreetBets that they represent the masses aren’t very convincing – although small by hedge fund standards, many of them appear to have five-figure sums to invest – it’s unfamiliar to say the least to see a pool motivated by rage or other emotions as opposed to the straightforward desire to make money. Just as air traffic regulation is based on the assumption that the planes are trying not to crash into one another, financial regulation is based on the assumption that people are trying to make money for themselves, not to destroy it for other people.

When I think about market regulation, I’m always reminded of a saying of Édouard Herriot, the former mayor of Lyon. He said that local government was like an andouillette sausage; it had to stink a little bit of shit, but not too much. Financial markets aren’t video games, they aren’t democratic and small investors aren’t the backbone of capitalism. They’re nasty places with extremely complicated rules, which only work to the extent that the people involved in them trust one another. Speculation is genuinely necessary on a stock market – without it, you could be waiting days for someone to take up your offer when you wanted to buy or sell shares. But it’s a necessary evil, and it needs to be limited. It’s a shame that the Redditors found this out the hard way.

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