Tuesday 22 March 2016
Iain Duncan Smith will do anything for Brexit – even tell the truth
Polly Toynbee in The Guardian
There’s only one question about Iain Duncan Smith: is he a “bastard”, as described by his former prime minister John Major, or a “shit” – as reportedly described by his current leader, David Cameron? For hypocrisy and outright dishonesty do you howl in indignation, or roar with crazed laughter at his new compassion? How has this architect of so much torment for so many, justifier of injustice, scourge of the poor and the sick, become the champion of underdogs? How can this Nosferatu say he never had a taste for blood?
As for David Cameron’s riposte yesterday – improving life chances, rebuilding sink estates? – reviving his old pretence of “modern compassionate Conservatism”, that deserves the same raspberries of ridicule. But he does it well, for those who hear the words and never see the facts on the ground. And now he is forced to abandon extra cuts.
What is the former welfare secretary up to? Look at the backers who defend him: all are Brexiteers, mostly on the right, not friends of the poor. He was always the pre-referendum ticking time bomb, and now he has pulled the pin to inflict maximum damage to the authority of the prime minister. As the Daily Express headline gloats: “Tory split helps fight to free us from Brussels.” The IDS backer and Europhobe Owen Paterson has never knowingly objected to cuts for the poor, nor has Bernard Jenkin: his wife, Baroness Jenkin, presented a Church of England report on 4 million people going hungry, saying: “Poor people don’t know how to cook. I had a large bowl of porridge today, which cost 4p.” In their world, poverty is always due to fecklessness: IDS never acknowledges that most of the poor are in work.
Worse than cuts has been this government’s relentless anti-poor propaganda, with George Osborne’s sneers at households sleeping on with blinds closed; or IDS’s attacks on the “something for nothing culture” as he warned those on benefits: “This is not an easy life any more, chum. I think you’re a slacker.”
The invention of “compassionate conservatism” came in 2002 when Duncan Smith staged a public epiphany with photographers in Glasgow’s Easterhouse estate: he said he was shocked by the wretchedness he saw. Cameron seized on this to detoxify the party. When I retraced Duncan Smith’s steps, I found those in the Easterhouse community centre he visited who had warmly welcomed his conversion now distraught at the effects of his policies. Many had been cut off benefits, one man with acute psychosis, another who was barely literate and failed to claim correctly. Food banks everywhere are filled with victims of sanctions: abolishing the emergency social fund – handing out £5 a day to the truly desperate – was emblematic.
Iain Duncan Smith rapped by watchdog for misusing benefits cap statistics
It’s hard to exaggerate the cruelty of his cuts, boasting of the £30bn “saved”. Not a croaky whisper of protest came from him at £12bn more cuts in the manifesto. The bedroom tax left most people unable to downsize, their income massively depleted. The benefits cap poleaxed families in the south-east. Universal credit has a 50-page online form, leaving many with learning difficulties or mental health problems unable to apply. Billed as a modest technical tidying up, universal credit has wasted billions with failed IT systems; it is years late and doesn’t do what he says it does: incentives to work are no better, its recipientslosing 65p or more in any extra pound they earn. It disincentivises partners from working, losing earnings in withdrawn credits.
IDS ignored warnings, claiming magical solutions to eternal welfare conundrums: how do you give the needy enough for a decent life without damaging the impulse to work? How do you taper benefits gently so that earning more doesn’t lose them money? At first he plainly didn’t understand the complexity: later he just denied it, claiming that putting six benefits together was “simplifying”. But each of those still has to be recalculated monthly.
His successor inherits a morass of expensive bungles and needless viciousness. IDS’s reign of terror extended to every jobcentre, though he denied there were targets for staff to knock claimants off benefits. The word “target” is replaced with euphemisms like “spinning plates”. One unhappy jobcentre adviser told me: “You park your conscience when you work here.” Advisers tell of orders to apply sanctions for tiny infractions, closing the claims of those who fail to follow the “50 steps to work” so they vanish from statistics. Every month managers check “sanction-raising figures”: low sanctioners are “managed out” of their jobs.
Duncan Smith’s numerical jiggery-pokery became legendary, undeterred by stern rebukes from the public accounts committee, the National Audit Office and the UK Statistics Authority. As few understand benefits, he felt free to make any claim and distort any figure. He, like Cameron and Osborne, is a serial user of factoids: the UK has 1% of the world’s population but spends 7% of the world’s welfare. True, but meaningless to compare ourselves with Sudan and other nations with no welfare.
Like Cameron yesterday, IDS denied cuts by pointing to the still rising total welfare bill. But rises in the population and numbers of pensioners, or in soaring housing benefit, are no comfort to those whose benefits certainly have been brutally cut. One legacy will be hundreds of thousands more children projected by the Institute for Fiscal Studies to fall into poverty by 2020. His answer was to change the measurement – until the Lords rebelled.
All this makes his sudden fit of truth-telling such a culture shock. He is entirely right: the budget was “deeply unfair”, extra money for the rich taken from poor and disabled people. How startlingly honest when he says his party ignores the poor because they don’t vote Tory. But what’s new?
Duncan Smith has always had a pious way, followed by irritability if challenged. The man’s psyche hardly matters, but he has a stock of self-belief and self-deceit that lets him utter sorrowful words of tough love towards the poor. Little is genuine – not his name, his qualifications, his repeated epiphanies. It’s the third time he has inflicted near-mortal damage on his party – against John Major, then as worst ever leader, now as would-be assassin of a winning leader.
In other times all this would be joy for Labour. But even they must realise this man’s only intent is to get Britain out of the EU. So gripping is the Brexit virus that its victims will sacrifice all other beliefs to pursue it. Here his chosen weapon is truth.
There’s only one question about Iain Duncan Smith: is he a “bastard”, as described by his former prime minister John Major, or a “shit” – as reportedly described by his current leader, David Cameron? For hypocrisy and outright dishonesty do you howl in indignation, or roar with crazed laughter at his new compassion? How has this architect of so much torment for so many, justifier of injustice, scourge of the poor and the sick, become the champion of underdogs? How can this Nosferatu say he never had a taste for blood?
As for David Cameron’s riposte yesterday – improving life chances, rebuilding sink estates? – reviving his old pretence of “modern compassionate Conservatism”, that deserves the same raspberries of ridicule. But he does it well, for those who hear the words and never see the facts on the ground. And now he is forced to abandon extra cuts.
What is the former welfare secretary up to? Look at the backers who defend him: all are Brexiteers, mostly on the right, not friends of the poor. He was always the pre-referendum ticking time bomb, and now he has pulled the pin to inflict maximum damage to the authority of the prime minister. As the Daily Express headline gloats: “Tory split helps fight to free us from Brussels.” The IDS backer and Europhobe Owen Paterson has never knowingly objected to cuts for the poor, nor has Bernard Jenkin: his wife, Baroness Jenkin, presented a Church of England report on 4 million people going hungry, saying: “Poor people don’t know how to cook. I had a large bowl of porridge today, which cost 4p.” In their world, poverty is always due to fecklessness: IDS never acknowledges that most of the poor are in work.
Worse than cuts has been this government’s relentless anti-poor propaganda, with George Osborne’s sneers at households sleeping on with blinds closed; or IDS’s attacks on the “something for nothing culture” as he warned those on benefits: “This is not an easy life any more, chum. I think you’re a slacker.”
The invention of “compassionate conservatism” came in 2002 when Duncan Smith staged a public epiphany with photographers in Glasgow’s Easterhouse estate: he said he was shocked by the wretchedness he saw. Cameron seized on this to detoxify the party. When I retraced Duncan Smith’s steps, I found those in the Easterhouse community centre he visited who had warmly welcomed his conversion now distraught at the effects of his policies. Many had been cut off benefits, one man with acute psychosis, another who was barely literate and failed to claim correctly. Food banks everywhere are filled with victims of sanctions: abolishing the emergency social fund – handing out £5 a day to the truly desperate – was emblematic.
Iain Duncan Smith rapped by watchdog for misusing benefits cap statistics
It’s hard to exaggerate the cruelty of his cuts, boasting of the £30bn “saved”. Not a croaky whisper of protest came from him at £12bn more cuts in the manifesto. The bedroom tax left most people unable to downsize, their income massively depleted. The benefits cap poleaxed families in the south-east. Universal credit has a 50-page online form, leaving many with learning difficulties or mental health problems unable to apply. Billed as a modest technical tidying up, universal credit has wasted billions with failed IT systems; it is years late and doesn’t do what he says it does: incentives to work are no better, its recipientslosing 65p or more in any extra pound they earn. It disincentivises partners from working, losing earnings in withdrawn credits.
IDS ignored warnings, claiming magical solutions to eternal welfare conundrums: how do you give the needy enough for a decent life without damaging the impulse to work? How do you taper benefits gently so that earning more doesn’t lose them money? At first he plainly didn’t understand the complexity: later he just denied it, claiming that putting six benefits together was “simplifying”. But each of those still has to be recalculated monthly.
His successor inherits a morass of expensive bungles and needless viciousness. IDS’s reign of terror extended to every jobcentre, though he denied there were targets for staff to knock claimants off benefits. The word “target” is replaced with euphemisms like “spinning plates”. One unhappy jobcentre adviser told me: “You park your conscience when you work here.” Advisers tell of orders to apply sanctions for tiny infractions, closing the claims of those who fail to follow the “50 steps to work” so they vanish from statistics. Every month managers check “sanction-raising figures”: low sanctioners are “managed out” of their jobs.
Duncan Smith’s numerical jiggery-pokery became legendary, undeterred by stern rebukes from the public accounts committee, the National Audit Office and the UK Statistics Authority. As few understand benefits, he felt free to make any claim and distort any figure. He, like Cameron and Osborne, is a serial user of factoids: the UK has 1% of the world’s population but spends 7% of the world’s welfare. True, but meaningless to compare ourselves with Sudan and other nations with no welfare.
Like Cameron yesterday, IDS denied cuts by pointing to the still rising total welfare bill. But rises in the population and numbers of pensioners, or in soaring housing benefit, are no comfort to those whose benefits certainly have been brutally cut. One legacy will be hundreds of thousands more children projected by the Institute for Fiscal Studies to fall into poverty by 2020. His answer was to change the measurement – until the Lords rebelled.
All this makes his sudden fit of truth-telling such a culture shock. He is entirely right: the budget was “deeply unfair”, extra money for the rich taken from poor and disabled people. How startlingly honest when he says his party ignores the poor because they don’t vote Tory. But what’s new?
Duncan Smith has always had a pious way, followed by irritability if challenged. The man’s psyche hardly matters, but he has a stock of self-belief and self-deceit that lets him utter sorrowful words of tough love towards the poor. Little is genuine – not his name, his qualifications, his repeated epiphanies. It’s the third time he has inflicted near-mortal damage on his party – against John Major, then as worst ever leader, now as would-be assassin of a winning leader.
In other times all this would be joy for Labour. But even they must realise this man’s only intent is to get Britain out of the EU. So gripping is the Brexit virus that its victims will sacrifice all other beliefs to pursue it. Here his chosen weapon is truth.
Monday 21 March 2016
The secret of a happy marriage? Low expectations
Daisy Buchanan in The Guardian
Since I got married last October, I’ve been thinking a lot about divorce. Not in a “serving papers” way, but in the sense that nothing is impossible and it’s good to be prepared. Divorce is something that could never have happened to me before the wedding – but now there’s a chance that it’s in my future. Just as some people believe there’s no better way of appreciating life than by contemplating the inevitability of death (“You might get knocked down by a bus tomorrow!” Not if I stick to heavily pedestrianised areas!), I think that the best way of appreciating the best bits of my relationship is to remind myself that we’re both free to leave at any time.
Reader, I married him hoping that it will last for ever, but knowing that it’s going to be hard, because life is hard. The variables are infinite – loved ones might get seriously ill, we might get ill, one of us could do something thoughtless and hurtful and stupid that changes the nature of the relationship, we might end up growing apart instead of growing together. Surely any idiot knows that the romantic bits – wearing your best underwear, snogging your way through plane safety demonstrations on your endless minibreaks and holding in your farts – happen in the six months after you meet. Marriage is all “Can you get a birthday present for my mum? By the way, the toilet’s broken and we’ve just had a council tax bill for 800 quid.”
So I’m not surprised by the results of a recent study which show that the higher a couple’s expectations of marriage, the more likely the union was doomed to failure. When couples had low expectations that were easily reached, they were happier than the couples who had higher expectations, despite having the same needs met.
The study surmised: “Among spouses who either reported less severe problems or were in marriages observed to be characterised by lower levels of destructive behaviour, standards were positively associated with satisfaction over time,” but that bringing impossibly high expectations to marriage was as damaging as undermining each other, or communicating badly.
Dr James McNulty, the psychologist in charge of the research, advises newlyweds to “realise their strengths and weaknesses and calibrate their standards accordingly”, explaining that the problems occur when couples experience “a mismatch between what they demand and what they can actually attain”.
The lesson is obvious. Love the one you’re wedded to, not the tidier, healthier, cleverer, more committed person you hope marriage might make them. If they’re always hitting on your friends and being sick in taxis, they won’t be cured of it just because all of your relatives have bought you flatware from a John Lewis list .
I know I’m incredibly lucky to have met my husband in the UK, in 2015. In other countries and other eras, marriage hasn’t been a choice for women but an inevitability. Many hoped that courtship, and the chance to live away from home, would lead to slightly more independence and fun. In some households, you’re still better off as a matriarch than as an adult female child. But that only reinforces my point.
If you’re marrying in the belief that it will make your life significantly better, then things probably aren’t great to begin with.
Literature is littered with characters who have entered disastrous marriages in the failed pursuit of wealth and adventure. Your Becky Sharps and Emma Bovarys start unions in the hope that they will allow them to realise personal ambitions, and it never ends well.
I’m optimistic for my own marriage because I have no hopes for social betterment, grand balls, or private jets. I married my husband knowing that we have the same idea of what constitutes a good time. We believe there is no greater state of wedded bliss than lying on a sofa with your head on your spouse’s bottom, and six hours of QI repeats scheduled. If I were to dare to dream and get ideas above my station, I might hope that one day we could replace our customary bag of own-brand crisps with a big sack of Kettle Chips.
Ultimately, a marriage can only ever be as good as the people in it. You can’t make coq au vin with a can of Red Stripe and a £1.99 six-piece selection from Chicken Cottage, but you’ll have a nicer dinner if you appreciate the tasty charm of your raw ingredients instead of moaning about their lack of nutritional value. My greatest ambition for my marriage is that we keep treating each other with as much tenderness and respect as we did when we first met, and that we love each other enough to admit it’s time to call it a day if we ever can no longer do this. I hope it will never happen, but at least when it comes to love, a pessimist is never disappointed.
Since I got married last October, I’ve been thinking a lot about divorce. Not in a “serving papers” way, but in the sense that nothing is impossible and it’s good to be prepared. Divorce is something that could never have happened to me before the wedding – but now there’s a chance that it’s in my future. Just as some people believe there’s no better way of appreciating life than by contemplating the inevitability of death (“You might get knocked down by a bus tomorrow!” Not if I stick to heavily pedestrianised areas!), I think that the best way of appreciating the best bits of my relationship is to remind myself that we’re both free to leave at any time.
Reader, I married him hoping that it will last for ever, but knowing that it’s going to be hard, because life is hard. The variables are infinite – loved ones might get seriously ill, we might get ill, one of us could do something thoughtless and hurtful and stupid that changes the nature of the relationship, we might end up growing apart instead of growing together. Surely any idiot knows that the romantic bits – wearing your best underwear, snogging your way through plane safety demonstrations on your endless minibreaks and holding in your farts – happen in the six months after you meet. Marriage is all “Can you get a birthday present for my mum? By the way, the toilet’s broken and we’ve just had a council tax bill for 800 quid.”
So I’m not surprised by the results of a recent study which show that the higher a couple’s expectations of marriage, the more likely the union was doomed to failure. When couples had low expectations that were easily reached, they were happier than the couples who had higher expectations, despite having the same needs met.
The study surmised: “Among spouses who either reported less severe problems or were in marriages observed to be characterised by lower levels of destructive behaviour, standards were positively associated with satisfaction over time,” but that bringing impossibly high expectations to marriage was as damaging as undermining each other, or communicating badly.
Dr James McNulty, the psychologist in charge of the research, advises newlyweds to “realise their strengths and weaknesses and calibrate their standards accordingly”, explaining that the problems occur when couples experience “a mismatch between what they demand and what they can actually attain”.
The lesson is obvious. Love the one you’re wedded to, not the tidier, healthier, cleverer, more committed person you hope marriage might make them. If they’re always hitting on your friends and being sick in taxis, they won’t be cured of it just because all of your relatives have bought you flatware from a John Lewis list .
I know I’m incredibly lucky to have met my husband in the UK, in 2015. In other countries and other eras, marriage hasn’t been a choice for women but an inevitability. Many hoped that courtship, and the chance to live away from home, would lead to slightly more independence and fun. In some households, you’re still better off as a matriarch than as an adult female child. But that only reinforces my point.
If you’re marrying in the belief that it will make your life significantly better, then things probably aren’t great to begin with.
Literature is littered with characters who have entered disastrous marriages in the failed pursuit of wealth and adventure. Your Becky Sharps and Emma Bovarys start unions in the hope that they will allow them to realise personal ambitions, and it never ends well.
I’m optimistic for my own marriage because I have no hopes for social betterment, grand balls, or private jets. I married my husband knowing that we have the same idea of what constitutes a good time. We believe there is no greater state of wedded bliss than lying on a sofa with your head on your spouse’s bottom, and six hours of QI repeats scheduled. If I were to dare to dream and get ideas above my station, I might hope that one day we could replace our customary bag of own-brand crisps with a big sack of Kettle Chips.
Ultimately, a marriage can only ever be as good as the people in it. You can’t make coq au vin with a can of Red Stripe and a £1.99 six-piece selection from Chicken Cottage, but you’ll have a nicer dinner if you appreciate the tasty charm of your raw ingredients instead of moaning about their lack of nutritional value. My greatest ambition for my marriage is that we keep treating each other with as much tenderness and respect as we did when we first met, and that we love each other enough to admit it’s time to call it a day if we ever can no longer do this. I hope it will never happen, but at least when it comes to love, a pessimist is never disappointed.
Why are corrupt politicians popular in India
This is an excerpt from a speech by India’s Reserve Bank of India chairman Raghuram Rajan. The full text is available here.
Even as our democracy and our economy have become more vibrant, an important issue in the recent election was whether we had substituted the crony socialism of the past with crony capitalism, where the rich and the influential are alleged to have received land, natural resources and spectrum in return for payoffs to venal politicians.
By killing transparency and competition, crony capitalism is harmful to free enterprise, opportunity, and economic growth. And by substituting special interests for the public interest, it is harmful to democratic expression. If there is some truth to these perceptions of crony capitalism, a natural question is why people tolerate it. Why do they vote for the venal politician who perpetuates it?
A hypothesis on the persistence of crony capitalism
One widely held hypothesis is that our country suffers from want of a “few good men” in politics. This view is unfair to the many upstanding people in politics. But even assuming it is true, every so often we see the emergence of a group, usually upper middle class professionals, who want to clean up politics. But when these “good” people stand for election, they tend to lose their deposits. Does the electorate really not want squeaky clean government?
Apart from the conceit that high morals lie only with the upper middle class, the error in this hypothesis may be in believing that problems stem from individual ethics rather than the system we have. In a speech I made before the Bombay Chamber of Commerce in 2008, I argued that the tolerance for the venal politician is because he is the crutch that helps the poor and underprivileged navigate a system that gives them so little access. This may be why he survives.
Let me explain. Our provision of public goods is unfortunately biased against access by the poor. In a number of states, ration shops do not supply what is due, even if one has a ration card – and too many amongst the poor do not have a ration card or a BPL card; Teachers do not show up at schools to teach; The police do not register crimes, or encroachments, especially if committed by the rich and powerful; Public hospitals are not adequately staffed and ostensibly free medicines are not available at the dispensary; …I can go on, but you know the all-too-familiar picture.
This is where the crooked but savvy politician fits in. While the poor do not have the money to “purchase” public services that are their right, they have a vote that the politician wants. The politician does a little bit to make life a little more tolerable for his poor constituents – a government job here, an FIR registered there, a land right honoured somewhere else. For this, he gets the gratitude of his voters, and more important, their vote. Of course, there are many politicians who are honest and genuinely want to improve the lot of their voters. But perhaps the system tolerates corruption because the street smart politician is better at making the wheels of the bureaucracy creak, however slowly, in favour of his constituents. And such a system is self-sustaining. An idealist who is unwilling to “work” the system can promise to reform it, but the voters know there is little one person can do. Moreover, who will provide the patronage while the idealist is fighting the system? So why not stay with the fixer you know even if it means the reformist loses his deposit?
So the circle is complete. The poor and the under-privileged need the politician to help them get jobs and public services. The crooked politician needs the businessman to provide the funds that allow him to supply patronage to the poor and fight elections. The corrupt businessman needs the crooked politician to get public resources and contracts cheaply. And the politician needs the votes of the poor and the underprivileged. Every constituency is tied to the other in a cycle of dependence, which ensures that the status quo prevails. Well-meaning political leaders and governments have tried, and are trying, to break this vicious cycle. How do we get more politicians to move from “fixing” the system to reforming the system? The obvious answer is to either improve the quality of public services or reduce the public’s dependence on them. Both approaches are necessary. But then how does one improve the quality of public services? The typical answer has been to increase the resources devoted to the service, and to change how it is managed. A number of worthwhile efforts are underway to improve the quality of public education and healthcare. But if resources leak or public servants are not motivated, which is likely in the worst governed states, these interventions are not very effective.
Some have argued that making a public service a right can change delivery. It is hard to imagine that simply legislating rights and creating a public expectation of delivery will, in fact, ensure delivery. After all, is there not an expectation that a ration card holder will get decent grain from the fair price shop, yet all too frequently grain is not available or is of poor quality. Information decentralization can help. Knowing how many medicines the local public dispensary received, or how much money the local school is getting for mid-day meals, can help the public monitor delivery and alert higher-ups when the benefits are not delivered. But the public delivery system is usually most apathetic where the public is poorly educated, of low social status, and disorganized, so monitoring by the poor is also unlikely to be effective.
Some argue that this is why the middle class should enjoy public benefits along with the poor, so that the former can protest against poor delivery, which will ensure high quality for all. But making benefits universal is costly, and may still lead to indifferent delivery for the poor. The middle class may live in different areas from the poor. Indeed, even when located in the same area, the poor may not even patronize facilities frequented by the middle class because they feel out of place. And even when all patronize the same facility, providers may be able to discriminate between the voluble middle class and the uncomplaining poor. So if more resources or better management are inadequate answers, what might work?
The answer may partly lie in reducing the public’s dependence on government-provided jobs or public services. A good private sector job, for example, may give a household the money to get private healthcare, education, and supplies, and reduce their need for public services. Income could increase an individual’s status and increase the respect they are accorded by the teacher, the policeman or the bureaucrat. But how does a poor man get a good job if he has not benefited from good healthcare and education in the first place? In this modern world where good skills are critical to a good job, the unskilled have little recourse but to take a poorly-paying job or to look for the patronage that will get them a good job. So do we not arrive at a contradiction: the good delivery of public services is essential to escape the dependence on bad public services?
Money liberates and Empowers…
We need to go back to the drawing board. There is a way out of this contradiction, developing the idea that money liberates. Could we not give poor households cash instead of promising them public services? A poor household with cash can patronize whomsoever it wants, and not just the monopolistic government provider. Because the poor can pay for their medicines or their food, they will command respect from the private provider. Not only will a corrupt fair price shop owner not be able to divert the grain he gets since he has to sell at market price, but because he has to compete with the shop across the street, he cannot afford to be surly or lazy.
The government can add to the effects of empowering the poor by instilling a genuine cost to being uncompetitive – by shutting down parts of the public delivery systems that do not generate enough custom. Much of what we need to do is already possible. The government intends to announce a scheme for full financial inclusion on Independence Day. It includes identifying the poor, creating unique biometric identifiers for them, opening linked bank accounts, and making government transfers into those accounts. When fully rolled out, I believe it will give the poor the choice and respect as well as the services they had to beg for in the past. It can break a link between poor public service, patronage, and corruption that is growing more worrisome over time.
Even as our democracy and our economy have become more vibrant, an important issue in the recent election was whether we had substituted the crony socialism of the past with crony capitalism, where the rich and the influential are alleged to have received land, natural resources and spectrum in return for payoffs to venal politicians.
By killing transparency and competition, crony capitalism is harmful to free enterprise, opportunity, and economic growth. And by substituting special interests for the public interest, it is harmful to democratic expression. If there is some truth to these perceptions of crony capitalism, a natural question is why people tolerate it. Why do they vote for the venal politician who perpetuates it?
A hypothesis on the persistence of crony capitalism
One widely held hypothesis is that our country suffers from want of a “few good men” in politics. This view is unfair to the many upstanding people in politics. But even assuming it is true, every so often we see the emergence of a group, usually upper middle class professionals, who want to clean up politics. But when these “good” people stand for election, they tend to lose their deposits. Does the electorate really not want squeaky clean government?
Apart from the conceit that high morals lie only with the upper middle class, the error in this hypothesis may be in believing that problems stem from individual ethics rather than the system we have. In a speech I made before the Bombay Chamber of Commerce in 2008, I argued that the tolerance for the venal politician is because he is the crutch that helps the poor and underprivileged navigate a system that gives them so little access. This may be why he survives.
Let me explain. Our provision of public goods is unfortunately biased against access by the poor. In a number of states, ration shops do not supply what is due, even if one has a ration card – and too many amongst the poor do not have a ration card or a BPL card; Teachers do not show up at schools to teach; The police do not register crimes, or encroachments, especially if committed by the rich and powerful; Public hospitals are not adequately staffed and ostensibly free medicines are not available at the dispensary; …I can go on, but you know the all-too-familiar picture.
This is where the crooked but savvy politician fits in. While the poor do not have the money to “purchase” public services that are their right, they have a vote that the politician wants. The politician does a little bit to make life a little more tolerable for his poor constituents – a government job here, an FIR registered there, a land right honoured somewhere else. For this, he gets the gratitude of his voters, and more important, their vote. Of course, there are many politicians who are honest and genuinely want to improve the lot of their voters. But perhaps the system tolerates corruption because the street smart politician is better at making the wheels of the bureaucracy creak, however slowly, in favour of his constituents. And such a system is self-sustaining. An idealist who is unwilling to “work” the system can promise to reform it, but the voters know there is little one person can do. Moreover, who will provide the patronage while the idealist is fighting the system? So why not stay with the fixer you know even if it means the reformist loses his deposit?
So the circle is complete. The poor and the under-privileged need the politician to help them get jobs and public services. The crooked politician needs the businessman to provide the funds that allow him to supply patronage to the poor and fight elections. The corrupt businessman needs the crooked politician to get public resources and contracts cheaply. And the politician needs the votes of the poor and the underprivileged. Every constituency is tied to the other in a cycle of dependence, which ensures that the status quo prevails. Well-meaning political leaders and governments have tried, and are trying, to break this vicious cycle. How do we get more politicians to move from “fixing” the system to reforming the system? The obvious answer is to either improve the quality of public services or reduce the public’s dependence on them. Both approaches are necessary. But then how does one improve the quality of public services? The typical answer has been to increase the resources devoted to the service, and to change how it is managed. A number of worthwhile efforts are underway to improve the quality of public education and healthcare. But if resources leak or public servants are not motivated, which is likely in the worst governed states, these interventions are not very effective.
Some have argued that making a public service a right can change delivery. It is hard to imagine that simply legislating rights and creating a public expectation of delivery will, in fact, ensure delivery. After all, is there not an expectation that a ration card holder will get decent grain from the fair price shop, yet all too frequently grain is not available or is of poor quality. Information decentralization can help. Knowing how many medicines the local public dispensary received, or how much money the local school is getting for mid-day meals, can help the public monitor delivery and alert higher-ups when the benefits are not delivered. But the public delivery system is usually most apathetic where the public is poorly educated, of low social status, and disorganized, so monitoring by the poor is also unlikely to be effective.
Some argue that this is why the middle class should enjoy public benefits along with the poor, so that the former can protest against poor delivery, which will ensure high quality for all. But making benefits universal is costly, and may still lead to indifferent delivery for the poor. The middle class may live in different areas from the poor. Indeed, even when located in the same area, the poor may not even patronize facilities frequented by the middle class because they feel out of place. And even when all patronize the same facility, providers may be able to discriminate between the voluble middle class and the uncomplaining poor. So if more resources or better management are inadequate answers, what might work?
The answer may partly lie in reducing the public’s dependence on government-provided jobs or public services. A good private sector job, for example, may give a household the money to get private healthcare, education, and supplies, and reduce their need for public services. Income could increase an individual’s status and increase the respect they are accorded by the teacher, the policeman or the bureaucrat. But how does a poor man get a good job if he has not benefited from good healthcare and education in the first place? In this modern world where good skills are critical to a good job, the unskilled have little recourse but to take a poorly-paying job or to look for the patronage that will get them a good job. So do we not arrive at a contradiction: the good delivery of public services is essential to escape the dependence on bad public services?
Money liberates and Empowers…
We need to go back to the drawing board. There is a way out of this contradiction, developing the idea that money liberates. Could we not give poor households cash instead of promising them public services? A poor household with cash can patronize whomsoever it wants, and not just the monopolistic government provider. Because the poor can pay for their medicines or their food, they will command respect from the private provider. Not only will a corrupt fair price shop owner not be able to divert the grain he gets since he has to sell at market price, but because he has to compete with the shop across the street, he cannot afford to be surly or lazy.
The government can add to the effects of empowering the poor by instilling a genuine cost to being uncompetitive – by shutting down parts of the public delivery systems that do not generate enough custom. Much of what we need to do is already possible. The government intends to announce a scheme for full financial inclusion on Independence Day. It includes identifying the poor, creating unique biometric identifiers for them, opening linked bank accounts, and making government transfers into those accounts. When fully rolled out, I believe it will give the poor the choice and respect as well as the services they had to beg for in the past. It can break a link between poor public service, patronage, and corruption that is growing more worrisome over time.
Wednesday 16 March 2016
Tuesday 15 March 2016
How reforms killed Indian manufacturing
Ashok Parthasarathi in The Hindu
As the government pushes for ‘Make in India’, it could begin by unmaking the damage the post-1991 reforms inflicted on domestic industry.
This year marks 25 years since the so-called “economic reforms” were launched in July 1991. By now, broad contours of the policies and practices that characterised such reforms are well known, viz. radical deregulation, marketisation and privatisation of the industrial, technological and financial sectors, and an across-the-board induction of foreign direct investment and foreign institutional investment, and so on.
Basing himself on the erroneous views of India’s IT software and service sector behemoths, the “advice” of Western governments, large foreign companies and the trinity of the World Bank, the International Monetary Fund and the World Trade Organisation, Manmohan Singh, then Finance Minister, concluded around mid-1992 that we could be globally competitive only in IT software and services and not in hardware. Thus he reduced import duties on all IT hardware purportedly to “facilitate” software promotion and growth on a globally competitive basis using imported hardware. Result: by 1994 our fledgling civilian IT hardware industry folded up.
No one seems to have told Dr. Singh that IT hardware far more technologically sophisticated than the commercial hardware being imported by our software companies was being manufactured by Indian defence, atomic energy and space agencies and even exported to other developing countries such as Brazil, Malaysia, and Indonesia.
Death by policy
The “reforms” also dealt a body blow to the indigenous optic fibre telecommunication systems industry, a project begun by the Department of Electronics (DoE) in 1986 with the setting up of the public sector utility, Optel. Based on a global tender, technology-transfer agreements were concluded with two companies, Fujitsu and Furukawa, in 1987 and a blueprint for the Optel plant prepared. It indicated a project cost of Rs.45 crore and a construction period of 30 months; when completed, the actual numbers were Rs.46 crore and 32 months.
All this was possible because I got one of our top technocrat-managers, Bhagwan Khurana, to leave his job as CEO of Punjab Wireless Ltd. (Punwire) and become CEO of Optel. A top-class cluster of three plants was operational by end March 1989. In its very first year of commercial operations Optel’s turnover was Rs.64 crore with a profit of Rs.11 crore. In 1990-91 the turnover zoomed to Rs.298 crore with Rs.35 crore profit.
Around this time, Sterlite, a metallurgical company, and Finolex, a packaging material producer, entered the field. They would import fibres and merely sheath them into cables. Even the sheathing material was imported — the cables had merely 10-15 per cent domestic content. This, however, ran into a roadblock in the form of the graduated customs duties then applicable, which promoted local production. They started lobbying with the government to reduce the import duty on fibre — a manufactured component — from 40 per cent to 10 per cent, which was the duty on raw materials. I was then Secretary of the Electronic Commission and Additional Secretary in the DoE. Despite the DoE’s stout opposition to both the character of the companies’ “projects” and the drastic and irrational reduction of duties, they got their way. Within six months, large quantities of optic fibre began to be imported. Optel had to close down its optic fibre plant and import low-grade fibre from China to be able to compete in our own market with the likes of Sterlite and Finolex!
Deindustrialisation
In 1990-91, there were at least a dozen electronics corporations producing a range of high-tech radio communication equipment, industrial electronics and control and instrumentation equipment worth annually around Rs.6,000 crore. However, the reduction in customs duties from 60 per cent to 30 per cent overall, which led to a glut of imports, forced many of these corporations to halt production and become import agents, a phenomenon repeated in the key solar photovoltaic industry.
“Reforms” also led to large-scale import of cell-phone handsets that could have been easily produced here had a policy of phased manufacture been adopted. Result? The entire market for such handsets was met by unnecessary imports from Day One in 2005-06. In 2013-14 cell-phone imports totalled Rs.35,000 crore.
By 2000, foreign brands grabbed 80 per cent of the television sets market, from a situation where 10 local companies catered almost fully to the demand. Six of the 10 indigenous television makers have folded up, with a ripple effect on the electronic components sector.
My final example is our heavy electrical equipment industry led by Bharat Heavy Electricals Limited (BHEL). Up until 1998-1999 this industry was doing very well. However from the next year onwards, four Chinese power plant equipment manufacturers began to seriously erode BHEL’s market. This erosion was despite the quality and technical reliability of the Chinese equipment being considerably inferior to BHEL’s products. The United States, home to General Electric and Westinghouse, imposed penal anti-dumping duties on Chinese power plant equipment. Yet, the Indian government merely watched as BHEL lost 30 per cent market share by 2014.
These examples indicate that in sector after sector, the “reforms” have led to deindustrialisation. Products that we were manufacturing in the 1990s are being imported now. The negative impact this deindustrialisation has had on employment and on our economy is gigantic. The government must act immediately to halt the destruction of domestic industry on such a massive scale instead of merely tom-tomming its “Make in India” policy.
(Ashok Parthasarathi was the Science and Technology Adviser to the late Prime Minister Indira Gandhi.)
Monday 14 March 2016
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