Thursday, March 3, 2011

Course of Democracy in the West

One of the most acclaimed revolutions in modern political history, the French Revolution in the period 1789–1799 was the first attempt at popular democracy. This began with a violent overthrow of the monarchy and establishment of an Assembly in 1789. A constitution was drafted proclaiming equality of all citizens, establishing basic human rights, and putting an end to feudalism and the hegemony of the Church and nobility.

However, what followed was no different from what has been happening in poor African or Asian nations upon introduction of popular democracy amidst poverty.As in many poor democracies today, and maybe even in the prosperous ones, rumor and ignorance played a significant part in popular politics. Even in the storming of the fortress of Bastille, popularly seen as a symbol of despotism, in reality only seven inmates were allegedly found. Likewise, in the rural areas, poor vagrants scouring for food and work were mistaken for armed agents of landlords hired to destroy crops and harass the common people. And thus the peasants, gripped by a panic, “the Great Fear,” attacked the residences of their landlords. Easily aroused, the crowds stormed Parisian jails, mutilating and murdering over a thousand prisoners who were no mutineers but were just serving time for petty crimes.

Such forms of mob fury based on rumors are common occurrences in poor democracies of our times, too.

The revolutionary government was also a machinery of war. While Austria and Prussia had shown little interest to intervene in France’s affairs, radical politicians like Brissot exaggerated the Austrian threat to the revolution and used this fear psychosis to generate support for declaring war on Austria. Many French-style revolutionary wars followed all over Europe.

Ultimately, democracy sabotaged itself and growing anarchy, violence and poverty led to a coup that brought Napoleon Bonaparte to power in 1799, leading to a military dictatorship with powers more absolute than even most kings had enjoyed before.

While much poetic significance has been attached to the Revolution, in effect it bred the same chaotic factionalism, violence, mob rule and loss of human rights that we see in the myriad poor nations that turn to popular democracy today. (Though it must be added here that France did lead the intellectual movement and development of the Western political philosophy and the French intellectuals continue doing so, often quite open to new ideas and encouraging of the unconventional).

Spain is another country that chose a direct shortcut to universal suffrage over slow and steady evolution This was tried with disastrous results in 1873 and then again in 1931, the second time leading to a civil war and the ascent of Francisco Franco.

A much more pragmatic and long lasting form to democracy was given shape by countries like the US and the UK, which gradually extended voting rights in line with economic development. Universal suffrage became a reality only when the middle class had already formed a majority.

For democracy to work and be progressive perhaps the presence of a middle class as the majority is a pre requisite - as was also theorized by Aristotle. While less critical of democracy than Plato, Aristotle too classified democracy as a bad form of government and polity a good one. He believed a democracy of the poor as the Greek society was also, back then, will tend to pull down everything. He believed in a middling factor between the insensitive upper class and the hopeless lower class for a government of many to function in a good manner.

As seen in our times too, democracy where the poor form the majority does not work and leads to subversive use of people power which is easily usurped by the wrong elements not unlike Robespierre and Danton.

The Days of the French Revolution, Christopher Hibbert

The Politics - Aristotle

Democracy on Trial, All Rise! Chapter 1 Democracy Amidst Poverty - the Forbidden Fruit

Wednesday, March 2, 2011

India’s Uneven Development – on demand and through “ Democracy”

42% of India’s population is estimated to be below poverty line and most of it lives in the villages. In the larger cities where employment opportunities abound, the population below poverty line is less than 10%. This urban – rural divide is the foremost reason behind India’s uneven development. Let us understand what the causal factors are – not on the basis of emotional arguments, as is the wont nowadays, but based on facts.

“In God we trust; everybody else, bring data to the table”
– Narayana Murthy

So, let us start by putting some data on the table.

India - Agriculture
1. With 72% population estimated to be rural, India continues to live in its villages.
2. Agriculture contributes only about 20% to the total GDP of the country yet 58% of the population supposedly derives its livelihood from it.
3. Dependent on the vagaries of nature, farming is a tough business and almost 40% of farmers have expressed an interest to be out of it.
4. It is also non remunerative and studies report that rural economic growth in India is largely on account of non agricultural activities.
5. In contrast, just the top ten cities in India comprising only about 5 – 7 % of the population, contribute about 25% to the national GDP.
6. India’s ground water table has been falling at an alarming rate and the World Bank predicts it would dry up in 13- 15 years. This is largely on account of wasteful agricultural practices in millions of rudimentary tiny farms spread across the country.

The key question remains - Can agriculture be turned around in terms of:
- greater food output (direly needed in the era of food shortages and associated inflation)
- efficient usage of water and other resources
- overall better remuneration for the huge population that is engaged in what can only be termed as subsistence farming

If so how?

To answer that, let us broaden our horizon, step back a little and take a look at experience of other nations.

Agriculture – World
1. At the aggregate level, agriculture contributes a mere 4% to the world GDP – the rest comes from value added goods and services.
2. The US and European Union together contribute about 22% to the world agricultural produce but only about 2% of the population is engaged in agriculture which relies on large farms that use machinery, modern farming methods and other scientific knowhow. This leads to efficient usage of water as well as the output is huge.
3. While its “factory of the world” story is well known, China’s lesser known story is its successful reform of the agriculture sector. In the last few years, China has emerged among the top food donors in the world. Yet, the sector contributes only 12% to its GDP. Further, in 1978, about 70% of its population was engaged in agriculture which has come down to just 23% in 2009. Like happened in the Western world in the 19th century, the agrarian population has moved on to industrial jobs. The farms have gotten bigger in size and use of scientific methods has improved efficiency in usage of water as well as increased the overall output.
4. In many of the African nations, about 80% of the population is, on the face of it, engaged in agriculture, but the output remains negligible.

The message here is for all developing nations with large bases of population engaged in agriculture where there are many misconceptions that maybe these governments have to focus on agriculture as the prime growth sector. That is a myth. The fate of agriculture is large farms that can use machines as well as technological and marketing know-how. That would vastly improve food availability and would go a long way in reducing the inflation.

In the West, industrialization precipitated a large scale migration to cities in search of jobs as the farms got bigger and more mechanized. They started using scientific methods in demand prediction, pest control etc. and also made more efficient use of water and soil. As a result food production soared, eliminating the large scale famine threats that had haunted mankind since time immemorial.

In the developing nations with largely poor and rural populations, the farms are small, farmers often debt ridden, relying on primitive wasteful methods and dependent on the vagaries of nature, making farming a risky but non remunerative business. If poverty has to be reduced, it means the agricultural community has to be moved to other avenues and that can be accelerated by the spread of industries as well as educational opportunities. Short term relief may be provided but the long term fate of the agricultural community is to move to other sectors.
What will be these sectors? And why aren’t the farmers in India moving on to better employment avenues and becoming a part of the economic growth story? Why are the economic opportunities in India limited to the few metros that are quite evidently bursting at seams? Is the government not doing enough to spread economic opportunities? Are the urban elites not allowing the spread of industries to the rural areas?

What or who stands in the way?

Surprisingly, the farmers themselves, goaded on to this path by opportunist opposition parties and misguided activists!
In order to alleviate poverty in rural India and lessen the population burden in the cities, the Indian government tried setting up industrial zones in remote parts of India, quite akin to the Chinese SEZ model. This would have provided employment opportunities to this poverty stricken population and allowed them to be part of the economic growth story. But it met with fierce opposition in rural India where people were rabble roused into frenzied fear that industries will take away farmers’ rights and agricultural land is being diverted to industries now (In reality all of the 540 odd proposed SEZs will take away only about 0.06% of arable land in India). Many such industries have been shut down by court orders and such decisions have been hailed as a victory for farmers and democracy.

Now the farmers have gone back to their meager destitute existence and the activists are back to decrying that India’s economic growth is not being shared with its rural majority, the farmers have no real jobs and the government is being blamed for doing nothing about it.

Sonia Gandhi once remarked, “Politics is the art of the impossible”. More to the point, perhaps “Democracy is the art of the impossible - It means opposing everything a government does and then claiming that the government does nothing". Is a democratic government reduced to the position of a mere straw-man?

Full essay in the book : “Democracy on Trial, All Rise!” – Democracy derails development – How and Why?

Tuesday, March 1, 2011

Democracy - Myopic Governance

The world has long been known to suffer from present biased thinking. Going back in time, it seems like a (pleasant) surprise that Democracy was generally a mistrusted word among the intelligentsia for most part of the history. Ancient Greek philosophers were ardent critics of democracy as also were several of the Enlightenment Age thinkers and the early American founders. Yet today all its faults are pushed under the carpet as it is glorified, eulogized and propagated or even imposed with a passion and frenzy akin to almost religious bigotry. Just not having a democracy by itself has become synonymous with lack of basic human rights, regardless of the fact that a premature turn to it often produces bigger civil catastrophes. Today's world view on democracy is dominated by the Western developed world's perspective – where the middle class has already formed a majority. That wasn’t so in the earlier times when these societies were also largely rural and poor and hence the harsher criticisms of democracy then. Besides, never before has mass media been such a force in shaping the world opinion. Media perhaps has a vested subliminal interest in not criticizing democracy as a system because it does share a symbiotic relationship with democracy. Anyhow, away from this present biased thinking, let us look at an aspect of democracy which could be considered as its near fatal flaw – myopic governance.

One of the criticisms leveled at democracy right in the Ancient Greek times was its tendency to be short term oriented. You can read an interesting post on Plato’s Criticism of democracy by Andy Hunter where he has tried to capture it in four key points:
“Criticism #1: Democratic leaders will seek popularity above statesmanship, public accord over balanced administration.
Criticism #2: These leaders have to pander to the people rather than do what they think is right.
Criticism #3: Leaders in a democracy will tend to focus on short-term goals, rather than the best course of action for the long term (think: the environment). After all, problems that are generations away will rarely figure with the masses in the upcoming election.
Criticism #4: Therefore, it is easier to give things to the people in democratic societies rather than ask them for sacrifice.”

The post captures the essence of Plato’s criticism rather well as relevant to the author’s present context – with the prevailing economic crisis in the Western developed world. While an economic crisis in an autocratic country proves that autocracy is bad, I wonder why an economic crisis (to the point of national bankruptcy) in a democratic country does not prove that democracy could also be bad.

Coming back to the developing world context and our usual basic bread and butter issues!
Poverty alleviation requires employment creation which in turn needs investment in infrastructure, education as well as stimulation of the economy. While a voter understands when a dignitary comes and hands him a free color TV set (India) or a bowl of soup (Venezuela), he is unable to appreciate the “invisible hand” of the government in a vibrant economy. If employment opportunities are created, he feels he worked hard to earn the salary; what did the government do? But if he gets something free he feels ingratiated to the party or the leader. Further benefits accruing from investment in infrastructure and education are rationalized over a long period of time. Their impact is not felt as sharply as receiving something free, instantly. The opposition parties are also lurking in this background, propelling him to believe that he would benefit nothing from these long term programs which are just anti poor and pro rich strategies. He is prone to believe it as he really does not see any immediate improvement in his wretched existence.

And just who are we talking about here? These are not the middle class professionals – teachers, doctors, nurses, traders etc. who try to plan their lives and make provisions for future. We are talking about a majority who is living on a meal to meal, day by day basis. Always in paltry debts, not having any money “whatsoever” in their pocket, having no access to any basic amenities – like clothes, water, sanitation etc., often subject to harassment and also living amidst a lot of violence and crime, they are truly living for the moment. Wondering where the next meal will come from, how many members will make it to the next day, how they will make it through the winter and such basic worries, does anyone expect them to ponder over long term investments and implications of alternate programs? But we do know that short term relief measures (whatsoever trickles down to them in reality) will not pull them out of destitution. Long term investments in infrastructure and education apart from other measures are crucial to alleviating poverty and misery. The governments understand this but find it very hard to communicate to this kind of a destitute and hopeless electorate, that too amidst suspicious political environment so typical of multi party democracies.

Even in China, which has now managed to eradicate poverty on a large scale, when the investment phase of development started about 2 – 3 decades back, people did not support those measures. They did not believe any benefits would accrue to them and there were large scale protests. But the Chinese government did not have to face the #2 problem listed above for democratic governments - These leaders have to pander to the people rather than do what they think is right. The Chinese government could do the right things despite "people's opposition" as well as (then)international criticism of its policies. A democratic nation can not do the former at least.

The issue here is not morality of politicians but voters’ inability to discriminate between a bribe and development. This does lead to short term oriented governance where investment needs of a nation are forsaken in favor of short term relief measures. Ideally there should be a balance between short and long term programs but voters’ perceptions of “what is good for them” drive it largely in favor of the former. Valuable resources are diverted from essential development projects to gratifying or bribing the voters instantly. Investment in education and infrastructure is dwindling as it is resource consuming yet not trusted by voters who dismiss it as empty promises or even pro rich strategies.

At this rate, Democracy will keep the developing nations underdeveloped, in all likelihood.

Plato, The Republic, Book VIII

Democracy on Trial, All Rise! Chapter 4 Wooing the Voters, Rules of the Game

Democracy's Myths

We may discuss the fate of democracy in Africa or the Middle East but somehwhere those failures have been explained through cultural underpinnings. Because democracy, afterall, has worked elsewhere. So, at the heart of it, the discussion on democracy in the developing world boils down to two prime questions:

1 Why does it work in India?
2. Why did it work in the developed world?

The 2nd question is answered more easily. In layman world history, which we all studied in school, there is a myth that the Western nations have been democracies for a very long time. They have not! In the 18th century or about, these societies were also predominated by poor rural classes and democracy was a mistrusted word. While constitutional republics were established, the voting rights remained limited to a small minority of propertied, white males. Only in the 20th century did these societies transform into developed nations - with "middle class as the majority". Democracy with equal voting rights was ushered in only then. Everyone has an equal right to vote in a democracy but the outcome of the process depends upon the will of the majority - so who forms a majority in a country is a critical success factor for democracy to work. With all its limitations, Democracy has still worked in the Western world. There is good reason to believe that it worked because it was ushered in at the right moment - when the progressive, educated middle class had already formed a majority. This kind of a class exists in the developing world too, but it remains in a minority. That may be core to the reason why democracy works differently in the developing world. There might still be cultural factors at play, why democracy works slightly better in one nation versus another but "who forms a majority" in a country when democracy is ushered in, is likely to affect its outcome the most.

Answering the first question is more complex but exploring or exploding many myths around it is key to the discusssion on democracy's suitability as a model to the developing world with largely poor, rural and uneducated majorities.

India - Part I - Despite the economic boom story and presence of a "democracy", why does abject poverty remain so high in India? As you can see in one of the previous posts, inflation is high in India too and does form the news headlines everyday. What are the causes of this uneven development? Are the "rich exploiting the poor" still? ... an attempt at answering these questions - in the Next few Blogposts.

Infamous Quotes

Democracy nowadays is portrayed as the supreme unquestionable system and its faults rationalized by claiming all other systems are worse (any proof to that sweeping claim?). When it delivers poor governance in nations, the blame is passed on to the politicians – if only they could be different, democracy would work. But, wasn’t it we who elected them and does not democracy empower all or any of us to join politics and show better results than these politicians? “By the people and of the people” – that is the system. If it does not produce good results, we may need to question the system.

Let us look at who in the past has criticized democracy - were they fanatics, freaks or some great leaders and philosophers?

Mankind will in time discover that unbridled majorities are as tyrannical and cruel as unlimited despots.
John Adams 1793 (1735-1826, 2nd President of the United States, 1797-1801)

Remember, democracy never lasts long. It soon wastes, exhausts, and murders itself. There never was a democracy yet that did not commit suicide.
John Adams

A democracy is nothing more than mob rule, where fifty-one percent of the people may take away the rights of the other forty-nine.
Thomas Jefferson: (1743-1826, 3rd President of the United States, 1801-09, Principal Author of the Declaration of Independence. 1762-1826)

A free government is a complicated piece of machinery, the nice and exact adjustment of whose springs, wheels, and weights, is not yet well comprehended by the artists of the age, and still less by the people.
John Adams to Thomas Jefferson

Democracies have been found incompatible with personal security or the rights of property; and in general been as short in their lives as they have been violent in their death.
James Madison (1751-1836, 4th President of the United States 1809-1817)

Remember, democracy never lasts long. It soon wastes, exhausts, and murders itself. There never was a democracy yet that did not commit suicide.
John Quincy Adams (1767 – 1848, 6th President of the United States 1825-1829)

I have long been convinced that institutions purely democratic must, sooner or later, destroy liberty or civilization, or both.
Thomas Babington Macaulay (1800 – 1859, British Historian and Politician)

The best argument against democracy is a five minute conversation with the average voter.
Winston Churchill (1874-1965, British Prime Minister during World War II)

Indeed, it has been said that democracy is the worst form of Government except all those others that have been.
Winston Churchill
(This is the only quote that is thrown about these days almost as the gospel truth about democracy. Maybe it was true of just UK in the mid 20th century – may not have been true in the century prior or even after. Winston's first quote criticising the very essence of democracy is not heard anymore.)

Democracy encourages the majority to decide things about which the majority is blissfully ignorant.
John Simon (1925- American critic)

Despots and democratic majorities are drunk with power.
Ludwig von Mises (1881-1973, Austrian Economist)

Democracy is a pathetic belief in the collective wisdom of individual ignorance.
H.L. Mencken (1880-1956, American Essayist)

A democracy cannot exist as a permanent form of government. It can only exist until a majority of voters discover that they can vote themselves largess out of the public treasury.
Alexander Tytler (1747-1813, Scott British Writer)

(Egalitarian models are different from democratic majorities cornering resources of a nation in instant benefits)

Democracy is a process by which the people are free to choose the man who will get the blame.
Laurence J. Peter (1919-1990, American Educator, formulated The Peter Principle)

Democracy means simply the bludgeoning of the people by the people for the people.
Oscar Wilde (1854-1900, Irish Writer)

Liberty doesn't work as well in practice as it does in speeches.
Will Rogers (1879-1935, American Commentator)

Democracy forever teases us with the contrast between its ideals and its realities, between its heroic possibilities and its sorry achievements.
Agnes Repplier (1855 – 1950, American Essayist)

Friday, February 25, 2011

India's Uneven Development Woes - Part II

In a few states like Gujarat, the government was able to push through its urbanization and industrialization agenda. In in less than 2 years of SEZ policy implementation, the state saw creation of about 2 million jobs. The state has also seen sharp fall in its poverty rates. In contrast, in West Bengal, one of the poorest states in India, where the first such SEZ was tried in Singur, it led to violent protests and clashes. Tata Motors plant was shut down and this stalling helped the opposition party make huge electoral gains. The poverty and unemployment remains as high as before in the state.

Due to such opposition to spread of industries to the rural areas and under pressure from activists, the Indian government then tried to implement National Rural Employment Scheme (NREGA). This meant paying minimum rate wages to all rural households for a minimum of 100 days under the guise of employment. The central government outlay for the scheme is estimated to be a whopping 5% of the GDP. Now coming to the implementation, which is the main problem in all such schemes. Corruption and discrimination has already seeped into the project. Making a job card requires bribes ranging from Rs5–50 and caste, gender and religion based discrimination has been noticed. The benefits have been cornered by local powerful elements and better off sections in the villages leaving the lowest castes, women (particularly widows) as well as the below poverty line populace relatively untouched. Social audits reveal that the number of job cards issued have been in excess of numbers employed, indicating that the funds have been embezzled by local officials. Studies show that there is little evidence that NREGA is being implemented any better than the panoply of poverty-focused schemes introduced by the government of India over the past 20 years, where a large share of intended benefits have been captured by the elite classes, including petty functionaries. "Jawahar Rozgar Yojna" was a similar scheme tried in the 1990s. This costly initiative is also at a time when India is facing large budget deficits as well as a ballooning debt problem. Ultimately, this kind of reckless spending without any long term payoffs leads to an inflationary economy as has already happened.

Let us examine in simple plain terms how a decentralized economy alleviates poverty. Let us say a few factories are opened in a rural area. Apart from direct employment as industrial labor, a lot of secondary and tertiary employment is generated. People come to live there and houses etc. have to be built, someone opens tea stalls, small eateries, someone caters to the factory canteens, housekeeping jobs are created, and small shops will open. Employment is created, in a sustainable manner; no supervision is required, people get paid for the work and initiative and it remains largely corruption free. Further, it would not put a burden on the already stretched exchequer; instead the government earns taxes from these business operations. Employment generation thus becomes the prime means of alleviating poverty.

Unlike in nations like Venezuela, the Indian government understands that development needs require spread of industries and urbanization, but it is the populace and their opinion leaders who stand opposed to it. As Narayan Murthy also notes in his book on India, all pro development and pro urban politicians lost elections in 2004. Looking at it from people's point of view, living amidst hopelessness and destitution, the poor populace relates to a leader who comes and distributes something free. He sees that as pro-poor and thinks this is the party that cares for him and must be voted for. It is hard, if not impossible, for him to fathom the intricacies of a market economy and how its "invisible hand" is going to benefit him. The model is rejected before even trying it.

This kind of a societal conflict over industrialization happened in the Western nations too, in the early part of the 19th century, but as they did not have democracy right through their development process, they did not have to convince the entire rural poor populace of the long term benefits of it. The poor, now as then, view development with suspicion, believing it will never benefit them. This insecurity is further fuelled by opposition parties, activists and even portions of media. Even in China the development and the resultant poverty alleviation program met with tremendous resistance and people did not support it initially, but the program was not derailed as Chinese leaders do not have to campaign for votes.

In an underdeveloped democratic nation, however, development is actively opposed but the need for instant gratification dominates the voters demands. There is a tendency to demand everything “free” from the government. And increasingly the governments that oblige with freebies like bags of rice, saris, cash, loan waivers, etc., are termed “pro- people”. In reality these are just short term programs that instill scope for corruption as political middle men hack away at the sums being doled out. Further to fund such pro poor programs, the governments start printing money which leads to inflation as has already been seen in India and far worse in a nation like Venezuela which has also tried some very ambitious "distribute something free to the poor" programs. Alternately, in a democracy, if a government follows a more long term and prudent approach of working through the economy or investing in infrastructure, it gets labeled as “pro-rich”. Such parties and leaders lose elections to make way for "pro poor messiahs" who distribute cash, TVs etc. free to the people but ultimately, it is unproductive use of already stretched and meagre resources. Further, benefits from such pseudo pro poor programs are cornered by the corrupt middle men but the inflation that results from such reckless spending hits everybody, whether or not they received any benefits.

Industrialization does pose challenges that ought to be addressed but the solution is not to avoid development altogether, leaving people destitute and agrarian. All the developed nations have followed a decentralized market economy as their basic poverty alleviation model and overall that is what has been the defining point between developed and under developed countries, not democracy. However in nations like India, a turn to democracy without developing first, has led to a stalling of the process itself. That is why poverty remains high and development uneven

What about education - why does such a large proportion of population remain illiterate? - Let us examine next..

Complete Essay in the Book Democracy on Trial, All Rise! - "Democracy Derails Development - How and Why"

Saturday, February 19, 2011

Democracy's Myth - India - Part I

Coming to the core of the argument on democracy in the developing world – let us unravel the successes and failures of the Indian democracy.

In most of the developing world, democracy’s failures have been blamed on improper implementation – military intervention, international intervention, ineptitude of local leadership, cultural factors etc. etc.

The one example that stands apart is that of India. India has a fully functional democracy with regular elections, freedom of speech, thought and assembly, citizens led initiatives, independent media, independent judiciary and separation of powers. The Indian government respects rule of law and the central government is transparent, open and tolerates criticism and dissent, at times much more than even some of the developed nations.

All in all, democracy is alive and kicking. But, after 60 years of its earnest implementation, where has it taken India?

42% of the population lives below the poverty line of $1.25 a day and about 34 % remains illiterate when the world averages today are about 26% and 16% respectively. There is substantial criminal infusion in politics at the grassroots, law and order has been on a decline, infrastructure is crumbling and the agricultural sector is ailing and sick. Yet through market oriented reforms that began in 1991, India’s GDP has grown but the development remains uneven and has failed to benefit a vast majority of people.


A truthful answer will help the entire developing world face up to the propagation of a system that is ill suited to their socio-economic context and one that is inherently crippling when the majority in a nation is – poor, rural and uneducated. The answers are complex and require an in-depth analysis of the problems. Bumper sticker slogans like “solution to bad democracy is more democracy” will simply not do anymore.

Let us analyze India’s crippling problems one by one and see why democracy is not helping and is indeed standing in the way of development.

“Satyameva Jayate”

– hopefully!