Thursday, September 29, 2011

The politics-policy disconnect

Just couldn't resist cut and paste this. It aptly sums up the state of affairs on both sides of the Atlantic and elsewhere.

In both Europe and the US, the need of the hour is much more aggressive monetary accommodation and fiscal stimulus. In Europe, national politics, especially in Germany, will not countenance such expansionary policies. Similarly, in the US, Republicans see debt and inflation as greater threats and oppose any further expansion.

In fact, it appears to be equally valid for India too. In the prevailing environment, there appears to be space only for "rights-based" policies - right to employment, education, food, and so on. The most important requirement, critical to sustaining the ambitious growth rates, is to ease supply-side bottlenecks - expediting investments in infrastructure, increasing the supply of quality manpower, labour market reforms etc. Unfortunately, none of this appears forthcoming in these times of policy paralysis.


KP said...

Dear Gulzar,

I find it amusing that after all these years our politicians have woken up to the need to educate , feed and employ its populace as a fundamental responsibility.

This situation is purely an outcome of having insufficiently provided attention to this area (or using it to fill their pockets) / and frittering away resources through corruption / in the past.

Voters from the marginalized sections have begun to see polling as more than being swayed by rhetoric and actually trying to squeeze something out of a wholly corrupt system - and that can result in reasonable and perverse forms of manipulative electoral politics.

However, the one good result of this cynicism - our politicians have lost the aura of being anything more than self-interested businessmen - the flipside of this is their complete lack of credibility. So motherhoods about nation building and culture - which served to deflect from their cynical manipulation - is now met with equal cynicism.

What should have been a right all along, now pases off euphemistically as "rights based" policies - it is a disgrace to have to address minimal public good in this fashion.

While we have good reason to be cynical of how the government deploys resources to meet these rights based policies - I think it is a key area that the government is expected to deliver on and should be accountable to - which had almost lost its primacy to government as being primarily in the business of "smoothing market creation" alone, in a vastly unequal country like ours.

Indeed the establishment preferred to focus its "energies" almost entirely on private sector entry into nearly all areas of economy - for a good reason that it was inevitable - and for the other reason that it was "lucrative" - as subsequent events prove.

I think delivery of rights based policies is essential - but why does that conflict with the focus on also improving supply side policies - all of a sudden???

The reason is the oblique reference being made in all our leading papers ?.. from experts?, business leaders ?? ...people like even Deepak Parekh, have been voicing this in the most disturbing fashion.

One of the ideas that is being bandied around - with a kind of seriousness that is almost perverse - is that the focus on corruption is slowing us down. Things are becoming slower because bureaucrats are being careful ... their "discretion" is being stymied so they are not in a position to take decisions effectively.

Some paper even comes up with the absurd example of buying pencils - a real reductio ad absurdum style of deflecting from the core issue - of using discretion as the fundamental rent seeking mechanism.

Indians have the maturity to understand when "discretionary" powers are employed to genuinely address the need for effective delivery - vis-a-vis where it is employed to fatten personal bottomlines - and the disingenuous argument is a pathetic excuse to explain the slowing down of decision making in government.

While large swathes of the street level bureaucracy have only become slightly more careful in their rent seeking behaviour - largely nothing has changed in practices except a sense of slightly higher caution.

But, the impact is most likely felt in the higher echelons of power - both bureaucratic and political - because that is where most of the focus is directed.

The slowing down is simply the effect of a lack of "incentive" in the larger decisions that are coming in for higher scrutiny. It is absurd to complain if discretion is being closely monitored to observe how it is being used - to say that this is forcing a slowdown only implies an obvious conclusion.

There is space for both types of policies - rights based and market based policies - but the policy paralysis has little to do with a lack of space but more dangerously for a system used to indiscriminate abuse of the nations resources - I believe, there is no "incentive" to decide.


KP said...

Dear Gulzar,

An addition to my note , my belief is that the problem is not between what is politically feasible and what will work.

Then we are making the case that -pragmatic policy making is unfeasible in India because the mandate is for a continuance of status quo - that is the continuance of status quo of a completely disengaged elite, who are more interested in policies that suit their private interests.

The gap is between what is electorally feasible ( or rather what the establishment can get away with - lie/ obfuscate/inveigle etc.,) - vis-a-vis - what is expected by the voting populace.

For example,the recent agitation and the elite push back to maintain status quo ( by elite I mean the political-bureaucratic-business cabal that extends right to the street level bureaucrat) is a case in point.

The push back was couched in a lot of nuanced argument, but effectively was indicative of a preference for status quo and tokenism as a response.

The argument that the agitation was not entirely representative - almost implied that there was a preference for the status quo from those who stayed out for whatever their reasons.

This is not about political feasibility, it is more about a system rotting at its core - of a political elite lacking sufficient incentive to acquiesce to make changes that can radically improve the system, in the absence of dangerous levels of pressure that spills to the street.

The danger is not that the elite is hemmed in by political feasibility or its mandate - rather it is the self-serving behaviour of the establishment, that when in power, has personal preferences, that is completely divorced from the mandate.

In this way the diagram may not be so apt in the Indian context.