Shruti Rajagopalan's Pollyanna Political Economy

The Business standard reproduced Shruti Rajagopal's Blomberg opinion piece on why reforms have stalled in India. Every line of it is false or foolish or both false and foolish. 

Exactly 30 years ago, a looming balance of payments crisis finally convinced India’s leaders to dismantle its socialist economy, ushering in private enterprise and years of higher growth. 

Nonsense! The IMF would have provided the same sort of generous terms they offered in 1981. The can could have been kicked down the road. India had no 'leaders' at that moment in time. Rajiv was dead and Sonia wasn't yet ready to take charge. Rao took a risk knowing that if his government was brought down, his successor too would be toppled. Meanwhile, being seen as 'business friendly' would refill the party coffers- not to mention further enrich his chum the bogus Godman Chandraswamy.

The 'structural' factor which made liberalization inevitable was 'Mandal'- i.e. affirmative action for backward castes. Clearly there could never be enough government jobs to go around and so there was no alternative but to grow the private sector, to absorb educated youth, or else risk 'caste war'. 

The Commies had previously pretended to believe there was some sort of agreement by which the 'Brezhnev doctrine' applied to India- i.e. the country was actually doing curry socialism, like 'goulash socialism' in Hungary. But, with the collapse of the Soviet Union, that pretense could not be maintained.

Those pundits and policy makers hoping that Prime Minister Narendra Modi might use the country’s Covid-induced slump to launch similarly dramatic reforms, however, are likely to be disappointed.

The Farm bill was touted as a dramatic reform. But look at the reaction it has provoked! Modi has an alibi for passing the buck to the only people able to do anything about reform- viz. the Chief Ministers.

That’s not because Modi is afraid of bold initiatives or lacks the political capital to see them through; his popularity remains unmatched, as does his flair for the dramatic gesture. The real issue is that his government and the Indian bureaucracy, unlike in 1991, aren’t set up to develop a consensus behind liberalizing reforms.

There was no such consensus. Certain politicians- V.P Singh, Ajith Singh etc- commissioned particular officials to prepare reports which were beneficial to themselves politically. V.P was seen as anti-Corporate and needed a way to appeal to the lower rung of businessmen. Ajith Singh was the son of a former P.M and had studied in America and had worked for IBM. He was presenting himself as a business-friendly version of his Dad, the farmer's leader. 


It’s important to remember that the 1991 reforms didn’t come out of the blue, purely in response to the crisis. They had been fermenting for more than a decade, prompted in part by the success of India’s more open Asian neighbors. 

Opposition to the license permit Raj began in the Fifties. It was thought that Shastri would do something in this connection after the War. Sanjay Gandhi might well have taken the country in a South Korean direction if his Mum hadn't called off the Emergency. 

Shruti is pretending that Indians respected the opinions of economists and bureaucrats. This was certainly not the case. Good economists emigrated. Better economists quit economics and started a restaurant or a dry cleaning business after emigrating. 

Growth miracles in countries such as South Korea and China defied the post-World War II consensus that poorer countries needed to shield their infant industries from outside competition.

There was no such consensus. It was obvious that such protected infants never grow up. Still, Development aid consisting of 'turn-key' projects were in vogue for various non-economic reasons.

 A program of fiscal discipline, deregulation, currency and trade liberalization, and privatization — familiarly known as the Washington Consensus — became the leading prescription for developing countries.

It was made by Latin Americans for Latin Americans. But, previously, it had been made by every single economically successful country for itself.

Key Indian technocrats grew to support such reforms during their time at international institutions such the World Bank, the International Monetary Fund and the United Nations, and began introducing them to India in the 1980s.

But Indians knew from the Fifties itself that the license-permit Raj was political, not economic. Anyway, by the late Sixties, you had Indian or Burmese (e.g. Myint) or other brown economists teaching Trade & Development in Western Universities who were energetically pushing this type of common sense. 

 While those initial efforts didn’t produce immediate change, the ideas percolated through the bureaucracy and found their way into parliamentary and expert committee reports.

Which nobody read. Nobody becomes a babu or a neta to read fucking reports. They do so to get rich or, if they are virtuous, to fuck over the country till it cries 'Ahimsa! Ahimsa!' and crawls into a corner to die of starvation.

 By 1991, after years of consultation and debate, they were ready to be implemented under pressure of the crisis.

This is foolish. You can scrap a whole bunch of regulations with a stroke of the pen. There is no need for any 'consultation or debate'. The only question is 'will this worsen or improve the balance of trade'? Obviously, it would worsen it initially. This pleased the politicians whose job it is to fuck over India coz that's what Gandhi and Nehru and Tagore had wanted. 

 They found the perfect shepherd in then-Finance Minister Manmohan Singh, an Oxford-trained economist with a doctoral dissertation in trade policy.

Manmohan, like Montek & Minhas was a Punjabi- that too a Sikh! Those stupid bastards don't understand that Economists must fuck over India till it cries 'Ahimsa! Ahimsa!' and crawls into a corner to starve to death. 

In 1939, Mahatma Gandhi wrote- 'Consider for one moment what can happen if the English were to withdraw all of a sudden and there was no foreign usurper to rule.

It may be said that the Punjabis, be they Muslims, Sikhs or others, will overrun India.'

Gandhi was referring to military domination. He firmly believed that the Hindus were worthless cowards. However, Punjabis aren't just brave, they are also hard working and want people to eat well and live nicely. Bastards! They are too stupid to understand that only a Gandhian hole in one's begging bowl can save the soul of Holy Mother India. 

Why did Hindus let ignorant Sikhs- like Manmohan and Montek- destroy India's starving soul? The answer is the Khalistan insurgency. Delhi had prevented industrial development in Punjab with the result that unemployed youth took up arms and started killing very soulful Hindu politicians. It seemed safer to let the Punjabis open the gates to prosperity (though the sly Southerners had already manipulated the system to get ahead) for the rest of the country. 

Two things have changed in recent years. First, among elite development economists,

there is not one single one who is not reviled. At best these guys can only measure poverty the way they, no doubt, keep measuring their micro-dicks in the hope it will get bigger. 

 the academic emphasis has shifted from chasing prosperity through free trade and economic growth to redesigning poverty alleviation and redistribution programs.

So there is no 'development econ' (which just amounts to 'do what smart countries are doing. If Bangladesh has overtaken you, do what they do') There are just a bunch of competing virtue signaling cretins who want to cream off a livelihood from the charitable dollar. 

 Much research focuses on what government interventions are most effective, using methods such as the randomized controlled trials that won Michael Kremer, Abhijit Banerjee and Esther Duflo a Nobel Prize in 2019. While few economists disagree about the need for India to liberalize its land and labor rules, implement tax reforms, and privatize banks and other state-owned enterprises, those ideas no longer have the same cachet.

Coz you will be fucking crucified on Twitter if you come out against the Farmer's agitation etc. 

Second, the bureaucratic system is no longer functioning as it once did, vetting proposals and building cross-party consensus.

and then tying up the country in red-tape till it went and sat in a corner to starve to death while muttering 'Ahimsa! Ahimsa!'. 

 In Modi’s first term, only a quarter of the bills introduced in Parliament were referred to expert committees — far below the 71% and 60% rates of the previous two governments.

So what? The bills were properly drafted- which is all that matters. 'Expert committees' just means 'bunch of senile shitheads'. 

 In his current term, that figure has declined to roughly 10%. 

I didn't know that. Good for Modi!

Nor has the process of pre-legislative consultation introduced by the Modi government worked as advertised: In his first term, only 44 out of 186 bills were treated to such back-and-forth.

I think PLCP was introduced by Manmohan not Modi. About 90 percent of bills since then have not followed the policy. So what? Policy paralysis has decreased.

In recent years, India has also taken to helicoptering in influential academics such as former central bank chief Raghuram Rajan rather than building a cadre of homegrown economists within the bureaucracy.

Manmohan did that. Modi saw it was silly.

 Their ideas have had limited buy-in from the permanent bureaucracy, always resistant to outside opinions. Modi’s government, too, is now seen as increasingly skeptical of foreign or elite influence, in part because of criticism from former advisers who have returned to the West.

Indians became skeptical of those shitheads once they started op-eding and we could discover that they had shit for brains.

What India had 30 years ago and lacks now is an infrastructure where good ideas can be refined and rise to the top levels of government.

No. What India has now is anti-corruption sentiment and Social Media. A policy change which let a lot of politicians get rich thirty years ago can't be implemented in the same way now. Why? Because Labor or Land or Farm reform affects a large class of indigenous intermediaries. Look at how successful the 'arthiyas' of Punjab have been in orchestrating the Farm protests. Now think about all the Trade Unionists and Labor lawyers and so forth who will supply a permanent 'rent a mob' for 'andolanjivis' to command.  

Still, at the State level, a Chief Minister can beat and jail and kill enough of the troublemakers to push needful reform through. Elite economists aren't going to suddenly appear waving lathis to beat back protestors. That is why they are useless. 

 In his July 1991 budget speech announcing liberalization, Singh paraphrased Victor Hugo: “No power on earth can stop an idea whose time has come.” 

But, as Prime Minister, he couldn't reform Labor and Land and so forth. Still, he was a good guy and will be remembered as such. Sonia's big mistake was to empower a bunch of Left-Liberal 'public intellectuals' who fucked over Manmohan in 2012 when he tried to turn a Moody credit downgrading into a 1991 type make-or-break moment. Maybe the Lefties thought they were providing an alibi for Rahul to push Manmohan aside and win the 2014 election on a 'Mr. Caring, son of Mr. Clean' platform. But Rahul was gun shy. Modi ran unopposed. 

But ideas can only come of age in an environment conducive to nurturing them.

Like where? South Korea in the late Fifties and early Sixties? Is this woman utterly mad?

 Until India regains that, the prospects for sensible economic reforms appear bleak.

So, first somebody must go shoot Rahul and Sonia and Priyanka. Then there will be sympathy vote for Congress. Then Robert Vadra will become PM the way Zardari became PM of Pakistan. Then some 'ideas' which have been 'incubating' will turn into reforms. Everything the garden will be lovely. This is the gist of Shruti's own patented brand of 'Political Economy'. Her parents must be so proud.