“Why account of @ashokepandit is suspended right before the release of his movie #72Hoorain ?

@Twitter Pls restore the handle immediately (sic)”, Mishra said,

Why account of @ashokepandit is suspended right before the release of his movie #72Hoorain ? @Twitter

Pls restore the handle immediately pic.twitter.com/OFfvlV5kNt

— Kapil Mishra (@KapilMishra_IND) June 14, 2023

Even TV reporter Amish Devgan tweeted, “Unfortunate right to freedom curbed  @Twitter suspended account filmmaker  @ashokepandit”

Unfortunate right to freedom curbed @Twitter suspended account film maker @ashokepandit . pic.twitter.com/JfxHeblZ1m

— Amish Devgan (@AMISHDEVGAN) June 14, 2023

The tweet that landed Ashoke Pandit in trouble was him issuing a death threat to former RBI Governor Raghuram Rajan. Although the threat was aimed at Rajan, the twitter account does not belong to Rajan, but is a parody account.

Here’s a screenshot of the tweet that led to his account suspension:

The said tweet was reported by Team Saath (Stand Against Abuse Troll Harassment) on Twitter and brought it to the notice of Twitter.

Dear @Twitter,@Ashokepandit is issuing a de*th threat to @ArunSFan in full public view. This calls for an immediate suspension of his account as per your rules.

cc: @elonmusk @TwitterSafety https://t.co/kVWKd3KF8c

— Team Saath Official (@TeamSaath) June 13, 2023

Soon after, Pandit’s  Twitter account was suspended.

Thank you @Twitter for suspending the account of @ashokepandit . It was long overdue.#TeamSAATH https://t.co/iq6lhZVqlY pic.twitter.com/7F9sCM22cE

— Team Saath Official (@TeamSaath) June 14, 2023

About his new film

The teaser of ’72 Hoorain’ was released on June 4, 2023. The first clip of the teaser begins with the voiceover which says, “Tumne jo Jihaad ka raasta chuna hai, wo tumko seedha Jannat me leke jayega, kunwari, anchhui hui, tumhari hongi humesha k liye. (The path of Jihaad that you have chosen, will lead you to heaven, where 72 virgin girls will be yours forever.)”

Visuals of Osama Bin Laden, Ajmal Kasab, Yakub Memon, Hafiz Saeed and Masood Azhar are also showcased in the teaser video. The director has said in one of his statements that, “The slow poisoning of the mind by perpetrators turns ordinary individuals into suicide bombers. Let us remember that even the bombers themselves, with families like ours, have fallen victim to the twisted beliefs and brainwashing of terrorist leaders. Trapped within the deadly illusion (and lure) of 72 virgins awaiting them in heaven, they embark on a path of wilful destruction, ultimately meeting a gruesome fate,” reports Zee News. Co-producer Ashoke Pandit opined, “The movie will definitely make you ponder certain beliefs prevailing in the society and how they are a mere figment of imagination. It will make you think about the concepts and ideologies that are not even close to reality in any way, and how they are merely used to brainwash people to mould them into terrorists in the name of jihad.”

Related:

Modi Govt said we will shut Twitter down, raid employee houses if orders are not followed: Jack Dorsey

Twitter acts against hate speech, locks hate monger’s account

In his Twitter exchange with a journalist, Vivek Agnihotri makes Islamophobic remarks about Muslims

The post Twitter suspends filmmaker Ashoke Pandits account for issuing threats to Raghuram Rajan appeared first on SabrangIndia.

Read the entire post here. 

The post Raghuram Rajan condemns JNU violence, praises student protests appeared first on SabrangIndia.

 
Former Reserve Bank of India governor Raghuram Rajan has said that people in authority have to tolerate criticism and that any move to suppress it “is a sure fire recipe for policy mistakes”.“What makes India strong is its diversity, debate and tolerance. What makes it weak is narrow-mindedness, obscurantism and divisiveness,” Rajan said in a long LinkedIn post on Monday, two days ahead of the 150th birth anniversary of the Father of the Nation. Rajan has been known to publicly make comments on the state of India’s economy and polity ever since he quit his post.

He also said that governments that suppress public criticism do themselves a gross disservice.

 “If every critic gets a phone call from a government functionary asking them to back off, or gets targeted by the ruling party’s troll army, many will tone down their criticism. The government will then live in a pleasant make-believe environment, until the harsh truth can no longer be denied,” he said.

“Undoubtedly, some of the criticism, including in the press, is ill-informed, motivated, and descends into ad-hominem personal attacks. I have certainly had my share of those in past jobs. However, suppressing criticism is a sure fire recipe for policy mistakes,” he added.

Last week, the Narendra Modi government had removed Rathin Roy and Shamika Ravi from the economic advisory council to the Prime Minister. Both had criticised some of the government’s policies. Roy had questioned the government’s decision to borrow funds from overseas markets through the sale of sovereign bonds. Rajan, too, had earlier cautioned the government about the consequences of raising funds through overseas sovereign bonds.

In his latest post, Rajan reposes great faith in the ability of India’s vibrant democracy to foster debate and make mid-course corrections.

“We have our weaknesses and our excesses, but our democracy is self-correcting, and even while some institutions weaken, others come to the fore,” Rajan wrote.

At one point, Rajan said: “…an attempt to impose a uniform majoritarian culture on everyone can kill minority community characteristics that can be very advantageous to growth and development. Cultural diversity can promote intellectual diversity and intellectual ferment, something every economy at the frontier needs.”

Rajan’s remarks have come at a time the government, which has seen economic growth tumble to a six-year low of 5 per cent in the first quarter ended June 30, has been hashing out a number of measures to kick-start the engines of growth.

But while putting into place a slew of post-budget measures, the government has not tried to foster a wider debate on some of its questionable policy prescriptions like the recent move to force banks to start a credit carnival to boost consumption, raising another spectre of bad loans just when financial service entities had started to clean up their books.

Rajan, who had significantly been a vocal critic of the idea of demonetisation when it was sprung on the country, had also recently argued that the Modi government’s move to consider the flotation of sovereign debt on overseas markets could prove to be disastrous, condemning India to the prospect of a perpetual cycle of debt. He had said the idea needed to be debated vigorously before any decision was taken.

“Constant criticism allows periodic course corrections to policy — indeed public criticism gives government bureaucrats the room to speak truth to their political masters. After all, they are not screaming the loudest in the room,” Rajan said in his latest post.

He said he was worried about three emerging developments in India. The first was a “tendency to look back into our past to find evidence of our greatness”.

“Using history to thump our own chest reflects great insecurity and can even be counterproductive,” he added.

His second concern was a tendency to regard foreign ideas and foreigners with suspicion.

“It seems a number of cultural and political organisations are trying to oppose anything foreign, not because they have examined it carefully and found it to be bad, but because of its origin,” he added.

“We cannot be so insecure that we believe allowing foreign competition will demolish our culture, our ideas, and our firms. Indeed, it is by erecting protective walls that we have always fallen behind, making us susceptible to total colonisation,” said Rajan, currently a professor of economics at the University of Chicago.

His third concern was the disquieting tendency to muzzle all debate. “A quick resort to bans will chill all debate as everyone will be anguished by ideas they dislike. It is far better to improve the environment for ideas through tolerance and mutual respect,” he said.

If India wanted to compete at the frontiers of production, he said it would have to stimulate debate rather than choke it off completely.

“It would be retrograde, indeed against our national interest, to give up this vibrant democratic society that tolerates and respects its diverse people and viewpoints for a more authoritarian, monocultural, majoritarian imposition,” he said.

Listing what one needs to do to keep the “idea factory” open, Rajan wrote: “The first essential is to foster competition (emphasis added by Rajan) in the marketplace for ideas. This means encouraging challenge to all authority and tradition, even while acknowledging that the only way of dismissing any view is through empirical tests.

“What this rules out is anyone imposing a particular view or ideology because of their power. Instead, all ideas should be scrutinised critically, no matter whether they originate domestically or abroad, whether they have matured over thousands of years or a few minutes, whether they come from an untutored student or a world-famous professor.”
 
Related Articles:

1. Professor Raghuram Rajan says ‘great to be back’ even as India miss him as RBI chief
2. Hitler, the Indian Emergency, A Strong Government must respect Rule of Law: Raghuram Rajan

The post Diversity & Tolerance make India Strong, Divisiveness makes us Weak: Raghuraman Rajan appeared first on SabrangIndia.

What is a  Bad Bank?

A bad bank is basically a bank which will buy the bad loans from different banks and try to “reconstruct” the assets to get back the money that was due.

With the main opponent to this plan- Raghuram Rajan out of office- the finance minister of India, the chief economic advisor to the Indian government  and a deputy governor of the Reserve Bank of India have recently opined that a bad bank should be established as soon as possible.
 

1. Why did Raghuram Rajan oppose it?

He opposed it because of the Indian banks’ debt profile. Almost all the bad loans or NPAs are in government owned public sector banks and almost all of these are a result of loans being given to privately owned corporation and business houses. The private sector will not invest in a bad bank because it is a venture which guarantees loss. So, Raghuram Rajan was worried about the government using public money in order to settle private debts which might have serious consequences for India’s debt to GDP ratio.

In other words, Raghuram Rajan implied that if most of the loans were in the private sector banks then the banks would/could have been forced to raise money from the public through securities to solve that problem. But now the government will be forced to do that if it decides to set up a bad bank which will increase government debt and force them to limit expenditure.
 

2. What does it mean in simple words?

Well, we as a nation have watched in slow-motion all the bad business decisions of liquor baron Vijay Mallya, such as, buying an IPL team, buying a Formula 1 racing team, private jets, expensive cars and last but not least swimsuit calendars. If a “bad bank” is formed all of Vijay Mallya’s bad loans could be transferred to it and the government will have to use our money to right Vijay Mallya’s mistakes. I don’t know about you but I find this completely unacceptable. But, Vijay Mallya is just one example- there are hundreds of people like him, many of whom are even bigger spenders than Mallya.
 

3. If this plan is so bad then who is supporting it?

Last year the former RBI governor Rajan forced all banks to disclose their Non-performing assets. This led to a lot of embarrassment for many bank officials when it emerged that they gave loans to private business concerns which should not have got any if normal banking procedures were followed. Investigative journalists also soon found out that many of these loans were given out due to pressure being exerted by government bureaucrats on the banks.

But now with a bad bank buying up all the banks’ bad loans and NPAs- the bank officials and bureaucrats can wash their hands off of their misdemeanours and pass the responsibility for an asset’s “non-performance” onto this newly founded institution.
Bankers have a second reason to support this plan. If a bad bank is set up then the responsibility of banks to lend money responsibly considerably decreases because after all if the loan becomes a Non-Performing Asset then they can simply sell it to the Bad Bank and wash their hands off from any fallout.
 

4. Is there any alternative to deal with NPAs other than opening a Bad Bank?

In order to deal with bad loans the government owned banks have been engaging in “assets reconstruction” either by themselves or by employing privately owned Assets Reconstruction Companies, but this initiative has been a failure. Now with a bad bank the government is hoping to succeed by setting up a big government owned Assets Reconstruction Company to deal with NPAs. I have only one thing to say here, that is to quote Albert Einstein- Insanity is doing the same thing again and again and expecting different outcomes.

Indian government should seriously and sincerely think of a different way to deal with these Non-performing assets. Below I have mentioned a suggestion- please have a look at it.

Possible Solution

One of the meanings of the word “democratise” is to make something available to all. Why don’t we democratise the NPAs?

Keep the NPAs with the respective banks. The banks know who their high value customers are. Banks can contact the assets reconstruction companies and not ask them to reconstruct the non-performing assets which take a lot of time without any guarantee of success but asks them which failed assets can most easily be reconstructed or re-converted into a profitable asset. This is not a difficult job to do and frankly there are many private consultancy firms in India which can do this job. The banks then should offer to sell these NPAs which have high probability of success to their high value customers. Only those customers who have impeccable credit record which can be easily determined with the help of CIBIL or Credit Information Bureau of India Limited should be made eligible to buy such an asset.

Any asset thusly sold to a private party should for a particular time period be made eligible for loans based only on the immovable assets of the business or the high value customer to whom this NPA had been solved. Moreover, loans should only be approved if the buyer of these assets agrees to implement the changes which have been proposed in a plan drawn up by the bank and the firm which assessed the non-performing asset before it is sold to the high value customer.

There are many high value individuals banking with Indian banks but most do not have any business background or entrepreneurial acumen. The pre-conditions to sell NPAs to such individuals should also be that they agree to set up an independent board of directors who can run the everyday operations of the newly acquired asset. The size of this board must vary according to the size of the asset and always be an odd number to avoid indecision.

I think this plan will work because there are many NPAs which have a lot of potential but have been run down by bad business decisions. I also think that there are sufficient number of high value individuals using the Indian banking system who would love to own a business but are hesitant to do it because they do not want to start from scratch and because they are ill-equipped to run the day to day operations of such a business. Moreover, a high value individual will most likely “adopt” a business close to where he/she resides, this will help in the welfare of local communities since NPAs and high value bank customers can be found everywhere in India.

If you like this suggestion on an alternate method to deal with NPAs, please share it online and on government portals.

(Full disclosure– There was recently a similar move to create a bad bank for Europe, but it has been shot down by EU’s biggest economy- Germany. I have been trained by and worked closely with at least 3 leading German economists and economic historians so the above article might be a result of my pre-conceived ideas.)
 

The post Why setting up a Bad Bank is a really Bad Idea and what can be its Alternative? appeared first on SabrangIndia.

“Taking my bike out and riding the bike path along Lake Shore Drive, that’s one of the great experiences in my life. And I hope to do it as long as I can. It’s great to be back,” Mr Rajan said in an interview with the media team of the University of Chicago Booth School of Business.

Lake Shore Drive is an expressway running along the shoreline of Lake Michigan through Chicago, Illinois.

“This (Booth School of Business) has been my home for 25 years. It’s a great city. I have great colleagues. And it’s a wonderful school.

“It’s different every time you come back. If it wasn’t different, it wouldn’t be doing its job,” Mr Rajan said.

Mr Rajan was governor of the Reserve Bank of India from 2013 to September 2016. His tenure was marked by both bouquets and brickbats but saw severe criticism from some political quarters towards the end, including personal attacks.

He was accused of refusing to lower rates to boost growth, though Mr Rajan often cited data to the contrary.

Previously, he served as the chief economist and director of research at the International Monetary Fund (from 2003 to 2006).

He is currently Katherine Dusak Miller Distinguished Service Professor of Finance at the University of Chicago Booth School of Business, which he joined in 1991.

Asked what he is looking forward to most after returning to academic life, the former RBI Governor noted that one of the difficulties of a job in the “real world” is that one does not really get time to shut oneself off in a room and think.

“Now in academia,…if you are careful, you can spend four days in a room, sit looking at a piece of paper and struggling with a thought that refuses to come out.

“At the end of those four days, sometimes, you say, ‘Oh my God, how did I miss this?’ and it dawns on you. And that’s as close to bliss as you can get,” Mr Rajan said.

Talking about focus of his research, he said, “Research never really leaves you… While I was at the Reserve Bank, I published some papers, but you don’t get time to really reflect.”

Referring to the global financial crisis, Mr Rajan pointed out that the crisis essentially gave us research topics for the next 30 years.

“If you look at what happened, there are about 15 to 20 different stories now emerging,” he observed.

He also argued that more liquidity means more leverage, which in turn means more financial fragility.
 

The post Professor Raghuram Rajan says ‘great to be back’ even as India miss him as RBI chief appeared first on SabrangIndia.

 
आपको बता दें कि रिजर्व बैंक के पूर्व गवर्नर रघुराम राजन इससे पहले भी नोटबंदी को लेकर अपनी आशंकाएं सार्वजनिक रूप से व्यक्त कर चुके हैं। सन् 2014 में भी उन्होंने इस पर अपनी राय रखते हुए कहा था कि चालाक लोग इससे बचने का रास्ता निकाल लेंगे। 

राजन के अनुसार इससे बचने का एक तरीका ये हो सकता है कि जिन लोगों ने बड़े नोट इकट्ठे कर रखे हैं वो उन्हें छोटे नोटों में बदल लेंगे जिससे उन्हें बदलना आसान हो जाएगा। राजन मानते हैं कि नोटबंदी किए जाने पर कालाधन रखने वाले बड़े नोटों से सोना खरीद सकते हैं जिसे पकड़ना और मुश्किल हो जाएगा।
 
राजन के अनुसार सरकार को नोटबंदी के बजाय भारतीय कर व्यवस्था को बेहतर बनाने पर ध्यान देना चाहिए। राजन ने बताया कि अमेरिका में अधिक आय वालों पर 39 प्रतिशत तक कर लगता है, इसके अलावा वहां के राज्य भी अलग से टैक्स लगाते हैं। जबकि भारत में ये दर अधिकतम 33 प्रतिशत है। राजन ने कहा था कि हमारे यहां टैक्स कई औद्योगिक देशों से कम है।
 
काला धन जमा करने वालों पर बोलते हुए राजन ने कहा था कि मैं लेन-देन पर ज्यादा निगरानी रखने और जहां लोग अपनी आय घोषित नहीं कर रहे हैं वहां बेहतर कर प्रबंधन पर जोर देता है। मेरे ख्याल से आधुनिक अर्थव्यवस्था में पैसे छिपाना आसान नहीं है।

Courtesy: National Dastak

The post नोटबंदी से नहीं लगेगी कालेधन पर लगाम- रघुराम राजन appeared first on SabrangIndia.

Image: https://www.facebook.com/pages/Namo-Nazi/ 

Fascism is an ideology with typical characteristics and fanatic follower’s .Its chief characteristic is to make every organ of the State subservient to the Leader and to totally regulate the life of every citizen.

 
Hitler and Mussolini were its incarnations in the last century .Their inhuman acts and the end to which they brought their nations are well known facts of history.
 
Though the 21st century is very different from 1930s, and fascism in its 1930's form may not flourish, a fascist State in its modified form is still possible. India is under its serious threat.
 
For example, Narendra Modi is now the only leader of the BJP and its government .All other leaders of the party who devoted their whole life to the party have been reduced to non-entities. L.K.Advani, Murli Manohar Joshi and the rest are nursing their humiliating wounds in silence. Rajnath Singh, a former president of the BJP has been reduced to nothingness as India's Home Minister. Nitin Gadkari, another ex-president of the BJP counts for nothing in the current dispensation. Sushma Swaraj, once an aspirant for the post of prime minister, is doing, at best, a house keeping job in the Ministry of External Affairs while it is Modi that performs as the de facto Minister of External Affairs for India.
 
Like a hyena feeding on the kill of bigger animals, Arun Jaitley is feeding off on Modi's kill. Like an archetypical fascist leader, Modi has surrounded himself by non-entities like Smriti Irani to project himself as a giant among the pigmies.
 
Like all fascists , he is systematically engaged in destroying the autonomy of all constitutional bodies and autonomous institutions .When two names were recommended by the Collegium for appointment as judges of the Supreme Court, he notified the name of one (Mr Nariman ) and withheld Mr Gopal Subramanian’s name. Such selective action was unprecedented. Mr Subramaniam withdrew his name out of disgust because –in typical fascist style — a campaign for his character assassination was launched.
 
Through this, one independent judge was prevented from reaching the apex court. Later, the Constitution was amended to give the power to appoint judges of higher courts to a National Judicial Appointment Commission with the Union Law Minister as one of its members .It was so formed as to make sure that nobody could be appointed as a High Court or Supreme Court judge who did not find favour with the government .
 
The sinister design is implicit; fill the higher judiciary with pliant and servile judges. Now that the National Judicial Appointment Commission was declared unconstitutional by the apex court, Modi is still trying to have the last word on appointments through unconstitutional provisions in the memorandum of procedure, which are being resisted by the judiciary leading to a confrontation with the Executive. Other political parties, too, are sympathetic to his move because they, too, have skeletons in their cupboards and want an amenable and manageable judiciary.
 
Universities and free students' organisations have been under a two pronged attack .The motive is to foist persons loyal to the Sangh's  ideology ready to toe their line on the educational institutions  and the other is to suppress freedom of thought of students and academia, on the campus.
 
A student organisation loyal to Ambedkar's ideology was banned in MIT, Madras, students at Hyderabad Central University were suppressed and victimised and almost a war was declared on JNU. A typically fascist tactic is employed to suppress students’s organisations and their activities. A conflict is engineered on the campus by employing the services of the Akhil Bharatiya Vidyarthi Parishad (AVBP).
 
The technique is simple, the ABVP, a student’s wing of the Rashtriya Swayamsevak Sangh (RSS), lodges a complaint with the authorities who then use their administrative power to suppress other students' organizations using police force, and their goons, if necessary. These fascist practices have been in evidence almost everywhere where there has been trouble on the campus (es).
 
Fascists perceive every independent person and institution as a thorn in their flesh. The RBI Governor Raghuram Rajan was a thorn which hurt Jaitley's ego more than his flesh. He is intellectually far superior to Jaitley, the lawyer and Modi, the Pracharak, whose small egoes were bruised by his intellectual superiority.  
 
The government had the power to remove him and they would have been within their right to sack him or to let him complete his term and part gracefully, but they chose to set Subramaniam Swamy to heap insults on him through the media to satisfy their meanness. Rajan has now declared that he would be returning to the academics in the US after completing his term.
 
 Fascists create an enemy to attack, viscerally, to divert people's attention from their continued and daily exploitation, suppression and misery and to, insidiously, justify their inhuman acts. Hitler projected German citizens of Jewish origin as the enemies of the fatherland (motherland, Bharatmata, here) and targeted and destroyed them. Modi has chosen the minorities, especially the Muslims, for this purpose.
 
While he himself keeps mum, his Ministers and members of parliament (MPS) act as the shameful firing squads, brazenly public in their minority bashing. Muslims are potrayed as disloyal Indians without any basis. They are projected as a threat to Hindus, who constitute 80% of
India's population, which is ridiculous.
 
This anti-Muslim tirade in different forms continues to be pursued with venom, rancour and a sinister design .The unfounded fear of a rising Muslim population, ordering Muslims to go to Pakistan at the drop of a hat, exhorting Hindu women to produce at least four children each, declaration of dates by which India would not have a single Muslim or Christian and other anti-minority acts are being used to keep the enemy image of the Muslims alive to pursue their fascist agenda.
 
The tell tale evidence of fascism knocking at our door is there for all to see and can be ignored only at the cost of our democracy and a free society; at our collective peril.

The post Fascism Knocks at India’s Door appeared first on SabrangIndia.

Full text of the speech by Dr. Raghuram Rajan, Governor, Reserve Bank of India, at the D.D. Kosambi Ideas Festival held on February 20, 2015 in Goa
 

Thank you for inviting me to this Festival of Ideas. Since this festival is about ideas, I am not going to tax you with the Reserve Bank’s views on monetary policy, which are, by now, well known. Instead, I want to talk about something I have been studying for many years, the development of a liberal market democracy. In doing this, I will wear my hat as a professor in the field known as political economy, and discard my RBI hat for the time being. If you came here expecting more insights on the path of interest rates, as I expect many of you did, let me apologize for disappointing you.

My starting point is the truism that people want to live in a safe prosperous country where they enjoy freedom of thought and action, and where they can exercise their democratic rights to choose their government. But how do countries ensure political freedom and economic prosperity? Why do the two seem to go together? And what more, if anything, does India have to do to ensure it has these necessary underpinnings for prosperity and continued political freedom? These are enormously important questions, but given their nature, they will not be settled in one speech. Think of my talk today, therefore, as a contribution to the debate.

Fukuyama’s three pillars of a liberal democratic state

In his magisterial two-volume analysis of the emergence of political systems around the world, political scientist Francis Fukuyama builds on the work of his mentor, Samuel Huntington, to argue that liberal democracies, which seem to be best at fostering political freedoms and economic success, tend to have three important pillars: a strong government, rule of law, and democratic accountability.

I propose in this talk to start by summarizing my (necessarily imprecise) reading of Fukuyama’s ideas to you. I would urge you to read the books to get their full richness. I will then go on to argue that he leaves out a fourth pillar, free markets, which are essential to make the liberal democracy prosperous. I will warn that these pillars are weakening in industrial countries because of rising inequality of opportunity, and end with lessons for India.

Consider Fukuyama’s three pillars in greater detail. Strong government does not mean one that is only militarily powerful or uses its intelligence apparatus to sniff out enemies of the state. Instead, a strong government is also one that provides an effective and fair administration through clean, motivated, and competent administrators who can deliver good governance.

Rule of law means that government’s actions are constrained by what we Indians would term dharma – by a historical and widely understood code of moral and righteous behaviour, enforced by religious, cultural, or judicial authority.

And democratic accountability means that government has to be popularly accepted, with the people having the right to throw unpopular, corrupt, or incompetent rulers out.

Fukuyama makes a more insightful point than simply that all three traditional aspects of the state – executive, judiciary, and legislature – are needed to balance one another. In sharp contrast to the radical libertarian view that the best government is the minimal “night watchman”, which primarily protects life and property rights while enforcing contracts, or the radical Marxist view that the need for the government disappears as class conflict ends, Fukuyama, as did Huntington, emphasizes the importance of a strong government in even a developed country.

No matter how thuggish or arbitrary the government in a tin-pot dictatorship, these are weak governments, not strong ones. Their military or police can terrorize the unarmed citizenry but cannot provide decent law and order or stand up to a determined armed opposition. Their administration cannot provide sensible economic policy, good schools or clean drinking water. Strong governments need to be peopled by those who can provide needed public goods – it requires expertise, motivation, and integrity. Realizing the importance of strong government, developing countries constantly request multilateral institutions for help in enhancing their governance capacity.

Strong governments may not, however, move in the right direction. Hitler provided Germany with extremely effective administration – the trains ran on time, as did the trains during our own Emergency in 1975-77. His was a strong government, but Hitler took Germany efficiently and determinedly on a path to ruin, overriding the rule of law and dispensing with elections. It is not sufficient that the trains run on time, they have to go in the right direction at the desired time. The physical rail network guiding the trains could be thought of as analogous to rule of law, while the process by which consensus is built around the train schedule could be thought of as democratic accountability.

But why do we need both rule of law and democratic accountability to keep strong government on the right path? Would democratic accountability not be enough to constrain a dictatorial government? Perhaps not! Hitler was elected to power, and until Germany started suffering shortages and reversals in World War II, enjoyed the support of the majority of the people. The rule of law is needed to prevent the tyranny of the majority that can arise in a democracy, as well as to ensure that basic “rules of the game” are preserved over time so that the environment is predictable, no matter which government comes to power. By ensuring that all citizens have inalienable rights and protections, the rule of law constrains the majority’s behaviour towards the minorities. And by maintaining a predictable economic environment against populist democratic instincts, the rule of law ensures that businesses can invest securely today for the future.

What about asking the question the other way? Would rule of law not be enough? Probably not, especially in a vibrant developing society! Rule of law provides a basic slow-changing code of conduct that cannot be violated by either government or the citizenry. But that, by itself, may not be sufficient to accommodate the aspirations of new emerging groups or the consequences of new technologies or ideas. Democratic accountability ensures the government responds to the wishes of the mass of the citizenry, allowing emerging groups to gain influence through political negotiation and competition with others. Even if groups cannot see their programs translated into policy, democracy allows them to blow off steam non-violently. So both rule of law and democratic accountability check and balance strong government in complementary ways.

Where do these three pillars come from?

Much of Fukuyama’s work is focused on tracing the development of each pillar in different societies. He suggests that what the nature of states we see today is largely explained by history. For instance, China had long periods of chaos, most recently before the Communists came to power; groups engaged in total war against one another. Such unbridled military competition meant groups had to organize themselves as hierarchical military units, with rulers having unlimited powers. When eventually a group was victorious over the others, it was natural for it to impose centralized autocratic rule to ensure that chaos did not remerge. To rule over the large geographic area of the country, China needed a well-developed elite bureaucracy – hence the mandarins, chosen by exam based on their learning. So China had strong unconstrained effective government whenever it was united, and Fukuyama argues, unlike Western Europe or India, did not have strong alternative sources of power founded in religion or culture to impose rule of law.

In Western Europe, by contrast, the Christian church imposed constraints on what the ruler could do. So military competition, coupled with constraints on the ruler imposed by canon law, led to the emergence of both strong government and rule of law.

In India, he argues, the caste system led to division of labour, which ensured that entire populations could never be devoted totally to the war effort. So through much of history, war was never as harsh, or military competition between states as fierce, as in China. As a result, the historical pressure for Indian states to develop strong governments that intruded into every facet of society was muted. At the same time, however, the codes of just behaviour for rulers emanating from ancient Indian scriptures served to constrain any arbitrary exercise of power by Indian rulers. India, therefore, had weaker government, constrained further by rule of law. And, according to Fukuyama, these differing histories explain why government in China today is seen as effective but unrestrained, while government capacity in India is seen as weak, but Indian governments are rarely autocratic.

Any of these grand generalizations can, and should, be debated. Fukuyama does not claim history is destiny, but does suggest a very strong influence. Of course, the long influence of history and culture is less perceptible when it comes to democracy where some countries like India have taken to it like a duck to water. A vibrant accountable democracy does not only imply that people cast their vote freely every five years. It requires the full mix of a raucous investigative press, public debate uninhibited by political correctness, many political parties representing varied constituencies, and a variety of non-governmental organizations organizing and representing interests. It will continue to be a source of academic debate why a country like India has taken to democracy, while some of its neighbours with similar historical and cultural pasts have not.

I will not dwell on this. Instead, I turn to a different question that Fukuyama does not address. Clearly, strong governments are needed for countries to have the governance to prosper. Equally, free markets underpin prosperity. But why is it that every rich country is also a liberal democracy subject to rule of law?

I will make two points in what follows: First, free enterprise and the political freedom emanating from democratic accountability and rule of law can be mutually reinforcing so a free enterprise system should be thought of as the fourth pillar underpinning liberal market democracies. Second, the bedrock on which all four pillars stand is a broadly equitable distribution of economic capabilities among the citizenry. That bedrock is fissuring in industrial countries, while it has to be strengthened in emerging markets like India.

Free Enterprise and Political Freedom

Why are political freedoms in a country, of which representative democracy is a central component, and free enterprise mutually supportive?

There is, of course, one key similarity: Both a vibrant democracy and a vibrant free enterprise system seek to create a level playing field which enhances competition. In the democratic arena, the political entrepreneur competes with other politicians for the citizen’s vote, based on his past record and future policy agenda. In the economic sphere, the promoter competes with other entrepreneurs for the consumer’s rupee, based on the quality of the product he sells.

But there is also at least one key difference. Democracy treats individuals equally, with every adult getting one vote. The free enterprise system, by contrast, empowers consumers based on how much income they get and property they own. What then prevents the median voter in a democracy from voting to dispossess the rich and successful? And why do the latter not erode the political rights of the ordinary voter. This fundamental tension between democracy and free enterprise appeared to be accentuated in the recent U.S. Presidential elections as President Barack Obama appealed to middle-class anger about its stagnant economic prospects, while former Massachusetts governor Mitt Romney appealed to business people, disgruntled about higher taxes and expanding healthcare subsidies.

One reason that the median voter rationally agrees to protect the property of the rich and to tax them moderately may be that she sees the rich as more efficient managers of that property, and therefore as creators of jobs and prosperity that everyone will benefit from. So, to the extent that the rich are self-made, and have come out winners in a competitive, fair, and transparent market, society may be better off allowing them to own and manage their wealth, settling in return for a reasonable share of their produce as taxes. The more, however, that the rich are seen as idle or crooked – as having simply inherited or, worse, gained their wealth nefariously – the more the median voter should be willing to vote for tough regulations and punitive taxes on them.
In some emerging markets today, for example, property rights of the rich do not enjoy widespread popular support because so many of a country’s fabulously wealthy oligarchs are seen as having acquired their wealth through dubious means. They grew rich because they managed the system, not because they managed their businesses well. When the government goes after rich tycoons, few voices are raised in protest. And, as the rich kowtow to the authorities to protect their wealth, a strong check on official arbitrariness disappears. Government is free to become more autocratic.

Consider, in contrast, a competitive free-enterprise system with a level playing field for all. Such a system generally tends to permit the most efficient to acquire wealth. The fairness of the competition improves perceptions of legitimacy. Moreover, under conditions of fair competition, the process of creative destruction tends to pull down badly managed inherited wealth, replacing it with new and dynamic wealth. Great inequality, built up over generations, does not become a source of great popular resentment.
On the contrary, everyone can dream that they, too, will become a Bill Gates or a Nandan Nilekani. When such universal aspirations seem plausible, the system gains added democratic support. The rich, confidant of popular legitimacy, can then use the independence that accompanies wealth to limit arbitrary government, support rule of law, and protect democratic rights. Free enterprise and democracy sustain each other.

There are, therefore, deeper reasons for why democratic systems support property rights and free enterprise than the cynical argument that votes and legislators can be bought, and the capitalists have the money. The cynics can only be right for a while. Without popular support, wealth is protected only by increasingly coercive measures. Ultimately, such a system loses any vestige of either democracy or free enterprise.

The Bedrock: Equitable Distribution of Economic Capabilities

There is, however, a growing concern across the industrial world. The free enterprise system works well when participants enter the competitive arena with fundamentally equal chances of success. Given the subsequent level playing field, the winner’s road to riches depends on greater effort, innovation, and occasionally luck. But success is not pre-determined because no class of participants has had a fundamentally different and superior preparation for the competition. If, however, some group’s economic capabilities are sufficiently differentiated by preparation, the level playing field is no longer sufficient to equalize a priori chances of success. Instead, the free enterprise system will be seen as disproportionately favouring the better prepared. Democracy is unlikely to support it, nor are the rich and successful as likely to support democracy.

Such a scenario is no longer unthinkable in a number of Western democracies. Prosperity seems increasingly unreachable for many, because a good education, which seems to be today’s passport to riches, is unaffordable for many in the middle class. Quality higher educational institutions are dominated by the children of the rich, not because they have unfairly bought their way in, but because they simply have been taught and supported better by expensive schools and private tutors. Because middle class parents do not have the ability to give their children similar capabilities, they do not see the system as fair. Support for the free enterprise system is eroding, as witnessed by the popularity of books like Thomas Pikkety’s Capital in the 21st Century while the influence of illiberal parties on both the Left and Right who promise to suppress competition, finance, and trade is increasing. The mutual support between free enterprise and democracy is giving way to antagonism.

Moreover, as class differences create differentiated capabilities among the public, governments can either continue choosing the most capable applicants for positions but risk becoming unrepresentative of the classes, or they can choose representativeness over ability, and risk eroding effectiveness. Neither biased nor ineffective government can administer well. So government capacity may also be threatened.

Thus, as the bedrock of equitable distribution of capabilities has started developing cracks in industrial countries, all four pillars supporting the liberal free market democracy have also started swaying. This is, to my mind, an enormously important concern that will occupy states across the world in the years to come.

Lessons for India

Let me conclude with lessons for India. India inherited a kind of democracy during British rule and has made it thoroughly and vibrantly her own. Of the three pillars that Fukuyama emphasizes, the strongest in India is therefore democratic accountability. India also adheres broadly to the rule of law. Where arguably we may have a long way to go, as Fukuyama has emphasized, is in the capacity of the government (and by this I mean regulators like the RBI also) to deliver governance and public services.
This is not to say that we do not have areas of excellence strewn throughout central and state governments – whether it is the building of the New Delhi Metro, the reach of the public distribution system in Tamil Nadu, or the speed of the roll-out of the Pradhan Mantri Jan Dhan Yojana – but that such capabilities have to permeate every tehsil in every state. Moreover, in many areas of government and regulation, as the economy develops, we need more specialists, with the domain knowledge and experience. For instance, well-trained economists are at a premium throughout the government, and there are far too few Indian Economic Service officers to go around.

An important difference from the historical experience of other countries is that elsewhere typically strong government has emerged there first, and it is then restrained by rule of law and democratic accountability. In India, we have the opposite situation today, with strong institutions like the judiciary, opposition parties, the free press, and NGOs, whose aim is to check government excess. However, necessary government function is sometimes hard to distinguish from excess. We will have to strengthen government (and regulatory) capability resisting the temptation to implant layers and layers of checks and balances even before capacity has taken root. We must choose a happy medium between giving the administration unchecked power and creating complete paralysis, recognizing that our task is different from the one that confronted the West when it developed, or even the task faced by other Asian economies.

For instance, a business approval process that mandates numerous government surveys in remote areas should also consider our administrative capacity to do those surveys well and on time. If it does not provide for that capacity, it ensures there will be no movement forward. Similarly, if we create a multiple appellate process against government or regulatory action that is slow and undiscriminating, we contain government excess but also risk halting necessary government actions. If the government or regulator is less effective in preparing its case than private parties, we ensure that the appellate process largely biases justice towards those who have the resources to use it, rather than rectifying a miscarriage of justice. So in thinking through reforms, we may want to move from the theoretical ideal of how a system might work in a country with enormous administrative capacity, to how it would work in the actual Indian situation. Let me emphasize, we need “checks and balance”, but we should ensure a balance of checks. We cannot have escaped from the License Permit Raj only to end up in the Appellate Raj!

Finally, a heartening recent development is that more people across the country are becoming well-educated and equipped to compete. One of the most enjoyable experiences at the RBI is meeting the children of our Class IV employees, many of whom hold jobs as business executives in private sector firms. As, across the country, education makes our youth economically mobile, public support for free enterprise has expanded. Increasingly, therefore, the political dialogue has also moved, from giving hand outs to creating jobs. So long as we modulate the pace of liberalization to the pace at which we broaden economic capabilities, it is likely that the public will be supportive of reform. This also means that if we are to embed the four pillars supporting prosperity and political freedom firmly in our society, we have to continue to nurture the broadly equitable distribution of economic capabilities among our people. Economic inclusion, by which I mean easing access to quality education, nutrition, healthcare, finance, and markets to all our citizens, is therefore a necessity for sustainable growth. It is also, obviously, a moral imperative.

Notes:

The Origins of Political Order: From Pre-Human Times to the French Revolution by Francis Fukuyama, 2011, Farrar Straus and Giroux, New York.
Political Order and Political Decay: From the Industrial Revolution to the Globalization of Democracy by Francis Fukuyama, 2014, Farrar Straus and Giroux, and
Political Order in Changing Societies by Samuel Huntington, 1968, Yale University Press, New Haven.

The post Hitler, the Indian Emergency, A Strong Government must respect Rule of Law: Raghuram Rajan appeared first on SabrangIndia.