Greenspan and Ayn Rand

The Wall Street Journal has an interview with Nouriel Roubini on nationalizing the banks where he makes some interesting remarks about Alan Greenspan.

"The two things that Greenspan got totally wrong were his beliefs that, one, markets self-regulate, and two, that there's no market failure. At some level it's good to have a framework to think about the world, in which you emphasize the role of incentives and market economics . . . fair enough! But I think it led to an excessive ideological belief that there are no market failures, and no issues of distortions on incentives. Also, central banks were created to provide financial stability. Greenspan forgot this, and that was a mistake. I think there were ideological blinders, taking Ayn Rand's view of the world to an extreme."

I think Nouriel is right in attributing Greenspan's mistakes to his naive belief in Ayn Rand's philosophy and how they apply to capitalism.

Weekend Reading List

Here are some interesting articles for your weekend reading:

1. Why Gandhi still matters
2. Barbarians at large: TOI editorial on increasing intolerance in India
3. Chetan Kunte vs NDTV freedom of speech issue coverage here, here, and here.
   
4. Public perception of police performance in India
5. India's hunger index
6. Fighting hunger with flood-tolerant rice
7. India's diplomatic outsourcing
8. What's your SlumDog opinion

Identity politics and administrative decay

Lant Pritchett, the Harvard economist, has written an interesting paper on India. Unable to slot India in any of the traditional categories of nations based on social, economic, political, and administrative attributes, he coins a new term - a flailing state. A flailing state, he says, is "a nation-state in which the head, that is the elite institutions at the national (and in some states) level remain sound and functional but that this head is no longer reliably connected via nerves and sinews to its own limbs." In other words, the Indian government and administrative branch, despite having some of the best brains who can "formulate excellent policies and programs", is unable to reliably provide basic services to its people.

India has shown strong economic growth in the past decade, has a vibrant democracy, and has strong world class institutions and companies. Unlike many of its neigbors, it has had a stable, democratically elected government for more than 50 years. Yet the ability of the Indian government to provide basic services and ensure law and order has deteriorated rapidly. One example Pritchett provides is of child immunization (DPT3) coverage where between 1995-2006 India went from 70% coverage to 55% whereas Bangladesh progressed remarkably from 70% to 88%.

He tries to identify the reasons behind this decay of the administrative abilities of the government. He highlights the following remarks by Naresh Saxena, a former IAS officer and Chief Secretary of Uttar Pradesh:

“…because between the expression of the will of the State (represented by politicians) and the execution of that will (through the administrators) there cannot be any long-term dichotomy. In other words, the model in which the politics will continue to be corrupt, casteist and will harbor criminals where as civil servants will continue to be efficient, responsive to public needs and change agents cannot be sustained indefinitely.
In the long-run political and administrative values have to coincide.”

Pritichett has a remarkable take on the role of politicians in all this. He says, "one cannot explain the situation as being caused by bad politicians, as those willing to take the role of bad politicians are in abundant supply in every country. Rather, one must seek the root cause of the ability of bad politicians to survive and thrive in a very competitive electoral environment. A likely answer is that politics is an arena not just for competing for some neutral notion of government efficacy or even about a set of 'policies' but is also a space for contests over identities. Perhaps the root issue with the flailing of administrative modernism in India today is the as yet unresolved (especially in the North) issues of identity politics around caste and communitarian concerns. Up to a point, politicians have been able to survive on creating identities around caste and religion claiming to deliver social justice by the very fact of their election."

We can now reflect on the amazing successes of leaders such as Mayawati and Lalu Prasad Yadav in light of the above observations on identity based politics. No wonder upcoming politicians find it easier to fight elections on an identity based platform of fear and violence than a reform based platform.

They'll come for us too

After their deafening silence during the 26/11 attacks, the moral police are now scampering out of the holes. In an incident today, members of Shri Ram Sena barged into a pub in Mangalore, and assaulted and molested guests, to protest against their "obscene" behavior. Meanwhile MNS goons have begun targeting people from Bihar and UP, threatening Pakistani artists and their employers, and, forcing business establishments and shopkeepers to remove all references to Pakistan from their store names. Mohan Sachdev, owner of Karachi Sweets in Mulund (Mumbai), was forced to rename his store to Jai Shri Krishna. This despite the assurances of the state home minister and city police commissioner. Well you can't blame Mr. Sachdev for ignoring them. The Mulund police themselves asked him to give into the demands of MNS. And while he could be sure of the goons attacking him and his store, the same couldn't be said of the government and police support. The state machinery turns a blind eye to law and order issues if it is politically expedient.

Lest it be seen that only Hindu parties are at the forefront of the fight to protect the culture and traditions of India, and uphold the dignity of women, we have maulanas and maulvis frequently issuing fatwas and edicts that defy belief and violate humanity.

We may shut our eyes and deny it. But the Taliban is here and thriving.
As we continue to ignore our conscience and live in fear and apathy, the words of Martin Niemoller ring true ........

When they came for me,
There was no one left to speak out.

चलता है (Life goes on)

Today a US Airways plane was forced to crash land on the Hudson river in New York. The plane supposedly hit a flock of birds during take off and lost both its engines. The pilot, Chesley Sullenberger, expertly navigated the plane away from the crowded areas of New York city and managed to land in the frigid waters without letting the plane break apart.

The emergency personnel and the people on the private ferries responded immediately, offloaded all the 150 passengers and crew, and moved them safely to be treated for hypothermia and injuries. All this happened in less than an hour.

The efficiency and professionalism exhibited by these people is amazing. The desire shown and the importance given to saving every life is unbelievable. This is something that Indians must emulate. India as a nation is very callous in protecting its citizens lives. Most of us just care about the well-being of our immediate family and friends. As long as they are safe, we revert to the "चलता है" attitude, irrespective of the magnitude of any tragedy.

There's hope that change will come. But it must start with each one of us.