This is a comment i recieved from my friend Bharat. Very interesting view points to say the least. Please give it a read.
I appreciate our outrage at the direction our fabled fatherland is going.
That’s good news coz it tells us that we take India and its debacles
personal. I’m afraid I haven’t had the patience to read the transcript. I
must admit I haven’t watched the interview on TV either. But I know one
thing for sure. What politicians say to the media is hardly of
significance. What matters is the decisions they make. The justifiability
(in a socio-economic sense) and the motivation behind political decisions
are easy to read into, even when the politician doesn’t part his lips for
a moment.
Reservations (wherever they might be) as we all know is a powerful weapon
in vote bank politics. When we know that it is vote bank politics at work,
does it make a difference as to what the venerable Arjun Singh says about
it?
Anyways, let’s for a moment take focus off the statements of Arjun Singh
and take a look at his actions. Vote bank politics is what is called
‘principal agent problem’ in economics. The principal is the stakeholder
in a country, company or contract. The agent is someone who makes
decisions on behalf of the principal. In a publicly traded company, these
terms translate to shareholders and managers. In a democracy they
translate to the people and the politicians. The sheer number of people in
a country and their inability to make collective, coherent decisions by
themselves and be accountable to those decisions gives rise to
politicians. (The assumption here is political decisions have to be made
and we can’t live without them. This assumption can be challenged by
extreme libertarian/anarchist thinking. But let’s stay prgamatic and go
with the assumption). However we need to realize that the agent
(politician) is a self intererested individual too at the end of the day.
There is a conflict of interest to some extent (the extent varies with the
individual) between the role of the politician and his personal desires
and motivations. It’s impossible to separate the two personalities,
however much we may want it as principals (people in a democracy). Looking
at it from the politician’s perspective, there is hardly any conflict of
interest between his roles. His office is meant to further his personal
goals. (I’m not making a statement on individual
goals are holy or unholy. They are just personal and have a bearing on
political decisions. Mahatma Gandhi, to the best of my knowledge, was a
man of holy intentions. Yet, when we made him our agent, he forced
perpetual appeasement of Muslims on us, for he thought it’s good to be
secular and had an extremely lopsided view of secularism.)
Democracy is, in a way, like consumer marketing. It’s all about the
numbers. The unit of money is here a vote! Different parties and politicians
target different demographic groups (based on economic status, religion,
caste, ideology….), much like automobile manufacturers do. Democracy is
egalitarianism are directly at conflict with each other. If a
politician/party can impress his core segment of consumers, even at the
cost of disparaging some other segment, that’s fantastic enough. That
brings us to the conclusion, a politician is not the representative of
everyone. A politician is the representative of only those who vote him or
are likely to do so at least. The incentives of the politician are not
aligned with the incentives of the entire populace, but those of a niche
segment of people with the numbers to catapult the politician to the
office next time. (I’m afraid, men like Arjun Singh, don’t have the
incentive to capture the office next time either, coz they are guaranteed
not to live that long!). In fact the interests of the principal are never fully
aligned with those of the agent. When you got to a doctor, your interest is to
get yourself cured of your disease, probably at the least cost (if you pay), while
the doctor’s interest is to charge you the highest fee he can to cure the disease.
Health insurance is a good way to align these orthogonal incentives.
I fully understand the frustration against reservation. But, I’m afraid,
it has become a sacred cow in Indian politics, much like agricultural
subsidies and perpetual tax holidays for farmers. (You can even compare
it with the funding for public universities in the US). The politicians
who introduced reservation first did so to gain a competitive advantage in
the electoral box office, much like Intel developing a new 64 bit
microprocessor). The moment they did it, it skewed the whole equation of
Indian politics. It became a Darwinian place for the politicians and
parties “adapt to reservation or perish, much like what happens to AMD
when Intel develops a killer product. It’s interesting to note that the
good or bad of the reserved castes is nowhere in sight in my argument.
Well, it’s nowhere in sight even in the minds of politicians either!
Reservation for OBCs in IITs/IIMs is just a tiny manifestation of the
colossal problem of reservation itself. The same holds for reservation
in medical colleges. There are some changes in
phraseology. That’s about it. I’ve heard people many times say that they
are ok with reservation but not ok with the way it is being implemented.
Let’s accept the truth.
1) It doesn’t matter whether reservation is acceptable to us or not. It’s
a game of numbers.
2) Reservation can’t be acceptable to all people and all demographic
groups no matter how it is phrased. The only thing that has a chance of
being acceptable to all, at least over time, is meritocracy.
If we want to fight against reservation, let’s fight about the very idea
of reservation, rather than the phraseology of it. Abolishing reservation
can discomfit the classes dubbed backward (I find it to unsulting a
nomenclature though) for a while, max for a generation. After that, their
survival instincts will take over and they will end up as competitive as
the other classes. I dare to prophecy like this, coz, I believe (somewhat
utopically) that all men are created equal. If there is nothing inferior
in the genes of the so called backward classes, there is no reason why
they should be disadvantaged in any way in a meritocratic system. If at
all they suffer from any disadvantage, it’s because of 56 years of
mollycoddling by the government. If we have to end reservation, we have to
stop this mollycoddling some day and give the normal men, unfortunately
branded backward, a chance to prove their competency. The longer we take
to stop the mollycoddling, the more painful we make it for the backward
classes to transition themselves to meritocracy.
Lastly, I’d again want to emphasize my de-emphasis on IITs/IIMs. Mates,
I’m afraid, India is a lot bigger than these places. There is no way
reservation can be acceptable at BMSCE and unacceptable at IIT Delhi.
There is no way reservation can be acceptable for SC/STs and unacceptable
for OBCs. (By the way we have silently accepted reservation for SC/STs
for 56 years. What sin have the OBCs committed to be excluded from the
coveted title of backwardness? If you are jealous of an unworthy
reservation candidate going to IIMA and landing the job of a
hedge fund manager at Goldman Sachs or HSBC, let me
assure you of something. If the candidate is really unworthy he is not
going to make it to Goldman. Goldman Sachs is not a govt organization and
has no obligation to social justice. (Or shall we say injustice?) There is
every reason for recruitment at Goldman or HSBC to work the free market
way. In fact the private sector job market is very close to a free market.
If a reservation candidate makes it to HSBC, you can rest assured that he
is worthy of it and would have made it anyway with or without reservation.
While we allay our fears this way, it is very important to note that the
proposal for reservation in the private sector must be fought with the
greatest fury. We simply can’t afford to destroy one of the very few
meritocratic systems we have managed to build. But this is where corruption
helps our otherwise medieval political landscape orient toward the free
market. Thanks to corruption and alliance between politics and business
(holy or unholy), I believe that business leaders will make sure that the
job market remains a free market, coz it is in the interest of business.
) then consider the side-effect of the above: To spend $8-10 billion in advertizing, the ad companies have to allot a percentage of their profits (which is an indicator of the growth of the economy , something also related, in some sense, to the risk free rate of returns), lets say they allot some 20% of their profits to advertizing. And say some 60% of that goes into i-net advertizing. That means 12% of the profits go to advertizing. Which means that the companies that do business with Baidu should make around 80 - 100 billion $ (i.e they should be valued something like 45 - 50 billion $ now) in profits in order for the market cap of Baidu to be the same as its true value. If I were having stocks of Baidu now… there is one thing that I should be doing SELL! You decide!