I was quoted in the Economic Times, in an article (.png) by Dinesh Narayanan on "Data blackhole in Q1 2020 would challenge govt policymaking and corporate decisions". Here is the quote:
Unavailability of data would have implications for firm and individual level decision making. "This is a Black Swan event. Firms can plan for risk. But what we are facing is uncertainty not risk. Current forecasting techniques and methods would be useless,’’ according to Prateek Raj... Raj says true uncertainty leaves firms clueless. Government-supplied data, while important, would not be enough anymore. Firms would have to constantly search for signals in other data such as Uber orders and Amazon deliveries. ``What they would need is an ensemble of data from various sources.’’...Raj says experience from the 2008 economic meltdown showed that firms that were more decentralised and whose local managers were empowered coped better after the crisis. A similar experience may be in store now as well for both firms and governments although the trend in India seems to be towards centralisation.
Now some context. Information is the chief driver of how business gets done, something that is one of the main learning points in my PhD course on Evolution of Business and Markets. Just as the printing press revolutionised business, triggered the decline of guilds in Northwestern Europe, and gave rise to modern corporations, the same way too much uncertainty and data can force firms to change the very structure of their business. In a 2016 article for LSE Business Review, I wrote that "in uncertainty, strategic advantage comes from organisational form not plan". Firms in times like this coronavirus pandemic need to recognise that uncertainty is different from risk. While risk can be mitigated by careful planning, uncertainty requires firms to recognise that blueprints become less useful, and hence firms need to start opening all their eyes and ears for any new information, responding quickly to changing situation. The idea seems obvious, but it is not so obvious, because such a change in form of doing business requires giving more autonomy to local managers, and moving away from a centralized top-down approach. A useful research that also supports this idea is by US-based economists Aghion, Bloom, Lucking, Sadun and Reenen, which found that "firms that delegated more power from the Central Headquarters to local plant managers prior to the Great Recession out-performed their centralized counterparts in sectors that were hardest hit by the subsequent crisis." as they were better at gathering local information.
The New York Times just wrote an editorial today, requesting Donald Trump to order a national lockdown in the United States, citing India's national shutdown which affects 1.4 billion people.
Mr. Modi's actions during the coronavirus pandemic are exemplary. He has taken timely and balanced actions. The 21 day national lockdown is yet another important and timely step at a time when India's coronavirus cases were at the cliff of explosion. This is exemplary because Mr. Modi has placed the national public health interests above economic interests, something which western governments like the USA and UK have still not been able to come to terms with. The Lt. Governor of Texas went so far to say that he was willing to risk his own life to save the economy, and had urged other Texans to "get back to work".
If Mr. Modi focuses on politics of substance - the everyday common-man issues like healthcare and economy through out his tenure, India would be better prepared for such pandemics. If the pandemic spreads despite this lockdown, we will once again be in a dangerous territory, as India has just not invested in its healthcare, and instead prioritised the divisive cultural issues a lot more than it can afford to. The last few years, and NOW, is a golden opportunity for a healthcare transformation (the Ayushman Bharat is a welcome scheme), but Mr. Modi and his party/government needs to empower the doctors and nurses on the ground - whom we badly need, and not the xenophobic beasts on social media. While the last few years were a lost opportunity, but now the coronavirus pandemic is at India's doorsteps, and Mr. Modi has begun to listen to the experts, and is doing a good job. This shows that Mr. Modi is indeed a good executive, but only if he is willing to listen to the advice of experts, and does not act as a maverick or heeds to the xenophobes that infest India's entire social media ecosystem.
I hope the pandemic ends, and Indians - esp. middle class Indians (who enjoy an amplified voice) change their understanding about the role of a government. Indians must recognize the global goodwill Mr. Modi generated for India and himself, when he followed the Raj Dharma of putting the public interest first, over a divisive cultural agenda. I hope Indians do the same, and when the pandemic ends, I no longer get to see those awful Whatsapp forwards that belittle and demonize other groups, and obsess over their narrow religious identities rather than their collective nationhood. That we do not get distracted by divisive, emotive, angering and hateful propaganda and instead we talk about, and force the government to focus on healthcare, jobs, water, infrastructure, agriculture, law and order, defense, and all such things that really matter for strenthening the nation.
We need solidarity and common sense in India, not just during these times, but for all the times to come in the future.
The coronavirus pandemic offers an opportunity for countries around the world to invest and expand their healthcare capacity to fit the needs of the modern world. It is a rare opportunity, where the stress test of our healthcare system, help us improve and if needed redesign the system to dramatically expand preventive, hospital and critical care capacity using new technologies.
Can India fight coronavirus, and rapidly scale its health capacity? If you have visited Kumbh at Prayagraj, you will believe yes it can. Kumbh is simply put - astonishing. Beyond the spiritual domain, administratively and in terms of planning and management, Kumbh is an event with no global parallel. A massive city catering to tens of millions a day emerges out of nowhere at the bed of Ganges for a few months, with almost every amenity one could look for. And then it dissolves into the river. India organizes the Kumbh periodically and has learned the ability over time to live in organized chaos. It is a skill that not every country has acquired. Hence, can India deal with coronavirus? Can its health capacity expand drastically to meet the challenging needs ahead? Yes it can.
I was member of a IIMB based study that studied the 2019 Kumbh at Prayagraj. Kumbh is a floating city serving 3-5 crore visitors on its peak day. The Kumbh was incidence free and deployed a temporary sanitation system, healthcare infrastructure, transport and housing facilities for millions of visitors. How could such high levels of effectiveness be achieved at scale, when otherwise India's state capacity is considered weak? Some features of Kumbh governance model are worth emulating for the rest of India.
Each of these factors helped the government achieve scale in a manner that is uniquely suited for a diverse multistakeholder democracy like India's.
“Faith sees best in the dark.”
I often wonder what values our children and the young are imbibing when they look at the current stock of world leaders - who may have many qualities, but are bereft of moral courage. The Bhagwat Gita says:
यद्यदाचरति श्रेष्ठस्तत्तदेवेतरो जन: |
स यत्प्रमाणं कुरुते लोकस्तदनुवर्तते || 21||
Whatever actions great persons perform, common people follow.
Whatever standards they set, all the world pursues.
When leaders sacrifice human dignity at the altar of power, and when every action is acceptable to achieve certain factional goals, then the social order collapses. Without the acknowledgement of human dignity, every person is a means to an end and in such a transactional world chaos is inevitable. Hence, we need decent leaders. Leaders who lead with moral courage, by which I mean, those who have the grace to see dignity in other human beings, even in the most adverse of circumstances, even when making the most difficult decisions. Today, we need leaders who are decent, and who have passed through fire and have still come out with grace.
Former US Vice President, Joe Biden has lived an extraordinary life. Generally, with public personalities we talk about their public accomplishments and platforms. But Joe’s life, in all its fullness, has been one with many highs and lows. Amidst all of it, Joe has maintained his grace. So much so, that I have turned to Joe Biden’s many personal interviews to seek guidance in times of struggle. When Joe says, “faith sees best in the dark” he is not repeating a catchy quote; he is sharing his lived experience of coping with love and loss. That tells me, that Joe is a man of faith, faith as it should be - patient, kind, and one that sees the dignity of others. He is a leader, who has through his lived experience, found grace and steadiness in life, and is capable of leading by example. This makes me believe that Joe Biden will be a good President of the USA.
After pondering for several months, I have decided to leave Twitter.
Twitter has been a very productive companion for me. It helped me interact with academics and researchers from around the world, and kept me updated with their work. I may still sneak into the public Twitter pages of my favourite academics to learn what's up with them and their connections.
I am leaving Twitter because of its very flawed design that enables hate in the public with real world consequences. Along with WhatsApp (about which I wrote last year in ProMarket), Twitter is the favoured platform for spreading misinformation, disinformation and xenophobic call-for-action in India. In the US, there is a significant discourse on the role of Facebook and YouTube in spreading visceral and false information (see the Stigler Center report (blog here) on digital platforms). However, the negative impact of platforms like WhatsApp and Twitter on our public conversation has been ignored. Both these platforms are wild and anarchic. I like this aspect of these platforms. Twitter is a massive list of billions of 280 character messages that millions of people are posting from around the world. I appreciated this anarchic nature of Twitter. It was raw and hence vibrant. But, the "trending" column of Twitter - although meant to be an organic reflection of public sentiment - has been hijacked by coordinated and strategic coalitions dedicated to the spread of propaganda.
Over the lasts few years, thanks to a barrage of xenophobic public misinformation on Twitter and WhatsApp, I have seen dehumanising language become the new normal in private conversations. A significant fraction of people are today convinced of conspiracy theories about inter-civilisational conflict. The world has become more hysterical. Such "clash of the civilisations" narrative has turned normal people into active belligerents, and people are viewed as soldiers on "their" side of the fight, or of the "others". Such a narrative - of a state of perpetual war - helps autocrats gain and maintain power, but it only fools people. The only way to stop such a narrative that dehumanises the "other" is to improve the systems of public conversation such as Twitter. I have a very simple request: Twitter, please remove your "trending" column, which is being used today to promote outright Nazi propaganda. This call is not new. Last year The Verge also wrote an article on the same.
My trigger for leaving Twitter came during the recent deadly Delhi riots, Twitter began to nationally trend a call to economically boycott Muslims. Both the riots and such a call for economic boycott were orchestrated, and Twitter was a willing amplifier of it. I find it rather odd that a company with such technical expertise is incapable of identifying organic trends from inorganic/orchestrated/coordinated ones. I would not protest as much, if such controversial sentiments were organic. I support unfettered free speech. But it is irresponsible for Twitter to amplify orchestrated hate campaigns through its "trending" column that remind of the 1933 Nazi Germany.
As I see it, Twitter may be a useful tool for me as an academic - to network, share and connect. But at a broader societal scale, Twitter has become an enabler of visceral hatred and falsehoods, which has left scores of people dead in Delhi's streets. This is inexcusable, and I can not be a part of such a hate machine.
I hope Twitter fixes its problems, and removes its "trending' column. I support uncensored free speech, including the ones that are controversial, blasphemous or offensive, but I can not support the muzzling of the original voice of the people by orchestrated hateful and false propaganda, that platforms like Twitter amplify. Once Twitter becomes a more dignified place for public discourse, I will be happy to be back on Twitter again.
With economic slowdown, India's ability to spend on the military is also eroding. As India Today reported yesterday Indian government has less money today than last year, which means lesser spending on government schemes for development and welfare, and lesser capacity to spend of the military.
India finds itself in a precarious situation where the power gap between its neighbor China and India has increased. Uttar Pradesh - India's most critical state for development- needs to seriously invest in skill development programs that can help the large unemployed youth.
India is not investing in future technologies. Our government is living in the past, with beliefs such as Astrology is a topmost science, and talking computers - whatever it means - could be developed only by employing Sanskrit. China, in contrast, today is a world leader in future technology - from quantum computing, to Artificial Intelligence, to solar technology. For 5000 crore (cost of large scale cultural projects), India could fund 500 high tech laboratories with a seed grand of more than 1 million dollars.
All of this is disappointing, because it is like watching a kid with a great future ahead, take drugs, and squander their future, not aware how grim and dark the future will be if they do not take the right action today. The whole country should wake up from its disinformation induced slumber.
Since March, every month I wrote an article highlighting that India is facing some serious economic issues. I will like to reiterate some of the key issues that India is facing today:
1. The Hindi heartland is not growing. It is stuck in a vicious cycle of conflict -> clientalism -> few public goods -> low growth -> small pie to share -> conflict. Hence, any political pursuit of ideological and cultural priorities rather than economic ones is a major concern.
2. The agricultural sector is in a dire situation, and the ADR survey showcases the issue well. People are worried because there is not enough money to make in farms, and they are worried more because there are no jobs in the cities to go to. So people are stuck. Short term solutions - to waive loans, offer pensions, artificially raise prices etc. - do not solve deep structural problems of agricultural sector. Rural india has to move up the value chain to processing and manufacturing aspects of agriculture. APJ Kalam and Srijan Pal Singh long ago promoted the vision of PURA (Provision of Urban amenities to Rural Areas), but till date developing processing facilities in villages remains a theoretical goal, probably because capital necessary for such investments is not available.
3. The banking sector has had a terrible bad loan problem which means investments are drying up. There can be many technical factors, but when lending is relational, and "contractual infrastructure" is not mature to ensure proper mechanisms for loan restructuring or recovery, bad loan is bound to be an outcome. Moving away from relational to more arm's length based (contractual) lending requires contractual infrastructure which is effective and impartial. Such impartiality requires that the deliberative powers of a strong executive, are strongly balanced by a procedural bureaucracy (and independent and efficient judiciary), that is accountable to laws not politicians.
The issue is solving India's problems requires a holistic thinking. A reductionist approach that strikes a hammer on every problem that pops up, will create the exact crisis that has been created today.
How are digital platforms like Facebook or Google influencing the state of news media, and journalism? Chicago Booth's Stigler Center just released a major report, on "Protecting journalism in the age of digital platforms", that I was a contributor to.
Key points: Journalism is an expensive and risky activity, which is essential for democracy. Traditional journalism was supported by advertising, and it bundled different types of stories to reach a broad readership.
The internet has given rise to several blogs and news websites, but such organizations lack the journalistic capacity to produce quality content, that can hold power to account. Internet disrupted the advertising model of newsmedia, and digital platform monopolies have concentrated much of the digital advertising revenue. Moreover, the bundled nature of traditional news - which gave readers a variety of information -has been replaced by atomized news, which now gets filtered and bundled by algorithmic filters that prioritize sensational content. Additionally, digital platforms are legally considered as carriers (Section 230 of the US Communications Decency Act), which means they lack the accountability for the content they bundle through their algorithms (e.g. fake news), unlike traditional newsmedia which is legally accountable for every word it prints.
The above factors: advertising, atomization, and accountability crisis has created a crisis in journalism, especially local journalism (see Figure). The report proposes solutions to end this crisis by rethinking journalism, especially investigative journalism, as an essential public good sustained by public funding. Just as basic science is funded through public funding, the report proposes providing private media vouchers to citizens so that they can buy newspapers of their liking, and boost a diverse and dynamic newsmedia industry. Other suggestions include ways to reduce concentration in media, and increasing accountability and transparency of digital platforms.
The Chinese economy ($13.4 trillion) is 5 times larger than India’s ($2.7 trillion) even though the countries are similarly sized in population. A small fraction of China’s large GDP can fund multiple Indian military budgets, and with large budgets, China is rapidly expanding its military capabilities.
India will become the fifth largest economy in the world this year. While that is reassuring, at no point in history of modern India has India been so weak relative to its neighbor in economic size. Even though India is growing at a rapid pace it is not growing fast enough. In the 2000s India expanded its nominal GDP more than three times. It should have expanded this decade even more, but this was a lost decade and in 2010s India’s GDP only doubled. During the same period China expanded its GDP by about six times in the 2000s, while in this decade it still managed to expand its GDP by about thrice.
Given the urgency of the situation, it is important that politicians prioritize economic issues over jingoism and cultural politics. Here’s the bottom line- patriotic slogans cannot fund India’s military. Only a growing economy can.
India has seen transformational change over the last three decades. Such a transformation has turned India into a highly aspirational country. Today the country wants better jobs, better health care, better public infrastructure and quality of life, better governed cities and modernization of agriculture and rural economy (see 2018 ADR voter survey). To achieve these aspirations India needs to empower its communities and turn them into producers of high-value goods and services.
Moving up the value chain
The first priority of Indians today is to enjoy better employment opportunities. This requires Indians to quickly move up the value chain, so that their skills and services can have greater demand in the labor market. China has been successfully making such a transformation. Consider the case of Indian IT firms like TCS and Infosys that were once supposed to turn India into an IT superpower. Today they have become stunted giants, while Chinese firms have built competitive global brands (Huawei, Tencent) in the same technology industry. While China has assertively moved from low cost manufacturing to production of high end goods and services, India has not. Indian IT "giants" still continue to do backoffice tasks, and are not providers of high end goods and services like Microsoft.
The rural economy needs to move up the value chain as well, and we need more processing done at the rural level so that they do not lose the surplus of their produce to intermediaries. India needs Indian products to turn into global brands, not intermediary inputs to production of other companies. At the same time, for certain regions like North India, we need specific interventions to promote urban development as it suffers from a metropolitan vaccum.
Why is India not moving up the value chain?
Moving up the value chain requires rapid improvement in skill set of Indian people. For example, Indian healthcare needs about 2.7 million doctors (three times the current number) to satisfy India’s healthcare needs, which requires a radical new scale at which Indian education system needs to function. The current system of university degree based education although necessary (e.g for training doctors), has become inadequate for the needs of India’s large young population.
Today with help of ICT, learning can be commodified, and people can learn specific skills in shorter duration, and upgrade their capability. We need an education system that encourages “constant learning” and we need to reimagine universities not as ivory towers in gated communities, but as open public spaces where citizens can walk in and learn. We need to also link high schools and diploma institutes to regional industries where students are taught necessary skills and do not wait for employment until they are in their mid 20s. For the future of India, the role of ITI type vocational institutions is crucial. If India wants IITs to matter too, then it needs to rapidly expand its research budget. For Rs 3000 crore (at cost of a mega statue), as many as 400 high end science labs with seed grant of a million dollars can be established.
Strengthening the community
The above ideas aren’t radical. Most Indians aspire for common sense investments: better infrastructure, governance and quality of life. Yet, simple demands do not get delivered. Why? It is important to note that a nation of 1.35 billion cannot be governed from New Delhi. The average size of an Indian province is 45 million which is larger than most European nations. Central governments and Lutyens mandarins can keep proposing policies after policies, yet such top down policies are bound to fail in a country of the size and scale as India. Consider a community of size of an Indian village with a population of around 1350 people each, then each of these 10 lack communities, need to get greater devolved powers. India needs effective and local community governance, which has four characteristics:
1. Citizen accountability, and open democracy where each household is member of the governing council.
2. The council has the power to raise funds and taxes, and to enact regulations.
3. Executive accountability of local mayors who are responsible for their village or neighborhood affairs.
4. Establishment of an independent local press, and a public square, with library (museum), community center etc as community amenities
Of the 25 lack crore rupees the central government collects as taxes annually (which should rise with greater growth and formalisation of the economy), it should return a significant fraction (about 20% of the budget), directly to the local communities. If 20% of central funds were distributed among the 10 lack communities of 1350 people (less than 300 households) each, then each community would get a grant of around Rs 50 lack annually as a corpus to fund public goods within the community, over which a governing council will have full budgetary power.
One can envision a kind of tax democracy, where each household gets a size weighted fraction of this Rs 50 lack community grant (about Rs 18500 each) and it can decide which public projects they will contribute their portion of funds to. The choice of public projects can be proposed by a mayor and its executive cabinet, and the governance council made of all village households can vote which public project gets how much funds, or else if the fund gets invested in a community savings account. Such a community grant can go a long way in establishing a baseline of services and quality of life, that each Indian deserves, fostering open democracy and provide real significant but constrained devolved powers to local governments.
Empowering communities was a promise of independence (Swaraj) that is left undelivered, and when communities are empowered to invest in themselves, what shall they invest in? In their future. They shall invest in resources that make them compete better in the increasingly connected and globalized world.
PS: The figure below digramatically represents the ideas of Swadeshi and Swaraj and its various components, which I elaborate in the caption and the link here.
First set of measures (Swadeshi) are fundamental, which help citizens succeed, and are well acknowledged: Without an educated and healthy population base, economic success cannot be broad. Thus the focus on Human Development. Similarly, without a strong economic engine that supports free enterprise and flow of capital/resources, an educated and healthy population cannot be sustained. Thus the focus on Enterprise Development. At the core of a strong economic engine lies the ability of a nation to generate enough innovation, that it can create value in a competitive global economy. Thus the focus on Knowledge Development. However, while these development measures are fundamental, achieving them is dependant on the specific regional characteristics. Hence, Swaraj. We have to empower individuals and free them from social restrictions that bind their abilities. Colonial laws and social mores that restrict the pursuit of happiness of women and sexual minorities need to go. The same way, we have to take the government away, and bring back the focus on communities. Mahatma Gandhi and APJ Kalam both dreamt of autonomous village republics. India had a proud history of Janpadas. These republics were built around voluntary and engaged communities. These engaged communities need to be empowered in the government, through decentralised governance. What is not necessarily the purview of the centre and the state, should be local. There should be stronger mayors and empowered panchayats, that are publicly accountable.
Personal blog. Views expressed are my own, expressed in personal capacity.