Think like a wise man but communicate in the language of the people.
– William Butler Yeats
The world’s biggest issues today are economic issues. They are about growth, inflation, unemployment, income distribution and so on. Many other issues are not directly about economics but are indirectly so – like climate change or immigration in the US. Even terrorism ultimately is linked to economics – people with nothing to lose are easy prey for those who preach hate.
As the world’s governments deal with these thorny economic issues, they face many challenges. The one that is peculiar to economic issues is that most voters don’t understand the economics behind these economic issues.
For contrast let’s take a social issue that does not involve economics – abortion. Should abortion be legal or not is one of the most polarizing issues on the American political landscape. But it is a well understood issue. People know what is at stake. It is just that their beliefs are different and so they have different positions on the issue.
On the other hand take the matter of free trade, again in the US. There is no question that millions of jobs have been lost to free trade over the last two decades. Yet over the same period that these jobs have been lost, millions more have been created that have more than made up for the lost jobs. Unemployment rates in the US continue to be low. Inflation is low. GDP growth has been solid. The evidence so far bears out economists’ abiding belief in free trade as a good thing for the economy.
Now imagine yourself as an average American citizen in the mid 90s. Chinese manufacturing or Indian outsourcing is still small but rising. You read the newspapers regularly and the news from corporate America is not all good – a lot of it is about shuttering plants and laying off workers. You wonder if this might happen to you. There is other “informed opinion” out there that argues the case for free trade, but who are you going to believe – your local newspaper or some Harvard economist quoting David Ricardo? Can you be blamed if you believe that free trade is the enemy?
Most economic issues are similar to the example above. In the best scenario, they are just complex. In the worst, they are counter-intuitive – they can mean one thing to economists and just the opposite to the average citizen. And as you know, average citizens have many more votes than economists.
India is a developing country and every major issue today is economic in nature – unemployment, inequitable growth, infrastructure and even reservations are all economic issues. This is good for India. It cannot afford to be distracted by non-economic issues like a war with Pakistan or another brush with Hindutva. Let me take a handful of such issues to illustrate how befuddling they can be:
Land acquisition – If jobs have to go to rural areas, factories have to be built there. Building factories needs land and with India’s density of population, there isn’t a whole lot of fallow land lying around. Therefore, agricultural land will have to be acquired to build factories. For this land, even if a fair price is struck with the landowners, the agricultural labour will lose their jobs. Some jobs will be lost, others (perhaps fewer but higher paid factory workers) will be created. An economist will say that this is good, this is progress. But anyone who saw the Singur drama on TV probably won’t agree.
Labour flexibility – My views on labour flexibility are pretty clear. But they are similar to an economist’s views (untrained, in my case). US style labour flexibility, which is praised by economists and business leaders, creates more jobs and lower unemployment than continental Europe’s hidebound labour laws. India is far from where the US is in this respect. Our labour laws protect well-paid organized labour and create disincentives to investments and to bringing millions of workers in the unorganized sector into the organized sector. It is bad for workers. Now take a deep breath and imagine yourself explaining this to the average Indian citizen. His likely response is going to be – “Layoffs should be legal and that is good for workers?! Tell that to someone else.”
Small-scale sector – By excise exemptions to small-scale industries we protect a few ‘handloom’ jobs in every industry that has this protection, but will never get of the higher productivity of the ‘powerloom’ technology. Wages remain low and the industry is not able to compete in global markets. Soon employment too declines. Sounds pretty straightforward to you and me but if this protection was taken away suddenly, most voters would connect the large scale loss of jobs to something that the government did and fail to follow the rest of the argument. And of course, the media even if they get it themselves, know that portraying misery sells better than a debate on economics.
I could go on but I think I’ve made the point. The major issues facing India are shrouded in the fog of economics. Far from there being consensus, there isn’t even a certain level of understanding about the issues. What implications does this have for the leadership of India?
Get your message right.
These issues aren’t going to go away. They impede the country’s progress. The easy ones like dismantling industrial licensing are all done and taken care of. What are left are issues that need us to make hard choices – which can only be taken if there is debate and a certain level of support from voters for them.
Begin the process of educating people on the nuts and bolts of economics, starting with legislators. Simplify things (how about a rendition of the budget for the common man). Encourage debate. Participate in it. When you implement something, stick to your guns, if you know you are right.
And, oh, next time try and get a simple majority (whichever party it is). It helps.