Delhi can never be improved — until the rest of India improves!

As a general rule, capital cities are economically unproductive places. They neither grow food nor create industry. What they produce, or are supposed to produce, are public discussion, debate, decisions, as well as data and information for governance of the country as a whole.  People who come to capital cities — whether politicians or foreign diplomats or businessmen or students or even bureaucrats and journalists — should come there only for  temporary purposes, and then, once their work or business is done,  leave for their own “native places”… 

Of course only one city is a capital city.  Other cities and towns develop naturally in response to economies of scale in commerce and industry. My second piece of academic research at Cambridge back in 1976-77, which I talked about at the Delhi School of Economics in 1977-78 as a  Visiting Assistant Professor, had to do with India and other developing countries markedly being “Dual Economies”, where city and countryside, towns and metros and hinterland, are linked continuously by that wonderful two-way mass movement known as internal migration….

There is obviously seasonal migration of agricultural workers in search of urban employment during the time a crop is growing in the ground, returning home for the harvest and other festivals.  Beyond such seasonal flows, we may expect  rural-urban migration to continue depending on individual family calculations of expected employment, income, benefits etc, until as it were, the last person who has been thinking about migrating from village to town or from town to city decides not to move but to remain where he/she is.  Families typically maximise their well-being by having some members here, other members there or there etc, meeting up again during seasonal festivals when they can.  Besides, with modern commuter railways, large numbers of day-workers and vendors travel in and out of cities from the towns and villages every day.

The academic literature is vast and excellent, starting with Dale Jorgensen “The development of a dual economy”, 1961 EJ, Harris-Todaro, 1970, AER, and easily available, Jerome Rothenberg’s 1975 MIT discussion paper “On the economics of internal migration” http://dspace.mit.edu/bitstream/handle/1721.1/63948/onmicroeconomics00roth.pdf?sequence=1… See too e.g. from 2010 http://www.csae.ox.ac.uk/conferences/2010-edia/papers/275-eberhardt.pdf

In case of Delhi, despite its lack of water and its inhospitable climatic conditions on the edge of the Rajasthan desert, the British stamped it to become their Imperial child in India for ever more…  Yet even the British routinely fled to Simla or England every summer — as the current Delhi elite flees abroad to their exported children in America, Europe, Australia etc…  

Since British times, Delhi has been pampered with India’s public resources.  Not making its own food or clothing, it must import everything from the rest of India. After 1947,  millions of Hindu & Sikh refugees from the new Pakistan set up shop… then came migrants from all over, Bengal, the South, North East, UP, Bihar, Haryana, Rajasthan, Punjab, Kashmir — everywhere.  Now Delhi’s problems can never be solved until the endless migration slows down. Delhi is India’s capital and the more it is pampered, the better it seems to become and hence the more attractive it seems to India’s many millions of free people.  It is not hard to see that Delhi can never do enough for its residents because, since, qua capital city, it does not grow food or create industry (and is supposed to produce only public debate, decisions etc as a service industry), whatever it spends on public services comes from India’s exchequer, which in turn creates incentives for mass migration to continue from everywhere with no equilibrium being ever reached. 

The fascist solution that was, as I recall, suggested momentarily by a former Congress CM of Delhi, would be to forcibly prevent people from coming in from the outside.   Apparently the PRC as a totalitarian regime has some kind of system of internal passports which restricts citizens from travelling into metros on their own free will.  That cannot work in free India, where the Constitution would forbit it. Hence the correct long-term way to help Delhi solve its problems probably involves trying to improve the rest of the country!  It is something for the AAP Government to think about when it talks to Narendra Modi: seek to help the aam admi *outside* Delhi if you want to really help the aam admi inside Delhi!  In the meantime, try to improve efficiency in the local public goods the local government is supposed to produce, and do not ask for more resources from India.

This has been a 15 minute analysis…More to come…   

Advertisements

A Discussion Regarding Mr Nilekani’s Public Project

In response to my “Nandan Nilekani’s Nonsensical Numbering”,

Friendly Critic says:

I don’t think registering everyone in the country is such a bad idea. It may be difficult. But the post office reaches letters to anyone in the country, even the homeless. I don’t think it is doing anything wrong.

I replied:

The post office reaches letters to those with an address.

Friendly Critic replied:

You are mistaken. It reaches letters to beggars, addressed to the nearest pan shop. To repeat, I do not think it is wrong to register all residents; there are some good uses for it. If it is all right to enumerate residents once every ten years, there is nothing wrong in maintaining a continuous inventory. Only the British have an aversion to doing so, on grounds of piracy. But even their electoral registers are based on enumeration. And to attack Nilekani simply because he has taken on a job offered seems excessive to me.

I replied:

Thanks for this correspondence.  We may be slightly at cross-purposes and there may be some miscomprehension.  Of course if a beggar has a pan-shop as an address, that is an address.   But we are not talking about the efficiency or lack thereof of our postal services.

We are talking about the viability and utility of trying to attach a number, as an identification tag, to every Indian — for the declared purposes of (a) battling absolute poverty (of the worst kind); and(b) battling terrorism and crime.

Many Indians have passports, driving licenses, Voter cards,  PAN numbers, mobile numbers etc.    I am sure giving them a Nandan Nilekani Number will be easy.  It will be, incidentally, lucrative for the IT industry.

It will also be pointless to the extent that these people, who may number into the hundreds of millions, are already adequately identifiable by one or two other forms of photo id-cards.   (By way of analogy incidentally, Americans used to cash cheques at supermarkets using one or two photo ids — but the Social Security Card or number was not allowed to be one of them as it had no photo.)

Neither of the two declared objectives will have been explicitly served by giving Nandan Nilekani Numbers to those already adequately identifiable.

My point about incentive-compatibility is that the intended beneficiaries in any program of this kind (namely the anonymous absolute poor) need to have clear natural incentives to participate in order to make it work.  Here there are none.  Taking the very poorest people off the streets or out of their hamlets to be interrogated, photographed, fingerprinted and enumerated against their will, when they may have many more valuable things to be doing with their time in order to survive, is a violation of their freedom, privacy and dignity.   Even if they submit to all this voluntarily, there are no obvious tangible benefits accruing to them as individuals as a result of this number (that many will not be able to read).

If those already adequately identifiable easily get an NNN (at low cost and without violation of indvidual freedom or dignity), while those who are the intended beneficiaries do not do so (except at high cost and with violations of individual freedom and dignity), that would enhance inequality.

Because such obvious points have failed to be accounted ab initio in this Big Business scheme paid for by public money, I have had to call it nonsensical.

Nandan Nilekani’s Nonsensical Numbering (Updated to 11 January 2013)

Original post: 14 Sep 2009

I have been a rather harsh critic of Indian English-language media but I was pleased to see Mr Karan Thapar with good research systematically expose the other day the nonsense being purveyed by Mr Nandan Nilekani about the idea of branding each of a billion Indians with a government number. This is not Auschwitz.   Nor can India create an American-style Social Security Administration.  Mr Nilekani seems not to have the faintest idea about India’s poor and destitute, else he would not have made a statement like “We need one single, non-duplicate way of identifying a person and we need a mechanism by which we can authenticate that online anywhere because that can have huge benefits and impact on public services and also on making the poor more inclusive in what is happening in India today.”  (italics added)

What does he plan to do?  Haul away the hundreds of thousands of  homeless from the streets  and  flyovers of our major cities and start interrogating, measuring, photographing and fingerprinting them against their will?  On what ploy?  That without the number  he will give them they will not be able to continue to live and do what they have been doing for half a generation?  Or that they will get a delicious hot meal from the Taj or Oberoi if they cooperate?  And what about rural India?  Does he plan to make an aerial survey of India’s rural landscapes by helicopter to find whom he can catch to interrogate and fingerprint? It will be grotesquely amusing to see his cohorts try to identify and then haul away India’s poor from their normal activities — he and his friends will likely come to grief trying to do so!  Guaranteed.  And the people will cheer because they know fakery when they see it.

Mr Nilekani needs to ask his economist-friends to teach him about asymmetric information, incentive-compatiblity theory etc.  There have been several  Bank of Sweden prizes given to economists for this material, beginning with FA Hayek in 1974 or even earlier.

(As for the wholly different stated agenda of preventing crime and terrorism using Mr Nilekani’s numbering, might we recall that Kasab’s dead companions have remained unclaimed in a Mumbai morgue for almost ten months now?)

The whole exercise that Prime Minister Manmohan Singh has with such fanfare set Mr Nilekani is ill-conceived and close to complete nonsense  — designed only to keep in business the pampered industry that Mr Nilekani has been part of as well as its bureaucratic friends.   The Prime Minister has made another error and should put a stop to it before it gets worse.   The poor have their privacy and their dignity.    They are going to refuse to waste their valuable time  at the margins of survival volunteering for such gimmickry.

A Discussion Regarding Mr Nilekani’s Public Project

September 15, 2009 — drsubrotoroy | Edit

In response to my “Nandan Nilekani’s Nonsensical Numbering”,

Friendly Critic says:

I don’t think registering everyone in the country is such a bad idea. It may be difficult. But the post office reaches letters to anyone in the country, even the homeless. I don’t think it is doing anything wrong.

I replied:

The post office reaches letters to those with an address.

Friendly Critic replied:

You are mistaken. It reaches letters to beggars, addressed to the nearest pan shop. To repeat, I do not think it is wrong to register all residents; there are some good uses for it. If it is all right to enumerate residents once every ten years, there is nothing wrong in maintaining a continuous inventory. Only the British have an aversion to doing so, on grounds of piracy. But even their electoral registers are based on enumeration. And to attack Nilekani simply because he has taken on a job offered seems excessive to me.

I replied:

Thanks for this correspondence.  We may be slightly at cross-purposes and there may be some miscomprehension.  Of course if a beggar has a pan-shop as an address, that is an address.   But we are not talking about the efficiency or lack thereof of our postal services.

We are talking about the viability and utility of trying to attach a number, as an identification tag, to every Indian — for the declared purposes of (a) battling absolute poverty (of the worst kind); and(b) battling terrorism and crime.

Many Indians have passports, driving licenses, Voter cards,  PAN numbers, mobile numbers etc.    I am sure giving them a Nandan Nilekani Number will be easy.  It will be, incidentally, lucrative for the IT industry.

It will also be pointless to the extent that these people, who may number into the hundreds of millions, are already adequately identifiable by one or two other forms of photo id-cards.   (By way of analogy incidentally, Americans used to cash cheques at supermarkets using one or two photo ids — but the Social Security Card or number was not allowed to be one of them as it had no photo.)

Neither of the two declared objectives will have been explicitly served by giving Nandan Nilekani Numbers to those already adequately identifiable.

My point about incentive-compatibility is that the intended beneficiaries in any program of this kind (namely the anonymous absolute poor) need to have clear natural incentives to participate in order to make it work.  Here there are none.  Taking the very poorest people off the streets or out of their hamlets to be interrogated, photographed, fingerprinted and enumerated against their will, when they may have many more valuable things to be doing with their time in order to survive, is a violation of their freedom, privacy and dignity.   Even if they submit to all this voluntarily, there are no obvious tangible benefits accruing to them as individuals as a result of this number (that many will not be able to read).

If those already adequately identifiable easily get an NNN (at low cost and without violation of indvidual freedom or dignity), while those who are the intended beneficiaries do not do so (except at high cost and with violations of individual freedom and dignity), that would enhance inequality.

Because such obvious points have failed to be accounted ab initio in this Big Business scheme paid for by public money, I have had to call it nonsensical.

Some follow-up  11 January 2013

From Facebook 11 January 2013

A biometrically generated large number is given to a very poor barely literate person and he/she is instructed that that is the key, the *sole* key, to riches and benefits from the state. The person lives on the margins of survival, eking out a daily income for himself/herself plus dependents under trying conditions. It is that absolute anonymous poor — who are *not* already identifiable easily through mobile numbers, voter id cards, drivers’ licenses etc — who are the intended beneficiaries. Suppose that person loses the card or has it stolen. Has the key to the riches and benefits from the state vanished? Those who are already easily identifiable need only produce alternative sources of identification and so for them to get the number as a means of identification is redundant, yet it is they who will likely have better access to the supposed benefits rather than the absolute poor. What New Delhi’s governing class fails to see is that the masses of India’s poor are not themselves a mass waiting for New Delhi’s handouts: they are *individuals*, free, rational, thinking individuals who know their own lives and resources and capacities and opportunities, and how to go about living their lives best. What they need is security, absence of state or other tyranny, roads, fresh water, electricity, functioning schools for their children, market opportunities for work, etc, not handouts from a monarch or aristocrats or businessmen….