September 25, 2009 — drsubrotoroy
Bruce Bartlett: This is the best picture of the diminution of the formerly major media that I have seen.
Subroto Roy: The long run problem though is how does new media actually become profitable enough to supplant the old, not just supplement it as it does now.
BB: I think it’s a given that that will happen eventually. The problem is how to maintain quality control and accountability in the new media when editorial oversight has effectively disappeared.
SR: Editorial oversight is substituted for by mutual peer review and reputation protection (as well as a return perhaps to a pre-codification state of customary law). But still, small subscription or user charges for many millions of users may be the only long run way to sustain it, not old media advertising.
BB: I have doubts about peer review being a viable replacement for editorial control. It’s too easy to delete comments, links get broken, search engines only scan the surface etc. The virtue of traditional media is that they have systems in place that ensure a degree of responsibility at least in the hard news coverage. That simply diesn’t exist in the new media and probably won’t be created because such systems are costly and time-consuming.
SR: In that case new and old will coexist, with new continually lifting material for free from the old without recompense. (Arianna H. had a nice comparison/contrast some months ago.) The equilibrium outcome may be one of vertically integrated companies…. Come to think of it, where is Rupert Murdoch in the new media world?
BB: I am sympathetic to the idea of modifying the antitrust laws to allow newspapers to collude to create some sort of payment system that all papers could participate in. Congress created such an exemption for baseball and I think newspapers are at least as important.
SR: Well vertical would involve the Murdochs of the world buying up the Googles and the Facebooks (or perhaps being bought up by them instead).
BB: Murdoch tried that by buying MySpace, which hasn’t worked out so well.
SR: Vertical integration is not easy managerially but it may provide the only business model in the long run for new media to coexist parasitically with old media — old media does the basic research and earns the revenue, new media spreads the technology and earns the goodwill while living off the old.
BB: I don’t agree. I think some sort of horizonal integration among news providers may be viable. The new media are essentially parasitic, living off the reportage and infrastructure created by the old media. We all know that the old media need to charge for content. But they can’t without creating some sort of arrangement that would basically involve price fixing. This is where modification of the antitrust laws would help. The alternative, I fear, is government subsidies of some kind to preserve the basic news gathering function.
SR: Well there is agreement then that the parasite metaphor may be useful. Old media is the host where new media is the parasite. Good parasites tend to be in a symbiotic relationship with their host, feeding off it but also doing good to it. It would be a foolish parasite that kills off its host altogether. In case of media, someone (Publisher) pays someone else (Reporter) to witness/record Event A. That is Stage One. Then Publisher pays someone else again (Editor) to evaluate whether the report about A deserves or not to be published via the airwaves (radio, TV), cables (Internet) or dead trees (newsprint). That is Stage Two. Our new media parasite can do Stage Two well but relies on old media entirely for Stage One, and without Stage One there is no Stage Two. Vertical integration here would merely mean the host-parasite relationship becomes contractually acknowledged. I do think the dead-tree aspect will become reduced even further but radio and TV will survive.
BB: The biggest problem with my idea is the problem of leakage. One blogger like Drudge can subscribe to all the hard news web sites and just recycle their reportage for free. I don’t know what to do about that and it argues for your idea of vertical integration. But you have the same problem in that there is no way of controlling new entrants. It may be that the problem cannot be solved and we will have to muddle through somehow. In a column a while back I suggested that reporting will never pay for itself and will have to be subsidized through foundations, universities and the like.
SR: A point of yours on which I agree is this: consumers of the Internet are gaining a free good, namely the outcome of the parasitic process we discussed, and hence there is a prima facie argument for them to be taxed (by a license fee for example) and, say, newsprint or journalism schools subsidised with the earmarked proceeds.
BB: Insofar as news gathering is a public good there is a case for some sort of tax to subsize it. The problem is that I don’t see any practical way of taxing Internet access, which would be the logical tax base. Second, I don’t see any practical way of subsiding news gathering without the danger of government control. There are also first amendment problems. Perhaps there is some way that the major search engines like Google could finance a C-SPAN-type basic news gathering service.
SR: We simply do what the BBC did when it started 70+ years ago, namely, license fees for radio and then TV. So each Internet connection gets taxed or pays a one-time or annual license fee. It is the logical tax base for sure. Re. subsiding news gathering, that is why I said subsidise newsprint (expensive raw material common to all newspapers), and perhaps subsidise young journalists in training (left, right or centre). That’s about it. Yes the C-Span model is good too but will depend on largesse of very rich people.
BB: Per our discussion.
(That is where the conversation stands as of about Sep 27 2009. Feel free to join in or model better.)
June 1, 2007 — drsubrotoroy
US election ’08:
America’s Presidential Campaign Seems Destined To Be Focussed On Iraq
By Subroto Roy
First published in The Statesman,
Editorial Page, Special Article, June 1 2007
Like baseball and American football, it is not easy to comprehend modern American politics from the outside world. The very idea that most American voters are either “Democrat” or “Republican” throughout or over much of their lives is itself a little odd. In an ordinary social or job-environment, a single Republican in a group of Democrats will feel uncomfortable as will a single Democrat in a group of Republicans.
Typically, each is in favour of some and against other specific “issues”, or, more accurately, specific political slogans. A Republican may be typically in favour of “free enterprise”, “limited government”, “a strong military”, and “family values”. A Democrat may be typically in favour of a woman’s “right to choose” (whether or not to abort a foetus), “gun control”, “universal health care” and tolerance of diversity. Republicans typically charge Democrats with being tax-raisers, profligate spenders of public money, soft on defence and crime, promoters of homosexual rights and generally daffy-headed hippies. Democrats typically charge Republicans with being stooges of the rich, oppressors of middle and working classes, proto-fascists and jingoists, and lunatic religious fundamentalists.
The mood is vicious, and in small social gatherings (even between husband and wife) tempers flare and can only subside by reference to some other neutral subject such as sports or by making a joke. Comedy is a major forum of political discussion and means of tension-release.
Greasy pole of power
A typical politician may rise from being an elected local official to running for the State legislature and thence running to be State Governor or a US Senator from the State, and thence either make a bid for the White House perhaps or fade away as a senior statesman. George W Bush was Governor of Texas, Bill Clinton of Arkansas, Ronald Reagan of California, Jimmy Carter of Georgia. George Bush Sr became Reagan’s Vice President after being a Texas legislator, head of the CIA and UN Ambassador. Gerald Ford went from House Speaker to Vice President and then President due to collapse of the Nixon Presidency. Richard Nixon himself was Dwight Eisenhower’s Vice President and before that an abrasive Senator from California. Eisenhower was not a politician but a retired soldier, the war-hero who led the Allies to victory, and became perhaps the most popular and competent of all modern US Presidents.
In a nutshell, American politics is about the reputations of individuals acquired along the way, which then their friends and allied interest groups seek to publicly enhance and their enemies seek to publicly destroy as they try to climb the greasy pole of political power. The media, especially television in the last fifty years, becomes pivotal, as each side tries to ferret out and expose publicly any dirty deeds of the other, or failing that, at least create a monstrous image based on a voting record in the public domain.
As the 2008 Presidential Election approaches, both major parties will witness ruthless slug-fests as candidates for the party’s nomination battle one another to see who is the last man/ woman standing. That person then gets to choose a Vice Presidential candidate, and the two form the “ticket” which will fight the other party’s ticket. This inter-party contest for the White House (and hence some 4,000 executive jobs in Washington DC for four years) has been compared by astute American observers to a nationwide popularity contest. It is certainly not the most reliable method in the 21st Century by which to find the wisest government of the world’s strongest (and perhaps most aggressive) military power.
The Iraq war has come to wholly dominate America’s current political debate. The number of American soldiers dead in Iraq is now well over 3,400 and climbing quickly; the number seriously wounded by roadside bombs etc is in the tens of thousands.
Among the Democrats, the perpetually ambitious Mrs Hilary Clinton is hard-pressed to explain how she, as Senator from New York State and someone with experience of her husband’s Presidency, backed his Republican successor’s jingoism and chose to be blind to all the official mendacity. She is unable to explain herself. Her rivals include Senator Barack Obama ~ the son of a black Kenyan graduate student in Hawaii and a white woman from Kansas, which, in American terms, brands him as black. He is a Harvard-trained lawyer married to a Harvard-trained lawyer, and though there is glamour and excitement in his candidacy as a young freshman Senator who voted against the Iraq war, it is inevitable many whites will see him as being a black man while at least some blacks will see him as being not black enough in not having been seared by the history of black people in America. His enemies have been already delighted to suggest he is Muslim with a middle name “Hussein” and that Obama rhymes with Osama. Such prejudices may be too much to overcome. The Democrats also include John Edwards of South Carolina, who was John Kerry’s running-mate in 2004, and who presently gains from being neither female nor black. It is not impossible once these and others like Governor Bill Richardson and Senators Joe Biden and Chris Dodd have bruised one another sufficiently, a heavyweight old candidate joins the Democratic race like Al Gore (who likely had beaten Bush in 2000). But Gore is now facing a personal obesity problem.
The leading Republican contenders are trying to outdo each other on harshness towards alleged terrorists trying to attack America (something which can simply mask racial and religious prejudices and sadism). Arizona Senator John McCain’s claim to fame is that he many years ago was a POW who suffered under the North Vietnamese. He was once seen as a reasonable politician but his outright support for Bush’s aggressiveness abroad goes against the 70% of voters who today think Bush has been dead wrong. Former New York Mayor Rudy Giuliani made his name by apparent efficiency and compassion during the 9/11 attacks. He now seems to see his task as one of outdoing McCain’s jingoism. Former Massachusetts Governor Mitt Romney has positioned himself to seem the most “standard” candidate around; but he is a member of the Christian sect known as the Mormons, prejudice against whom remains deep in the country and Romney may eventually face the same uphill task as Obama.
New shoots of life
Surprise factors have been upstart anti-War candidates. Mike Gravel, a principled former Senator from Alaska, forced his fellow-Democrats to face up to their hypocrisy over Iraq and war in general. But Gravel is the longest of long shots, and lacks the power of any of the Democratic special interest groups on his side. Republican Texas Congressman Ron Paul is the dark horse in the entire field at the moment. He is staunchly libertarian or “classical liberal” on principle, believes in a wholly non-interventionist American foreign policy, consistently voted against the Iraq war and has never voted in favour of raising taxes. He is the runaway favourite of the Internet where America’s real political discussion is increasingly taking place, and his grassroots support among both Republicans and Democrats opposed to the Iraq war is swelling fast. An obstetric surgeon by profession, Paul, at age 71, has been and remains married only once (an American rarity), and may well appeal to all sides of the political and economic spectra although his technical monetary economics is weak. What his emergence does show is how American democracy is yet able to spring healthy shoots of new life from within a decaying morass.
Correction : In my previous article “On Indian Nationhood”, it was said Independence came “forty years” after Montagu-Chelmsford when it was thirty years. The error is regretted. I had meant the Morley-Minto period of 1906-1908.
February 5, 2006 — drsubrotoroy
OF GRAVEN IMAGES
It is a fallacy of our narcissistic age to expect images of what supreme leaders of thought may have looked like; their teachings and deeds are unaffected by our erroneous expectations
By SUBROTO ROY
First published in The Statesman Editorial Page Special Article, Feb 5 2006
IT is hard for us in our narcissistic age of photography, cinema, TV and the Internet to imagine older worlds and cultures where men and women (especially named historical figures) lived and died without any images whatsoever being left behind of what they may have looked like. Few of us know what our own great great grandparents looked like, and they died only a century ago. In Indian religious and philosophical thought, we hardly even know any names.
Eliot in his monumental Hinduism and Buddhism said, “In reading the Brahamanas and older Upanishads we often wish we knew more of the writers and their lives. Rarely can so many representative men have bequeathed so much literature and yet left so dim a sketch of their times. Thought was their real life… we hear surprisingly little about contemporary events.”
In Jain tradition, the first saint, Risabha, son of a king of Ayodhya, was born 100 billion sagaras of years ago, where one sagara is 100 billion palyas, and a palya is the period in which a well a mile deep filled with fine hairs can be emptied if one hair is withdrawn every one hundred years. That is a long time. Risabha lived 8,400,000 years, exceeding all the enormous longevities mentioned in Judaeo-Christian scriptures.
Fortunately for the cause of logic and natural science, “the lives of his successors and the intervals which separated them became shorter”. In Asoka’s edicts, the Jains find their first definite objective mention outside fable, myth and legend. Mahavira, the 24th and greatest Jain saint, whose personal name was Vardhamana, was a contemporary of Buddha though somewhat older. His parents lived in a suburb of Vaisali. When he was 34, “they decided to die by voluntary starvation and after their deaths he renounced the world and started to wander naked in western Bengal, enduring some persecution as well as self-inflicted penances.” Thirteen years later, at age 47, Mahavira had attained enlightenment and appeared as the head of the Nigantha religious order, i.e. the “unfettered”, and it is by that name that the Jains are known to the Buddhists. No image of the historical Mahavira is available, which should not surprise us given the great length of time that separates us as well as the simple fact that the art of realistic portrait-painting is but a few centuries old — starting with, say, Rembrandt and the Dutch Masters — and of course the arts of photography etc are all wholly recent.
Of Gotama, the Buddha, the Sakyamuni of Mahayana tradition, there have been countless images made over the millennia though none may bear any recognisable likeness to the actual man. During his period of fruitless self-mortification, we have his own words “When I touched my belly, I felt my backbone through it and when I touched my back, I felt my belly”. After his enlightenment, wanderings and teachings, the “beauty of his appearance and the pleasant quality of his voice are often mentioned but in somewhat conventional terms which inspire no confidence that they are based on personal reminiscence, nor have the most ancient images which we possess any claim to represent his features, for the earliest of them are based on Greek models and it was not the custom to represent him by a figure until some centuries after his death.”
It is possible “the truest idea of his person is to be obtained not from the abundant effigies which show him as a somewhat sanctimonious ascetic, but from the statues of him as a young man such as that found at Sarnath, which may possibly preserve not indeed the physiognomy of Gotama but the general physique of a young Nepalese prince, with powerful limbs and features and a determined mouth. For there is truth at the bottom of the saying that Gotama was born to be either a Buddha or a universal monarch: he would have made a good general, if he had not become a monk” (Eliot).
In case of Yeshua ben Nazereth, the founder of Christianity, the controversy has become most intense in recent times. A trial has begun in an Italian courtroom on 27 January 2006 as to whether Jesus existed at all, whether the Roman Catholic Church has violated Italian law by teaching about him. An atheist plaintiff, Luigi Cascioli, has alleged “The Church constructed Christ upon the personality of John, the son of Judas of Gamala”, and claims it is up to the Church to prove in court that Jesus did exist. A priest, Enrico Righi, representing the Church in court, has been accused of breaking two laws: impersonation and abuse of public belief, for having published in a parish bulletin that Jesus was born of a couple named Mary and Joseph in Bethlehem and lived in Nazareth. Judge Gaetano Mautone initially refused to hear the case but was forced to do so after being over-ruled by the Court of Appeals.
As for what the historical Jesus may have looked like, The Bible gives no physical description other than in Isaiah 53:2b, “he hath no form nor comeliness, and when we shall see him, there is no beauty that we should desire him.”As a Palestinian Jew, Jesus was likely to have been dark, not the blue-eyed Nordic Jesus of modern American imagination with Presbyterian nose, long blonde hair and height of six feet (Fig. 1). For centuries, the Shroud of Turin was believed by many to have been the actual burial cloth of Jesus — until modern scientific techniques of carbon-dating have conclusively proved that the Shroud was probably of a medieval nobleman and had nothing to do with the historical Jesus. Out of respect as well as sheer ignorance of what he may have looked like, modern cinematic productions traditionally did not show Christ’s face. But based on the Shroud of Turin image (Fig 2), the actor Jim Caviezel recently acted the role of Jesus in “The Passion of the Christ” (Fig. 3). Jean Claude Gragard, in a 2001 BBC documentary “Son of God” chose a different way. “Using archaeological and anatomical science rather than artistic interpretation makes this (Fig 4) the most accurate likeness ever created. It isn’t the face of Jesus, because we’re not working with the skull of Jesus, but it is the departure point for considering what Jesus would have looked like.” They “started with an Israeli skull dating back to the 1st century. They then used computer programs, clay, simulated skin and their knowledge about the Jewish people of the time to determine the shape of the face, and colour of eyes and skin.” The result is “a broad peasant’s face, dark olive skin, short curly hair and a prominent nose, about 5’ 1” in height, 110 pounds in weight.” We do not and cannot in practice know what Jesus looked like but this might be closer to the truth than the work of great artists.
And of course, Jesus’ Divinity to Christian believers, and his teachings and deeds for all mankind, like those of Mahavira or Buddha or other supreme leaders of human thought like Aristotle, Zarathustra, Confucius, Muhammad and Nanak, are unaffected by whatever image people have erroneously made of them.
see also my Twitter Wall on the CharlieHebdo controversy; also https://independentindian.com/2001/12/22/the-case-for-and-against-the-satanic-verses/ and https://independentindian.com/science-religion-art-the-necessity-of-freedom-2004/
January 31, 1998 — drsubrotoroy
Transparency and Economic Policy-Making
An address by Professor Subroto Roy to the Asia-Pacific Public Relations Conference, (panel on Transparency chaired by C. R. Irani) January 30 1998.
This talk is dedicated to the memory of my sister Suchandra Bhattacharjee (14.02.1943-10.01.1998).
1. I would like to talk about transparency and economic policy-making in our country. For something to be transparent is, in plain language, for it to be able to be openly seen through, for it to not to be opaque, obscure or muddy, for it to be clear to the naked eye or to the reasonable mind. A clear glass of water is a transparent glass of water. Similarly, an open and easily comprehensible set of economic policies is a transparent set of economic policies.
The philosopher Karl Popper wrote a famous book after the Second World War titled The Open Society and its Enemies. It contained a passionate defence of liberal institutions and democratic freedoms and a bitter attack on totalitarian doctrines of all kinds. It generated a lot of controversy, especially over its likely misreading of the best known work of political philosophy since the 4th Century BC, namely, Plato’s Republic . I shall borrow Popper’s terms ‘open society’ and ‘closed society’ and will first try to make this a useful distinction for modern times, and then apply it to the process of economic policy-making in India today.
2. An open society is one in which the ordinary citizen has reasonably easy access to any and all information relating to the public or social interest — whether the information is directly available to the citizen himself or herself, or is indirectly available to his or her elected representatives like MP’s and MLA’s. Different citizens will respond to the same factual information in different ways, and conflict and debate about the common good will result. But that would be part of the democratic process.
The assessment that any public makes about the government of the day depends on both good and bad news about the fate of the country at any given time. In an open society, both good news and bad news is out there in the pubic domain — open to be assessed, debated, rejoiced over, or wept about. If we win a cricket match or send a woman into space we rejoice. If we lose a child in a manhole or a busload of children in a river, we weep. If some tremendous fraud on the public exchequer comes to be exposed, we are appalled. And so on.
It is the hallmark of an open society that its citizens are mature enough to cope with both the good and the bad news about their country that comes to be daily placed before them. Or, perhaps more accurately, the experience of having to handle both good and bad news daily about their world causes the citizens in an open society to undergo a process of social maturation in formulating their understanding of the common good as well as their responses to problems or crises that the community may come to face. They might be thereby thought of as improving their civic capacities, as becoming better-informed and more discerning voters and decision-makers, and so becoming better citizens of the country in which they live.
The opposite of an open society is a closed society — one in which a ruling political party or a self-styled elite or nomenclatura keep publicly important information to themselves, and do not allow the ordinary citizen easy or reasonably free access to it. The reason may be merely that they are intent on accumulating assets for themselves as quickly as they can while in office, or that they are afraid of public anger and want to save their own skins from demands for accountability. Or it may be that they have the impression that the public is better off kept in the dark — that only the elite nomenclatura is in position to use the information to serve the national interest.
In a closed society it is inevitable that bad news comes to be censored or suppressed by the nomenclatura, and so the good news gets exaggerated in significance. News of economic disasters, military defeats or domestic uprisings gets suppressed. News of victories or achievements or heroics gets exaggerated. If there are no real victories, achievements or heroics, fake ones have to be invented by government hacks — although the suppressed bad news tends to silently whisper all the way through the public consciousness in any case.
Such is the way of government propaganda in almost every country, even those that pride themselves on being free and democratic societies. Dostoevsky’s cardinal advice in Brothers Karamasov was: “Above all, never lie to yourself”. Yet people in power tend to become so adept at propaganda that they start to deceive themselves and forget what is true and what is false, or worse still, cannot remember how to distinguish between true and false in the first place. In an essay thirty years ago titled Truth and Politics, the American scholar Hannah Arendt put it like this:
“Insofar as man carries within himself a partner from whom he can never win release, he will be better off not to live with a murderer or a liar; or: since thought is the silent dialogue carried out between me and myself, I must be careful to keep the integrity of this partner intact, for otherwise I shall surely lose the capacity for thought altogether.”
3. Closed societies may have been the rule and open societies the exception for most of human history. The good news at the end of the 20th Century is surely that since November 7 1989, when the Berlin Wall fell, the closed society has officially ceased to be a respectable form of human social organization. The age of mass access to television and telecommunications at the end of the 20th Century may be spelling the permanent end of totalitarianism and closed societies in general. The Berlin Wall was perhaps doomed to fall the first day East Germans were able to watch West German television programs.
Other than our large and powerful neighbour China, plus perhaps North Korea, Myanmar, and some Islamic countries, declared closed societies are becoming hard to find, and China remains in two minds whether to be open or closed. No longer is Russia or Romania or Albania or South Africa closed in the way each once was for many years. There may be all sorts of problems and confusions in these countries but they are or trying to become open societies.
Under the glare of TV cameras in the 21st Century, horrors like the Holocaust or the Gulag or even an atrocity like Jalianwalla Bag or the Mai Lai massacre will simply not be able to take place anywhere in the world. Such things are not going to happen, or if they do happen, it will be random terrorism and not systematic, large scale genocide of the sort the 20th Century has experienced. The good news is that somehow, through the growth of human ingenuity that we call technical progress, we may have made some moral progress as a species as well.
4. My hypothesis, then, is that while every country finds its place on a spectrum of openness and closedness with respect to its political institutions and availability of information, a broad and permanent drift has been taking place as the 20th Century comes to an end in the direction of openness.
With this greater openness we should expect bad news not to come to be suppressed or good news not to come to be exaggerated in the old ways of propaganda. Instead we should expect more objectively accurate information to come about in the public domain — i.e., better quality and more reliable information, in other words, more truthful information. This in turn commensurately requires more candour and maturity on the part of citizens in discussions about the national or social interest. Closed society totalitarianism permitted the general masses to remain docile and unthinking while the nomenclatura make the decisions. Dostoevsky’s Grand Inquisitor said that is all that can be expected of the masses. Open society transparency and democracy defines the concept of an ordinary citizen and requires from that citizen individual rationality and individual responsibility. It is the requirement Pericles made of the Athenians:
“Here each individual is interested not only in his own affairs but in the affairs of the state as well; even those who are mostly occupied with their own business are extremely well-informed on general politics – this is a peculiarity of ours: we do not say that a man who takes no interest in politics is a man who minds his own business; we say that he has no business here at all.”
5. All this being said, I am at last in a position to turn to economic policy in India today. I am sorry to have been so long-winded and pedantic but now I can state my main substantive point bluntly: in India today, there is almost zero transparency in the information needed for effective macroeconomic policy-making whether at the Union or State levels. To illustrate by some examples.
(A) Macroeconomic policy-making in any large country requires the presence of half a dozen or a dozen well-defined competing models produced by the government and private agencies, specifying plausible causal links between major economic variables, and made testable against time-series data of reasonably long duration. In India we seem to have almost none. The University Economics Departments are all owned by some government or other and can hardly speak out with any academic freedom. When the Ministry of Finance or RBI or Planning Commission, or the India teams of the World Bank or IMF, make their periodic statements they do not appear to be based on any such models or any such data-base. If any such models exist, these need to be published and placed in the public domain for thorough discussion as to their specification and their data. Otherwise, whatever is being predicted cannot be assessed as being very much more reliable than the predictions obtained from the Finance Minister’s astrologer or palmist. (NB: Horse-Manure is a polite word used in the American South for what elsewhere goes by the initials of B. S.). Furthermore, there is no follow-up or critical review to see whether what the Government said was going to happen a year ago has in fact happened, and if not, why not.
(B) The Constitution of India defines many States yet no one seems to be quite certain how many States really constitute the Union of India at any given time. We began with a dozen. Some 565 petty monarchs were successfully integrated into a unitary Republic of India, and for some years we had sixteen States. But today, do we really have 26 States? Is Delhi a State? UP with 150 million people would be the fifth or sixth largest country in the world on its own; is it really merely one State of India? Are 11 Small States de facto Union Territories in view of their heavy dependence on the Union? Suppose we agreed there are fifteen Major States of India based on sheer population size: namely, Andhra, Assam, Bihar, Gujarat, Haryana, Karnataka, Kerala, MP, Maharashtra, Orissa, Punjab, Rajasthan, Tamil Nadu, UP and West Bengal. These States account for 93% of the population of India. The average population of these 15 Major States is 58 million people each. That is the size of a major country like France or Britain. In other words, the 870 million people in India’s Major States are numerically 15 Frances or 15 Britains put together.
Yet no reliable, uniformly collected GDP figures exist for these 15 States. The RBI has the best data, and these are at least two years old, and the RBI will tell you without further explanation that the data across States are not comparable. If that is the case at State-level, I do not see how the national-level Gross Domestic Product can possibly be estimated with any meaningfulness at all.
(C) Then we hear about the Government Budget deficit as a percentage of GDP. Now any national government is able to pay for its activities only by taxation or borrowing or by using its monopoly over the domestic medium of exchange to print new money. In India today, universal money-illusion seems to prevail. It would not be widely recognised by citizens, journalists or policy-makers that, say, 100,000 Rupees nominally taxed at 10% under 20% inflation leaves less real disposable income than the same taxed at 20% with 5% inflation. This is in part because inflation figures are unknown or suspect. There is no reliable all-India or State-level consumer price index. The wholesale price index on the basis of which the Government of India makes its inflation statements, may not accurately reflect the actual decline in the purchasing power of money, as measured, say, by rises in prices of alternative stores of value like land. The index includes artificially low administered or subsidized prices for petroleum, cereals, and electricity. To the extent these prices may be expected to move towards international equilibrium prices, the index contains a strong element of deferred inflation. One urgent task for all macroeconomic research in India is construction of reliable price-data indices at both Union and State levels, or at a minimum, the testing for reliability by international standards of series currently produced by Government agencies.
Without reliable macroeconomic information being spread widely through a reasonably well-informed electorate, the Government of India has been able to wash away fiscal budget constraints by monetization and inflation without significant response from voters. The routine method of meeting deficits has become “the use of the printing press to manufacture legal tender paper money”, either directly by paying Government creditors “with new paper money specially printed for the purpose” or indirectly by paying creditors “out of loans to itself from the Central Bank”, issuing paper money to that amount. Every Budget of the Government of India, including the most recent ones of 1996 and 1997, comes to be attended by detailed Press discussion with regard to the minutae of changes in tax rates or tax-collection — yet the enormous phenomena of the automatic monetization of the Government’s deficit is ill-understood and effectively ignored. Historically, a policy of monetization started with the British Government in India during the Second World War, with a more than five-fold increase in money supply occurring between 1939 and 1945. Inflation rates never seen in India before or since were the result (Charts 0000), attended by the Great Famine of 1942/43. Though these were brought down after succession of C. D. Deshmukh as Governor of the Reserve Bank, the policy of automatic monetization did not cease and continues until the present day. Inflation “sooner or later destroys the confidence, not only of businessmen, but of the whole community, in the future value of the currency. Then comes the stage known as “the flight from the currency.” Had the Rupee been convertible during the Bretton Woods period, depreciation would have signalled and helped to adjust for disequilibrium. But exchange-controls imposed during the War were enlarged by the new Governments of India and Pakistan after the British departure to exclude convertible Sterling Area currencies as well. With the Rupee no longer convertible, internal monetization of deficits could continue without commensurate exchange-rate depreciation.
The Reserve Bank was originally supposed to be a monetary authority independent of the Government’s fiscal compulsions. It has been prevented from developing into anything more than a department of the Ministry of Finance, and as such, has become the captive creditor of the Government. The RBI in turn has utilized its supervisory role over banking to hold captive creditors, especially nationalized banks whose liabilities account for 90% of commercial bank deposits in the country. Also captive are nationalized insurance companies and pension funds. Government debt instruments show on the asset side of these balance-sheets. To the extent these may not have been held had banks been allowed to act in the interests of proper management of depositors’ liabilities and share-capital according to normal principles, these are pseudo-assets worth small fractions of their nominal values. Chart 0000 shows that in the last five years the average term structure of Government debt has been shortening rapidly, suggesting the Government is finding it increasingly difficult to find creditors, and portending higher interest rates.
General recognition of these business facts, as may be expected to come about with increasing transparency, would be a recipe for a crisis of confidence in the banking and financial system if appropriate policies were not in place beforehand.
(D) As two last examples, I offer two charts. The first shows the domestic interest burden of the Government of India growing at an alarming rate, even after it has been deflated to real terms. The second tries to show India’s foreign assets and liabilities together – we always come to know what is happening to the RBI’s reserve levels, what is less known or less understood is the structure of foreign liabilities being accumulated by the country. Very roughly speaking, in terms that everyone can understand, every man, woman and child in India today owes something like 100 US dollars to the outside world. The Ministry of Finance will tell you that this is not to be worried about because it is long-term debt and not short-term debt. Even if we take them at their word, interest payments still have to be paid on long-term debt, say at 3% per annum. That means for the stock of debt merely to be financed, every man, woman and child in India must be earning $3 every year in foreign exchange via the sale of real goods and services abroad. I.e., something like $3 billion must be newly earned every year in foreign exchange merely to finance the existing stock of debt. Quite clearly, that is not happening and it would stretch the imagination to see how it can be made to happen.
In sum, then, India, blessed with democratic political traditions which we had to take from the British against their will — remember Tilak, “Freedom is my birthright, and I shall have it” — may still be stuck with a closed society mentality when it comes to the all-important issue of economic policy. There is simply an absence in Indian public discourse of vigourous discussion of economic models and facts, whether at Union or State levels. A friendly foreign ambassador pointedly observed an absence in India of political philosophy. It may be more accurate to say that without adequate experience of a normal agenda of government being seen to be practised, widespread ignorance regarding fiscal and monetary causalities and inexperience of the technology of governance remains in the Indian electorate, as well as among public decision-makers at all levels. Our politicians seem to spend an inordinate amount of their time either garlanding one another with flowers or garlanding statues and photographs of the glorious dead. It is high time they stopped to think about the living and the future.
 Renford Bambrough (ed.) Plato, Popper and Politics: Some Contributions to a Modern Controversy, 1967.
 Philosophy, Politics and Society, 2nd Series, Peter Laslett & W. G. Runciman (eds.), 1967.
 Thucydides, History of the Pelopennesian War, II.40.