#
The world has changed forever and we will spend the next few years haunted by regrets
#
and thoughts of what might have been.
#
Maybe we will regret spending too little time with loved ones.
#
Maybe we will regret spending too much time with them.
#
Maybe we will regret taking good health and long life for granted and not doing all that
#
We will cross off items from our bucket list, sacrificing those dreams forever, such as
#
those that involve travel.
#
And we will wonder why we didn't appreciate more the beauty of noses and lips as those
#
parts of the face, hidden from view in public due to an evolving custom, become erogenous
#
zones for the kids born today.
#
And everyone who is making decisions of public policy will have more than just personal regrets
#
They will also have to deal with the decisions that they took today.
#
In this turbulent time of COVID-19, with all their costs, with all their lives lost.
#
This is true regardless of what that decision might be.
#
Every single decision, in fact, is a devil's alternative.
#
Many of the costs will be seen.
#
Many of the benefits will be unseen.
#
Please indulge me while I elaborate on this with the example of whether to do a lockdown
#
In early March, a policymaker in India would have looked at the trajectory of COVID-19
#
in other countries and been alarmed.
#
It would seem that if the pandemic took off in India, it would be worse than anywhere
#
Our poor, many of them trapped in congested cities, would suffer the most.
#
To add to which is the fact that Indians have more comorbidities or other existing illnesses
#
like diabetes, more than people from other countries.
#
Our healthcare services are far worse in countries in the developed world like Italy, Spain and
#
the USA, which have since been overwhelmed.
#
You cannot think of herd immunity as a way out, as the UK briefly considered, because
#
that would require around 60% of the population to get the disease and even at a conservative
#
mortality estimate of 0.5%, that would mean 40 lakh people dead.
#
As a policymaker then, what are the options you have?
#
Sure, you can ramp up testing and tracing, but there isn't enough state capacity for
#
Your best tool seems to be the blunt tool of a lockdown.
#
Local distancing should at least flatten the curve, as the phrase goes, so things don't
#
go out of hand while you build the state capacity to deal with the outbreaks that will occur
#
The problem here is that this decision carries huge costs and you cannot calculate them.
#
As we have seen, there will be enormous suffering among migrant labor who are stuck in inhospitable
#
cities often without food and water.
#
As the economy is suspended, businesses across the country will shut down, jobs will be lost,
#
and livelihoods will be destroyed.
#
We know that for every 1% rise in GDP, 2 million people come out of poverty.
#
So what is the cost of dropping several points of GDP growth, even possibly going into recession?
#
What is the cost to the poor especially?
#
Not only can we not calculate the first order effects of a lockdown now, but even second
#
order effects down the line.
#
And even if we estimate the gains from a lockdown now, we cannot estimate second order gains
#
down the line from the productivity that would come from the lives saved.
#
So whether or not you choose to go in for a lockdown, the costs of the action will be
#
seen and the benefits will be unseen.
#
Whatever you do, future generations can easily blame you in hindsight for making a mistake.
#
Sitting at a distance, a commentator like me can appreciate the complexity of all this
#
and refrain from making a decision or recording an episode.
#
But in the thick of things, there are people who have to decide and who know that whatever
#
they decide, many, many people will die because of what they do.
#
Welcome to the Scene and the Unseen, our weekly podcast on economics, politics and behavioral
#
Please welcome your host, Amit Verma.
#
Welcome to the Scene and the Unseen.
#
When COVID-19 broke, there was huge popular demand on Twitter for me to do an episode
#
I refrained because I felt as I feel that we are in the fog of war, so to say, in terms
#
We do not know enough about the virus.
#
We don't understand so many policy implications.
#
And most experts I know are struggling to get a grip on things.
#
I like to do timeless episodes that can be heard 30 years from now that are a definitive
#
guide to the subject at hand.
#
When the two political crises of last year broke, the abolition of Article 370 in Kashmir
#
and the introduction of CAA, I took my time and recorded what I think of as fairly definitive
#
episodes on them, which will stand the test of time.
#
I cannot offer you something like that for COVID-19 right now, but it is too important
#
and too consequential for me to ignore.
#
And I do spend a lot of time thinking about it and worrying about it.
#
So I finally decided to put together this episode with my friend and frequent guest,
#
the economist Shruti Rajgopalan, who has thought deeply about this crisis and written many
#
thousands of words on it.
#
We will not discuss the scientific and epidemiological aspects of it in detail because we are not
#
experts of that and we are not fans of winging it.
#
Instead, we will talk about the policy aspects, the economic aspects, and the philosophical
#
dilemma of figuring out what the right decision can possibly be.
#
We are recording this in the early hours of April 17th, India time.
#
And I'd like to add three things here.
#
One, I had put in a spurt of recording for this podcast in February and I've banked episodes
#
till the start of June.
#
I'll continue releasing them after this one and will wait to do deeper episodes on COVID-19
#
Two, I'm recording this episode for the first time from my home using the app ZenCaster
#
to connect remotely with Shruti.
#
So apologies in advance if there are issues with the sound.
#
Three, there are many podcasters out there who are doing a much better job of speaking
#
about this pandemic than I can.
#
This lockdown is a great time to discover new podcasts, so please check those out.
#
One that I liked in particular is by the data journalist Rukmini S, who tweets at the handle
#
She's done a series of great episodes on COVID-19.
#
They are linked from her Twitter page.
#
The Takshashila folks have done some very good episodes of All Things Policy, the Daily
#
Do search for that and check that out.
#
The formidable Neha Matthews is also doing great work at Indian Express Podcast, specifically
#
a podcast called Three Things.
#
Check them out as well.
#
Among people whose Twitter streams I have been following and have learned from a lot
#
in the last few days are Balaji S Srinivasan at Balaji S, Max Rozer at Max C Rozer and
#
Anoop Malani at Anoop underscore Mallani.
#
Before we begin our conversation today, though, let's take a quick commercial break.
#
If you enjoy listening to The Scene and the Unseen, you can play a part in keeping the
#
The Scene and the Unseen has been a labor of love for me.
#
I've enjoyed putting together many stimulating conversations, expanding my brain and my universe
#
and hopefully yours as well.
#
But while the work has been its own reward, I don't actually make much money off the show.
#
Although The Scene and the Unseen has great numbers, advertisers haven't really woken
#
up to the insane engagement level of podcasts.
#
I do many many hours of deep research for each episode, besides all the logistics of
#
producing the show myself, scheduling guests, booking studios, paying technicians, the travel
#
So well, I'm trying a new way of keeping this thing going and that involves you.
#
My proposition for you is this, for every episode of The Scene and the Unseen that you
#
enjoy, buy me a cup of coffee or even a lavish lunch, whatever you feel it's worth.
#
You can do this by heading over to sceneunseen.in slash support and contributing an amount of
#
This is not a subscription.
#
The Scene and the Unseen will continue to be free on all podcast apps and at sceneunseen.in.
#
This is just a gesture of appreciation.
#
Help keep this thing going.
#
Sceneunseen.in slash support.
#
Shruti, welcome to The Scene and the Unseen.
#
It is so nice to hear your voice.
#
And you know, while we had gone for the break, dear listener, Shruti told me why was I so
#
dead serious and why could I not make Rajma jokes like I did during our episode on the
#
But these are not exactly very funny times.
#
How has the lockdown been for you?
#
I'm embarrassed to say it's been very comfortable.
#
You know, I'm one of the privileged few who lives in a very low density and safe and clean
#
I'm from Arlington, Virginia, and I live with my favorite human and my favorite dog.
#
And it's been very calm.
#
And you know, luckily, we are not struggling for essential supplies.
#
Our fridge is stocked, you know, the dog just keeps us in good cheer.
#
We have excellent internet, so all work continues, you know, as usual.
#
And I work with a really great group of people who've all adjusted to this new situation
#
So there's been no stress on that end.
#
I guess the only stress is when one thinks about COVID and writes about COVID and what's
#
It's just, you know, the lack of good news.
#
It's just relentless right now.
#
Anytime you look up anything, it's more bad news and you know, terrible things are happening
#
across the world to people.
#
So that has been the only hard part so far.
#
Yeah, I have also been extremely lucky.
#
Like, you know, you and I just live such privileged lives that we have no business complaining
#
about small things here and there.
#
And you know, that brings me to a thought that I shall probably come back to closer
#
to the end of the episode about how one of the trends that we are seeing is that a lot
#
of the less fortunate people, a lot of the poorer people are looking at this lockdown
#
as a measure of the elites to protect themselves while the poor suffer the brunt of it.
#
And it's very easily understandable, of course, why they think like that.
#
And you know, and we'll probably come back to that a little later in the episode.
#
But what I sort of wanted to kind of start chatting with you about was that one, you've
#
been working incredibly hard through this crisis.
#
You've done a couple of papers, you've written at least three columns, your alignment column
#
about this whole crisis, and you were one of the very early clear voices calling for
#
So before we get to that specific decision, tell me a little bit about your framework
#
of thinking about public policy in times like this, like how do you think about policy when
#
you think about what we should do and what we should not do?
#
It seems to me that normally, you'd be looking at policy from a point of view of saying these
#
are the costs, these are the benefits, these are the probable costs and the probable benefits
#
and you apply all the principles, you know, from your knowledge in different fields.
#
But over here, there seems to be this great fog, where, you know, we can't imagine what
#
the cost could be of doing this or that and, you know, we are sort of playing around with
#
so little information and there is so much at stake.
#
So how do you think about this at a meta level?
#
So honestly, I find it very difficult to put on a different hat from the one I feel like
#
I always wear, which is the economist hat.
#
So, you know, many of your listeners know this from my previous visits on the show,
#
but I'm an economist by training.
#
I think about pretty much everything in life, in my work as a set of trade-offs because
#
that's the core fundamental idea when we think like economists.
#
So what are the trade-offs and opportunity costs which are hidden or visible in any particular
#
The other hat that I wear is someone who's familiar with Indian political economy.
#
So most of my work has been in the area of public choice, law and economics and constitutional
#
economics and that kind of training and looking at the Indian system over the last decade
#
has given me insight into a whole range of issues.
#
You know, you and I have done episodes on the Bhopal gas tragedy, we've talked about
#
labor law, we've talked about, you know, urban and rural municipal governance.
#
So we've talked about property rights.
#
So just given the kind of work that I do, I have had like, you know, just a good fortune
#
of looking at different aspects of Indian political economy, all of it as an economist.
#
And when COVID started coming about in different parts of the world and one could see that
#
this is a pandemic, which could be on a global scale, I used the same set of tools that I
#
have always used to study this problem.
#
So you know, I'm not thinking about this from a medicine point of view, I have absolutely
#
no training in medicine, epidemiology, you know, microbiology, virology, nothing.
#
So please don't take anything Amit and I discuss on those margins.
#
Just even if we mention something, you know, it's not our core competence.
#
So my framework was the same framework I have used on every single topic that you and I
#
have discussed, simply because I have no other skill set other than being an economist.
#
And that seems to me to be, you know, actually, a very important framework because that is,
#
you know, especially the part of the framework where you talk about understanding the political
#
economy in India, which seems critical because when we talk about India, in particular, you
#
are going to a have a decision taken, which will have elements of both public policy and
#
politics, where you will have people who have to make decisions and consider not just, you
#
know, the conflicting views of different experts from different sides, but also what is politically
#
feasible, what they can get away with at some points, you know, as in the case of extending
#
the lockdown, there can be an element of covering your ass, and so on and so forth.
#
We can discuss sort of the political considerations that go into that later.
#
But you know, you'd written an early column by early, I mean, it's recent, but it seems
#
early on March 16th, where it meant where you recommended very strongly that India go
#
And I'll quote from that piece you wrote quote, according to World Bank data 2017, India has
#
eight doctors for every 10,000 Indians compared to Italy's 41 doctors for 10,000 Italians.
#
If India is three weeks behind Italy on the trend, and you meant the trend of the pandemic,
#
if India is three weeks behind Italy on the trend, and if the country does not take drastic
#
containment measures, given our weak healthcare setup, we will register much higher fatality
#
rates, especially among the poor.
#
So stock quote, and I of course, agree with you on this.
#
And can you elaborate a little bit on why you were so, you know, even long before Modi
#
himself came to the conclusion you were recommending long before this column, in fact, that we
#
have to do a lockdown, why?
#
So one of the things that happens, I have the good fortune of working at the Mercator
#
Center, which thought about COVID very deeply and carefully, you know, on a daily basis,
#
I have the good fortune of reading and thinking and talking through to with people like Tyler
#
Cowan and Alex Dabrock, who write marginal revolution, they were way ahead of anyone
#
else on the curve of COVID, because they saw what's happening in China.
#
And that kind of got me started, because India has numbers which are very similar to China,
#
So that's what really got me started.
#
So let me explain the trade off and why I was so vehemently in favor of a shutdown.
#
When I saw what was happening in Italy, and about 12, 13 years ago, I had the good fortune
#
of living in Italy for a semester.
#
So I reached out to my Italian friends, I saw that almost every single one of them has
#
lost someone in the family.
#
The weekend, you know, I think of 10th March, when I was working on this column or thinking
#
about the column in Bergamo, the paper had 10 pages of obituaries.
#
And that just kind of shook me what was happening in Italy.
#
So I started thinking through what would happen if this happened in India, and I started looking
#
Now, one thing where economists are a little bit lucky is we really think about exponential
#
functions well past 9th or 10th standard, right?
#
Most people in other jobs, they haven't looked at an exponential function after their 10th
#
And we are continuously looking at growth rates, we're looking at compounding, we're
#
looking at federal rates.
#
So we are in the habit of thinking about exponential rates and how compounding works, that if something
#
is doubling every seven days, you're not going to think of it as large numbers right now,
#
but five weeks from now, you're going to be in tens of thousands, right?
#
So what was happening in Italy when I started looking at the trend lines, India was just,
#
you know, a few weeks behind Italy.
#
And when I saw what was happening in Italy, I was just shaken to the core.
#
At that time, Italy was also struggling with its hospital system.
#
And I said, okay, what does the Indian healthcare system look like?
#
I haven't lived in India for the last 12, 13 years.
#
So I don't know the changes.
#
My experience from my childhood is that government hospitals are extremely overcrowded.
#
And all the private small dispensaries and clinics, some of them serve the poor through
#
charitable trusts and, you know, just people's goodwill and, you know, the nonprofit sector.
#
The really functional part of the Indian healthcare sector is the private healthcare sector, which
#
tends to be quite expensive.
#
And I was like, let me just get some numbers and start thinking about what this situation
#
And that is where my panic really began.
#
And it became very clear to me where I am on the trade-off.
#
So let me explain the trade-off.
#
During a pandemic and of the kind, you know, of the COVID kind, where it's highly infectious
#
and people can be asymptomatic and they can be carriers without knowing that they're carriers.
#
Sometimes it takes 10 to 14 days for the symptoms to manifest.
#
So if they've attended an event or they've shaken someone's hand, it's perfectly possible
#
that that person was not sick and no precautions were required, but you realize two weeks later
#
that they were in fact sick or just hadn't, you know, developed the symptoms and you have
#
been infected and therefore you have interacted with 20 or 30 other people and you could have
#
So, you know, COVID is a particular kind of virus, which is a little bit hidden or unseen,
#
as you would like to say.
#
So the nature of this virus means that it can spread quite quickly without people knowing.
#
And that's exactly what happened in other countries.
#
Now when something spreads very quickly, there is no healthcare system in the world, no matter
#
how developed a country, that provides one hospital bed for every citizen.
#
The reason it doesn't exist is it's simply too costly.
#
And in extremely rare circumstances, once in a century, once in a couple of centuries,
#
you hit a situation where everyone is sick at the same time, either because of a natural
#
disaster or war or pandemic.
#
So for the rest of the time, it would be a huge opportunity cost on the system to have
#
one bed per individual.
#
So no country, including the Scandinavian countries or the United States, nobody has
#
hit that measure, right?
#
So every country estimates some kind of healthcare capacity and says, this is how many hospital
#
beds we have, this is how many doctors we have, this is how many ventilators we have.
#
In most developed countries, this is a function of demand and supply.
#
Demand and supply in these instances depends on how rich the people in that particular
#
country are, what kind of healthcare system they have, do they have willingness to pay
#
If the demographics are tilted towards slightly older people, then you tend to have more ventilators
#
and intensive care units which sort of support the demand or the healthcare requirements
#
So this varies across countries.
#
Now in India, we have realized now that our healthcare system is extremely weak.
#
So we have one of the fewest hospital beds amongst BRICS countries and most emerging
#
You pointed out the figure on doctors, right?
#
So India has only about 86 doctors per 100,000 people.
#
The global average is 150 doctors per 100,000 people, South Africa has 91, Nigeria is way
#
It has only 39 or 40 doctors per 100,000 people.
#
So different healthcare systems are in different points on capacity, right?
#
Same thing with ventilators, the United States has 172,000 ventilators and the ability to
#
scale it up very quickly because they specialize in building ventilators.
#
India has only about 40 to 50,000 ventilators and we import a lot of the ventilators and
#
ventilator parts, so it's not easy for us to scale that number quickly.
#
So I started digging into all these different things and looking at what can our healthcare
#
capacity sustain because if everyone gets sick at the same time, which is likely to
#
happen or large population gets sick at the same time through COVID, which is likely to
#
happen, what will happen to our hospital system?
#
As I told you, what I found was extremely frightening.
#
So we have very few hospital beds, but even the hospital beds that we have, the big problem
#
with it is that most of them are taken, right?
#
Our intensive care units are operating at almost 100% capacity at the moment because
#
intensive care units are extremely expensive and most of them are in the private sector
#
and no private hospital finds it in its interest to just have an empty bed in intensive care.
#
It's very, very costly, right?
#
And there is fairly high demand.
#
So we are operating at very, very close to full capacity for intensive care units.
#
We are operating, when I called a few government hospitals and I asked them what is their capacity
#
right now of available beds, they said they're working at 120% capacity in government hospitals.
#
And I said, how is that possible?
#
And they said, oh, we don't have beds.
#
People bring their own gaddas and sleeping bags.
#
They just come in for treatment.
#
They sleep in the corridor.
#
Aims in New Delhi is famous for having a whole number of cancer patients who sleep under
#
the flyover outside and just come in for treatment during the day.
#
So this is a system where the healthcare facility is operating at above 100% of the number of
#
beds they have because they need to treat a lot of people.
#
They just don't have enough beds, but they can't turn people away.
#
So India's capacity was very low, which means India desperately needs to flatten the curve.
#
And what we mean by flattening the curve is that we need to create a circumstance where
#
everybody cannot get the infection at the same time, right?
#
So right now we don't have a vaccine for this.
#
Different people have started formulating a treatment protocol, but we don't have a
#
So in the world without a vaccine, you need to close things down or social distance in
#
a way that a few people get sick at a time and we spread that out so that the hospital
#
capacity is not overwhelmed and doesn't collapse altogether.
#
And this is not just true of India, it is true of Italy, it is true of Spain, it is
#
true of the United States, it's true of the UK.
#
So across the world, no matter how rich or poor you have, as I mentioned, there is no
#
healthcare system that has one bed and one doctor per citizen, which means we need to
#
find some way of flattening the curve.
#
Now here is the trade off, right?
#
The better your healthcare system or the greater the capacity of your healthcare system, the
#
less you need to flatten the curve, right?
#
The more it can accommodate, such as Germany.
#
The worse your healthcare system, the poorer the capacity of the healthcare system, the
#
more you need to flatten the curve, which means you need to go towards more and more
#
severe or stringent lockdown measures.
#
It just so happens that poorer countries have worse healthcare systems, generally speaking,
#
which means poorer countries, developing countries, will see the worst, most stringent lockdowns
#
in this particular scenario, otherwise they will face huge outbreaks and local transmission
#
and community transmission.
#
So India was very wise to recognize that our healthcare system is extremely weak and cannot
#
accommodate this, so we need the most stringent version of the lockdown, which is what I was
#
Now the trouble with that is poorer countries also cannot easily soften or mitigate the
#
problems that come with the lockdown.
#
The lockdown means pretty much closing down all economic activity.
#
Economic activity is what keeps people's homes running, what keeps the lights on, what puts
#
And the poorer the country is, the more stringent the lockdown measures, which means the more
#
So the column that you read out on March 16th, all the stuff I had been tweeting just before
#
and after that, and also the columns and papers I have written successively after, in every
#
single one of them, I've categorically mentioned that the lockdown needs to be combined with
#
some kind of basic income or like direct cash transfer, right?
#
Without that, the number of poor people who will die in India of starvation is incredibly
#
So we are in a very tough situation right now.
#
If we don't lock down, sorry, I just want to go back to one small point.
#
You said we'll get to this later in the episode, but I think it's pertinent to mention it here.
#
You said that a lot of poor people think that the lockdown is to keep the rich people safe,
#
The elites safe while they watch Netflix, the poor people suffer.
#
That was not the way I thought about it.
#
The rich people I'm afraid will capture all the private hospital capacity, which will
#
respond very quickly to money flowing in.
#
So if there are lots of people who are demanding hospital beds, private hospitals will try
#
and quickly increase capacity to deal with the increased demand.
#
And hospitals treat the poorest people and are doing it almost for free or very, very
#
These are the places which are already overcrowded.
#
And according to me, the poor people are the ones who would have been left without healthcare.
#
So the lockdown, I believe, contrary to popular opinion, actually protects the poor from the
#
Second, the poor in India have worse comorbidities because there is a greater amount of malnourishment
#
and they have lesser access to clean air and clean water than the elites.
#
And these three things put together place them at higher risk if they get infected by
#
And that's another reason why we really need to think about this for a majority of the
#
country, which has not got great resources or great healthcare.
#
And they are the ones who will be protected by a sensibly executed lockdown.
#
Now, of course, we did not have a well-executed lockdown.
#
That's a whole different problem.
#
But the original logic for me sort of really putting out a lot of statements in favor of
#
shutting down the Mumbai locals or in favor of shutting down a lot of economic activity
#
and trying to flatten the curve was because I saw the other half of the equation, which
#
is our healthcare capacity, and it is abysmal to non-existent, especially in the government
#
So, you know, before I get to my next question, a couple of related thoughts.
#
One, I want to underline for my listeners how extraordinary this virus is, this specific
#
coronavirus is SARS-CoV-2, which is in the sense, it's practically the optimal virus
#
if you want to cause damage.
#
If you look at viruses of the past like Ebola, for example, Ebola had a far higher mortality
#
rate, I think almost half the people who got it died.
#
But the point is that you immediately became symptomatic, that is, you developed symptoms
#
immediately which immobilized you and you weren't able to travel around much to pass
#
the virus on and people would know to avoid you because the symptoms would be so obvious.
#
What is remarkable about this specific coronavirus is that one, it takes a long time before carriers
#
show symptoms and sometimes they do not show symptoms at all.
#
So they feel they are perfectly normal, they're going around interacting with people and they
#
are passing the virus on.
#
And at the same time, while we don't know the specific mortality rate yet, that's something
#
we'll know only over a much longer period of time.
#
The fact is that it is still high enough to cause a huge amount of damage.
#
So you have a very high chance of infectiousness, of this being passed around, combined with
#
a mortality that is high enough to paralyze healthcare systems once things get out of
#
So it is practically the optimal virus.
#
And here in India, we actually had a chance to see this play out first in China and then
#
in Italy, which is a first world country with, you know, developed healthcare systems.
#
And we saw how things bad up.
#
My second observation would be that as far as affecting the poor is concerned, I agree
#
And I think both of us would agree that, I mean, my guiding principle when I think of
#
public policy is Mahatma Gandhi's guiding principle, which is a question he always asked
#
himself is, how will this affect the poor?
#
That's what I care about.
#
If the answer to that is negative, I don't care what else the policy does.
#
In India, our imperative is to remove poverty, which, you know, we have, there's been a failure
#
over decades and there's also been some limited success since liberalization.
#
But by and large, that's still a moral imperative.
#
We haven't paid enough attention to.
#
Now, the dilemma here is that, look, when we think about a policy, we don't, we can't
#
only think of how the policy would work in theory.
#
We have to think about how it would work in practice.
#
So the paradox here is that on the one hand, you know, people like you and me are proposing
#
a lockdown because state capacity in India has failed to the extent that our healthcare
#
And we know that there will be carnage, especially among the poor people of India, if the pandemic
#
So there appears to be no option but a lockdown.
#
Now, the practice of it, which also you've recognized and you've commented on that right
#
from the start, but it's part of the paradox.
#
The practice is that because of that state capacity, it is also going to have enormous
#
And by that, I don't just mean state capacity in terms of the manpower of the state or what
#
the state can do and so on, but also in terms of the approach and expertise.
#
For example, your first piece asking for a lockdown on March 16th, you know, illustrated
#
exponential growth with a chess board where you place a grain of rice on the first square
#
and two on the second and you keep doubling and so on.
#
And then on March 30th, you wrote another piece that I'm going to quote from, which
#
also circles back to a chess board.
#
And in this you wrote, quote, in an earlier column, I had compared various attempts at
#
social and economic engineering with the exertions of Adam Smith's man of system, who, quote,
#
seems to imagine that he can arrange the different members of a great society with as much ease
#
as a hand arranges the different pieces upon a chess board.
#
And you know, and this sort of engineering mindset of designing society is, you know,
#
something that is endemic in India that has caused much distress and say earlier cases
#
like demonetization to just take a recent example.
#
And so how do you account for that where it seems evident to you that only social distancing
#
We have to have a lockdown.
#
But at the same time, you just know that the cost will be so incredibly high.
#
And if you are to attempt, say, a sort of a utilitarian kind of calculation here, you
#
can only attempt utilitarian calculations where you have enough knowledge.
#
And here everything is in this fog where the cost can be absolutely humongous.
#
Did any of it take you by surprise what happened?
#
All the things that went wrong after a lockdown?
#
And how does one think of this?
#
OK, so I'm going to answer you.
#
You've posed like a really big problem.
#
So I'm going to take a stab at it in two, three different parts.
#
So the big conundrum we have right now is, as you know, I'm a public choice trained
#
And one of the key learnings of public choice is we don't just think of market failure.
#
We also think of government failure.
#
And this COVID-19 pandemic has brought us to our knees on both market failure and government
#
There is no question there's a market failure problem in the sense that there is a huge
#
externality that private individuals can pose on other private individuals deliberately
#
or inadvertently because of the characteristics of the virus, as you mentioned.
#
And there is no easy market-based decentralized solution to the problem.
#
It's in everyone's interest to be out and about, especially if they're asymptomatic.
#
But that also means that they can spread the virus much more quickly and affect the people
#
who are in high-risk groups who are really going to lose their lives because of it.
#
So we need some kind of government intervention to, you know, regulate or impose social distancing,
#
the most stringent version of it being a lockdown.
#
But the flip side to that is while there is market failure, there is also government failure.
#
And weaker states, developing countries, poorer states tend to be rife with government failure
#
America has had such a high degree of government failure while dealing with this pandemic.
#
And everyone has been talking about Trump's response and how, you know, the administration
#
was asleep at the wheel and they delayed any kind of, you know, putting in place any machinery
#
for social distancing, as well as treatment, as well as economic stimulus, and so on and
#
So in that sense, it doesn't surprise me that different governments across the world
#
are struggling with the appropriate response.
#
What did surprise me about the Indian government's response is that it was so blind and deaf
#
That genuinely shocked me because normally the way I think about this is politicians
#
are self-interested and they think of their core, you know, sort of voting constituency.
#
India is a poor country.
#
A lot of the people were talking about the median voter is also typically below the,
#
you know, not they don't make elite salaries.
#
They don't live elite lifestyles.
#
And I thought that all policies, when it came to the lockdown, out of sheer self-interest
#
would be made keeping that person in mind, you know, your core constituency of voters.
#
The way those people were just rendered invisible in our system, that truly took me by surprise.
#
What I realized when I wrote the Man of System column in regard to Modi's lockdown, it was
#
very specifically talking about the lockdown announcement.
#
If we go back to that announcement, which was, you know, end of March, he does not mention
#
what is an essential service.
#
There is no clarity on what will be open and what is to remain closed.
#
There is no clarity or direction given to the police on how they are to enforce the
#
The moment he finished his announcement at about 8.30 PM, there was a run on all the
#
stores and pharmacies because people wanted to stock up because they didn't know if they
#
And the reason they didn't know if they can get milk tomorrow is because there was no
#
direction on a 40 minute, you know, prime ministerial broadcast on whether he thought
#
essential services would stay open and how he was planning to deal with it.
#
Now my understanding of why that announcement was made in a particular way was he thought
#
people will just trust him.
#
So if he says we will keep essential services open, people just trust him.
#
You know, like nice pieces on the chessboard, they stay put and they say, I think that's
#
It's far worse with migrants, right?
#
Like migrants, especially in the informal sector, almost all are in the informal sector.
#
They've been rendered utterly invisible in our current political economy.
#
And this is not a COVID problem.
#
This is a larger political economy problem in India.
#
92% of the Indian labor force works in the informal sector.
#
60 to 70% are daily wage laborers in that particular system.
#
Only 8% of India's labor force is formal, you know, all above board with formal contracts.
#
In these circumstances, when like we're talking not about a few thousand people or a hundred
#
thousand people, we're talking about 400, 500 million people in the country at a particular
#
Just to not think of them or not to think about how they're going to survive the next
#
three weeks when they don't have daily wage coming in, he did not make an announcement
#
to give them any income support.
#
There was no announcement made for in-kind transfer in that particular press announcement.
#
There was literally nothing for them.
#
So are we really surprised that they wanted to go home, right?
#
If there's any kind of economic uncertainty, the first thing I would want to do is go to
#
a safe place where I will be looked after, as opposed to being a strange city where I'm
#
staying in a slum, where I don't know if I'll have a job tomorrow, where I don't know if
#
I can get out of the home tomorrow and I can even buy bread or biscuits to eat.
#
So we saw this huge exodus of migrant labor trying to go back home to places where they
#
And then we saw the state just come down on them with the full brute force, literally
#
beating people up, you know, who were standing at bus stops.
#
What happened in Anand Dehar in Delhi is just an embarrassment.
#
So it's a combination of a complete failure to understand how a normal, rational person
#
would think in these circumstances and a particular sort of blindness to who are the people in
#
need in India, who are the people who are vulnerable to economic stress, who are vulnerable
#
to health stress, who are vulnerable to social stress.
#
And how do we keep that person in mind, like the Gandhi talisman that you spoke about,
#
and figure out policies around it?
#
His press announcement just completely sort of, it was a failure on all of those counts.
#
There was some relief package which was announced 48 hours later.
#
It was too little, too late.
#
By then the economic stress and the panic related economic stress and uncertainty had
#
In every single one of my recommendations to have a lockdown, at each point I've said,
#
we need to give direct cash transfer, maybe some food subsidies for three to four months.
#
Because let's say the lockdown lifts in five weeks, doesn't mean all industries are going
#
Are we going to allow construction?
#
If you don't allow construction, then all the people who work on daily labor as daily
#
labor and construction sites are no longer going to have a job.
#
So we need to really carefully think about what does the Indian political economy look
#
Who are the people working in it?
#
There's only seven to eight percent elites who have formal contracts, internet, who can
#
stay at home and think about, you know, I'm getting bored watching Netflix kind of problem.
#
Everyone else is going to think about livelihood.
#
They're going to think about their children, they're going to think about the ability to
#
feed themselves and literally no sort of, you know, policy or emergency relief was created
#
Now things have started coming in.
#
The government has started thinking more keenly about emergency relief.
#
You know, they're thinking of opening up food go downs, you know, giving away in-kind transfers
#
in terms of food grain, things like that, LPG gas.
#
So the government has now started thinking about it, but the initial wave of panic could
#
have just been stopped if the Modi administration had thought about the citizens as individual
#
people who react to circumstances as opposed to pieces on a chess board, which can simply
#
So I have like three observations to make here.
#
The third one in part of this agreement, which leads to a further question, but the first
#
two observations are that number one, when we speak of state capacity, I'd also like
#
to speak of within that subset, which is intellectual capacity in the sense that one
#
thing I think that does not exist in the state is the capacity to appreciate the complexities
#
of the economy, which run through spontaneous order.
#
For example, nobody within the state seemed to figure out that, you know, that almost
#
every service in a sense was an essential service because they were all interconnected.
#
It was one thing to say that, okay, a grocery store is an essential service and it will
#
remain open, but there is an entire supply chain of, for example, truckers are bringing
#
maida to the grocery store and those truckers have to eat somewhere and if the dhabas are
#
closed on the highway, they cannot drive the truck.
#
And there are all kinds of ancillaries up and down the chain, which involves practically
#
And honestly, those are all too complex for a central planner or a group of babus or an
#
expert committee sitting down somewhere to basically figure out that these are all the
#
things that will happen.
#
This is not meant in any way as a criticism of the lockdown or to say that the lockdown
#
should not have happened.
#
You know, like you, I recommended from the start, we should have a lockdown and I stand
#
But these are some of the things which you couldn't have looked at.
#
Secondly, one of the things which came, I won't say it appalled me because it was not
#
new to me, one of the things that came into stark relief during this entire period is
#
you use the term citizens earlier, I object to that because constantly the political dispensation
#
has treated us not as citizens, but as subjects, you know, even in the prime minister's last
#
address, which he made where he's saying that keep a distance and we must make sure it doesn't
#
spread and blah, blah, blah.
#
It was all about this is what you must do.
#
It's not about here is what I am doing for you.
#
I am the Pradhan Sevak.
#
These are the incentives I've put in place to get more mass manufactured.
#
These are, you know, how we are going to get more ventilators down and all of that, nothing
#
about what he was doing for us, but more about here is what you subjects must do.
#
And you know, that sort of approach is a little appalling.
#
The third area where I want to sort of cast a skeptical eye on what you said about cash
#
transfers and food subsidies and all that, forget the theory of that.
#
I'm not going to argue now about whether those are desirable or not.
#
But I'm just going to say that, listen, the state could not have implemented them.
#
So even if they were to see that there'll be a huge problem with migrant labor and we
#
need to feed everyone, the state did not have the capacity and does not have the capacity
#
as of now to implement it.
#
In fact, you know, what you see in the big cities where I'm familiar with relief efforts
#
such as Mumbai and Delhi, 90 percent, if not more, of the relief efforts at feeding these
#
migrants or sheltering these migrants are coming from civil society.
#
And because I define markets as basically all voluntary exchanges, it is actually markets
#
which are coming into play, you know, society helping itself and the state remaining a sort
#
And this actually sheds light.
#
And of course, you know, COVID-19 sheds light on many things and we'll speak about that
#
as this episode goes on.
#
But one of the things that it shed lights on is why government needs to be as local
#
as possible, because the more local government is, the more problems like this are solvable.
#
You know, for example, you see the response in Kerala where you really see the benefits
#
of local government and local knowledge coming into play.
#
Even in Maharashtra, sitting in Mumbai, I am pleasantly surprised at the leadership and
#
communication of someone like Uddhav Thackeray.
#
I mean, I've opposed the Shiv Sena all my life, but he's been coming on TV every evening
#
or giving these broadcasts every evening in Marathi where he's just talking in this conversational
#
way about the nuts and bolts of what is happening and what he's doing.
#
And my sense is that the more local you make governance, the better the governance will
#
be, which is a larger point people like you and I have made forever, but has come into
#
sharp focus because of this crisis.
#
So I'll tell you where, I mean, I completely agree with you, even your disagreement with
#
My point was not that the state can actually execute a direct cash transfer perfectly.
#
My point was more that they didn't even think about it, right?
#
Just the complete like blindness to who are the people in this country and what will be
#
the immediate cause for panic or what are their immediate circumstances.
#
Now if they had announced something like that, it might have sort of not caused the large
#
Now I completely agree with you that India doesn't have the state capacity to execute
#
these things perfectly, but it would have at least prevented the original chaos that
#
started which potentially could have spread the virus, which was already in big cities
#
to now districts in Western Bihar and UP.
#
So that could have been prevented, but it wasn't prevented because they just weren't
#
thinking about people, as you said, like citizens, they were thinking about them like subjects
#
or just someone to be directed.
#
Now coming to the state capacity issue, this is the great conundrum of this COVID crisis.
#
Now we need the lockdown because we have poor healthcare capacity.
#
We have poor healthcare capacity because we have overall weak state capacity, but overall
#
weak state capacity also means two more things.
#
One, we cannot enforce social distancing very well, right?
#
And this is on two margins.
#
One is we just don't have the manpower and personnel to actually make sure that everyone
#
Everyone has essentials, everyone has food and people who need help or medical assistance
#
have it so that they can shelter in place properly.
#
We don't have that manpower at the state level, which means a lot of the gaps are picked up
#
The second part is weak state capacity also means that we don't have, not everyone in
#
India has clean water or access to clean water, which means this whole, please keep washing
#
I mean, it's laughable.
#
10% of India has absolutely no access to clean piped water, right?
#
In the other 90%, we have pretty good data on who has piped water to their dwelling,
#
but most people have extreme water shortages, close to 60% of Indians who do get piped water
#
have extreme water shortages, especially in the summer months, right, for anything except
#
Most of rural India, you know, 50%, 60% of rural India relies on community hand pumps
#
to get most of its water.
#
So in these circumstances, even the simplest solution, which is keep washing your hands,
#
it is a huge protection against the spread of the virus, is not easily implementable
#
Now you live in Mumbai, one of the ticking time bombs in Mumbai, which literally keeps
#
me up at night is Dharavi.
#
Dharavi, in the slum part of Dharavi, they don't have access to clean water.
#
4 to 500 people on average use a single bathroom facility, right?
#
And all this is a function of weak state capacity to begin with.
#
The inability to make sure that we have access to clean water, that we have access to clean
#
sanitation facilities, that people are not washing their hands right next to where people
#
are openly defecating or urinating.
#
We have not solved that problem in 70 years.
#
So now suddenly putting on a mask on TV and saying, please keep washing your hands.
#
It doesn't get you very far because the state capacity has not made that solution possible.
#
So we have a problem in both facilitating shelter in place and social distancing, and
#
also in the most basic forms, which is, you know, can people wash their hands?
#
Can people keep themselves clean?
#
So this is just the kind of, or sort of the depth of the problem we have with COVID.
#
Now these problems make the lockdown even more essential, right?
#
Because if people can't shelter in place appropriately and they can't wash their hands and they could
#
possibly become vectors or worse still asymptomatic vectors spreading the virus, then even more
#
reason we need a more stringent version of the lockdown.
#
So then the police and the danda comes down even more harshly.
#
So the whole problem, as you rightly identified, is one of very weak state capacity, both intellectual,
#
also in terms of manpower, and also in terms of just the way we think about these problems
#
at the union, state and local government level.
#
Now coming to the local government issue, a lot of these problems of, you know, clean
#
water, public sanitation, the ability to have access to facilities, right?
#
Just can I go to a food shelter?
#
Can I get access to water easily?
#
Can I get access to medical supplies easily?
#
These things are best done at the municipal level.
#
And over 70 years, we never built up any kind of local government and we didn't empower
#
You and I have talked about this in at least two of your previous episodes.
#
One which was on urban local government and the other one which was on a caste and open
#
In both cases, we discussed in detail how the 73rd and the 74th amendment of the constitution
#
created an entire layer of government.
#
They empowered it to be democratically elected, but they never devolved funds to that layer
#
So, you know, we have no fiscal federalism in India, municipalities today, if the union
#
government writes a cheque and just sends it to municipal governments, they don't have
#
the capacity to even spend it because they have not developed capacity over the years.
#
Hired enough manpower actually spent these resources.
#
Kerala and Tamil Nadu are two states which historically devolved much more of the governance
#
to the local level from the state government.
#
And that's why they have been so good at combating this current problem, right, of COVID-19.
#
India has been particularly good for other reasons too which we can get into if you want.
#
But the element of how strong is your local governance is incredibly important.
#
Now in the absence of union government being able to do anything, state government not
#
being able to reach the last mile, our failsafe in India is civil society and it has always
#
It was the case during demonetization.
#
It was really civil society which came to the rescue.
#
You know, people started using each other family networks, giving each other IOUs to
#
actually get through life and even then we had an inordinate human cost, a lot of debts,
#
a lot of deprivation, a lot of loss of livelihood.
#
But people got through because of civil society and COVID-19 is no different.
#
Whatever we manage to get through will be because of civil society.
#
On that hopeful note, let's take a quick commercial break.
#
See you after a minute.
#
If you're listening to The Scene and the Unseen, it means you like listening to audio and you're
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That being the case, I'd urge you to check out Storytel, the sponsors of this episode.
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Remember, there's Storytel with a single L, Storytel.com.
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Welcome back to The Scene in the Unseen.
#
I'm chatting with Shruti Rajgopalan about COVID-19, a subject she spent a lot of time
#
thinking and writing about.
#
And one of the places where her writing has appeared on this is on the great blog Marginal
#
Revolution, which is, even though the age of blogs is dead, that is a one blog I still
#
go to almost every day to remarkable thinkers who run it, Tyler Cowen and Alex Tabarrok,
#
both of whom have been on The Scene in the Unseen.
#
In fact, I have one episode I recorded with Shruti and Alex when I met them in Delhi at
#
the start of Feb, which will now be released in June, and you know, it has nothing to do
#
with COVID, obviously, because it was the start of Feb, you'll have to wait for that.
#
But I have rambled again.
#
The reason I brought up Marginal Revolution was that Shruti wrote a piece on Marginal
#
Revolution, and all her stuff will be linked from the show notes, where Shruti, you spoke
#
about the few things that the government needs to do to make the lockdown a success, like
#
this piece was written right after the lockdown was announced.
#
And you said, okay, it's not enough to announce it, you need to make sure that we use this
#
opportunity, here are the things we need to do.
#
So can you recapitulate some of that for me?
#
Yeah, so the way this came about is, I work at George Mason University, so, you know,
#
the Marginal Revolution appearance should be considered in that context, Tyler Cowan
#
runs is also the academic director of the Mercator Center, which is where I work, Alex
#
Tabarrok and Tyler were both my teachers when I did my PhD, Alex is also a co author, and
#
we've appeared on your podcast and done a few things together.
#
So when the lockdown happened in India, as soon as Prime Minister Modi announced the
#
lockdown, I started thinking through, you know, the kinds of things that are important.
#
And my way, just like you, of thinking through a lot of these ideas is just to write.
#
And I'd written an email to Tyler Cowan and that, you know, a version of that email is
#
what appeared on the blog.
#
So that's what you see.
#
Now, when the lockdown was going on, I was working on another paper with my co author
#
He is a doctoral student at the University of Hamburg, really smart, young economist.
#
And we were working on assessing India's health care capacity.
#
So this is the first paper, which we've alluded to a few times where we were looking at how
#
many hospital beds does India have, how many doctors does it have, and so on.
#
This is now Makita's working paper and it's available publicly.
#
So while writing this paper, a few things became very clear.
#
One, as I said, overall, India's health care capacity is extremely weak, right?
#
Another thing that became very clear, and I wasn't aware of this because I've not worked
#
on the health sector before the COVID crisis, is that India's private sector for health
#
care is about three to four times larger in terms of overall health care capacity than
#
the government health care system, right?
#
And that has been a consequence of a lot of historical policies and the focus of the government.
#
But consequently, about 55 to 60% of the hospital bed capacity is in the private sector in India.
#
90% of the doctors work in the private or charitable sector in India, right?
#
80% of the ventilators are in the private sector because close to 80% or more of the
#
intensive care beds are in the private sector.
#
So it became very clear to me that during the lockdown, the whole point of the lockdown,
#
as we mentioned at the head of the podcast, is that there's this trade-off, right?
#
We need to flatten the curve.
#
So a lockdown is only helpful if you build up health care capacity during the lockdown
#
so that when things start slowly opening up, you have more health care capacity to deal
#
with the transmission of the virus.
#
Now, if you don't do that, no matter when you lift the lockdown, there is going to be
#
a spread of infection, and we can't have an endless lockdown.
#
So this was from that point of view.
#
Now, if the Indian health care system was entirely run by the government, as it is in
#
many other countries, I would have had a different recommendation.
#
By most of India's health care resources, especially at the top end for critical care
#
ventilators, pharmaceuticals, all of this is in the private sector, which means that
#
to battle the COVID crisis, we need to really rely on the private sector response.
#
And as you and I have talked about many, many times before, we need to sort of initiate
#
and stimulate private response by incentivizing them.
#
And the best way to incentivize them is to pump in a lot of funds into the private sector
#
So as you know, in India, we have a huge tendency to nationalize things.
#
It seems that hasn't happened in a while since Indira Gandhi, but we nationalized and demonetized
#
So the tendency to sort of appropriate private property and nationalize has been there in
#
every single government in India, not just the Modi government.
#
So my first recommendation was that we need to resist that temptation, because the moment
#
you nationalize private health care capacity, it cannot grow.
#
So if today we have 131 beds per 100,000 by including public and private capacity, tomorrow
#
if you nationalize it, that's where it ends.
#
On the other hand, if you say that we're going to pay for all tests and the treatment, even
#
of the poorest people, please keep your doors open to them.
#
The government will reimburse or subsidize.
#
Then private sector has a huge incentive to respond and increase capacity.
#
So this has been said many, many times over.
#
You mentioned Marginal Revolution, the book that is written by Tyler Cowen and Alex Tabarrok
#
on principles of microeconomics has this lovely sentence on the price system.
#
It says the price is a signal wrapped in an incentive.
#
So it both signals whether there is a shortage or whether there is a surplus because the
#
price will adjust, but it is also an incentive.
#
When prices are high, suppliers have an incentive to increase supply.
#
So that was the thought process behind it.
#
When you take stock, most of the resources are in the private sector, so let's respond
#
Aside from most of our resources being in the private sector, the other thing I realized,
#
and this will be of no surprise to you because we've talked about this for education, it's
#
no different in healthcare.
#
Even the poorest Indians prefer going to a private healthcare facility and paying a lot
#
of money for it rather than going to the free or highly subsidized government facility.
#
You can imagine why government hospitals are not that great.
#
They are extremely overcrowded.
#
They have very few doctor to patient ratio.
#
They don't have the most advanced equipment, and especially at the smaller primary healthcare
#
centers, depending on which state you're in, things tend to be falling apart, right?
#
So if you look at the national sample survey data, across every expenditure quintile, that
#
is from the lowest household expenditure group, the lowest fifth to the highest, every single
#
quintile, people prefer going to private hospitals and they spend an enormous amount of money
#
And the way they fund that is borrowing from families, selling jewelry, selling land and
#
So there is a huge demand even amongst the poorest citizens to go to private facilities.
#
So we can just leverage that if the state said we will subsidize it, right?
#
And this is the time for the state to intervene and really look after people.
#
I would have said that the same is true for testing.
#
And as you know, the Supreme Court has displayed and continue to display its complete economic
#
illiteracy and lack of common sense time and time again.
#
They said that all private labs need to conduct tests for free, right?
#
Now the problem with this is private labs can't just work on science and good intentions.
#
They need to cover their costs.
#
And if you tell someone that they can't make money even to pay their employees and keep
#
the lights on, then they will just shut shop, which means we already have too few labs in
#
We're going to have even fewer because of this awful policy.
#
What they should have said instead, I mean, first they shouldn't have said anything at
#
all on this matter because they're really giving executive orders from the bench.
#
This is not a judicial issue, right?
#
So they should have stayed away from it.
#
What the executive state government and union government should have said instead was we
#
will reimburse private labs for tests where people cannot pay for tests, right?
#
And usually in these circumstances, it's not like there's going to be a huge moral hazard
#
Rich people can easily pay 4,000 rupees or whatever the cost of a private test is, whereas
#
And that difference is quite clear.
#
And I think we can trust hospitals to know who can pay and who cannot pay and depending
#
on the circumstances and the government should have just reimbursed.
#
So there will be much more large scale, wide scale testing, right?
#
The poorest people will not be denied tests.
#
But at the same time, we don't compromise testing capacity because private labs need
#
to provide a bulk of testing capacity.
#
The other reason we want a lot of new private labs to come up is we don't want everyone
#
to go to one place for a test in a pandemic.
#
We want people to go to a lot of different private labs.
#
In fact, what we want is mobile labs that go to people.
#
So these are the sorts of things that the government should have thought about that
#
I hinted in that marginal revolution blog post.
#
And this really had to do with me evaluating along with Abhishek Chaturagunta the kind
#
of health care capacity we have.
#
And we found that a bulk of it is in the private sector.
#
And two other findings from that paper were that there is huge variation in capacity across
#
Health care is a state level subject in India.
#
And the difference between Andhra Pradesh and Bihar is just staggering, right?
#
So even within India, as you know, Kerala has dealt with the problem particularly well.
#
But Andhra Pradesh has very high ratio of doctors per capita or hospital beds per capita.
#
Bihar, UP, Chhattisgarh, Jharkhand traditionally extremely low.
#
And you can imagine this, right?
#
Poorer states also have, you know, lower GDP per capita, which means lower demand for private
#
health care facilities, which means fewer clusters of health care in urban and peri-urban
#
So they're just stuck with whatever the government health care system is.
#
So that is kind of, you know, the situation there.
#
The third, and this is extremely related to COVID, is most of the government efforts in
#
health care facilities are in rural areas.
#
And this is historically because, you know, rural health has been a huge problem.
#
Infant mortality rates in rural areas has been very high historically.
#
So over the last 30 years, successive governments have made a huge push to improve rural health
#
In the process, most of the government facilities are in rural areas and fewer in urban areas.
#
And most of the urban health care is handled by the private sector.
#
But this also means that the urban poor are at risk if you're not willing to subsidize
#
the private sector, because they will overcrowd existing government hospitals.
#
And that number is extremely low in urban areas.
#
And urban areas are at a higher risk of the pandemic.
#
So these were some of the trends that we found, which I tried to highlight.
#
And because of this understanding of the difference between the health care capacity of the private
#
sector and government sector, I made certain recommendations, which is, you know, we need
#
to incentivize the private sector, and we need to think about how we spread the problem
#
And some of it is to, you know, make sure we don't have price and quantity controls.
#
We don't have import tariffs right now, when we desperately need to import testing kits.
#
We try and have some kind of bilateral negotiations with various countries.
#
As you know, we are a huge producer of generic pharmaceuticals, and the whole world is relying
#
on us to supply some of this, including the anti-malarial, which, you know, some people
#
have found may or may not help treat COVID.
#
But we should also think about things that India doesn't have, such as ventilators, right?
#
India is extremely short of ventilators.
#
We have only about 48,000 ventilators across the country.
#
And most of them, as I mentioned before, are already taken.
#
So we need to think about importing ventilators from other countries, right?
#
So we need to keep the market system open and functioning, even though the tendency
#
during the pandemic is, let's suppress the market system.
#
Yeah, and I want to elaborate a little bit on that.
#
But first, I want to express my outrage, which all my listeners will share, that one of my
#
guests before I could said the word incentive, there is this common trope on Twitter that
#
Amit can't go five minutes without talking about incentives on his show.
#
And I did not do it through the entire first half.
#
But now that you've brought it up, I am an economist.
#
So now that you have brought it up, I will have to sort of elaborate on an aspect of
#
what you mentioned, which is a beautiful phrase of prices being signals wrapped up in incentives.
#
An illustration of that, for example, is a price control that was initiated a few days
#
ago on hand sanitizers.
#
And the result of that is that you don't have hand sanitizers in the market right now, at
#
And look, here's how it works.
#
What happens is, let's say there's a hand sanitizer which is going for 50 rupees, a bottle
#
of hand sanitizer of 50 rupees, suddenly it becomes 200 rupees.
#
And the state steps in and says, oh, you know, hand sanitizer seller, you are profiteering.
#
No, the price must be fixed at 50 rupees.
#
One is the immediate effect, which is not even so bad, honestly.
#
The immediate effect is that it is first come first serve and sanitizer sell out at 50 rupees.
#
If there's a shortage, you can't get them anymore, which is the situation now.
#
But the worst effect is that had the price being allowed to go up to 200 or whatever,
#
that would have incentivized manufacturers to ramp up manufacturing.
#
And in fact, manufacturers of other chemical products, for example, to say that let us,
#
you know, find a way to make sanitizers for now, because that is where the profit margins
#
And therefore, what would have happened is that the prices would eventually have gotten
#
back to normal because the supply shortfall would have been met by people incentivized
#
That's the beauty of prices, they carry information and incentives and people simply do not get
#
Similarly, why I was kind of appalled by that Supreme Court ruling that they should be free,
#
which in my view is basically mass murder, because if you just look at the incentives,
#
you cannot give an order to private people like they are your freaking slaves, or that
#
they are your subjects to go back to that, to the term we used earlier.
#
They are rational people responding to incentives who need to feed their families who need to
#
pay their employees who need to pay the rent of their workplace.
#
And there is no way to do that if they start giving products for free.
#
What I vastly prefer is the solution that you have come up with.
#
And that brings up issues we will also discuss.
#
What I vastly prefer is that the state figure out a way to pay for them.
#
So the incentives of the private players keep working in the right direction, that there
#
is something in it for us if we keep manufacturing these.
#
Of course, civil society is full of good people who are doing good things for their fellow
#
citizens out of the goodness of their heart.
#
But most of the ways in which we serve each other arise out of this sort of self interest.
#
You know, people are not going to put sanitizers out in the market, out of altruism, they are
#
going to do it because they want to make a profit off it.
#
And that's how people will get the sanitizers they need or the masks they need or whatever.
#
And you know, and having finished this rant, before I move on from the rant, did I...
#
I mean, if you were in my principles of economic class, you would have gotten full points.
#
And I have, of course, learned a lot from you over the years in our conversations.
#
So a formal education is not necessary.
#
I wasn't inviting you to my class, Amit.
#
I was just saying, well done.
#
I would be the classic disruptive backbencher if I did come to your class.
#
But having sort of gotten the rant out of the way, I also want to raise another question
#
which has been coming up, which is, you and I, of course, are what, you know, people would
#
apply the term libertarians to us.
#
I have more and more come to object to that term or any other term because I think that
#
we think too much along tribal lines.
#
So I don't want to be thought of as someone who belongs to a particular tribe or otherwise.
#
But one thing that people often say and have said during the pandemic is that here is this
#
pandemic and you are supposed to hate the state and like private action, but you are
#
actually a wonder of wonders, you are actually promoting coercive action by the state and
#
recommending things like a coercive lockdown and so on.
#
And I briefly want to state my position on that.
#
And then, you know, I'm sure you'll have a deeper, more nuanced take on it.
#
But my take is simply this.
#
My take is that, look, you know, most libertarians would agree that the state is necessary for
#
There is the classic liberal paradox that, you know, for our rights to have any meaning,
#
we need someone to protect our rights and that someone can only be the state to whom
#
we grant the monopoly on violence.
#
And the existence of the states means that automatically some of our rights are being
#
infringed by the state itself.
#
That becomes a necessary evil.
#
Now arguments can be made about how big the state should be and what the scope of the
#
state should be, but people like you and me would agree that the state in India is a weak
#
state that does a lot of things badly.
#
You and I, I think, would agree that any ideal state anywhere should be a strong state that
#
does a few things very well, but otherwise doesn't interfere much.
#
It's the opposite in India.
#
And one of the fundamental core roles of a state is to protect the citizens.
#
That is a whole raison d'etre.
#
That is why it exists in the first place.
#
Protect the citizens, not just from other citizens, which is why you need the rule of
#
law, not just from enemy states outside of your geographical borders, which is why you
#
need a defense ministry, but also from things like a virus.
#
And this is a classic situation where, like you said, there is a market failure of sorts,
#
And therefore the state needs to step in at this point and sort it out.
#
What would your take be?
#
Is it similar to mine or?
#
I would just state it a little bit differently.
#
So as a libertarian or as a classical liberal, to me, that just simply means that on the
#
margin I would favor liberty enhancing measures and I would walk away from coercive measures.
#
So I have a preference for voluntary action over coercive action.
#
So that's just, you know, it's a, that's an ideological framework.
#
That is what I believe in.
#
Many people don't believe in that for various reasons.
#
We can debate that later.
#
Now it just so happens that a lot of voluntary action is negotiated very, very well through
#
Not all of it, but a lot of it.
#
And by this, this is the classic Adam Smith version of the market, which is it is an institution
#
which aligns self-interest with social interest beautifully, right?
#
So going back to your hand sanitizer example, people may be selling hand sanitizer to make
#
a quick buck because the price increased.
#
But in the process, they are supplying an extremely valuable commodity in the midst
#
of a global pandemic to the people who need it the most, right?
#
And they are doing it not out of their benevolence.
#
They're doing it probably out of their self-interest to make money, but in the process they are
#
serving people who actually come and become their customers.
#
So the market nine out of 10 times does a great job aligning self-interest with social
#
interest, and in the marketplace, more often than not, private costs and social costs tend
#
Now as you and I have talked about this before, there are cases where that doesn't happen.
#
And these are classic externality cases where we say there is a market failure, right?
#
Air pollution is something you and I have talked about before, which is a classic market
#
failure where it is in each person's interest or incentive to pollute, but the overall outcome
#
is so far beyond what the social cost of it is, so far beyond what the private cost of
#
each person breathing in that same air that there is a huge, huge externality problem.
#
Now let's come to the pandemic.
#
We have a very, very similar market failure in the pandemic.
#
And frankly, because we are still in an epistemic fog and we don't know how bad it is or how
#
bad it could be or which groups it affects the most, we just don't even fully realize
#
what that social cost could be.
#
But we at least understand conceptually that the social cost deviates from the private
#
That is much bigger than the private cost, that there could be people who are asymptomatic
#
who go around spreading this, right?
#
That there could be people who are symptomatic, but because of economic desperation or some
#
other problem are out and about working and they inadvertently spread it.
#
So there is a question of a classic market failure problem.
#
We've met the market failure.
#
So when it comes to a market failure, yes, you need some kind of government action, but
#
we have to realize that the government is not perfect.
#
And even when we invite government action to correct market failure, we need to think
#
about the incentive problems of the government and we need to think about the knowledge problems
#
of the government, right?
#
And those are two margins where if we can streamline incentives well, things would be
#
So for instance, when it comes to the knowledge problem of governments, we, you and I already
#
talked about how this is best done at the most local level, which is the municipal or
#
the Panchayati Raj level, because they have the most knowledge, because what is happening
#
in Dharavi is completely different from what is happening in Sikkim, right?
#
And so that is one way of thinking about how do we further fine tune, align the government
#
structure such that it can respond with the least amount of failure, with the most amount
#
of success while correcting a market failure, right?
#
The second is the incentives, which is things like, you sort of talked about this in your
#
introduction, which is people are going to be blamed in government no matter what, right?
#
So there are incentives to think about where, what kind of risk averse measures would one
#
be more likely to take?
#
So one is most people who are working, who are IAS officers and who are formulating policy
#
on this, they're fairly well off, they're part of the elite, they have CGHS, you know,
#
which is a central government health scheme, they're never going to go to a terrible hospital
#
for treatment, they're fairly well protected, they have piped water and all of those things.
#
Maybe they will err on the side of social distancing policy, which they can follow,
#
but no one else can follow, right?
#
Or if someone like me is formulating policy, for instance, I have a grandfather who's 102
#
He's in good health, knock on wood, but he's 102 years old.
#
He is one of the highest risk category people in this kind of a situation.
#
Now someone like me, if I were in the chair of a bureaucrat might impose too harsh a lockdown
#
because the person who I'm trying to protect is someone like my grandfather and I'm elite
#
and I'm comfortable and I really don't care about, you know, what is going to happen to
#
migrant labor or daily wage labor.
#
So there are incentives to think about, are the incentives aligned such that you impose
#
the least amount of total costs on your citizens or are they aligned such that you sort of,
#
you know, protect your own backs, serve your own interests, even if they're personal interests
#
and impose a lot of social costs, either because you had too stringent a lockdown or no lockdown
#
So these are some of the things to think about even while we wear our libertarian hat.
#
So overall, we want the system to be as, you know, voluntary based and low in coercion
#
as possible, but I'm afraid, I'm sorry to all the libertarians out there, we've met
#
So we need to do something and we have the government that we have.
#
So we need to put on our public choice, political economy hats and try and think about minimizing
#
government failure and minimizing government overreach every time on the margin.
#
We can't do anything systemically.
#
Agree with everything, first of all, and the interesting, the dilemma that I can't find
#
a resolution for in my head is what you just said, that if you look at it, the extension
#
of the lockdown, you know, which by the way, I think is a perfectly fine decision, I don't
#
have an argument with it, but quite apart from the goodness or the badness of that,
#
which we will never know, because you know, there'll be so much that remains unseen for
#
decades about the costs and the benefits, but the extension of the lockdown was almost
#
a political inevitability because you know, the politicians would be able to cover their
#
ass and say that, look, we are doing better than the rest of the world because we put
#
this lockdown in place, which is surely partly true.
#
And therefore we got to do more of it.
#
And also because the people who will be worst hurt, the people who are really affected by
#
this, like the migrant laborers and all of that are not such an influential voice in
#
I don't imagine migrant laborers anywhere really count as a vote bank and certainly
#
not as influential interest groups.
#
So they will always be the ones who get shafted.
#
So I will say one thing.
#
I think the lockdown is a failure.
#
The lockdown would be successful only if you use the period of the lockdown to build up
#
healthcare capacity so that when you reopen the economy slowly and steadily, you need
#
to flatten the curve a little bit less than five weeks ago.
#
That was the whole point of the lockdown because if you don't build up healthcare capacity
#
during the lockdown, then whenever you reopen the economy, you're in the exact same conundrum,
#
which means technically you can never reopen the economy.
#
So we closed things down March 24th.
#
We have no greater healthcare capacity today on April 17th than we had on March 24th, which
#
means we wasted a month with huge economic costs and no immediate site into when we can
#
So in that sense, I think the lockdown is a complete and total failure because I don't
#
think the government understood that at the end of the lockdown, whenever the time comes
#
to open the economy, there will be transmission, right?
#
So there seems to be no policy around that.
#
I have not seen any state other than Kerala at this point trying to seriously build up
#
What states are doing is just suppressing, right?
#
And they're like in panic situations, we're firefighting.
#
So Maharashtra is firefighting.
#
We're trying to contain the problem in slums.
#
We're trying to do contact tracing.
#
We're trying to do testing.
#
So all of those things are very important and they're great that we're doing that.
#
But at the end of the day, if you don't increase the number of hospital beds and you don't
#
increase the number of tests and private labs and pharmaceutical firms, which are producing
#
medicines, then you can never get out of the lockdown, right?
#
It's never going to be a good time to get out.
#
So I will disagree with you a little bit in that I think the lockdown is a good idea because
#
we have no other choice.
#
But I also recognize that the lockdown is a failure because the most important thing,
#
you know, union and state governments should have done during the lockdown.
#
I don't see that happening other than two or three different states.
#
No, I agree with you on the fact that these are all the things we needed to do during
#
And I had actually suspended judgment on that because I don't think there's enough information
#
available to me to know whether that capacity is being built.
#
I would have thought it a no brainer.
#
I know that there are lots of very smart people on advisory panels advising the government.
#
But yes, there is that epistemic fog.
#
And if they haven't actually put those extra beds in place or ramped up the production
#
of masks, because honestly, when the lockdown ends, every freaking Indian has to be wearing
#
You know, if you haven't ramped up ventilators, then I agree with you.
#
So I'll tell you what will happen in India, there will be a government mandate that says
#
everyone has to wear a mask in public.
#
We don't have enough masks, which means some poor person is going to be out and about without
#
a mask looking for food or medicines.
#
And then the police will beat that person up, right?
#
So this is the way we execute things in India without realizing that you can't just dictate
#
It's not there's no Akshay Patra.
#
Okay, you can't say we want masks and masks will just magically appear.
#
You need to incentivize the private sector.
#
You need to say there's an essential good, let's produce masks, right?
#
You need to say we will pay for every single person's mask who cannot afford it.
#
Masks are very cheap compared to private tests and hospital beds and things like that.
#
So civil society can help in a huge way, but we still need to have some kind of a signal
#
that here we need more masks.
#
So we don't have that yet.
#
I mentioned this before the you know, we have testing kits which we've imported, which are
#
just sitting waiting for customs clearance, waiting for approvals from the drug controller,
#
We still have import duties on a whole number of things.
#
Very recently, the finance minister thankfully in a wonderful move suspended import duties
#
on medical equipment, but we just have a supply side problem on each of these things.
#
And until we remove the roadblocks for the supply side problem, we won't get an increase
#
in supply on any of the essential goods which either help mitigate the problem like you
#
know, hand sanitizers and masks or help treat the problem like hospital beds and ventilators.
#
And you in fact recently wrote a column which could easily have been titled The Seen and
#
It referred to Bastia and his famous essay from which I got the title of the show and
#
it repeatedly I dedicate it to you.
#
Thank you for your show and your dedication to me to Frederick Bastia himself, one of
#
my 19th century heroes whose masterpiece, The Law, I think everyone should read and
#
In fact, they will be linked from the show notes.
#
But meanwhile, can you sort of quickly shed light on some of the Seen and the Unseen effects
#
of the pandemic because I just found it so delightful.
#
So you know, the classic example that Bastia gives when he talks about the Seen and the
#
Unseen effects is the broken window example, right?
#
So the folklore goes such that, you know, you break a window of a tailoring shop and
#
people say that, oh, this is wonderful because it's going to stimulate the economy because
#
now someone has to spend money to repair the broken window, which means the glass manufacturers
#
and the window installer and all these people will make money and it will stimulate the
#
So that's the Seen effect.
#
The Unseen effect is that had the window not been broken, there would have been more money
#
in the pocket of the tailoring facility and maybe they could have employed another employee
#
and maybe they could have bought another sewing machine.
#
And that would have stimulated a whole number of other important areas in the economy and
#
it would have been a valuable, you know, spending of resources towards things that people actually
#
want rather than just breaking a window and repairing it.
#
So if breaking a window and repairing it was a useful thing, we can keep stimulating the
#
economy that way, right?
#
But we know that it's not.
#
So the Seen effect and the Unseen effect are quite different.
#
Now, this is just one of the many, many examples that Bastia talks about.
#
In my column, I was talking about import tariffs specifically.
#
So as I mentioned, we have very high import tariffs more generally and in the case of
#
medical equipment, they are somewhere between say 12% and 26%, depending on, you know, the
#
assesses applied and what you're talking about exactly.
#
The testing kits, many of them, a 26% tariff is applied to them.
#
Now as we know, the reason, the ostensible reason given for import tariffs is that they
#
protect domestic industry, right?
#
And the way they protect domestic industry is because the domestic industry is not as
#
And what we mean by competitive is it doesn't produce say testing kits with the lowest number
#
of resources available, right?
#
It doesn't, it's more costly than people who do it abroad, but we still want to encourage
#
domestic industry even though they don't produce as effectively or as cheaply.
#
In the process, we put in a tariff and any foreign supplier who is selling to India is
#
going to have a higher price presented to the consumer.
#
So the consumer, if they can buy from the domestic person at a hundred rupees for the
#
same thing, we'll have to pay 126 rupees to the foreign supplier.
#
So the domestic supplier seems cheap in comparison.
#
These things are typically put in when the domestic producer makes testing kits available
#
at say 120 rupees, right?
#
The foreign supplier makes it available at a hundred rupees.
#
So the 26 rupee tariff is going to make the domestic producer seem slightly cheaper on
#
the margin or make them more competitive on the margin.
#
Now this is encouraged saying that the domestic producer will use local resources.
#
They will employ local people and all of those good things.
#
So that's the scene effect.
#
The unseen effect is that every single individual and lab in the country, which is buying a
#
testing kit, is spending an extra 26 rupees that they could have spent on other things.
#
They could have spent that extra 26 rupees on a mask.
#
They could have spent that extra 26 rupees on food.
#
If they had a lot of money sloshing around in their pockets, they could have given that
#
26 rupees to someone who needed it desperately.
#
And now all that money is spent, you know, sort of propping up a domestic producer because
#
they weren't as competitive as a foreign producer.
#
Now normally we tolerate all of this under the guise of patriotism and the whole problem
#
is presented as a tax on the foreign supplier, you know, vis-a-vis the domestic supplier.
#
So we're taxing foreigners, we're hurting foreigners, we're protecting Indians.
#
But the unseen effect is we are hurting the Indian consumer to protect the Indian producer.
#
And in this particular instance, normally this unseen effect, you know, is not visible.
#
In this particular instance of the COVID crisis, it has become extremely visible because in
#
this case, the domestic consumer are people who desperately need a test or are sick, who
#
will die waiting for a test or will transmit the virus to other people.
#
And the producer is, you know, some manufacturer.
#
Now suddenly the tables are a little bit turned.
#
We're like, oh, we're literally going to kill people while waiting for a test because
#
we're not allowing them to import foreign tests, which are more cheap and competitive
#
and available in larger quantities than the domestic manufacturers.
#
So this is one instance where the pandemic has made a traditionally unseen effect seen.
#
And in fact, the result became so visible that even the government has taken notice.
#
So the finance ministry, I believe on April 9th, issued a notification saying that until
#
September 30th, they're going to suspend all import tariffs on medical equipment and masks
#
and ventilators and testing kits, and also on the inputs that go into these, you know,
#
the various equipments.
#
Because for ventilators, we actually import a lot of different parts, but we might assemble
#
So it's important to also think about inputs.
#
So the government actually made this change.
#
So it was a remarkable thing where a traditionally unseen effect has become visible.
#
And thankfully, we have made one step towards greater trade, lesser coercion and fewer transfer
#
of resources from consumers to producers.
#
You know, I want to rant a little bit about this because this really makes me angry.
#
I think import duties, all import duties, without exception, are immoral.
#
They are an attack on the people of your own country.
#
And I want to talk a little bit about this.
#
I'll go back to your example.
#
Let's say that there is a sanitizer that a domestic producer can make for 120 rupees
#
and you know, a company outside maybe in China or wherever can make for 100 bucks.
#
I, the consumer, can now get it for 100 bucks if there are no import duties.
#
You put an import duty of 26%, 26 rupees, that is 126.
#
I have to buy from the local guy for 120.
#
What is happening here?
#
One, as you pointed out, the unseen effect is that that 20 rupees that I would have saved
#
would have gone back into the economy.
#
I would have spent it on something else.
#
It would have been put to productive use in the economy.
#
It would have generated jobs which would have been productive jobs and, you know, more than
#
made up for the loss of whatever the domestic industry would be.
#
But secondly, and I want to phrase it like this, what the government did with an import
#
duty was it redistributed money from the poor to the rich.
#
What happened was that the poor consumer at large lost 20 rupees.
#
It was coerced away from him by this government regulation and given to a rich interest group
#
of domestic manufacturers.
#
And the rich interest groups of domestic manufacturer then spends a chunk of that lobbying the government
#
or bribing the government to pass the import duty in the first place.
#
This is the circle that we need to watch out for.
#
You know, the crony capitalist using the power of the state to redistribute money from the
#
And this happens in so many different ways.
#
All protectionism, all protectionism is like this.
#
You know, restricting, for example, FDI on retail, which so many of the parties have
#
been for, is another example of that.
#
And they are always couched in rhetoric of, oh, we are helping the domestic manufacturer.
#
But listen, markets exist for the benefit of consumers, for the benefits of citizens.
#
And all of this amounts to redistribution from the poor to the rich.
#
And therefore, I hope that in time, now that we have come to see the evil effects of these
#
import duties, that in time, you know, we begin to cut down on import duties altogether.
#
You said we are transferring from the poor to the rich, which is incredibly true in a
#
country like India, where, you know, large number of consumers of pretty much anything
#
tend to be poorer than the manufacturers.
#
The other thing is we're distributing from a very large number of people to a very small
#
And that is also the reason why some of these things persist.
#
So it's very difficult for a large number of citizens, you know, maybe 100,000 people
#
in India need one of the medical equipment or, you know, a mask or something that we're
#
And it's very difficult for them to coordinate and say, hey, you're robbing us of 20 rupees
#
And it's much easier for the six or seven manufacturers to coordinate and say, oh, we're
#
going to get 20 rupees additional from, you know, 100,000 consumers out there.
#
And we can split it amongst the five of us.
#
So now how do we lobby the government?
#
So this is a classic case of concentrated benefits and diffused costs, which is why
#
many of these things exist.
#
So it's not just a transfer from the poor to the rich, which is a morally bankrupt situation.
#
But the reason why they persist is also it's a transfer from a very large number of people
#
who pay a small fraction to a very small number of people who gain a large fraction.
#
And in fact, to add to that, I'd also point out that the cost is unseen in the sense that
#
I, as a consumer, don't know the cost that I would have saved had the import duty not
#
I, for example, as a consumer certainly pay something every year for to keep Air India
#
You know, I have paid something in the past to have these giant statues built, but I don't
#
And even if I knew what it was that, hey, Amit, you're spending 100 rupees every year
#
on Air India and, you know, 100 rupees each on a million things like that.
#
For the sake of that 100 rupees, I would not be able to get together with all other citizens.
#
It would not be incentive enough to actually spend so much time and effort.
#
But for the person who is gaining from it, for Air India, it's very easy to then lobby
#
They're unionized employees.
#
Yeah, exactly, who are, you know, subsisting on this coercion.
#
But you know, sort of let's go back and your column, of course, has more examples of this
#
and it's a beautiful column.
#
I'll link it from the show notes.
#
I wish I had written it and all columns dedicated to Amit Verma are beautiful columns.
#
This is the first column ever that has been dedicated to me, but thank you so much.
#
It should be dedicated to Bastia not to me.
#
No, no, yes, I do mention Bastia in the column, but a conversation with you got me thinking
#
So Amit and I had chatted sometime in the morning, just before I started working on
#
the column and something Amit said to me, you know, got me thinking in that direction
#
and I was already thinking about import duties and I was like very frustrated with the fact
#
that there are testing kits stuck at ports because the drug controller has not approved
#
it and you know, things like that.
#
So that's what instigated me to write this, which is why it is dedicated to Amit.
#
We are all riding on the coattails of Bastia.
#
We are riding on the coattails of Bastia and at this point I must point out, I must retrospectively
#
dedicate my last column to you because it was about the flailing state and of course,
#
I first learned about that great 2009 paper by Land Pritchett because of you.
#
You introduced me to that paper and I want to now sort of turn to that.
#
The argument I made in that column, which will be linked in the show notes, is basically
#
that this temporal passing, hopefully passing disaster of COVID-19 has also shed light on
#
a deeper underlying disaster, which we have completely normalized, which is a failure
#
The term Land Pritchett used for it was flailing state, which is when, you know, the head of
#
the state, the brain of the state has no connection with any of the bodily organs, which we have
#
actually seen in practice where after the lockdown was actually called, there was so
#
much police brutality across the country because they simply hadn't got the instructions that
#
essential services to be kept open, people can go out to buy food, etc, etc.
#
And the larger point I was making and again, something that I get emotive about and feel
#
strongly about is that, you know, there has been a huge, not just state failure, but moral
#
failure over the last 70 years in what we have done to a poor in the fact that we are
#
still a poor country 72 years after independence.
#
I think the a couple of the stats I cited in my column is that every day, every day
#
in India, 3000 children die of starvation of not getting enough food.
#
One fourth of all Indian children are malnourished.
#
And honestly, you know, I can cite figures from various fields, you can look around,
#
you look what is being done to our farmers, you look what is being done to our women,
#
you know, perennial second class citizens and a layer of pain that lies beneath every
#
other crisis that you can name, whether it's a jobs crisis or the farming crisis and all
#
of this points to sort of the failure of the state and the way in which society runs itself
#
despite the state, as we have seen in all the volunteer efforts coming out, coming up
#
across the country to help the migrant laborers, just to take a small example.
#
Now my sort of related question is that look, you know, you and I would both agree that
#
part of this failure lies in the way that we think about it, that we think as men of
#
system to use Adam Smith's term and we think in paternalistic terms that if we give handouts
#
and all of that, then we can solve the problem of poverty, which is how we know that it cannot
#
We know that there is, you know, a disconnect between, there is a trade off between growth
#
and redistribution and that 1% of GDP growth lifts 2 million people out of poverty, that
#
economic freedom and allowing society to function well is the biggest driver of growth and therefore
#
of people coming out of poverty and paternalistic policies have a very limited impact.
#
Now in terms of dealing with the current COVID-19 crisis, you have proposed as a short term
#
measure a number of policies, which otherwise we would frown upon as paternalistic and,
#
you know, giving a man a fish instead of teaching him how to fish, for example, a time bound
#
So explain to me your thinking on this, that, you know, policies which we would never consider
#
to and which we know would not work for this larger ongoing normalized disaster, that is
#
poverty in the Indian state, we are seeing them as a short term fix now.
#
Is it an extension of the fact that in this crisis, the primary duty of the Indian state
#
is to protect the citizen and if those measures like a lockdown have economic costs, those
#
have to be ameliorated by the state.
#
Is that where the thinking is coming from?
#
Yeah, so three things, you know, you've talked about, I think, three distinct issues with
#
So the first one, the flailing state, I completely agree with you.
#
I mean, that's a fantastic paper by Landt, he's written a lot on this, Alex and I wrote
#
Our basic point, which, you know, you agree with, is that the Indian state tries to do
#
It tries to regulate areas that it has no capacity to regulate.
#
It tries to monitor things that it simply cannot do and it does too little of what it
#
is supposed to do, which is provide law and order and provide public goods and security
#
In fact, one great line from Ed Glazer, the economist, when he wrote about state capacity
#
in an essay, he said, a country that cannot provide clean water should not be in the business
#
of regulating film dialogue.
#
And you and I, as, you know, classical liberals, will agree that no one should be in the business
#
of regulating film dialogue anyway.
#
But on the margin, what he was talking about was state capacity is limited resource like
#
And the Indian government spends all its capacity on all these useless things, which it cannot
#
possibly accomplish, right?
#
Instead of actually providing clean water, basic public goods, sewage systems, you know,
#
maybe like a primary education system, things that we associate with the government doing
#
even in your and my version of a limited government.
#
So our government is completely like...
#
So in the process, it has spread itself too thin and it's flailing.
#
So the Indian government has labor regulation, which the most advanced countries in the world
#
don't have and cannot hope to enforce.
#
And so what happens as a consequence is that the Indian government also doesn't enforce
#
It just does it in a discretionary and pernicious fashion.
#
So when it wants to come down hard on some manufacturer, they will send the labor inspector
#
and, you know, sort of list the 30 violations and try to put that person in jail or get
#
So that's how the Indian government operates.
#
So I'm completely with you.
#
I think I wrote a similar column on this.
#
I think it's called the upside down Indian state.
#
I'll share it with you so that you can put it in the show notes.
#
We can link it in the show notes.
#
So that's one part of it.
#
And then I'm in complete agreement with you.
#
The second part of it is what is the appropriate role of the state in peacetimes?
#
And what is the appropriate role of the state in pandemic times?
#
Now I completely agree with you that over 70 years, because of terrible socialist laws
#
and paternalistic laws and, you know, us just trying to stifle the market system and voluntary
#
action at each and every stage, we have completely suppressed private enterprise.
#
And in the process, we've impoverished hundreds of millions of people.
#
So on that, I think there is no debate between you and me.
#
And I think 90% of the economists agree with us.
#
But the fact of the matter is we are currently living in a country of 1.3 billion people
#
where 275 million are below the poverty line and the poverty line is $1.25 a day.
#
So these people subsist on less than 3000 rupees a month.
#
And that's something we need to seriously think about.
#
The second is even people above the poverty line, because of really stupid policies like
#
our labor regulation, like our industrial licensing, most of them work in the informal
#
sector, which means they don't have the safety of contracts like, you know, people like me,
#
So I have a contract with my employer, you know, they can't fire me if I'm working remotely.
#
And right now I'm not able to produce anything because of the COVID crisis, you know, I still
#
Most people living and working in India do not have that security.
#
When you work in the informal sector, you also don't get employee insurance, you don't
#
get pension, provident fund, you know, a whole host of things.
#
And a very large proportion of the people in the informal sector are actually daily
#
wage laborers, which means if I can't go to work today because I have a fever or my family
#
member is sick, then I don't get paid anything and I need to go to bed, you know, starving.
#
So that's the circumstance we have created for about three to 400 million people.
#
So these people in India are above the poverty line because they work very hard, they work
#
long hours, they work as daily wage laborers, usually in the informal sector.
#
But the flip side to that is the moment you have something like demonetization or a lockdown
#
to mitigate the COVID pandemic, these people are not going to get paid.
#
So they are not a group that has savings, right?
#
So for instance, if I didn't get paid right now, I'm an economist, I've come from a lot
#
of privilege, I have some savings in the bank that will tide me over for X number of months.
#
There's a large group in India, three to 400 million people who cannot go through three
#
weeks of a lockdown because they don't have savings to sustain them for three weeks.
#
And this is no fault of theirs.
#
It's not like they did poor financial planning and ate too much popcorn when they went to
#
They just don't make enough money, they live on subsistence day to day.
#
If they earn today, they can feed their family, if they don't earn tomorrow, they can't feed
#
Now, this group has suddenly, it's very vulnerable to economic stress, even in normal times,
#
and they get pushed to the poverty line or below poverty line when there is a huge shock.
#
So when everything gets locked down because of pollution in Delhi, that is a big shock.
#
Not only do these people get sick, they also don't have the ability to go to work.
#
When things get locked down because of demonetization or COVID lockdown, same problem.
#
So they're very vulnerable to economic stress and they slide back into poverty.
#
So poverty is not a fixed concept of I'm poor or I'm not poor, it's all circumstances, right?
#
So currently, in addition to this 275 million who are below poverty line, and they are very
#
well targeted, we have a pretty good idea of who these people are, and there are a lot
#
of policies targeted towards them.
#
You and I can debate the effectiveness of those policies, but the government has at
#
least made an attempt to identify these people.
#
The 400 million people who are on the cusp of economic stress being pushed one way or
#
So when markets flourish, they get lifted out of poverty, and when markets can't flourish,
#
they get pushed back into poverty.
#
This group is invisible, right, or unseen, to go back to our theme.
#
And we do need to think about them.
#
We definitely need to think about them in pandemic times, even if we don't think about
#
But I think overall, we need some kind of a sensible solution for that.
#
So in the post, I had suggested a UBI.
#
I did not think of it as a paternalistic act.
#
I thought of it as a fundamental moral duty of the state to make sure that its citizens
#
And the reason the citizens are in that position in the first place is because both as a government
#
and as a society, we have consistently looked the other way when it comes to the informal
#
We are not very good about, you know, even the most elite among us.
#
How many people are offering health benefits to their household help?
#
I would assume a very small percentage.
#
So it's not just the government.
#
It's also the rest of us as a country, as a society.
#
We have made these people invisible in the system, and we just operate business as usual.
#
And we look the other way when we pass a slum, we just hold our nose up and, you know, sort
#
of we carry on with things.
#
And right now, the pandemic has cracked open this sort of, you know, underbelly of the
#
Indian political economy, which we always pretend doesn't exist.
#
So slums is another problem, as you and I have talked about this before.
#
Slums are a consequence of terrible urban land regulation and housing policy.
#
That's why slums exist.
#
Bombay would not function without its slums.
#
No big city in India can function without its slums because 42% of the households in
#
Bombay live in slum or slum-like arrangements, informal arrangements, but they are the bulk
#
of the labor that runs the Mumbai economy, right?
#
So we need to think about these people, but we don't address these issues normally.
#
Now that there is an outbreak in Dharavi, suddenly we're like, oh my God, we need a
#
But historically, we've not addressed it.
#
And now helping these people, we can't say that's paternalism or that's a handout.
#
At this moment in a pandemic, it is absolutely our fundamental moral responsibility to ensure
#
that people we have personally and as a society kept impoverished do not die of starvation
#
or do not die of disease.
#
So that's my response to that.
#
When it comes to your third question of, do I think a UBI should carry on beyond this?
#
Now in normal times, both you and I are not in favor of transfers from the government
#
We are not in favor of subsidies and things like that.
#
Now as an economist, I will say that an income support, which is not means tested, that is
#
we're not saying you get it if you qualify, if you're below a certain income or if you
#
have a certain profession.
#
So basically we just give it to everyone of a particular category.
#
Those tend to be the cleanest transfers.
#
They have the least distortions.
#
So as an economist, I'm a huge fan of universal or quasi-universal income and that being given
#
in the form of a direct cash transfer, simply because it's the cleanest instrument that
#
It has the fewest price distortions.
#
So it's much better than giving agricultural subsidy, water subsidy, food subsidy, fertilizer
#
subsidy and all the million other distortive subsidies that we have.
#
So that's the economist part of it.
#
The other aspect I want to shine light on when it comes to income support as an economist
#
and we are seeing this happening the world over, the market process, while it's incredibly
#
valuable in pushing people towards prosperity, it is not seamless and it is not even in its
#
There are business cycles and we've seen this happening in developed countries.
#
Because of globalizations, there are certain areas such as manufacturing, which have taken
#
a huge hit and the people who are working in those sectors suddenly find themselves
#
And they are not at any personal fault.
#
It's not that they don't work hard.
#
It's just the global forces of the market are so big that their firm had to move its
#
manufacturing operations to China or something like that.
#
And as a society, we need to think about how do we support people for a short period of
#
time or in times when there are business cycles such that they can retool and get back into
#
the economy as opposed to them losing their job and then suddenly being out of work.
#
Now even someone like me, as we talked about this, I come from a lot of privilege, but
#
I have hyper specialized.
#
I have just been in academia my whole life.
#
I don't know very much beyond economics and public policy.
#
If you asked me to go and work tomorrow and say, Hey, your university is closed, but we
#
Why don't you go and work in a factory that produces masks?
#
I mean, they'll throw me out.
#
I don't know how to sew or I know how to sew very badly.
#
So it's going to take me some time to retool, even if I'm willing to take on a different
#
job, which is in manufacturing or a different kind of job writing outside of academy or
#
So we need to think about that.
#
So the market is not seamless.
#
It comes with business cycles.
#
And this is true both in India, where we're looking at unproductive sectors of the economy,
#
like agriculture and people moving to manufacturing or services, people moving from unproductive
#
rural areas to urban areas.
#
Income support hugely helps people when they are making these transitions.
#
And these transitions are extremely necessary when we think about a functional market system.
#
Can some of these transitions be provided by civil society?
#
I don't think income support should a means that civil society cannot participate.
#
Second, I don't think income support should be very high.
#
The kind of income support I'm talking about is 3000 rupees a month.
#
That's the poverty line.
#
So it is not enough to incentivize anyone to just stop working and hang out at home.
#
It's just about going to buy you food and shelter, if at all.
#
So I don't think there is too much moral hazard and I don't think there's too much paternalism.
#
And the really rich people who spend 3000 rupees on a meal or a drink who don't need
#
it will not get it anyway.
#
So I think it's a very clean instrument and I think it's necessary.
#
I don't think this is a paternalistic act.
#
I think if you and I are to take the functioning of the market seriously, we also need to think
#
We need to talk about sectoral shifts.
#
We need to think about how people in a society which is civilized, which has deep division
#
of labor and specialization are not going to be able to transition from one area to
#
another area overnight and seamlessly.
#
And according to me, the cleanest instrument I can think of in these circumstances is some
#
kind of direct cash transfer, basic income support.
#
So I have a bunch of thoughts on all of that.
#
To begin with, I'd like to share an image with you, which I feel like we can finally
#
So I'm looking forward to this.
#
The disagreement comes at the end.
#
In fact, you know, when people ask me that, you know, why don't you get people on your
#
show you disagree with, I say, look, I disagree with almost everyone who comes on my show,
#
with the exception being Shruti Raj Gopalan.
#
So boom, that achievement unlocked.
#
But anyway, my first observation is not a disagreement.
#
It's in fact, it strengthens your case, which is an image that our mutual friend Kumar Anand
#
once told me about, where Kumar used to live in Mumbai in those days.
#
Now, of course, he's in Delhi.
#
And Kumar was once chatting with a taxi driver and the taxi driver told him about the circumstances
#
Obviously, he was a migrant from somewhere else.
#
I forget where UPB or wherever to Mumbai.
#
Now the taxi driver lived with seven other people, eight people to a room.
#
So they shared this narrow cloistered space.
#
And when the time came for him to work, he got up from sleep and he went to work.
#
There were actually 16 people who lived in that room, but they slept in shifts.
#
So you'd have eight people who would have it for half the day.
#
And then those eight people would go out to work to drive the taxis or whatever other
#
And the other eight would come back from their shift, whatever it was they were doing, and
#
So in a room, you manage to pack in eight people.
#
And then you're there actually 16 people.
#
Now, what happens when you have a lockdown?
#
What happens when you have a lockdown is, first of all, none of these guys has work,
#
None of these guys has work.
#
They're all out of work.
#
They're probably people who subsist on maybe they have a week's money in advance at most.
#
They don't have savings.
#
And now instead of eight to a room, there are 16 to a room.
#
They can't even lie down in their own space because their own space was, you know, had
#
that temporal limitation.
#
And the thought that strikes me here is who let them down?
#
In my mind, if I go to root causes, I would say again, it's that same thing.
#
It's a failing state that let them down, that over 72 years we have with, you know, a crony
#
socialism and our distrust of private enterprise, we have not allowed our society to progress
#
to the level where everyone can meet what the philosopher Harry Frankfurt calls a doctrine
#
None of these people meet that and all of these 16 people may be above the poverty line.
#
So when a pandemic happens and there's a lockdown, do we owe them something?
#
And I agree with you, it's a moral imperative, we owe them something.
#
But I will also, you know, frame it by alluding to something the great farmer Sharad Joshi
#
Sharad Joshi, of course, is one of my favorite 20th century leaders.
#
You can hear a bit more about in the only Hindi episode I've done on my podcast, which
#
is episode 86 of the Seen in the Unseen.
#
It is my most favorite Seen in the Unseen episode of all time.
#
Which therefore, you know, I should do more Hindi episodes, but that is with the farmer
#
It wasn't because it was in Hindi.
#
It was with Gudmant Patil, who is just such a clear thinker.
#
So that episode was with the farmer leader Gudmant Patil, who was an old associate of
#
And he spoke about Sharad Joshi's fantastic phrase, negative subsidy.
#
Now what is a negative subsidy?
#
We all talk and this is extremely unfair.
#
We talk unfairly of farmers, of people who are subsidized by the state.
#
In Sharad Joshi's words, farmers are actually hurt so much by the bad policies of the state
#
and do go back and listen to that episode and one more I'll link from the show notes
#
are hurt so much by the acts of the state that they actually lose money.
#
And Sharad Joshi calls this the negative subsidy.
#
And Joshiji was against all forms of paternalism.
#
But nevertheless, you know, if you look at the manifestos that he drew up for the Shed
#
Kari Sangat and other party, which he founded and ran so well, everything there was promoting
#
freedom and anti paternalistic and talking about removal of controls and blah, blah,
#
But there was one thing which on the surface sounds paternalistic, which was farm loan
#
But it sounds paternalistic on the surface.
#
Joshiji's point was that, look, this is a compensation for the negative subsidy that
#
we have been subjected to all our lives.
#
And in his mind, it was, you know, a temporary measure that you have to do only side by side
#
with all the other reforms and how farm loan waivers of course used in modern India are
#
in a paternalistic way without making any of those structural reforms and therefore
#
Now, I want to sort of when we are talking about markets and since agriculture is what
#
we brought the subject to, I also want to point out that when we liberalized and it
#
was a very limited liberalization, sadly in 91, the one sector that we did not touch was
#
It wasn't liberalized at all.
#
I've had episodes speaking at depth about this.
#
And that is a one sector where there is the largest amount of distress.
#
So I would still hold that in the long run, you have to let voluntary action play a role
#
that you know, people are not cost, they are resources.
#
And that if you look at what has happened in other free economies and in the sectors
#
that we did free up, they have done far better.
#
And you know, in agriculture, they continue to sort of do not so well.
#
And here I would again, you know, go back, you know, when we talk about UBI and when
#
we talk about helping poor people with redistribution, I would point out here that there is a cost
#
to this and it is both a moral and a financial cost.
#
The moral cost of course is coercion.
#
Every compassionate act of government is founded on coercion because the government takes its
#
taxes by coercive means.
#
So that is a moral cost.
#
And it's a moral cost we should acknowledge while talking about what government action
#
is justified and is not justified.
#
I would, for example, say that the rule of law is justified, that coercion is justified
#
It is not justified for building a 100 meter statue or for spending thousands of crores
#
in advertising government services.
#
Without the case, irrelevant, leave that aside for a moment.
#
But the financial cost, you know, I had Ajay Shah and Vijay Kelkar on my show a few months
#
back and that book is really fantastic.
#
I think everybody must read In Service of the Republic.
#
Yeah, they wrote a brilliant book called In Service of the Republic, which I totally second
#
Everyone should read that.
#
And a concept that they very clearly elaborated upon at length is a marginal cost of public
#
funds, which is for every one rupee spent by the government.
#
The cost to the economy is that of three rupees, I mean, between two and a half to three and
#
But you can approximate that to three rupees.
#
So it's not just if you give a handout of one rupee to someone, the cost to the rest
#
of the rest of society at large of that one rupee is three rupees for a variety of reasons
#
which the book elaborates upon.
#
Yes, and in the scheme of things, UBI is on the lower end of that cost because it's much
#
cleaner than most other subsidies.
#
But there is a certain cost of public funds.
#
So now the point that I'm getting to with regard to UBI is that I would actually be
#
OK with UBI if we make the assumption that look in a poor country, there is immediate
#
distress that you have to relieve and therefore the UBI works for that.
#
But the caveats I would put is that it has to come in place of all the other failed paternalism
#
that effectively makes us that effectively makes us a predatory state.
#
I do not see that happening in the political economy.
#
And be in a case like this, while I agree that it is a moral imperative that we have
#
to make sure nobody starves, I mean, that is regardless of context, that is regardless
#
of covid, no one should starve.
#
But then the point is that and this sort of leads me to the next question, but we'll come
#
But just you know, I don't want to keep peddling all my columns.
#
But my argument I have written against UBI in India, though I'm a big fan of UBI overall.
#
And my argument was very similar to yours, which is in India, normally UBI should be
#
a substitute for all our other bad subsidies.
#
So what we should do is we should add up the cost of all those subsidies, we should scrap
#
all of them and whatever money is remaining in that pot, we should say, OK, what is a
#
fiscally responsible, you know, income support that we can provide from that?
#
What India has done instead is it announced quasi UBI is just before the last general
#
election and it didn't scrap any of the subsidies.
#
So I think the title of that column was UBI is universally botched by Indians.
#
And I was saying something very similar to what you're saying, which is we don't want
#
to end up in a situation where we give a UBI and all these other subsidies and keep compounding
#
the problem more and more.
#
So I very much agree with you.
#
It has to be a substitute.
#
It can't be an addition.
#
I think it's a very much it's a cleaner substitute.
#
And the other thing I would add is we need to keep it relatively low that it doesn't
#
turn into a moral hazard problem.
#
And the moral hazard is never from the poor in our country.
#
It's always from the rich, and I don't think the UBI will will subsidize anything for the
#
So, you know, I think we can we can stay away from that.
#
I agree with that in theory.
#
But you know, the thing is that, again, it goes back to the public choice issue of incentives.
#
The predatory state is never going to reduce any of its predation.
#
So if a UBI is added, it's not going to be as if you decide, OK, we'll get rid of all
#
the other subsidies and we'll put the money in a pool and let's do a UBI from that.
#
That's not going to happen.
#
And you will just increase the fiscal burden, which, of course, means that one rupee of
#
state spending is equal to, you know, a cost of three rupees to society.
#
And that cost of three rupees to society then accumulates and prevents society from advancing
#
freely and helping itself, because ultimately, as we have seen, mainly society helps itself
#
So I have a slightly more optimistic view on how this can happen.
#
And you know, just bear with me.
#
And this is obviously there are some huge assumptions I'm making.
#
You'll hear me out anyway.
#
Now, I think it's a good idea to introduce a UBI kind of income support during COVID,
#
because once you start giving people checks that get into their bank accounts, it's very
#
difficult to take it away.
#
But to be fiscally responsible, because there are only so many resources and the government
#
can't keep raising more and more revenue, it's already finding it hard to raise revenue.
#
At some point, something has to give.
#
And it would be very difficult to take away the UBI support, so other cross subsidies
#
That is my optimistic version of this problem.
#
Now, I understand that that may not happen, or it may take too long to happen.
#
But I think the UBI helps us get around that problem at least a little bit.
#
Maybe I'm being too optimistic for Amit Verma, but I will still hold on to this optimism.
#
You are almost being as optimist as a communist, that everything will work just fine.
#
But incentives, incentives, no, no, I'm just kidding.
#
So let's sort of, I mean, I will suspend my judgment on that, and I hope you are right.
#
And let's move on from that.
#
I have two broad areas I want to talk to you about.
#
But before I do, I should clarify for people listening in that, oh, what are these heartless
#
People should not be given money, and UBI is this idea, or...
#
And the whole point is that we cannot judge policies by their intentions, but by their
#
And therefore, we have to take a good hard look at all policies according to the effects
#
that they will have, particularly what I call the unseen effects.
#
You know, as in the price controls we discussed earlier, who would object to everybody getting
#
But what happens if you fix the price is that nobody gets them.
#
And you have to sort of look a little deeper.
#
I would still say a small income support is slightly different from price and quantity
#
controls, but you and I agree on what margins they are different.
#
But I just want to flag that.
#
And I am not a big fan of income support in developed countries or in Scandinavian countries.
#
I think there's a genuine model hazard problem.
#
I think there's a question of disincentivizing productive labor force and things like that.
#
In India, we're talking about this at the subsistence and starvation level.
#
So I find it very difficult.
#
Maybe I have to turn my libertarian card in to the libertarian policeman out there.
#
But you know, I still think we have to figure something out because their impoverishment
#
is not their fault, but our failure as a government and society.
#
I think I would, you know, go back to Sharad Joshi to think about this, where Joshi ji's
#
formulation was that, look, we need to make all these structural changes and paternalism
#
However, as a short term anesthetic, while you make those changes, you better compensate
#
us for the misery that we have had to go through for all these decades by at least giving us
#
these waivers now and never again.
#
Because once you make the structural changes, we won't need them.
#
And that was his point.
#
That's the hope that India is so rich that it doesn't need this kind of income support.
#
Income support is required when people are living on subsistence levels.
#
They have no savings to fall back upon.
#
You know, any kind of economic distress immediately pushes them into bankruptcy or they need to
#
sell their land and their wives' jewellery.
#
Those are the kinds of circumstances we're talking about.
#
But my whole point is that those circumstances are brought about by and persist because of
#
pernicious regulation, yes, and the point is, my worry is that this will again become
#
a paternalistic patronizing swap thrown to them without any of those structural changes
#
And then it becomes a trap that they remain trapped in, much as has happened in agriculture.
#
But let's move on from that.
#
I have a couple of larger questions, which I think we can finally begin to agree on something
#
I'm surprised, you know, I always thought we agreed too much.
#
I'm glad we found some point of disagreement.
#
Yeah, actually, I remember the only...
#
I should put on a t-shirt.
#
I disagree with Amit Dharma.
#
Well, you know, I think the whole freaking world is a market for that t-shirt in that
#
But yeah, so good luck with that.
#
I'll make a lot of money selling the t-shirt.
#
So that is kind of sort of the next thing I'd like to talk about, which is essentially
#
that what we see in many crises of whatever sort, whether it's a pandemic sort or a war
#
sort or just an economic downturn sort, is that the government will use a crisis as an
#
excuse or rather the state will use a crisis as an excuse to take even more power than
#
it has in, quote unquote, peacetime.
#
And those powers persist after the crisis is over.
#
For example, you know, in wartime, a government could hypothetically take over powers which
#
affect your privacy and which affect your freedoms.
#
And they would say, you know, it's a freedom versus security thing, we are in war, so freedoms
#
are not that important.
#
And in peacetime, we'll see.
#
But in peacetime, things never go back to normal.
#
Do you see that there's a risk of that happening during this crisis?
#
And if so, in what ways?
#
That keeps me up at night.
#
So you know, in general, I think emergency powers, they tend to be draconian.
#
We already have a draconian Indian state, but emergency powers tend to give more discretion
#
to the state, more power to the state to really infringe on private activity.
#
And it's not clear to me that that goes away easily.
#
Now in India, you know, when you and I recorded the episode with Alex, I don't remember verbatim
#
But when you asked him for his thoughts on Indian society and Indian state, he said,
#
Indian people tolerate too much abuse from their state or something like that, right?
#
Something to that effect.
#
About how we are a tolerant nation.
#
And that episode, by the way, will be recorded in early February, but it will release now
#
And it has nothing to do with what I don't think it will be dated because our subject
#
Because we are timeless, Alex and I know it's because.
#
So he said that, and I agree with him, the Indian state already has taken such extraordinary
#
powers and had such major infringements on individual liberty.
#
We don't even realize when the state is imposing more stress on us.
#
And I'm very worried that COVID will do that.
#
I'll tell you a couple of areas where I'm particularly worried.
#
One major problem we have, and this goes back to the, you know, head of the show when we
#
talked about healthcare capacity.
#
So Alex and I have written about what kind of pandemic policies we need in developing
#
countries in the absence of healthcare capacity.
#
So we don't have enough testing kits.
#
One way by which Kerala has had success and other states should emulate is contact tracing.
#
So the state is going to come and it's going to ask you your travel history.
#
It's going to ask you every single person you've met.
#
It's going to ask you who you shook hands with.
#
And then it's going to go to each and every one of those people.
#
And if anyone's affected, they're going to take them away from their family or their
#
neighborhood and they're going to isolate them.
#
This is an enormous infringement on individual liberty, right?
#
We are tolerating it in a pandemic because we live in very difficult circumstances.
#
We live in very dense urban environments.
#
We don't have a good culture of social distancing because of our lack of resources.
#
We have intergenerational cohabitation, so it's very difficult to socially distance from
#
people who are elderly and could be at risk.
#
So we are tolerating this kind of infringement.
#
But I don't think it is a good idea ever for the state to know where I have been, what
#
I have done, who I have met, who I shook hands with last.
#
This is a really big problem.
#
But contact tracing is one of the very few mechanisms we have as a substitute for wide
#
scale or large scale testing, which we cannot implement in India.
#
So in an ideal world, we'd be like South Korea, right?
#
We conduct millions of tests and people just go, they test, they get tested positive or
#
negative and accordingly they isolate or they don't isolate.
#
In India, we don't have that.
#
In fact, we've had people lie about their travel history, right?
#
We had the infamous Kanika Kapoor, who's the singer who came and attended four weddings.
#
She lied about her travel history.
#
She did not quarantine.
#
She's created a racket at a government hospital in Lucknow where they tried to isolate her.
#
So the Indian elite can be very badly behaved.
#
The Indian, you know, the non-elite, the poor, very often they are not in circumstances to
#
They're like, I am the sole breadwinner of the family or I'm the only one who can look
#
after my parents, right?
#
If I leave, there's no one to look after my kid.
#
So these kinds of infringement on individual liberty, I'm not a fan of.
#
And I would really like to not see this persist.
#
We're also getting into huge privacy issues if we look at contact tracing through mobile
#
I was told, I don't know how to verify this information because I'm not a computer science
#
But I was told that the government apps, which are the diagnostic apps, they register your
#
location through, you know, GPS and Bluetooth long after you've done the diagnostic test.
#
That is something that worries me deeply.
#
So these sorts of things I'm not comfortable with.
#
I don't see what the alternative is.
#
The alternative is excellent healthcare capacity and everyone having a large house, lots of
#
square footage, clean pipe water and soap and hand sanitizer to self-isolate while they
#
comfortably live off their savings.
#
But we don't have any of them, let alone all of the above.
#
So these are the sorts of spaces where we are ceding a lot of control to the state and
#
I'm not a fan of it persisting.
#
And in the United States, you know, it's passed the CARES Act.
#
It's an extraordinary economic stimulus because these are extraordinary times we've had, I
#
The last time I checked about 22 million, you know, unemployment claims in the last
#
few weeks since people have started putting in a shelter-in-place orders and, you know,
#
restaurants and other services have started shutting down and people have lost jobs.
#
But it's a two trillion stimulus and we have to pay for it.
#
And when I say we, I mean the future Shruti Rajagopalan and the future workers two years
#
from now, three years from now in the American economy need to pay for this.
#
And there is no clarity on how we came up with this number, whether it goes to sensible
#
Two trillion in a stimulus for COVID and the related economic crisis and hardly any of
#
it has gone towards development of vaccines, which frankly is the only way to get out of
#
So it's not clear how that money, you know, if the dollars were put to the best use either.
#
So I'm not an expert on the CARES Act, but there is another way by which, you know, we've
#
given up or we've ceded a lot of control in these emergency situations to the government
#
to spend a lot of money without any of us having a very clear understanding of how we're
#
going to get out of that spending and how we get out of that situation.
#
And right now everyone's attitude is, look, it's an emergency.
#
We shouldn't worry about spending.
#
We'll figure it out later.
#
If we don't spend the money now, there will be no economy to protect or, you know, the
#
You know, there's all of that chatter and I can sympathize with some of that, but it
#
does concern me on, you know, how are we going to go back and sort of control the fiscal
#
So there is the excess in terms of privacy, there is the excess in terms of, you know,
#
There's also excess in terms of just, you know, police brutality and things like that
#
So we don't know what the appropriate role of police officer in these circumstances,
#
When they say enforce a lockdown, is the job of the police officer to assist people when
#
they're in distress and want to congregate or is their job to shut down things, overturn
#
vegetable carts and milkman's trucks and, you know, sort of start beating people up
#
and doing lotty charges to get them to walk away from a Monday.
#
You know, we have no clarity on that.
#
My understanding of a police enforcing a lockdown is we systematically control crowds and have
#
social distancing, but the police need to help people get the essential things that
#
No one is out and about just having a good time.
#
The people who are out and about need to be there because they need to buy vegetables
#
So we don't have a good understanding of what it is.
#
So the police in India is just danda, right?
#
Anyone who comes out in a lockdown, we just beat them up.
#
So these are the sorts of areas where we've ceded too much control to the government.
#
We're willing to cede it during a lockdown, just not comfortable with it.
#
And my related thoughts, number one, in the context of, you know, ceding our freedoms,
#
it seems to me that there is also a widespread subject mentality in India.
#
Like I watch a lot of Tik Tok and one common meme there is about these people who are saying
#
And then the guy goes out and he comes back later and he says, mujhe toh kuch nahi hua.
#
And then he turns around and you realize that his shirt is torn because he's got a lotty
#
And that's completely okay.
#
Apparently all the police brutality is completely normalized.
#
I mean, I had a similar experience in my housing society here in Mumbai where my society secretary
#
got a call from the nearby police station saying, hey, the commissioner is going to
#
Can you organize your society to applaud for him?
#
So on the society WhatsApp group, they organized everybody to go down and applaud and a couple
#
of women went out and showered flowers on the commissioner as he passed by.
#
And that is such an obsequious sort of display.
#
And you know, and yet it's a perfectly rational response in a world where the police is draconian
#
and will unleash its brute force on you if you don't sort of, you know, acquiesce and,
#
you know, applaud them or give them whatever it is they want, including respect.
#
And it was actually rational on the part of the secretary of our society to ask that people
#
do this because other societies would, and you don't want to be in a situation where
#
the society needs something tomorrow and the cops say, hey, no, but you are those guys
#
and you didn't help us.
#
Number two, you know, in the, and I forget why this thought came to me in the context
#
of what you were saying, but it's something that my friend Suyash Rai once said to me
#
in the context of demonetization, which you and I have recorded an episode on, but Suyash
#
and I also recorded an episode on, I think there was an episode.
#
And I would recommend his overminds.
#
They're both at different stages of the thing, but the point that he made was that whenever,
#
and this is really important that applies to everything, that whenever you're doing
#
a cost benefit analysis, you need to keep in mind that your calculation doesn't work
#
if you're talking about costs to one group of people and benefits to another group of
#
And it's, and it seems to me that with a lot of this, you know, throwing money at a problem,
#
you are borrowing from the future to fund present problems.
#
Number one, and number two, there is also a lot of coercion going on in unseen ways
#
on people who do not see it, but it's going on.
#
And we ignore all those costs and we think about the assumed benefits.
#
And now coming to that, that's a third point.
#
I was reading an excellent column by Rathin Roy today, I think, where Rathin made the
#
point that fiscal stimulus and all is okay, but there is a danger that if you put too
#
much money in the hands of people and they don't have goods and services to spend it
#
on, what you will then have is hyperinflation.
#
And these are very wise words.
#
And this is one of those sort of downstream effects that we are not taking into account
#
We are sort of going with that dogmatic thing that, oh, let's do a fiscal stimulus.
#
We'll put money in the hands of people, they'll spend it and the economy will bounce back,
#
you know, which is again thinking like a man of system where everybody is a piece on a
#
chess board, but that's not how the real world and the economy work.
#
So Rathin, I mean, Rathin is an excellent economist.
#
You should get him on the show.
#
He is the director of NIPFP and he also writes beautifully, not just during the COVID pandemic,
#
but more generally on, you know, fiscal issues and public finance.
#
So he's definitely, you know, everyone should read him and his business standard columns.
#
You should have him on the show.
#
I agree with Rathin in the sense that there are so many effects.
#
So as you pointed out again, in the head of the show that, you know, there's no one thing
#
called an essential commodity, right?
#
There's no one thing called a supply chain.
#
The economy is a beautifully woven web of thousands of decentralized actions.
#
And if you suppress or control one thing, it's going to pop up in a different unintended
#
consequence somewhere else.
#
And we need to have a very detailed and nuanced understanding of the economy before we just
#
started throwing money from helicopters or giving fiscal stimulus and things like that.
#
So one area where, you know, I mean, I think Rathin and I would agree is we need to support
#
people at the subsistence level.
#
We need to make sure people are fed.
#
But I do agree with Rathin that we need to be very careful about broader fiscal stimulus.
#
It's not clear what money in the hands of people will do if there is an overall contraction
#
of the economy because of the lockdown, both in terms of aggregate demand and aggregate
#
So that is something we just, we don't have a handle on.
#
We don't know what kind of contraction we're talking about.
#
We don't know how long it will persist because at this point, no one knows how long this
#
version of the lockdown will go on and how the next opening up of the economy or, you
#
know, easing the lockdown, what exactly it looks like.
#
So we don't fully have a handle on what the overall economic contraction is.
#
And in those circumstances, just waving around, you know, well-known tools and just printing
#
more money and saying this is a war and we should just throw money in a war economy.
#
It doesn't help anyone.
#
So I do agree with them there.
#
Let's, let's move on to, you've written a paper with Alex where you talk about 10 solutions,
#
what we can do going forward.
#
And you've also spoken in conversations with me about broad strokes, policy solutions.
#
How do we look at India specifically moving forward, you know, and I won't even say in
#
a post-COVID situation because I think a post-COVID situation frankly is a long way away.
#
This is an ongoing crisis that we are part of.
#
It has, it has changed our lives forever.
#
I don't think most people realize the extent of the cultural changes and the economic shift
#
that is going to happen because of this.
#
But what are your sort of prescriptions going forward?
#
So this is actually prescriptions not even going forward.
#
These are prescriptions for yesterday.
#
So we wrote this last week, Alex and I, one of the themes that we have worked on before,
#
and this is the paper on, you know, premature imitation and state capacity in India and
#
the flailing state, which, you know, we recorded a podcast with you.
#
Our theme has generally been that it is problematic when developing countries just borrow solutions
#
or best practices from the developed world because a lot of those best practices don't
#
translate and they don't work very well in India.
#
So you know, the WHO and all the international organizations say, oh, the best thing that
#
you can do right now is stay at home.
#
Don't meet anyone, wash your hands, you know, be safe and clean.
#
Now we know in India, most people cannot follow that prescription.
#
And the reason most people cannot follow that prescription, you know, two or three different
#
Number one, the average living space in India per capita is relatively low, right?
#
And this is particularly low in slums.
#
So the average Indian, you know, per capita space, especially in urban areas, is about
#
127 square foot per person, right?
#
In Mumbai, which is India's densest city, the average living space per capita is 48
#
And our friends at IDFC Institute kindly pointed out that 48 square feet is smaller than an
#
So that is the kind of tight spaces in which we live.
#
In slums, that number is close to 30 square feet, right?
#
And then there are things like shifts that you talked about, which don't work in a lockdown.
#
So we're talking about very low per capita living space in India, either because urban
#
areas are extremely dense or rural households have more space, but the size of the household
#
Second, we have intergenerational cohabitation.
#
So you know, there's the, you know, the joint family system in India where the grandparents,
#
grandkids, parents, everyone lives together.
#
So it's very difficult to social distance.
#
Third is we don't have access to clean sanitation facilities.
#
The worst example is Dharavi where, you know, 400 to 500 residents have access to a single
#
toilet facility out of, you know, the million people living in Dharavi.
#
But the better form of it is, you know, people who do have a restroom, it's not attached
#
When it's attached to the dwelling, you don't get clean pipe water.
#
When you get clean pipe water, you don't have it for all day.
#
You know, there are huge water shortages, especially in the summer, things like that.
#
And because of these reasons, we cannot follow the simple, easy WHO prescription of wash
#
your hands, stay at home, protect the elders, right?
#
So we need special policies for this, for India.
#
So number one, one of the recommendations we gave was we need to repurpose existing
#
government buildings into quarantine facilities because we need to actually extract people
#
out of these dense circumstances and put them somewhere else.
#
And we can't extract individuals.
#
We need to extract the whole family because the Indian system doesn't allow for one person
#
in the family to get quarantined separately.
#
So one of our suggestions was right now all schools are closed, right?
#
And every single district has at least one public school, usually more.
#
And they all have to have, under the RT requirements, they must all have access to water.
#
They must all have a restroom facility and they must all have a kitchen for the midday
#
So these facilities can be very quickly repurposed into quarantine areas where we move entire
#
And this is obviously a short-term solution, but it's one of the few policies that we can
#
actually implement because most Indians cannot follow the social distancing rules.
#
Another example is, you know, this is very, it sounds very like Mary Antoinette, but if
#
you can't give clean piped water, give hand sanitizer, right?
#
Usually in places like America, we're being told that, hey, hand sanitizer is the superior
#
We are in extreme shortage.
#
Soap and water work great.
#
Please use soap and water in the absence of hand sanitizer.
#
And I would flip it for India.
#
In India, we need to increase the supply of hand sanitizer, especially in those, you know,
#
one rupee sachets of two ml each, you know, those individualized, personalized hand sanitizers
#
that you see everywhere in pharmacies normally.
#
Right now there's a huge shortage and that is what we need to scale up and distribute
#
across India because in the absence of water, you use hand sanitizer.
#
So India needs slightly different policy mechanisms to deal with this, you know, social distancing
#
So there are some of these things that the government can do.
#
One interesting solution we gave was right now the hotel industry is down and out, right?
#
And I'm sure someone is going to start talking about stimulus and package for the hotel
#
industry and the tourism industry.
#
Our suggestion was let the government at a subsidized rate rent private hotel rooms,
#
you know, relatively low budget and repurpose them into quarantine facilities for say the
#
next two to three months.
#
And this can act as both a stimulus, but it can also get people out of these very dense
#
situations and it can use existing capacity, which is there in the economy, which is currently
#
debt capital, and it can quickly switch it around for something that is useful and productive
#
Of course, we suggested that they rent private hospitals, they don't nationalize them.
#
So I want to put that out.
#
Again another simple measure is to wear a mask, right?
#
The world has been flip-flopping on that.
#
First experts said masks don't help.
#
Then they said that, you know, using the Hong Kong and Taiwanese experience, the masks help
#
So you know, follow Asia and everyone should wear a mask.
#
So a month ago in America, they said no one needs to wear a mask.
#
And today if you don't wear a mask, the police like literally beat you up, as you saw with
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the gentleman in Philadelphia.
#
So in an ideal world, we would want these N95 masks to be produced and scaled up, but
#
even the regular masks, simple masks made at home work reasonably well.
#
And you know, suddenly all our tailors are out of work.
#
And you and I have friends who, you know, using civil society mechanisms are working
#
with handloom facilities and tailors to quickly scale up the production of masks and distribute
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This will both employ tailors and also give masks to the needy.
#
And civil society is doing this in a way that the government has not yet been able to do.
#
In fact, on our last Zoom call of a bunch of friends last weekend, you know, two of
#
our friends are personally in different cities actually working on these specific initiatives.
#
So they're doing it at a big scale already.
#
So and you know, we don't just need to, we need 2,000 of our friends to do this.
#
So it's a wonderful initiative, but those are the kinds of things we need to think about
#
in the state is finding it very hard to think about it.
#
So we need to switch it up.
#
You know, civil society can think of some things and the state can maybe fund all this.
#
One was just removing regulatory roadblocks and you know, I mean, you and I have had hundreds
#
of conversations over the last decade on the kinds of regulatory roadblocks that exist
#
But one of them is just approvals, right?
#
So the state has tight controls on all kinds of approvals.
#
So for instance, they remove the import duties on testing, but the Institute of Virology
#
needs to approve any test kit before it is deployed and the drug controller needs to
#
approve any imported test kit before it can be deployed, right?
#
And most firms have one or the other, they either have the license from the drug controller
#
or they have the approval from the Institute of Virology, they don't have both.
#
So one of our suggestions was any test kit that's been approved in China, Japan, Singapore,
#
United States, South Korea, Japan, Western Europe, just approve it in India already,
#
There are countries with far better state capacity, with far better regulatory capacity,
#
which have looked into these and which have approved them.
#
There are Indian firms which are exporting to these countries but cannot sell in India
#
because their approvals are stuck.
#
The Financial Times did a great piece on that.
#
So we need to remove regulatory roadblocks very quickly and I would say this is a great
#
time to piggyback on state capacity of other countries.
#
You know, tying in with this is removing import tariffs on medical equipment.
#
Of course, you and I think we should remove import tariffs on everything, but the urgent
#
need is medical equipment.
#
And you know, we talked about, you know, private Indian labs running tests for which the government
#
can reimburse, at least to cover costs, even if they don't cover the profits.
#
So these are the sorts of recommendations that we made, which are very specific to the
#
Another important tool is mobile phones and now you and I have spoken about this in the
#
past on how the mobile phone revolution in India helped India skip an entire stage of
#
You and I come from a generation where we remember that you had to wait for four or
#
five years to get an empty annual telephone line, right?
#
And the moment they liberalized the telecom sector, you could get, you know, landlines
#
And then when the mobile phone revolution came, hundreds of millions of Indians just
#
completely bypassed the landline stage and went straight to mobile phones.
#
Now as a consequence, an incredible thing that's happened in India is two thirds of
#
Indians either have their own mobile phone or have access to a mobile phone within the
#
household and about a quarter of Indians have smartphones with data, right?
#
Now this can be deployed in a big way when we are talking about testing and tracing.
#
Now I'd like this to be done as much on a voluntary basis as possible with as little
#
But I think there is some element of state coercion when it comes to contact tracing
#
and taking down people's, you know, travel histories and personal histories.
#
So you can use mobile phones.
#
For instance, I know a couple of people who are already doing this and these are private
#
They are not hoping to make any money.
#
In fact, one of the people I know who's doing this young boy, 17 years old called Sahil
#
Mohammed, he's an Emergent Ventures winner and he created a diagnostic app in Canada
#
and English initially because he's a resident of Mysore.
#
And you just take the test and it tells you, you know, you put in all your symptoms and
#
it tells you whether you're at a high or a low risk of COVID and whether you should isolate
#
and you should, you know, go look for a test or something like that.
#
Now it has two benefits.
#
One it provides information to people and provides information in local languages through
#
an easy instrument that people can use and people can sort of use their phone and they
#
The other is if you take permission of these people and I'm not, I don't know exactly
#
the technical details of his particular app, but if you take the permission of people and
#
say can we use your location data, not individualized but anonymized, then depending on how many
#
people in a particular district have taken a particular diagnostic test, you can figure
#
out even before an outbreak in the community on whether that is a hotspot displaying certain
#
symptoms in large numbers, right?
#
So mobile phones can be deployed in a very interesting way.
#
Mobile phones were deployed in Vietnam.
#
The government introduced its own app and two thirds of Vietnamese people have access
#
to the internet and the mobile phones and through Facebook and a number of, you know,
#
local initiatives, they had a huge public outreach explaining what is the meaning of
#
the coronavirus epidemic, how does it spread, how people can be asymptomatic but still infect
#
other people and what kind of precautions should be taken and they incentivized people
#
to give information on a voluntary basis, right?
#
And those sorts of things are extremely important, especially given that we are not able to test
#
So mobile phones can be used to screen.
#
So one of our suggestions was it would be great if we can keep mobile phone accounts
#
alive and allow mobile phone companies to use the 2% CSR that they are supposed to spend,
#
you know, mandated by law towards helping people in distress to keep their mobile phones
#
switched on because that's a great way of reaching information to people and also collecting
#
information from people.
#
So we just came up with, you know, a list of 10 recommendations.
#
This is in no way an exhaustive list, but it's just a basic list of things that are
#
very India specific and very developing country specific that need to be accounted for when
#
you're thinking of, you know, COVID policy during a lockdown.
#
And it will be linked from the show notes, obviously, I mean, a couple of, I mean, the
#
related worry I have is that, of course, you know, the seductions of technology can often
#
lead us to even at a voluntary basis, sign away freedoms without being aware of what
#
could lie down the road in a different time.
#
And that's really the only thing that I worry about as far as privacy is concerned.
#
And I'm with you on that.
#
And I'm also a little worried about and I mean, I could actually frame it as a question
#
to you that, you know, it is also seductive to be able to use all the tools of your trade
#
and then adopt an engineering mindset.
#
Like, I think the greatest danger to India, frankly, is the engineering mindset where
#
you try to fix everything from the top down and design things.
#
And you know, all the man of system as the woman of system, as Adam Smith would have
#
said if he was, women would never do such a thing, would never do such a thing.
#
So that's a joke, people.
#
The person of system, how do you watch out for that tendency in yourself?
#
Because very often you have a lot of intricate knowledge about how a system works.
#
You also know at a broader level that, look, this is spontaneous order, I can't control
#
I can't design all of this.
#
I must not fall for the fatal conceit.
#
But there is also then that confidence.
#
And if I may say it, perhaps sometimes that arrogance of that intricate knowledge.
#
So how do you watch out for that tendency in yourself?
#
So one excellent thing for me personally is that I have zero power and influence on any
#
policies actually being implemented.
#
So that is the greatest check on any hubris or arrogance I may have.
#
I can write purely from a point of view of educating myself and educating other people
#
and thinking through the economic logic and incentives of a particular situation, knowing
#
full well that I have very little influence or control over policy.
#
So that's a great check on my humility overall.
#
Another is, like I said, I always veer towards voluntary action as opposed to coercive action
#
because that is an ideological preference and a personal preference of mine.
#
I would say it's a moral preference.
#
It's a moral preference, but it's also something I don't know if I ever cultivated it or if
#
I was just always like this.
#
So it's not like I'm trying to be like this.
#
I just fundamentally have a preference towards very low coercion as far as possible to avoid
#
it and as far as possible rely on voluntary arrangements.
#
So that also helps me a little bit.
#
When it comes to this stuff like we're recommending mobile testing and things like that, I would
#
say the third aspect is my two checks are always, it needs to be incentive aligned and
#
it needs to tap into as much local information as possible.
#
So this mobile phone testing, while it seems like an engineering tech solution, it is really
#
the success or failure of it depends on bottom up information coming from various decentralized
#
And if people are not willing to participate in this and the whole thing, you can have
#
as many mobile phones as you want, it's not going to do anything.
#
And the man of system government thing has to do nothing short of a hundred percent invasive
#
surveillance to substitute for that decentralized information to get any traction to, you know,
#
So these are some of the checks that are in place.
#
I'm not claiming that I get any of it right all the time, but I think just having a huge
#
preference towards voluntary action keeps my power hungry side in check.
#
Not that that side is being fed at all.
#
I don't even have power when it comes to my dog in my house.
#
So you know, that's kind of my status on the totem pole.
#
So I think that's usually what keeps me in check.
#
But I think it's very important to worry about certain things.
#
I think reading history helps, you know, thinking about what happens when we cede a lot of power
#
to the government during war, during other emergencies, that helps a lot.
#
Understanding the kinds of things that you have talked about, which is, you know, there
#
is a lot of inertia in government and any time we roll out a new government program,
#
it's very difficult to roll it back.
#
So what kinds of ways do we, you know, what are the methods we use to make sure that temporary
#
relief or temporary use of draconian power do not persist in the long term?
#
And these are just lessons.
#
It's not like I knew this all along.
#
It's just something you learn from reading a lot of history.
#
So I think just reading the kinds of things I have read, you know, over a period of time,
#
which is world history, lessons from Indian political economy, the kinds of draconian
#
measures Indira Gandhi took during the emergency, whether it is forced sterilization, slum demolition,
#
these are just lessons for us that we must just never forget.
#
So I guess having a good memory on things that happened long before I was born and thinking
#
about them constantly helps too.
#
So those are some of the checks, but I don't think any of us, you know, only people who
#
believe no action should be taken in any circumstance can be completely protected from, you know,
#
veering into engineering mindset from time to time.
#
And you know what you say about learning from history?
#
Well, look, Indians, firstly, do not learn from history.
#
And secondly, they don't read history.
#
And secondly, we use the tools of WhatsApp University to manufacture our own history
#
according to the lessons we want to learn.
#
These are dark and depressing times for more reasons than just COVID-19.
#
And you know, on this, I have to say, I'm going to throw the Indian elite under the
#
bus because they have been one of the greatest disappointments for me in recent times.
#
We were talking about all the areas in India which are rendered invisible.
#
A lot of it is because Indian elite just carry on business as usual and don't apply themselves
#
and their influence enough.
#
So one huge area is how we treat essential workers.
#
So you know, we want our cities to be clean.
#
We want our bathrooms to be clean.
#
We want the sewage system to be cleared.
#
We want the garbage to be picked up.
#
But we never acknowledge who are the people who are actually doing this work.
#
Even right now, everyone is clapping for people who are doctors and nurses who are still people
#
of relatively privileged positions.
#
But you and I have discussed this before, a disproportionate percentage of our health
#
and sanitation workers, especially the sanitation workers, are Dalits and there is zero acknowledgement
#
There is zero increase in their pay.
#
We don't believe in paying them overtime because they're working overtime right now.
#
They're not acknowledged as an essential service.
#
We've read reports of, you know, Dalit sanitation workers going to work who get beaten up on
#
We simply don't treat people well, right?
#
So same thing with slum dwellers.
#
We've created a slum problem because of the NIMBYism of the elites, right?
#
Even in Mumbai, routinely people will say, but you know, if we increase the FSI, there's
#
going to be too much overcrowding and we won't get enough water and parking.
#
And in the process, you know, we limit the FSI and we get slums.
#
And every single one of these elites there, the bye who comes to work in the house to
#
clean it or the garbage man who comes to pick things up or the auto rickshaw driver who
#
takes them everywhere, they all live in these slums.
#
You know, the taxi driver Kumar spoke to is living in slums and shifts.
#
And we just look the other way, making these people and their problems invisible.
#
So in that sense, I think the elites right now, for the first time, we're talking about
#
Indian husbands chopping vegetables at home.
#
There's a whole thing on TikTok and Instagram on, you know, how people's rotis are getting
#
burned and they don't know how to cook.
#
It's simply because we never paid any acknowledgement to essential workers who do the bulk of the
#
unpleasant jobs in our society.
#
And we've never created mechanisms to support them.
#
We've rendered them invisible.
#
And now we're like, oh, how do I manage without a buy?
#
You know, how do we manage without the garbage getting picked up or the milkman, you know,
#
So the Indian elite really need to step it up.
#
Okay, and routinely we have the Indian elite who, you know, I've been watching this on
#
As you know, the first super spreader event just happened to be a Muslim congregation.
#
It could have been anybody, right?
#
This was pure chance, according to me, you know, in the timeline of things, but it was
#
a super spreader event.
#
And now suddenly we have Indian elites just outraging against Muslims on Twitter.
#
Because of coronavirus is a Muslim created problem and, you know, like telling the government
#
and the policeman to use as draconian measures as possible, saying things like we need to
#
We need to put them in prison.
#
We need to isolate them, you know.
#
So it's like the Indian elite is a little too comfortable giving up more and more part
#
of the government because they're very comfortable in the knowledge that the abuse of that power
#
is always only against people who are already marginalized.
#
And for this, you know, the Indian elite has to just be blamed and thrown out of the bus,
#
especially the middle class.
#
So I have suddenly in this COVID crisis, a very bad taste in my mouth because of everything
#
I read written by them on Twitter and TikTok and places like that.
#
I don't know what your thought is on this.
#
No, I agree with you entirely.
#
These are very wise and sad thoughts, though I'd say that it's a rant, but we'll turn
#
them into wise and sad thoughts.
#
That's what we do in podcasts.
#
A rant on any other medium is a wise thought on a podcast.
#
So I will say one thing about TikTok that I've actually watched thousands of TikTok
#
videos over the last few days and I think got a better, much better sense of my society
#
And there is not only cause for despair, but some cause for hope.
#
And I'll end on the note that I actually, you know, listening to your words, I thought
#
to myself that I wish Indian society was a little bit more like the coronavirus because
#
the coronavirus does not discriminate.
#
Shruti, thank you so much for coming on the show.
#
Thanks so much for having me, Amit.
#
It was really nice chatting with you.
#
I mean, normally we do this face to face after you fed me a lovely Bengali meal at Oh Calcutta
#
across the street from your studio where we used to record.
#
But in these times when I don't know when I'll see you next, it is just really nice
#
to be still be able to talk to you.
#
Social distancing, Zindabad, online connecting Zindabad.
#
If you like listening to this episode, do follow Shruti on Twitter at S Rajgopalan.
#
You can follow me at Amit Verma, A-M-I-T-B-A-R-M-A.
#
You can browse past episodes of The Scene and the Unseen at www.sceneunseen.in.
#
Thank you for listening.
