Formal Employment Data Sources: New and Old

Ajit K Ghose has an article in Business Standard on why payroll estimates data does not accurately represent job creation in the Indian economy.

What I found most interesting was that he has listed all the sources of formal employment data in India in this article. It is very rare to find all employment data sources, old and new, in one place. So, I’m noting them down here:

  1. Monthly estimates of payroll account derived from the database maintained by the Employees’ Provident Fund Organisation.
  2. Surveys of employment and unemployment conducted by National Sample Survey Organisation (NSSO).
  3. The Labour Bureau conducted a survey similar to (2) for 2015-16.
  4. Starting 2017-18, NSSO has launched a periodic labour force survey to produce annual estimates of formal employment in the country.

A Broken Legislature

PRS Legislative Research has some damning stats out on the recently concluded Budget Session of the Parliament.

Key lowlights are:

  1. Least amount of time spent by both Houses on debating the Budget since 2000
  2. 100 percent of the demand for grants passed without discussion
  3. 1% of productive time spent on legislative business in Lok Sabha; 6% in Rajya Sabha
  4. Poorest performance of Question Hour in Lok Sabha since 2014

Basically, no work got done in the entire Budget Session. And we have an entire ministry for Parliamentary Affairs! In a well-functioning democracy, heads should have rolled for this incompetence.

Pashtun Protection Movement: A Radically Networked Society in Action

If you have been trawling the internet in search of reliable news and opinion about the Pashtun Tahaffuz Movement (PTM), there’s some good news. Beena Sarwar has an excellent backgrounder in Scroll.in. 

What caught my attention was the social media’s role in mobilising widespread support given that there is a blanket censure  of PTM by all major media houses in Pakistan. Sarwar describes this role as follows:

Their (PTM’s) demand for constitutional rights directly challenging Pakistan’s powerful security establishment was blatantly censored from the mainstream media. The pattern has continued with subsequent rallies.

But in this digital age, news of the Swat demonstration could not be suppressed. The social media activists or citizen journalists who trended the hashtag #PashtunLongMarch2Swat included gender studies lecturer Tooba Syed from Islamabad. Making the four-hour journey to Swat by road, she movingly documented her experiences on Twitter.

Without social media, “the movement would not be possible”, said one of its leaders, 34-year-old lawyer Mohsin Dawar, a former student activist associated with Left politics.

The rapid rise of social media in Pakistan (17% internet penetration, growing fast) and mobile phone subscribers (over 70%) makes television coverage (73%) less crucial than before. But censorship still violates the people’s right to know, as a statement endorsed by over 100 journalists in April emphasises. [Scroll.in, 6 May 2018]

So, the PTM is a textbook example of what we call a Radically Networked Society (RNS) — a web of hyper connected individuals, possessing an identity (imagined or real), and motivated by a common immediate cause.

In PTM’s case, the Pashtun ethnicity provided the common identity, Naqeebullah Mehsud’s cold blooded murder by the Karachi Police became the immediate cause, and Twitter, WhatsApp, Signal, and Facebook enabled the movement to scale. 

The oppressive and all-powerful Pakistani State has ensured that media houses have no reportage of the protests. And yet, it has been unsuccessful in stopping the spread of information via the RNS route. This typifies the nature of information flows — information propagates rapidly in networked societies, at a pace too fast for hierarchical states to arrest.

From past instances of RNS mobilisations, we know that governments tend to use excessive force in desperation if extended internet shutdowns do not work. And Pakistan Army has a long history of using force on its non-Pakistani citizens. Unfortunately, looks like this is likely to be the next step. Watch out for the Karachi rally that the PTM has called for on May 13th.

 

Brush up on Your History, Mr. President

Back in 1930, 1028 prominent economists wrote a letter to Congress urging them to reject the highly protectionist Smoot-Hawley Tariff Act. Messrs Smoot and Hawley, Senator and Representative respectively, sponsored the Tariff Act which raised the tariffs on more than 20,000 imported goods. Congress did not heed to the advice of the economists and went ahead with the Tariff Act. Naturally, other countries followed suit and retaliated against the US protectionist measures. This had disastrous consequences on the American economy and global trade, in general.

US imports decreased 66% between 1929 and 1933, and exports decreased 61% in the same time period. Gross National Product fell from $103 billion in 1929 to $76 billion in 1931 and bottomed out at $56 billion in 1933. Overall, world trade decreased by some 66% between 1929 and 1934. The tariffs, which were meant to protect American jobs, did not do much on that account either. Unemployment was at 8% in 1930 when the Smoot–Hawley tariff was passed. The rate jumped to 16% in 1931, and 25% in 1932–33. To be sure, not all of these effects can be attributed solely to the protectionist measures, given that the economy was in a downturn already, but it did have a significant negative effect.

Now, in 2018, President Trump has introduced a host of protectionist measures and imposed tariffs on washing machines, solar components, and even steel and aluminium used by U.S. manufacturers. With the reintroduction of tariffs, the economists are back once again. More than 1100 economists, including several previous Nobel prize winners, have signed a letter to Trump warning him of the dangers of the new protectionist measures. They draw his attention to history, to the Smoot-Hawley tariff in particular. In fact, the latter half of the letter just reproduces the economic principles laid out in the original letter. They reason that though the components and volume of trade have changed, “the fundamental economic principles as explained at the time have not”.

We are convinced that increased protective duties would be a mistake. They would operate, in general, to increase the prices which domestic consumers would have to pay. A higher level of protection would raise the cost of living and injure the great majority of our citizens.

Few people could hope to gain from such a change. Construction, transportation and public utility workers, professional people and those employed in banks, hotels, newspaper offices, in the wholesale and retail trades, and scores of other occupations would clearly lose, since they produce no products which could be protected by tariff barriers.

The vast majority of farmers, also, would lose through increased duties, and in a double fashion. First, as consumers they would have to pay still higher prices for the products, made of textiles, chemicals, iron, and steel, which they buy. Second, as producers, their ability to sell their products would be further restricted by barriers placed in the way of foreigners who wished to sell goods to us.

Our export trade, in general, would suffer. Countries cannot permanently buy from us unless they are permitted to sell to us, and the more we restrict the importation of goods from them by means of ever higher tariffs the more we reduce the possibility of our exporting to them. Such action would inevitably provoke other countries to pay us back in kind by levying retaliatory duties against our goods.

Finally, we would urge our Government to consider the bitterness which a policy of higher tariffs would inevitably inject into our international relations. A tariff war does not furnish good soil for the growth of world peace.

P.S: I had recorded a “The Seen and The Unseen” Podcast with Amit Varma on the 8 Myths of Protectionism. Check it out:

The Kennedy-Klobuchar Bill – Updates from a Post-Zuckerberg Congress

(This post is part 1/n of what’s happening in the US Congress post the Zuckerberg testimony.)

If (like me) you spent hours watching Zuckerberg testify before the US Congress, then you’d remember how several legislators promised Facebook they would be tabling bills to regulate social media.

Well, it’s just over two weeks after Zuck’s testimony, and the first such bill is already tabled before the Senate. Sponsored by Democrat Senator Klobuchar and Republican Senator Kennedy, the Social Media Privacy Protection and Consumer Rights Bill, 2018 centers around important principles of user consent and compulsory breach notification.

The bill stresses on drafting the terms and conditions in simple English so that users know exactly what data the website wants to collect, store and process. It also puts the ball back in the user’s court by allowing her to delete her social media data once she becomes aware of a breach.

Well-intentioned as it is, it looks like the Kennedy-Klobuchar bill retains a “Take It or Leave It” binary. It proposes solid user protection and rights, but most of them are squarely based on the power of the data collector to provide only two polar options to the user – to opt-in to its terms, or to opt-out of the platform completely.

If you’ve been so bored that you’ve read your favourite app’s terms and conditions, you will know that several of them today are a binary.

These are called “Take it or Leave It” clauses – so, if a user does not agree to a particular clause her only option is often to not sign up on the platform at all. While this provides simple, easy to understand options to the user, it is also a problem because it may make the user accept terms she is unhappy with. This is why, one of the suggestions data privacy advocates make is that companies collecting data devise smarter, non-binary ways in which the user is assured while still making their platform available to users.

Simplifying these terms and conditions, while still allowing the user multiple options other than to “Take It or Leave It”, as well as being a fast moving service provider at the same time is bound to incredibly tough for the social media company. The good news is, there are some effective ways to do that. However, as the Kennedy-Klobuchar bill rests on the correctness of this approach, its impact is automatically limited.

That said, the Kennedy-Klobuchar bill is an otherwise significant proposal. It looks out for the user by making the data collectors responsible for communicating terms and conditions in a simple manner.

The nerd in me is super excited to do a clause-by-clause breakdown of the bill, but until then, here are some neat summaries of what it talks about:

Senate privacy bill gives Facebook what it asked for.

Senators introduce bipartisan internet privacy bill.

Who made Xi move half-way across the country?

Ananth Krishnan points out that Xi Jinping’s decision to travel halfway across his own country to meet Narendra Modi (who had travelled completely out of his own country) for an informal summit in Wuhan is remarkable, and no one in Beijing expected it. It’s been quite a journey for their India policy, from threatening to order military attacks to perhaps ordering a six pack for a chillout session between the two leaders this month.

Were they really impressed by India’s resolute stance of not backing down at Doklam, of not signing up for the Belt and Road Initiative? Perhaps. What really made Xi travel halfway across his country is a man halfway across the world. A certain Mr Donald Trump. Washington is putting extreme pressure on Beijing on two counts: North Korea, and more importantly on trade.

It took Trump to remind Beijing that their projection of power ultimately relies on their economy, and that in turn relies on the goodwill of China’s trading partners. Most importantly, on the United States. A trade war will not only have unsettling effects on the Chinese economy in the short term, it can take the wind out of China’s economic sails in the longer term. The wise men in Beijing ought to have expected this. If they didn’t, then their wisdom is overrated. If they expected this, then they ought to have cautioned Xi Jinping against getting all on the front foot and antagonising India, Japan and Vietnam all at once. If they did and Xi didn’t heed their advice, then his astuteness is perhaps more limited than is made out to be.

In any case, India must expect that Xi’s front-footedness is China’s long-term strategy. Trump’s mercurial policy positions have caused Beijing to buy time and space by reaching out to India and Japan. The moment the pressure is off — for Trump can as quickly change his mind — it’s likely that Beijing will resume pushing the envelope again. New Delhi can certainly hope that Beijing has learned that it is not a good idea to antagonise your neighbours as you set out to confront your distant adversary. Yet if you were sitting in Beijing you might reckon it’s important to suppress your neighbour’s power to create trouble, before you confront your main adversary.

It is in India’s interests to have better relations with China and the United States than they have with each other. So the chillout at Wuhan is a good thing. Modi, however, must be keenly aware that a China reset in Delhi does not mean a India reset in Beijing. There’s nothing to indicate China’s fundamental approach towards India has changed. Or that it will change. For now all the chilling out is contingent on the extent and duration that the United States maintains pressure on China.

 

Three Dollars a Mind

Turns out that armchair activists like yours truly, who sit and analyse issues and write op-eds, are not completely useless!

A new study by David Kirby, Emily Ekins and Alexander Coppock finds that op-eds (opinion pieces in newspapers) actually do end up persuading their readers. General readers are apparently persuaded in a larger number compared to ‘elites’, from a sample of US readers with different political leanings. While the observed effect of persuasion drops by half after 10 days of reading an op-ed, that effect lingered and lasted for much longer.

Analysing the costs of persuading a single reader, Kirby et al find that:

Based on the cost of producing an op-ed, the number of people likely to read it, and its ability to sway a reader’s opinion, the researchers estimated that an op-ed costs from about 50 cents to $3 per mind changed.

[Science Daily, April 24, 2018]

The key to this is to figure out how many people even read op-eds. Even in the United States, a New York Times op-ed can only hope to get 500,000 readers, and a Newsweek op-ed can get only about 50,000 readers. The numbers in India would be drastically smaller.

Ping me on twitter if you want to take a look at the full text of the paper.

Hat-tip to Raju Narisetti for sharing the paper on Twitter.

EPFO Releases Payroll Data

The Employees Provident Fund Office has, for the first time, released data on payroll enrolment in India. This data shows, by age group, the number of enrolments with the office by month, and this is the first instance that we’re having such data being available.

While it would be easy to start those “data science machines” churning to process this data right away, a closer look suggests a more careful approach.

Screenshot source: Somesh Jha on Twitter https://twitter.com/someshjha7/status/989095752411570176?s=12

Firstly, the data for September 2017 for the 22-25 age group is clearly an error, being an order of magnitude lower than the number for the same age group in all subsequent months. Hopefully this will be corrected in a subsequent release.

Next, what explains the age bands? Why do we have 18-21 and 22-25 (4-year bands) and then a 3 year age band (26-28), and a 7-year age band (29-35)? And why is everyone in the 35+ age group put together into one band?

Then, the note attached to the data release states that this includes temporary employment as well. While the number of enrolments of temporary employees might be low, it would have been far more useful to have that data separately.

Notwithstanding all this, the publication of this data is welcome, since the Indian policy environment is so data-poor that any new data release is welcome! It is fair to expect that these errors will get corrected in time, and this might yet become a great source of data on formal employment in India.

 

Banning Cryptocurrency is a Terrible Idea

The RBI released a notification recently on virtual currency. In essence, the central bank is trying to ban cryptocurrency in India:

In view of the associated risks, it has been decided that, with immediate effect, entities regulated by the Reserve Bank shall not deal in VCs or provide services for facilitating any person or entity in dealing with or settling VCs. Such services include maintaining accounts, registering, trading, settling, clearing, giving loans against virtual tokens, accepting them as collateral, opening accounts of exchanges dealing with them and transfer / receipt of money in accounts relating to purchase/ sale of VCs.

For those who are already engaged in the practices mentioned above, the RBI has given them three months to exit it.

This form of blanket ban has been feared for sometime. There were whispers that such a daft move would be done and the RBI didn’t want to disappoint. They have carried out the ban in order to protect consumer interests, market integrity and to prevent money laundering.

There are several problems with this:

  1. Ineffective: Such a ban will be completely ineffective. By its very nature, and as the name suggests, cryptocurrencies are hard to track and provides anonymity for its users. How does the government actually plans to ban it?
  2. Loss of control: By not banning it, RBI had a better chance of regulating some aspects of cryptos. Now, it has lost all control and all the transactions will go underground. Those who want to use Bitcoins will continue doing so by using cash, or other discreet financial instruments to trade. And as Rahul Matthan says in his editorial, “The only people who abide by the terms of a ban are those who always intended to use the service for legitimate purposes”.
  3. You can’t have one without the other: The government, it seems, is quite keen on developing and using blockchain technology for various public purposes, such as maintaining land records, public health records, etc. However, the best use case of blockchain is cryptocurrencies. By banning one, there will be no innovation and test cases of blockchain in India.

It will be interesting to see how this pans out. My guess is that RBI will soon realise that it has no control over this and will backtrack on this move. However, it might have already set a bad precedent and the narrative that these are inherently dangerous and risky.

India’s China Reset ≠ China’s India Reset

Global Times carried an op-ed on 12th April applauding India’s reported China Reset policy.

With regard to their ties in the past three years, many Indian media outlets and scholars believe New Delhi has gone astray with its China policy. Following a misjudgment of China’s development and the international landscape, the Indian government chose to confront China and consequently damaged India’s own development.

In typical Global Times style, the op-ed didn’t miss a chance to take a dig at India:

The rise of China actually constitutes an opportunity for India instead of posing a threat. China’s GDP is nearly five times that of India, so the two are at different levels of economic development. New Delhi can hardly expect to exert powerful leverage against China. The primary priority for India is mulling over how to take a ride on China’s development and realize its dream of national rejuvenation.

The bluster aside, what should be clear to us is that a China Reset in New Delhi does not imply an India Reset in Beijing. In fact, China’s recent foreign policy conduct shows that the reverse is likely to be true. With every Indian acquiescence to China’s aggression, China will escalate provocations.

Ask Philippines, Indonesia, and Vietnam, if you are still in doubt.