New Perspectives for Independence Day

Last week, India celebrated more than seventy years of being independent. This is a fact that Indians should be proud of and we are, judging by the articles and news segments that are common during this time of the year. At the same time, it is useful to not look at the country’s independence and its progress in isolation. Taking a step back and looking at the experiences of other countries can provide an interesting perspective on our own journey and offer some lessons for the future. I thought of this as I came across some literature about Kenya over the past few weeks.

First was the novel A Grain of Wheat by Ngũgĩ wa Thiong’o, set during the time Kenya became independent in the sixties as well as the long period of emergency that preceded it. While the book illuminates much about how Kenya gained independence and how ordinary Kenyans approached it, what took me by surprise were the multiple references to India. India, by then, had already been an independent nation for the better part of two decades and was a model of resistance for people still struggling against colonialism elsewhere. One of the characters in the book makes repeated references to Gandhi and the spirit of non-violence that contributed to India’s liberation. There are also less charitable references to Indians vying with the Europeans to seize local markets at the cost of the indigenous population.

The second was about the prosecution service in Kenya which is, on paper, an excellent and well thought out mechanism. It provides for the Director of Public Prosecutions to be a Constitutional position answerable to the Parliament with adequate safeguards against executive interference. It is also a relatively recent system, with the current version of the Kenyan Constitution having been in force for less than ten years. It shows the advantage of learning from the mistakes of other countries. For instance, as was pointed out to me, it would be difficult for India, without a Presidential form of government and with the anti-defection rule in place, to adopt a similar model even if it guarantees to be an upgrade on our existing system.

So, to recap the lessons learnt: one, we should be mindful of our influence and our power in being role models for other countries. And two, wherever possible, we should take advantage of being late to the party by adopting systems and institutions that do not carry the heavy burden of legacy while being best-suited for our unique needs.

Social Capital and Caste

Conventional wisdom is that social capital in India is low because of our historical caste system. By placing people in a rigid hierarchy, and giving some people privileges over others just because of the families they were born into, the caste system prevented people from cooperating as well as they would in a more equitable society – that is what conventional wisdom says.

However, a point that we cannot miss is that despite the caste system placing a hierarchy on people, people from different castes did regularly cooperate and trade with each other. In fact, with caste being tied to hereditary professions, people had little choice but to regularly interact and trade with people from other castes. And this inevitably created social capital.

Putting it differently, the result of the caste system was an unequal but stable society, and this stability led to reasonably good social capital (history might be biased given it was written by people from certain castes, but we don’t see many instances of caste riots or clashes from over 200 years ago). You can think of it as a stable society with “handicaps”, where some people were privileged over others (in fact, there was a hierarchy of privilege), to the extent that it was okay for some people to abuse others in various ways.

Over the last 150 years or so, the caste system has been (rightly) challenged, and we are seeing various movements towards a more equal society. One side effect of this has been that the (unequal) equilibrium that had existed has been disturbed, leading to caste-based antagonism and a fall in social capital.

We are in the process of moving from one (unequal) equilibrium to another (more equal) equilibrium, but until we get there, existing beliefs and biases will continue to be challenged, which means some sets of people will continue to be suspicious of others, and there will be mistrust and thus low social capital.

Hard and Soft Data Localisation

Last year, when conversations were taking place on the kind of data protection framework India should adopt following the landmark privacy judgement, one issue kept turning up over and over. It seemed strange that the Justice Srikrishna Committee was seriously considering data localisation when most evidence suggested it did not protect citizens from foreign governments or agents and was harmful to the economy. It was little surprise then that the draft Personal Data Protection Bill released last week revealed a strong data localisation mandate.

Looking at the provisions around this in the proposed law, I see a distinction between two types of data localisation: a hard data localisation and a soft one.

Hard data localisation can be seen in Sec. 40(2):

40(2) The Central Government shall notify categories of personal data as critical personal data that shall only be processed in a server or data centre located in India.

This is the stereotypical notion of data localisation, one that completely restricts the ability of an entity to transfer data outside a set territory.

Soft data localisation, on the other hand, can be seen in Sec. 40(1) of the Bill:

40(1) Every data fiduciary shall ensure the storage, on a server or data centre located in India, of at least one serving copy of personal data to which this Act applies.

While this is not a complete restriction on cross-border data transfers like the previous one, it does impose costs on a data fiduciary. These costs, which might take the form of setting up local servers or procuring the services of an entity that provides local storage, is a real and tangible one. When the inevitable criticisms of the data localisation mandate in the Bill make it to the headlines, I hope this softer variant also attracts equal attention.

Of Football and Nationalism

One of the first classes in my public policy course is to help students distinguish between the concepts of nations, states and governments. These concepts are interesting simply because they play out in every other political discourse. Take Trevor Noah’s coverage of the French victory of the 2018 Fifa World Cup:

Noah congratulated the French team with a jubiliant cheer,

Africa won the world cup! Africa won the world cup!

The French Ambassador sent a letter to Noah, accusing him of racism to which Noah responded,

When I’m saying “African” I’m not saying it to exclude them from their French-ness, I’m saying it to include them in my African-ness.

Noah has come under criticism for his views. And while he is beholden to them, the fundamental problem is that the two nationalisms that we speak of are very different. As this article in the Quartz points out,

That’s where the difference between multiculturalist states like the US and assimilationist states like France really comes in. The Jacobin universalist definition of the French national identity promises to allow people freedom from differences; if everyone is French first, then everyone is equal. The “melting-pot,” multiculturalist American model allows people the freedom to be different, but still be American.

If you’ve read classics like the Scarlet Pimpernal or the Count of Monte Cristo, you will see how easily the French Revolution was dismissed as a crazy political project that professed to place reason above all else. So while, ban on the burkini is heavily criticised outside France, the French see it as a reflection of their nationalism.

Noah, who appreciates American multiculturalism professes admiration for a nationalism that accomodates and promotes (to a certain extent) differences. But it is also the French Revolution that provided the clarion call for liberal nationalism (Liberte! Egalite! Fraternite!) to which American, and even modern Indian nationalism can trace its roots back to.

The problem is not nationalism but the way the nation is built. India has attempted to assimilate minorities into a single Indian nation from the time of British India. Assimilation projects based on language have failed in the past but continue to dominate politics and identity. Over the last few years, fingers increasingly point to ‘anti-nationals’ who flout the perceived idea of the nation. As the French mull over what it is to be French, perhaps, it is a good time for us, as Indians, to revisit what ‘Indian-ness’ means as Independence Day draws closer.

Meanwhile, Mesut Ozil has resigned from the German foot ball team citing discrimination over his meeting with Turkish President Recep Erdogan — proving that nationalisms will always be at play in the sporting arena, long after stadium lights are dimmed. 

Politics as Persuasive Performance

In this post, I juxtapose two notions about politics that I came across in the past couple of weeks.

One, in Slate’s Lend Me Your Ears podcast on Julius Caesar (which I referenced in my two earlier posts, available here and here), Mark Antony’s famous speech is seen as an appeal to emotion and is in stark contrast with Brutus’ appeal to reason. It is a performance, a façade that Antony puts up to get what he desires.

Two, in an episode of the Waking Up Podcast on the current fate of liberalism in the USA, Mark Lilla argues against the pull of identity politics. He says that politics should not succumb to self-expression. Instead, it should be a tool for persuasion.

So, there you have the reason for the annoying alliteration in this post’s title. Politics as a combination of performance and persuasion. A persuasive performance, if you will. Of course, this begs the larger question: would it be good politics, and I use good in a value-neutral sense here, if one of these features is absent? This is something to mull over in the future.

Xi Jinping’s foreign policy pivot

Chinese President Xi Jinping addressed the Central Conference on Work Relating to Foreign Affairs recently, with his speech offering important insights into Chinese foreign policy philosophy, objectives and approaches. Xi defined his philosophical program as “diplomacy of socialism with Chinese characteristics for a new era,” outlining 10 key aspects of this thought.

Examining these, it isn’t surprising that Xi’s first and foremost priority in foreign affairs is to uphold the “authority of the CPC Central Committee” and strengthen “its centralised, unified leadership on external work.” This has a domestic and international component. Domestically, it refers to the emergence and role of a diverse set of actors in Chinese foreign affairs – from the top leadership, diplomatic corps, representatives at international institutions, party members in the judiciary, the trade and commerce bureaucracy, local governments, the military to financial institutions and state-owned enterprises. Externally, it implies an expansion in the role of party organs and ensuring that events outside do not jeopardise the Communist Party’s rule.

Analysing the state media readout of the speech, one can identify that the fundamental objective of Xi’s foreign policy is to “facilitate a favourable external environment for realising the Chinese Dream of national rejuvenation.” This is an expression of Xi’s shift from Deng Xiaoping’s tao guang yang hui (roughly translated to hide your strengths and bide your time) in favour of the strategy of fen fa you wei (roughly translated to striving for achievement.)

What this implies is that one can expect China to continue with an assertive foreign policy to actively shape events, attitudes and institutions in order to achieve its objectives. However, this round of assertion will be different from the nationalistic kind that has been witnessed since 2008, say in the South China Sea or with regard to Senkaku/Diaoyu islands dispute since 2012.

For starters, Xi acknowledges that China’s rise is “intertwined” and interacts with “the most profound and unprecedented changes (that the world is currently undergoing) in a century.” In such an environment, he is placing priority on developing “global partnerships while advancing diplomatic agenda.” This ranks two spaces above “national core interests as the bottom line” in the list of ten aspects of the new diplomatic thought. Also, ranking higher than core interests are the goals of “building of a community with a shared future for humanity” and “reform of the global governance system with the concept of fairness and justice.”

This indicates that Beijing is keen to actively “advance major country diplomacy” to reduce friction and work with partners, particularly developing countries, to expand its global influence and play a greater role in norm setting. For potential partners, this signifies an important window of opportunity, as China is likely be more amenable to addressing sources of tensions and flexible towards accommodating their concerns. One can view events like December’s South-South Human Rights Forum, Beijing’s outreach to New Delhi and Tokyo over the past few months, its deepening ties with Moscow, its attempts at negotiating a new South China Sea Code of Conduct with ASEAN and its efforts to gather support against Donald Trump’s protectionist policies in this context. This subtle change does not imply an infusion of universalistic or idealistic notions in Chinese foreign policy but is rather driven by pragmatism.

A final noteworthy aspect of Xi’s speech was the constant reference to history. The repeated emphasis on having “an accurate understanding of history,” the need to “review the past, summarise historical laws,” understand “the trend of history” and the identification of present times as a particularly significant “historical juncture” operate at multiple levels. First, it signifies a sense of manifest destiny that has characterised Xi’s leadership. Second, it is an example of personal narrative building, whereby Xi has appropriated for himself the goal of making China strong, after it has stood up and grown rich. This once again places Xi in the league of Mao Zedong and Deng Xiaoping, above his predecessors Jiang Zemin and Hu Jintao. And third, it is a nudge to the party rank and file to maintain “strategic confidence” and not be disoriented by “ever-changing international chaos.”

Effectively what Xi appears to be telling Party cadres and the world at large is that while the tide of realpolitik may ebb and flow, China is here to play the long game, “keeping in mind both internal and international imperatives.”

Lessons from Julius Caesar – Part-II

Note: This is the second of a two-part series on some thoughts I had after reading the play Julius Caesar. You can read the first part here. Slate’s Lend Me Your Ears podcast has an excellent episode that looks at the play from a modern context and that helped me gain some valuable perspective on this famous piece of literature. I would highly recommend listening to it if you have read the play.  

Julius Caesar is a tragedy. Characters exhibit flaws and make choices that lead to terrible consequences. It is easy to feel sorry for Caesar, who gets stabbed by his good friend, or Brutus, whose misplaced idealism comes back to haunt him (quite literally at that). But the individual I felt sorry for the most was one who had a bit part role, the poet Cinna.

In the aftermath of Mark Antony’s incendiary speech, the Romans go berserk, searching for the men who murdered Caesar. They come upon Cinna on the street and kill him because his namesake was one of the conspirators. The scene is short but shocking, but with a tinge of black humour when the crowd realises they have the wrong man but kill him regardless, justifying their action on the basis of his supposedly bad verses.

I have two thoughts on this little episode.

One, it best showcases Shakespeare’s cynicism about human reason that I touched upon in my previous post. If it was not clear already, this scene shows just how vacuous a crowd can be. The broader implications this has on a democracy and a republic cannot be ignored.

Two, it asks questions about Antony’s role in Cinna’s death. Yes, he could claim he had no intention and that Cinna’s death was an unfortunate case of collateral damage. But he was aware of the crowd’s nature and knew exactly what buttons to push to get them riled up. Shouldn’t he then bear some responsibility for his words? Or does the blame lie solely on the crowd even though their capacity to reason is stunted? These questions act as a precursor to a conversation about hate speech and how best one can prevent it while still preserving a right to free speech. That we are still having this conversation centuries after Shakespeare wrote the play shows just how vexing a problem it is.

Lessons from Julius Caesar – Part-I

Note: This is the first of a planned two-part series on some thoughts I had after reading the play Julius Caesar. Slate’s Lend Me Your Ears podcast has an excellent episode that looks at the play from a modern context and that helped me gain some valuable perspective on this famous piece of literature. I would highly recommend listening to it if you have read the play. 

Shakespeare’s Julius Caesar is an intriguing blend of high drama, sudden bursts of violence, and impressive speeches. It is also a realistic and sombre meditation on the fragility of a republic. This fragility stems from the play’s take on human nature, which it would not be a stretch to say is a touch cynical.

Brutus, the idealistic senator and Caesar’s friend, sets great store by reason to disastrous effect. He believes that his fellow conspirators are as idealistically motivated as he is. He believes that the citizens of Rome will understand his reasons for assassinating Caesar. He is mistaken on both counts. The self-interest that propels these groups is a trait that very few individuals, like Brutus, can disavow. Left to their own devices, they will wreak havoc on society, which they do in the play to varying degrees of success.

This points towards the quality that a republic must have in order to endure, namely, that of being more than the sum of its parts. It needs to rise above the individuals who form it. And the way it can achieve this is by having institutions that channel the best of such individuals while avoiding the unsavoury bits. A republic thus lives and dies on the strength of the institutions that undergird it. This is a lesson worth revisiting every time the functioning of a republic is questioned.

Vulnerability in jobs in India

India has been infamous for the magnitude of informal jobs in the country. Though a significant issue, informality is just a part of the bigger issue, i.e, the increase in the number of highly vulnerable jobs. Vulnerable jobs usually include own-account workers and family members working informally. Basically anyone who does not have a stable contract or flow of income, and are open to exploitation. All informal workers are vulnerable to an extent since they aren’t on any payroll or have a formal contract.

This long standing problem has become significant as the number of vulnerable employees has been increasing in the past few years. As per International Labour Organisation (ILO), 77 per cent of workers in India will have vulnerable employment by 2019. In a country where 92 per cent of the employed population is in informal sector, it is a concern if the ratio of vulnerable jobs increase.

 

Source: World Employment Social Outlook2018, International Labour Organisation

The ILO report also pointed out that

“a significant portion of the jobs created (in India) in the services sector over the past couple of decades have been in traditional low value added services, where informality and vulnerable forms of employment are often dominant.

It is no solace that the problem is global in nature,

Globally, the significant progress achieved in the past in reducing vulnerable employment has essentially stalled since 2012. In 2017, around 42 per cent of workers (or 1.4 billion) worldwide are estimated to be in vulnerable forms of employment, while this share is expected to remain particularly high in developing and emerging countries, at above 76 per cent and 46 per cent, respectively. Worryingly, the current projection suggests that the trend is set to reverse, with the number of people in vulnerable employment projected to increase by 17 million per year in 2018 and 2019.

This is not a surprise as 80 per cent of the casual workers and 31 per cent of the regular/salaried workers in 2016 earned less than the national minimum wage of Rs 66 / day. If looked at on the basis of gender, 95 per cent of women working as casual labour got less than the minimal wage as against 74 per cent men. Lower wages make workers more susceptible to being caught in the low income trap. With income not enough to save and invest, people earning low wages are unable to earn or multiply their money and get stuck at living at basic sustenance levels. The only way to move from the equilibrium is by earning a higher amount and saving it.

With low income levels in the country and substantial number of informal workers, India needs to look at vulnerability within jobs as a criterion in itself while assessing jobs problem. In order improve the conditions, the jobs created in the country need to assure a certain level of stability and redressal mechanisms. More than skilling, the government needs to create avenues for job creation. A good starting point would be to modify the labour laws and reduce the cost of doing business in the country.

A Police Officer in an Assistant Public Prosecutor’s Clothing

I came across a strange provision in the Code of Criminal Procedure, 1973. Part of Section 25, which concerns the appointment of Assistant Public Prosecutors (APPs), reads as follows:

…(2) Save as otherwise provided in sub-section (3), no police officer shall be eligible to be appointed as an Assistant Public Prosecutor.

(3) Where no Assistant Public Prosecutor is available for the purposes of any particular case, the District Magistrate may appoint any other person to be the Assistant Public Prosecutor in charge of that case: Provided that a police officer shall not be so appointed—

(a) if he has taken any part in the investigation into the offence with respect to which the accused is being prosecuted; or

(b) if he is below the rank of Inspector.

Yes, the appointment of a police official as an APP is an exception rather than the rule and yes, an officer involved in a case is not eligible to be a prosecutor as well. Even then, it seems stretching the bounds of propriety to have a provision such as this.

So many questions come to mind about this provision. How is it consistent with the principle of separation of powers? Can it be said with a high degree of certainty that an individual will not be conflicted between her loyalty to the police force to which she belongs and the responsibility she has been entrusted with as an APP? Is there such a lack of qualified advocates who can be appointed as APPs that this provision needs to exist? How often has this been utilised over the years?

On the last question, it would be a relief to know if, like several legal provisions, this one is seldom applied in practice. But even if it is never used, we need to take a long hard look at the continued existence of such language in the statute.

Market Microstructure and Monetary Policy

Conventional wisdom holds that the monetary transmission mechanism (MTM)– a collection of pathways that connect the central bank actions such as increasing repo rate to real economic decisions such as taking a home loan–is quite weak in India. In theory, MTM is supposed to act in two separate legs. After the monetary policy committee decides to change policy rate, the RBI conducts liquidity management operations to bring overnight interest rate which happens to be operating target–the weighted average call rate (WACR)–within the policy rate corridor.

Since WACR, at the margin, determines the funding cost to the banking sector, it should ultimately change banks’ benchmark lending rates and affect economic variables like investment and savings etc.

But there is theory and there is practice. Recent repo rate hike by the RBI has been a very different story altogether. After the hike, there seems to be plenty of liquidity in the system. RBI is still conducting reverse repo operations to mop up excessive liquidity.

On the other hand, even before the hike was announced, a number of banks led by the State Bank of India and ICICI, had already increased their lending rates, increasing the borrowing cost both for prospective and existing borrowers.

Rather than the textbook monetary mechanism, interest rates seem determined by the market leader and imitated by other banks. There are striking similarities with  the Stackelberg market leadership model. The bottom line is that market microstructure is an important part of the price formation in Indian banking sector.

In this respect, Urjit Patel committee’s observations about the India-specific peculiarities of the MTM may be recalled:

Significant asymmetry is observed in the transmission of policy rates changes between surplus and deficit modes suggesting that maintaining suitable liquidity environment is critical to yielding improved pass-through.

Could it be that the ‘significant asymmetry’ is less due to liquidity environment and more due to market structure? The hypothesis can not be ruled out.

 

Advantage China after Trump-Kim summit

For all the talk about China being insecure with regard to potential Donald Trump-Kim Jong Un bonhomie, Beijing is likely to be rather pleased with the events that transpired in Singapore today.

First, soon after the early reports of the agreement came from Singapore, China called for easing sanctions and “establishing a peace mechanism.” The US-DPRK statement also envisions something similar, i.e., the “building of a lasting and robust peace regime.”

Such a framework places Beijing directly at the negotiating table. Foreign Minister Wang Yi underscored this today, saying China had and continues to play a “unique and important role” in the Korean Peninsula issue. The fact that Kim flew on an Air China jet shows Beijing’s continuing influence over Pyongyang.

Second, the formulation of the DPRK committing to work towards complete denuclearisation, while Trump describes US-South Korea drills as “provocative” and talks about ending US force presence in South Korea also works for Beijing in more ways than one. This is essentially what Beijing had been seeking for months, via its double freeze proposal. Moreover, Trump’s characterisation of US force presence in the region isn’t likely to have gone unnoticed in other regional capitals.

For one, the South Korean administration appeared to have been caught off guard with Trump offering the drills as a bargaining chip. The presidency and military both issued statements saying that clarity was needed on “the meaning and intention” of Trump’s remarks.

But more broadly, if US-South Korea military ties and exercises are “provocative,” would Washington under Trump be a reliable partner for states involved in the South China Sea dispute or even Taiwan, irrespective of the Indo-Pacific strategy and Defence Secretary James Mattis’ tough words at the Shangri-La Dialogue.

Also, Trump’s remarks about the cost of military exercises are very damaging. It’s one thing to want allies to carry their weight. But the repeated counting of costs is incredibly short-sighted and likely to raise questions about the costs that the US will be willing to incur to challenge an assertive China in the region.

After today, it appears that for all the rhetoric, Trump is uninterested in incurring those costs. Trump might have sought history in Singapore. But today’s developments mean it’s advantage Beijing.