Monday, July 18, 2011

Measuring development

Development, as opposed to economic growth, is a “soft” issue and measuring it is still softer. True, we have the Human Development Index (HDI), a compound metric considering health, education and economic production. But that is so “soft”.

Surprisingly, no one seems to have given much thought to the one issue in India that has been staring us in our eyes. Corruption. There is a way scandals, or if you like it, scams when money is involved, can come in handy in assessing the position of a country on the scale of development. No, I am not going to equate corruption to development in a raw sense.

What I have in mind is a little more involved and for that reason, and being a non-expert, I will not be able to devise a system of measurement. But people who are more capable than I am can definitely take a shot at it. It is perception of corruption rather than corruption itself that should engage us. Let me explain.

Only 15 paise out of one subsidy rupee reaches the intended target (Isn’t this what Rajiv Gandhi supposed to have said? Correct me if I am wrong); the 2G scam – Rs. 1.76 trillion (based on nominal valuation of the spectrum); MGNREGS – leakage about 30% of the total outgo, say Rs. 0.2 trillion; black money stashed abroad (billions of crores); CWG scam and Bellary mining scam (real and not merely notional money) – both in rupee terms, millions of crores; and on and on..
We reckon corruption exclusively through monetization. We do not seem to think of the myriad ways in which the polity beyond the market is affected.

Has anyone ever felt concerned, say about MGNREGS, about how many poor rural families may have been affected by the monies spirited away from MGNREGS? No. What about K-G gas concession? Have we ever heard anything in mainstream media about the possible environmental consequences of gas extraction? No. What about the tribals affected by land acquisition by Vednanta ? No. All the issues are monetized and nothing exists outside. There are no human interest stories after monetization.

Scandals may involve matters other than money, say the sanctity of privacy of individuals, but scams are expressed only through monies. Or, to put it another way, scams are monetized scandals.

Even holiness / spirituality is monetized: Thiruvananthapuram Padmanabhaswamy Temple treasures – Rs. 1 trillion; the wealth of Sri Sathya Sai Central Trust – Rs. 0.4 trillion. We are into serious monetizing. How were these amassed? Who were at the end of "giving" in these deals? How could they have afforded it? No questions. The fact that we have put a number to the event, spurious the number might as well be, all other matters are brushed underneath the carpet.

Scandals are automatically transmuted into scams.

Compulsive monetization defines mercantilist behavior. Or, perhaps I should take an example from the lower levels of society, a daily laborer. We behave like one. (S)he earns and spends on a daily basis. No opportunity to think about tomorrow, take a wider perspective. “I want the money now; let me think tomorrow about tomorrow.” I think I will blame R K Laxman for his “Common Man” character.

We find that by fitting ourselves into the straitjacket of the “Common Man” we [even those who have two cars, parked on the sidewalks – could not afford a garage and hence a “Common Man”] can easily absolve ourselves of any responsibility for things going on around us, and in the future too. We have no responsibility to the future. R K Laxman made it easy for us to justify ourselves as perpetual victims. Unbounded monetization helps, as the sums involved in the scams, temple wealth are beyond our imagination. And, out goes any consideration of human decency.

Beyond Indian shores, particularly in the developed countries, the biggest current news is about the now defunct NoW - News of the World. Rupert Murdoch is in real trouble. The chief of Scotland Yard has resigned. Les Hinton, the publisher of Wall Street Journal has resigned his post. The communications director of the prime minister has been arrested. The boss is apologizing to everyone and his cousin, after letting his blue-eyed girl Rebekha Brooks go after the Saudi royal investor threatened to pull out. Murdoch’s empire may survive, but he has lost his swagger. And, through all this I had read not a word on the monies involved, the bribes given and taken by police officials and others. At best we heard about a dozen meetings the prime minister held with News Corporation officials in rapid fire succession. Something strange, of course, but not even a beep on money changing hands, even if it did in the first place. Nothing. The scandal is about what happened, who have been involved (even a former prime minister was not off-limits to the sleuths of NoW), and not about how much money was involved. The scandal remained a scandal and not a scam. A lot of sub-plots were more human interest stories than anything else.

And, as much as I know that just before going defunct the tabloid was raking in big moolah, I have not read serious numbers on it. And, I was definitely surprised to hear the phrase “value of decency” out of his mouth. As much a dyed-in-the-wool capitalist as he is and as ruthless as he is, Rupert Murdoch found time to mention “value” and “decency”, together! But the context may make such utterance a little less surprising.

Someone from his media stable hacked into the voicemail of a murdered teenager and this is a no-no in a society that values its privacy, money or no money and however much. He must have felt a twinge in his heart. Perhaps the country had something to do with that feeling of guilt, such an unconscionable money making scheme. Privacy is valued and so is decency. That is a developed country.

Can you imagine if it had happened in India? Why imagine? We had an equivalent – the coffins for dead soldiers. The talk was more about the loss to the exchequer, again in crores of rupees. Would it have mattered that the problems in the deal amounted to mere piffling? Yes, to the exchequer, but no, to the families of the soldiers. This is the measure of decency, or lack of it, I mentioned earlier.

Now, this is the basis of the metric I am proposing to assess development. How fast and furious scandals metamorphose into scams; how quickly the varied issues are brought under one umbrella, money; how human interest is squeezed out of a human interest story.

The slower it is the more developed the country is. Getting this idea onto MS Excel is not going to be easy, but we must try. And, when we finish that task, please do not be surprised if we had slid down the development scale in the comity of nations.

Raghuram Ekambaram

6 comments:

Tomichan Matheikal said...

It's great you are continuing blogging.
That's the least I can say right now.

mandakolathur said...

I knew I will not stop letting my thoughts flow out,matheikal. Only the medium has changed.

Raghuram Ekambaram

dsampath said...

all development metaphors have been based on the world view of Adam Smith's economic man..The needs of a society have been looked at from the eye of someone who is living in US. We should move away form equation oranges to apples. let apples and oranges and grapes be...

mandakolathur said...

True DS sir ... but Adam Smith had also recognized that the Economic man is not complete in himself ... this portion of his meaasge, articulated strongly by Joseph Stiglitz and Amartya Sen in recent times, has been steadfastly ignored by the monetarists and the economic neocons.

The HDI was developed by a development economist ul Haq (Pakistan) and I am OK with it. But, I think we must also understand development from a negative perpective - Not just the material deficiencies of the un(der) developed nations, but also what they ignore. They ignore aspects of corruption that transcend money. This was the thrust of my post. Thanks for visiting and posting a meaningful comment.

Aditi said...

Raghu, a fine piece indeed!!The idea that there is much more to development than mere numbers is at the crux of welfare economics...I read your response to Sampathji. Apparantly Stiglitz and Sen were commissioned to give actionable points to measure wellbeing of citizens ( perhaps by Sarkozy for France... if my memory is not failing), but not much progress has happened....in the meanwhile Cameron has instructed his National Accounts people to work on a similar index to measure well being for the Brits.

While I have no issues with your drawing a distinction between a scam ( in the perspective of a developing country) and a scandal ( in the perspective of a developed country), it is entirely understandable, I would say. When a country requires to strive for economic betterment so as to make its citizens come out of poverty, economic measurement of growth and yes, extent of financial scam IS important, it shows by how much the country has been deprived. For a developed country, financial scam will be a small part of the 'scandal'/embarrassment.The perspective will be 'necessarily' different.

mandakolathur said...

Aditi, you said, "When a country requires to strive for economic betterment so as to make its citizens come out of poverty, economic measurement of growth and yes, extent of financial scam IS important, it shows by how much the country has been deprived. For a developed country, financial scam will be a small part of the 'scandal'/embarrassment.The perspective will be 'necessarily' different." This is exactly my point and you explained it so beautifully [all that training apparently helped :-)]

Yes, I had in the back of my mind the report by Stiglitz & Sen (Commissioned by Sarkozy, and your memory has not started failing you!), but I was also making the point that how we behave and what concerns the so-called middle class is also a barometer of development.

As I said in the post, I am more concerned about the dominant (not necessarily the majority across the population) perception of corruption.

Thanks for the thumbs up.

Raghuram Ekambaram