Assume Mr Average-Voter, a resident of Prosperityland, is offered the choice between two electoral alternatives — a school building or a road connecting the neighbouring village. Now imagine the same Mr Average-Voter, living in Populismland, and facing a choice between another two voting alternatives — a cellphone or a television set! Much as Mr Average-Voter would covet the cellphone or the television set, the prospect of a school building for his daughter or a road to transport his agriculture produce would appear more attractive. But unfortunately, our polity increasingly resembles Populismland and it remains a formidable challenge to formulate policies that emulate Prosperityland.
It is widely perceived by political parties that providing individual benefits is the surest way to win over voters, especially the poor. This perception is in accordance with our political tradition that is directed more at the individual voter than interest groups. Indian politics is replete with numerous examples of political parties competing in promising individual benefits such as social welfare pensions, loan waivers, housing, Rs2 rice, free power, etc. This list is now expanding rapidly to include modern consumer durables such as television sets, cellphones and refrigerators.
Such individual-centric promises are a natural progression from the well-documented practice of purchasing votes by allurements of liquor and cash. Political parties now see an opportunity to formalize and institutionalize such allurement and regard the median voter as a commodity to be purchased in the political marketplace. The result is an increasing trend towards competitive populism, targeted at the individual voter and pandering to the lowest common denominator, which threatens to engulf our polity like cancer.
Political commentators and opinion makers express righteous indignation and anger at competitive populism, and demand putting an end to it. Economists despair about its consequences on the fiscal balance. But it may be facile to assume that populism can be eliminated.
Competitive populism is a well-established strategy through which political parties signal their intent to voters. Just as supply and demand in a regular market facilitates price discovery, the dynamics of competitive populism operating in an open political marketplace helps in efficiently allocating votes among competing parties.
Much like the market in goods and services, the political marketplace, too, cannot be regimented through something similar to command and control policies, which seek to outlaw populism. The challenge is to incentivize populism to benefit the common good.
The populism that panders to individual welfare suffers from many problems. In an extremely diverse and heterogeneous society like ours, satisfying individual desires with scarce public resources is impossible. Individuals have varying needs and wants, and specific forms of individual assistance will end up satisfying few, and even that only partially, while leaving the large majority dissatisfied. Therefore, government programmes which promise individual benefits generate substantial deadweight losses. Further, the scarce resources and huge demand ensure that we invariably spread the batter too thinly to benefit anybody.
What do the poor really want? The popular stereotype paints a picture of the poor person queuing up for subsidy or loan waiver dole. However, a more critical analysis of what most immediately and directly affects our village and slum residents points to severe deficiencies in community infrastructure. Besides keeping living standards low, the absence of critical community and infrastructure assets stunts economic growth, lowers incomes and imposes significant opportunity costs on the residents.
It, therefore, makes sound electoral sense for political parties to promise vital connecting roads, water supply, sewerage facilities, agriculture storage and marketing facilities, community halls and libraries, school and hospital buildings, and check-dams and irrigation channels.
Community assets and infrastructure, unlike individual benefits, are public goods, appreciated by everybody in more or less equal measure, and fulfilling at least a few of them leaves everyone satisfied. After all, everyone — villager or slum dweller, rich or poor — benefits from the new road. This improves the productivity and living standards of local residents, encouraging further investment, providing jobs and expanding economic and commercial opportunities.
Such investments generate a multiplier effect on the local economy and expand its production possibility frontier.
Competitive populism can also be a very effective way to identify the long-felt community needs. Since these are area-specific, political parties and candidates will focus on local problems, thereby making elections more issue-oriented and participatory, and our democracy more vibrant and responsive.
The collective goodwill generated by bridging a long-felt infrastructure deficit is always much more than the sum of the goodwills generated by any individual benefit conferred. The impact of the former on the local economy and the economic opportunities generated thus for each resident is direct, immediate, substantial and long-term.
All this is not to say that there is no place for individual-centric welfare programmes such as pensions, housing, self-employment schemes, agriculture and food subsidies, etc. They will remain the critical components of the social safety net and poverty alleviation programmes of any government. But these programmes are too complex to conceive and administer, and should be done so taking into account the varying needs and problems of different areas and communities. Their designing cannot be left to the caprices of the political marketplace.
The aim should not be to blindly eliminate populism, but to channel it towards achieving socially and economically desirable objectives, while reconciling the interests of the political parties. Ultimately, the politician is spending our money, and it is only appropriate that we demand that this expenditure generate the maximum bang for the buck.
For a start, the Election Commission of India could prohibit competitive populism which caters to individual benefits. This will enable realignment of the incentives and interests of political parties with those of our society and economy. This will be the first step in the journey to Prosperityland!
Gulzar Natarajan is a civil servant. These are his personal views. Comments are welcome at email@example.com