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Business News/ Opinion / Views/  Political incentives for populism could let India’s democracy down
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Political incentives for populism could let India’s democracy down

Too often are reforms held back by the interests of a vocal few at the cost of benefits that could’ve accrued to the vast majority

Photo: HT Premium
Photo: HT 

In January of 2018, taxi drivers in Goa went on an indefinite strike against the state government’s move to install speed-governors in taxis, which was seen as a precursor to allowing the entry of Ola and Uber into the state. Tired of years of bullying by the tourist state’s taxi drivers (commonly referred to as “taxi mafia"), and with neither Ola nor Uber, the public voiced support for the state government. Despite the Congress party officially taking the side of taxi drivers on this issue, even core supporters of the party openly stood behind then chief minister Manohar Parrikar. However, after two days of grandstanding, during which the entire state came to a stand-still, Parrikar caved in, much to the disappointment of Goa’s people; even now, Goa does not have Ola and Uber. Taxi drivers determine electoral outcomes in no more than four seats in the 40-member Goan assembly. So, politically speaking, Parrikar stood to gain by sticking to a position that had support across most of the state. However, human psychology and game theory posit otherwise.

For the people in those four constituencies where taxi drivers determine election results, the entry of Ola and Uber causes a loss. For other Goans, it promises a gain. Prospect Theory posits that the impact of a loss is twice as powerful as that of the same quantum of gain. This means that had the government firmly taken on the taxi drivers, the next election would have been a single-issue election in those four constituencies. But for the general public supporting the government on its stance, it would have been a multi-issue election, with the entry of Ola and Uber being just one of them, and Parrikar knew this. As a result, voters in those four constituencies, united by a grievance, held the state to ransom. Nassim Nicholas Taleb, in his 2017 book Skin in the Game: Hidden Asymmetries in Daily Life, calls this the dictatorship of a minority.

The scenario also explains the difference between populism and reform in the public policy space. Populist leaders aren’t those who address the needs of the numerical majority; they address the needs of a well-knit numerical minority whose interests are consolidated well enough to prevail over the dispersed and divergent interests of the majority. The ongoing protest against India’s farm laws illustrates this phenomenon. A handful of farmers who don’t represent the country’s farming community have forced the government to defer the implementation of farm reforms, which benefit every citizen in general and other farmers in particular. Supporting these protesting farmers and their short-term interests is populism. The same was true of opposition to the now-shelved land acquisition bill. Reform-oriented leaders are those who support and push for policy measures that address the latent needs of the numerical majority, a need that they sometimes may not even appreciate.

About 60% of India’s population was born after 1991, and hence they don’t know what it means to live under a licence regime. But, back in 1991, even among Indians who did not have an alternative economic world view, there was a latent need for change, choice and growth. Despite opposition from a vocal minority constituting crony capitalists, socialist politicians and other vested interests, P.V. Narasimha Rao, the then prime minister, ushered in economic reforms. If Rao had sought the support of India’s general public to implement those reforms, he would have hardly got any. But a consequence of the policy shift was a proliferation of long-term economic benefits even to those sections that opposed or were indifferent to reforms. It’s a tragedy that 30 years after the adoption of measures that lifted an estimated 200 million Indians out of poverty, Rao remains a pariah across the political spectrum.

Reforms are the only way through which development can be institutionalized. But against every reform, there will be a vocal minority masquerading as the voice of the majority, determined to stall the process. Unfortunately, democracy has a political incentive to support such myopic and self-serving interest groups, thereby making reforms difficult. As explained by game theory, the difficulty gets compounded when the democracy in question is as diverse as India’s.

The nature of choices that voters have in a democratic set-up resembles the Prisoner’s Dilemma game in which players confront two options: one that will benefit individuals a little, but collectively they’re better-off if everyone else also exercises that choice; and an alternative which will benefit individuals more, but at the cost of others, and if everyone exercises this choice, the collective outcome is worse for all (this lock-in is called the Nash equilibrium). In a democratic system characterized by immediate interests that are at cross purposes, anecdotal evidence suggests that citizens mostly tend to exercise choices keeping their self-interest in mind. When everyone does this, the result is an inefficient and incompetent governance system that has little appetite or vision for reform. Hence, it’s no wonder that the political trajectory of some of India’s leading politicians began with their championing of populist causes.

In contrast, the career growth of a politician in China is not through election by people but performance evaluation by political higher-ups. The evaluation is based on economic reforms and growth, where the voice of any dictatorial minority does not prevail over what’s good for the larger population. Consequently, the Chinese system of governance has a healthy disdain towards populism. No Chinese politician can afford to protest rising fuel prices or acquiring land for setting up a factory in their province.

Democracy, though referred to as “the will of the people", often represents the will of vocal special interests. Across every issue, the demands of numerical minority groups tend to prevail. So, in this age of hyper-media, politicians in democratic societies are increasingly incentivized to respond to populist demands. In societies such as China, the political system incentivizes politicians to eschew populism. This is a fundamental feature that not only distinguishes the two nations, but also explains why reforms are the norm under the Chinese political system while they are an exception in the Indian one. In its current form, our democracy is failing us.

Prasanna Karthik is a governance strategy and public policy professional. He served as a policy advisor to former Goa chief minister Manohar Parrikar. These are the author’s personal views.

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Updated: 14 Sep 2021, 06:12 AM IST
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