Welcome to what happens next.
My name is Larry Bernstein.
What happens next is a podcast which covers economics, finance, and history.
And today's episode is entitled, India's Broken.
Our speaker is Ashok Modi, who is a professor in international economic policy at Princeton.
He is the author of the book, India's Broken, A People Betrayed, Independence to Today.
I hope to learn from Ashok about whether India's democracy is working and what are the risks of authoritarianism.
I also want to hear about the failures in public health and education and how that relates to India's economic underperformance
relative to China and its other Eastern Asian neighbors.
India recently became the world's most populated country at 1.41 billion people,
and that is 17 and a half percent of the world.
So India is everybody's problem.
Ashok, in your opening remarks, tell us about your new book about India since independence.
Larry, thank you very much for having me.
It's been a great pleasure.
We've done this before on my previous book, and I'm so happy that you have called me up to do another book.
So the book has three strands that run through the history of 75 years for India.
The first strand is jobs, whether the Indian economy has been generating jobs of adequate quality.
The fact that it has not been doing so is in some sense the central reason why I wrote that book.
The second strand is the poor provision of public goods.
Education, health, the judicial system, and of course the environment,
which includes air, water, land, and increasingly climate change.
Public goods are essential not just to improve the lived reality of people,
but also for the purpose of creating good jobs in a healthy economy.
And the third strand that runs through this book is the erosion of social norms and public accountability,
that at some point becomes irreversible.
When a lot of people cheat, then it is in my incentive to cheat before you can cheat me.
India was a British colony before independence.
The British were generally successful with its former colonies in providing norms
that included democracy, common law and courts, and preventing corruption.
Tell us about British influence after independence.
I think the British left a very weak and unfortunate legacy.
The economy had not grown for the previous 50 years before independence.
The agricultural sector was in great distress.
In terms of institutions, democracy was not something that came from the colonial masters.
Yes, they copied the Westminster style of democracy, but it was a purely Indian invention.
Independent India started with liabilities that the British left,
and it was then a moment of great exhilaration, which Nehru captured in his opening speeches.
He then promised using the words of Mahatma Gandhi to wipe every tear from every eye.
India is the world's biggest democracy.
It's incredible.
The number of people who vote in each election at both the national and local level.
Yet there's also corruption within the democratic process.
Tell us about that.
India has held successive elections on a scale that most non-Indians are not even able to imagine.
The early elections were fair and well contested.
It is the case also that elections tend to be competitive even today,
but today they required many US-like features of huge campaign expenditures.
The Indian national election in 2019, the campaign spending was more than the US election.
Just prior to it, which had both the president and Congress elected in 2016.
So the campaign expenditures are vast and almost entirely illegal.
Those campaign expenditures vastly exceed any limit,
which means that a lot of the money is unaccounted for.
It's what Indians call black money since the 1980s.
But gathering steam ever since is that some very deep pocketed,
wealthy people have come in to the electoral process.
The most frightening element of the Indian democracy is that today in the Indian national parliament,
the Lok Sabha, 29% of the legislators have criminal charges against them,
serious criminal charges against them, rape, murder, extortion, kidnapping.
The law says that you can contest and win an election as long as you are not convicted.
The problem with that is that once these guys become politicians,
they also defect to receive the protection of the state from being convicted.
So they remain politicians for long periods of time,
bringing charges against them becomes very hard.
The related problem is that the judicial system is broken.
There are people who are under trial and those trials drag on for decades sometimes.
So yes, it is true that India has the framework of a democracy.
There's an election commission, there's an auditor general.
This is where economics literature says good institutions help create good democracies
and good economic outcomes.
And the puzzle for me was why despite the structure of what appeared to be good institutions,
does the democratic process not deliver the public goods that people aspire to?
And why does the democratic system seem so unaccountable?
And the answer is norms.
You can have the rules, but if people disregard the rules or bypass the rules or distort the rules,
then you need certain accepted ways of behavior, accepted sense of right and wrong.
Unless people adhere to that, the institutions and the rules and the laws don't work.
I mean, just give you one last example.
India is some of the best environmental laws in the world.
But environmental degradation occurs at a rampant pace.
Nobody cares about those laws.
And so having the rules, the laws and the institutions creates the sense of democracy,
but it does not operate for the vast bulk of people.
It operates for those who are able to use the rules and institutions in their own favor.
That's the subtitle of my book.
That there is a democracy, but it betrays the people.
In the United States, we have two major political parties.
India has lots of different parties.
Power is diffuse.
Why are the parties both so regional and religiously based?
Remember, country of 1.4 billion people, many of the states are much larger in population
than most European countries.
For example, the state of Tamil Nadu, something like 70 or 80 million people,
which is approximately the size of Germany.
That's where the diversity comes in.
Each state has a certain regional representation,
which leads that state to have its own parties.
Sometimes in a democracy, when a politician is corrupt, they throw the bombs out.
Why is there escalating corruption in India despite the frequent democratic elections?
The nature of corruption and norms is what economists call a multiple equilibrium.
That means that if everyone is honest, then it's everyone's incentive to remain honest,
because you are singled out or because you get punished.
But if a sufficiently large section of people say 20% become corrupt,
then the 21st percent finds it very tempting to be corrupt,
because that percentage sees the other 20% getting away with it.
It's downhill because you don't stay at 20%, you go to 80% directly.
So either you have a Sweden-like system where almost no one is corrupt
and everything is transparent, or a system that is vastly corrupt.
The downhill process started from the very beginning.
There was a lot of corruption in infrastructure and public services contracts,
even in the British period.
By 1964, there was a major report which said corruption is now infiltrating the bureaucracy
and even perhaps the judiciary.
And then Mrs Gandhi gave that a further knock.
Mrs Indira Gandhi was the third Prime Minister, also daughter of Jawaharlal Nehru.
She was a politician who was very focused on maintaining her own power.
And in that process, legitimized corruption at the highest levels of political leadership.
Towards the end of her career in the early 80s, her son Sanjay Gandhi began to induct criminals into politics.
So it did not happen in one day.
It happened over a significant period of time.
But by the mid 80s, corruption and crime in politics are now deeply ingrained and very difficult to reverse.
And that downhill slide continues in large part because campaign finance expenditures are exploding.
And so together, an inheritance of weak norms that have accumulated over a quarter century
and the rising campaign finance expenditures make this a process that's very difficult to reverse.
Next topic is political assassination.
Mahatma Gandhi was murdered as well as Nehru's daughter Indira Gandhi who was not related to Mahatma.
How important is political assassination in India and how rampant is political violence?
The two most spectacular cases you have already outlined.
Political murders on that scale of that national leadership are very rare phenomenon.
Political violence in the Indian context has to be thought of as a low-grade violence that permeates a broader section of society.
It again goes back to Mrs Gandhi's period. There was a so-called Naxillite rebellion.
Initially, it was a peasant rebellion and it became an urban guerrilla movement.
We are talking about 1966, 67, 68.
And unable to quell this social protest, Mrs Gandhi began to use first the police and then the armed forces.
Then she instituted something called the Unlawful Activities Prevention Act,
which gave the authorities virtually unlimited ability to arrest people on very sort of flimsy charges
and detain them for long periods of time without even charging them and the easy ability to deny them bail.
What I am talking about is this underbelly of violence, which is not every day and in your face,
but it is what anthropologists call structural violence.
There is the possibility of being arbitrarily arrested and detained.
This was already a low-grade phenomenon for many years, but then specially since 2014,
the installation of the BJP-led government, that political violence,
specially associated with arbitrary detention, have become common and are used as a method of suppressing dissent.
From 1975 to 77, Prime Minister Indira Gandhi declared a state of emergency and martial law across India.
Some of the well-off Indians were happy to see authoritarian rule.
Some said, how could a democracy work for over a billion people?
Was Indira's successful using these emergency powers?
Did it set back democratic norms?
Was authoritarianism rejected then?
And do you think people still look favorably back to a non-democratic alternative?
The emergency under which Mrs. Gandhi acquired dictatorial powers was an unmitigated disaster.
There was no economic initiative that she took that was worth its name.
There were these two draconian measures.
One was a forced sterilization of men and the other was so-called beautification of urban areas,
which meant demolition of various sites occupied by the most vulnerable people.
The premise of the forced sterilization was that we need to reduce our population rapidly.
It had things completely backwards.
The goal has to be to create economic prosperity so that people become forward-looking
and therefore have an incentive to send their children to school and therefore to have fewer kids.
The process of development that has occurred worldwide in healthy societies gets development
to be in some sense the sterilization force.
The same thing was true of the so-called urban beautification process under Sanjay Gandhi
where he demolished slums.
You may remember very famous author activist Jane Jacobs of the United States.
And she made this statement that if you destroy slums without giving people opportunities,
they will just create new slums.
And so slum demolition is not an answer to anything.
The answer has to be more jobs.
Jane Jacobs said that people don't want to live there, but they have no choice.
Both in terms of essential economic principle and in terms of the brutality of its execution,
it went the way most authoritarian regimes go, which is they inflict brutality on their people
and serve no economic purpose.
Next topic is the Indian Diaspora.
Indian Americans are the wealthiest group in the US as their median family incomes are twice
the nationwide average and 50% more than whites.
If India cannot provide basic public services for their people, why don't they leave and
come to the West or somewhere else?
Look, 1.4 billion people is going to create some people of exceptional talent.
And so you have all the CEOs in Silicon Valley and so on.
Once in these societies, everyone has an incentive to follow the norms of that society.
The ability to infect a society with norms of the parent country is going to be difficult.
So I'm not sure that we would expect Indian norms to transfer with the Diaspora.
I'm looking at why people are exited.
So in my day, which is about almost 40 years ago, it was mainly young people coming for education.
Increasingly, we are seeing young parents leaving India because they know that their children
will not get good education and health care in India.
People who are buying these so-called golden visas, where they are able to buy their visa
either in the United States and there is a similar visa in the UK, there is a similar
visa in the UAE.
I do want to be sure I'm not overstating my point.
The numbers are still small.
People live in gated communities within India.
There are some extremely high quality schools in India, which are run for people who can
afford them, who pay almost international prices for them.
So the exit is not necessarily always a physical exit.
The exit is from the process within the nation.
So if for example, I'm taking a helicopter flight into downtown Mumbai, then it's not
particularly urgent for me to improve the traffic conditions to come from the suburbs into the city.
The same is true for education.
Today, more and more parents who can afford it are sending their kids for undergraduate
education to the United States, Australia, the UK, something that was virtually unthinkable
in my time.
There's one last more insidious form of exit and that occurs in water.
So water is a chronically under-provided public good.
And the rich and privileged will often appropriate for themselves the scarce water resources of
a city and have swimming pools and water theme parks while there's water shortage in the rest of the city.
Their interest in providing their voice for a broader public welfare is extremely limited.
I use the term exit in a very sweeping sense to ask the question, is there an interest in the
Indian elite for a broader upliftment or is the interest mainly in making sure that the poor
and vulnerable get soaps, which will appease them and therefore keep the discontent at a low level.
Next topic is sewer systems.
Public defecation has been a major public health issue.
The current Indian Prime Minister Modi announced that he was going to provide millions of new public toilets.
Why does India have this very serious defecation and public toilet problem?
To be fair to the Prime Minister, it is important to acknowledge that there has been progress.
There has been a tendency in the current administration to vastly overstate its performance.
So there is a fog of data on this whole issue of open defecation.
Many states in India claim that they are free of open defecation.
People who are on the ground will tell you that there are problems of lack of water,
broken toilets which continue to persist.
The historical sources of this are very hard to identify in any precise way.
It has been a function of poverty, but it is probably also a function of historically grounded norms
and different functions of different costs.
But we have to see the problem in the broader context of health and nutrition.
In that broader context, the stunting of Indian children, anemia amongst pregnant women,
good nutrition remains a very serious problem and open defecation is a small part of a much bigger issue
that has not been handled as far as I can judge from the statistics on things like stunting and anemia.
Public education in India at the grade school, high school and college levels is a catastrophe.
The quality of the typical education is abysmal.
Teachers rarely show up for work.
In your book, you mentioned that capable and well educated Indians cannot find employment.
So, why can't they find decent educators who will do their job?
This is an area where the breakdown of norms has had its most deleterious effect.
There is a recognition that this is a problem.
Sometime in the late 80s, early 90s, teachers' salaries went up.
To qualify as a teacher, you need a teacher certification.
So, what happened then was that a number of local politicians and notables
bribed the regulatory authorities to set up teacher training institutes
where they charged large fees to prospective teachers, but gave them very poor education because all they wanted was the fee.
They then certified poorly trained teachers.
And so, you now have an equilibrium over here.
Everyone who is a part of the system benefits.
The regulators benefit because they are getting a take from the politicians and notables.
The politicians and notables are charging fees to prospective students who they certify without actually teaching them to teach.
And that the teachers are poorly trained and therefore their interest in teaching is limited.
If they can get away with not teaching, they are cool doing so.
It's not that this country cannot create capable people.
It's just that in this system, it seems to people that it's easier to succeed in life through cheating.
And that cheating equilibrium creates the problem.
You did not mention that the real losers are the parents and their children who are denied a good education.
Why don't they revolt against this nonsense?
Even if the K to 12 is corrupt, the colleges charge the parents and students.
Why is there a market failure for a college education in India?
Lots of garbage colleges producing garbage degrees and therefore producing unemployably young people.
You have this one thin slice of extremely elite schools.
And as you know, Larry, I have been a beneficiary of that.
Now, the question you are asking is why don't people revolt?
That is a much broader question and that is why you are right to begin with the nature of the democracy.
The question is where in the democratic process is there a legitimate ability to revolt against these inequities?
And in principle, it is through casting my vote.
Here we have this other unfortunate phenomenon, which is that politicians have learned over time to buy people's votes in two different ways.
One is giving gifts at the time of election.
And there are other stories about how large these gifts are of cash, of gold, of liquor, televisions, and laptops and so on.
And then there is a more institutionalized bribery, which is that every politician will promise you that if I am elected, you will get free electricity or you will get free water.
Now free electricity and free water doesn't come free because somebody has to pay for it.
The problem is that in a system where people are vulnerable, appeasing them with gifts buys their loyalty.
The vulnerability itself creates the loyalty which attracts the votes.
There are people who will tell you that we want better education, we want better health, and we are going to vote for it.
But in the end, the current government is giving free grain of certain amount to every family.
And that creates a constituency.
It is through that form of appeasement that the authorities are able to buy the votes of people.
Large part of the campaign expenditure is devoted to that.
I have many friends who are Indian Americans, nearly all of them attended IIT in India.
I recognize that this represents an incredibly small slice of Indian society.
The graduates of IIT are so bright and so capable.
Why can't India scale IIT?
For IIT to be scalable, you need to scale the primary education first.
The scalability cannot start with an IIT.
The heart of the problem is at the primary level and at the secondary level.
So sometime in the 90s India finally achieved 100% primary enrollment.
But the quality of education in terms of the ability of students to perform at grade level is unfortunately pathetic.
And that gap between student performance and grade level benchmarks keeps increasing as they go higher up in their school grades.
Something of the order of about 30% of kids drop out before they reach high school.
And then kids are ill prepared for college and they go to these garbage colleges.
The system is not supportive of people.
Replicating an IIT is not really the solution.
The solution has to be a much more concerted effort in mass education.
Zvi Galiel is the former Dean of Computing at Georgia Tech.
He spoke on this podcast, What Happens Next Previously.
He created an online master's degree computer science program at Georgia Tech that now has 100,000 students.
Wow.
Georgia Tech is a top 10 engineering school in the United States.
100,000 students who each pay only $8,000 a year.
If the infrastructure for education in India is so pathetic, should they skip a step and try to teach online?
I know the human touch is better than online, but the alternative here is so bad.
The human touch is dominantly important. It's not a minor thing.
This guy who's got 100,000 students probably has students who already have crossed many different filters.
We are talking about primary, secondary education where the kids need vast amounts of hand holding.
So Salkan, as you know, the founder of Khan Academy says that computer-aided learning is different from online learning.
The computer-aided learning is a tool in the classroom that a human teacher uses.
And the human interaction is central to the success of Khan Academy.
It is not a desirable frill. It is a core requirement in the Indian context, especially for education.
You need the human touch.
Now just broadening this for a second, Jane Jacobs actually makes a very interesting statement in passing.
She says that safe neighborhoods have good schools and a unsafe neighborhood can destroy a good school.
So education is not just about teaching. Education is about nutrition of kids.
It's about giving kids a certain degree of safety and a certain degree of self-confidence.
It is about parents being educated. It's about teacher motivation.
It is a complex of broader collective action within a society that produces education.
In her book, The Death and Life of Great American Cities, Jane Jacobs highlights successful neighborhoods like Greenwich Village.
She loves small streets with high density, where at each corner you have lots of choices when you move around that offers a plethora of small storefronts.
India is the best at offering high-density living. You spoke about the slums.
I think Jane Jacobs sees the beauty of it, the close proximity of people, lots of interactions with merchants.
Maybe Sanjay Gandhi saw it as a slum. Jane Jacobs would see it as a successful human society, obviously limited by their economic opportunities.
But it is still a lovely working society. How should we think about high-density living in these Indian urban areas?
I think you characterized the spirit of Jane Jacobs correctly, but Jane Jacobs did not romanticize slums.
They are communities. They are support systems.
And the de-slumming has to occur by giving economic opportunities.
What you need to do is ask the question, why does India not create good jobs?
Why today, after all these years, there is still a large job shortage.
The Indian jobs problem cannot be characterized by a number called the unemployment rate, because most Indians cannot afford to be unemployed.
So they are employed for short periods of time. The real problem is what economists call under-employment.
The problem is that India never created a large manufacturing base, which, like the East Asian nations, was able to export to the world.
The mass job creation in this century in developing nations has come through exports of labor-intensive manufactured products.
There is no exception since the Industrial Revolution of a country being successful without good school education and nations that have brought women into the workforce have been much more successful.
A hundred and fifty years ago, half of all Americans worked on the farm. Today is less than 1%.
And this was made possible because of massive increases in farm productivity, better seeds, fertilizer and equipment.
Today, India still has substantial employment in agriculture. Tell us about that.
70% of the Indian labor force was in agriculture at the time of independence. Today, that number is 45%.
That is a very slow rate of progress. The East Asian nations were about the same as India in the 50s and 60s, and today they have 5, 10% of their labor force in agriculture.
There are direct problems associated with agriculture. Only about 25% of the country has canal irrigation.
So, most of the irrigation has come in the last 50-60 years through pumping of groundwater.
But because there are no significant job opportunities in urban areas, people have stayed on on farms.
And the generational subdivisions have made the farm sizes increasingly smaller.
The problem is that these increasingly small, sometimes tiny farms just don't have the wherewithal to engage in intensive capitalist farming.
The process that you are describing in the United States, or in Japan, is a simultaneous process of increased productivity in agriculture that releases people from agriculture
and brings them to jobs in urban areas. One of the striking features that is the reverse migration.
At the time of COVID, millions of people lost jobs. They had limited savings and a vast trek began back to the farm.
How do you define underemployment?
I'll give you an example. I go into a store in Saket Market, which is where my parents used to live.
I go into Bayasampu, and there's a woman sitting over there, and she has obviously come out from a backroom somewhere behind the store, and she's sort of the guardian of the shop.
And I say, can I have a shampoo? And she calls out to a little boy who comes scampering from somewhere behind.
And he probably was watching cricket on television. He climbs the ladder, he brings the shampoo down, and he shows it to me. I choose one, I pay her and I leave.
And the question I ask my student, are the lady and this boy employed?
And the technical answer is they're employed, but they don't do anything for the vast length of the day.
The same thing you will see in college dorms. There are people who will stay for years in college because they have no job prospects.
You don't have any clear, productive way of using your time. So underemployment is lack of use of available time on the part of people who would like to work more.
I end each episode on a note of optimism. What are you optimistic about?
I am looking ahead and asking myself the question, what is India's future? And I believe that the best way for India to progress is to move away from the seduction of autocracy.
Which seems to be a short-sighted knee-jerk reaction of Indian elites to a more grounded democracy.
I'm thinking of going back to the description that Alexei did toke will and then Robert Putnam gave of community-based associations and institutionalized civic consciousness that emerges from that.
We see only a glimpse of this in the southwestern state of Kerala. If I had a hope for India, it would be that those kinds of institutionalized experiments at creating civic consciousness grow and flourish and are copied across the country
and that the norms that they generate at that community level then percolate up into the state and national governments.
When people ask me, so what is the policy you would recommend? I say that there's no policy that I can recommend that will not be distorted.
I need a system where there would be a faithful implementation of good policies. And for that faithful implementation, I need a system of norms and accountability.
And it is this more grounded democracy that is community-driven and anchored. That is my fundamental hope for India.
Am I optimistic about it? I'm not going to go that far, but I'm saying that is where the hope lies.
Thanks to his show for joining us today. If you missed last week's show, check it out. The topic was the where-taking advice from generals.
Our speaker was Ingo Trowshweiser, who is professor of military history at Ohio University. He wrote a biography entitled Maxwell Taylor's Cold War from Berlin to Vietnam.
I'm very concerned about relying on advice from generals in political decision-making. Generals often see military solutions to foreign policy problems and that can lead to war.
We used Maxwell Taylor as a case study. Taylor was a famous war hero and later became chairman of the Joint Chief of Staff and was in the Oval Office advising JFK during the Cuba Missile Crisis and LBJ during the Vietnam War.
Taylor recommended to JFK to destroy the Russian nuclear missiles in Cuba and to LBJ to expand the U.S. military presence in Vietnam.
I would now like to make a plug for next week's show with Edwin Batastela, who is the author of the book, Sorry About That, The Language of Public Apology.
I'm fascinated by apologies and what makes a good one and why others fall flat. It's more than an art because it must include true contrition.
God knows we all make mistakes and wish we were better. I look forward to making better me a compass.
You can find our previous episodes and transcripts on our website, What Happens Next in 6Minutes.com.
Please subscribe to our weekly emails and follow us on Apple Podcasts or Spotify. Thank you for joining me. Goodbye.