A democracy cannot exist as a permanent form of government. It can only exist until a majority of voters discover that they can vote themselves largess out of the public treasury.
— Alexander Tytler
Some numbers are well beyond human comprehension. We can talk glibly about millions and billions of this or that but we cannot intuitive grasp what they actually mean. Evolution has equipped us with fine brains but those brains never needed to deal with thousands — leave alone millions — of anything. So we have to do some mental gymnastics to get a fleeting glimpse of what very large numbers represent.
Here’s a way of realizing how large millions, billions, and trillions are relative to a thousand. One thousand seconds passes in less than 17 minutes. A million seconds takes around 13 days. A billion seconds takes a bit over 31 years. We humans live for something between 2 and 3 billion seconds. A trillion seconds is over 31,688 years. We don’t really know what thousands of years mean, of course. Human civilization is not a trillion seconds old.
The US war in Iraq has been estimated to cost around $3 trillion. That is, $3,000,000,000,000. Details are in Joseph Stiglitz and Linda J. Bilmes’ new book, “The Three Trillion Dollar War: The True Cost of the Iraq Conflict.” See The Cold Price of Hot Blood in Salon for more on that. The total cost globally could well be over $6 trillion.
In any case, one way of looking at that number of $3 trillion is that every man, woman, and child in Iraq could have been paid over $100,000. In other words, the average family of five could have been given over half a million dollars. Most of us, of course, don’t quite fully understand how much money half a million dollars is. We just know that it is a real truck load of money.
Even for the US, a few trillion is a large sum. As has been plausibly argued by some that it is possible that the wars in Iraq and Afghanistan will eventually hasten the decline of the US. In a sense it is a self-inflicted wound which will bleed the US. It is the pitiable ignorance of the people that is the cause of this. Think about it. They voted for the warmongering dictators. These dictators then did what was in their best interest and in keeping with their ideology. Turning nations into rubble — not just other’s but even their own — is not too high a price for them.
Yes, I know that democracy is all the rage these days. India is the largest democracy and the US (for a while at least) is the most powerful democracy.
In other news, the government of Manmohan Singh has decided to cancel the debts of small farmers. It will cost Rs 60,000 crores (US$ 15 billion.) That once again is a large number even though it is several orders of magnitude lower than the US cost of the Iraq war. However, the US is an order of magnitude richer than India and so it can afford things that India cannot. If not exactly cripple India, the cost of debt cancellation will most definitely very severely adversely affect India. Its long term growth will suffer.
So why is the UPA government doing it? Because it is good for the party. It is the very nature of democracy that creates the perverse incentives for the politicians to implement policies that help themselves at the cost of immense harm to the country. Those who make the policies enjoy the indirect benefits of the policies — votes from specific groups — without paying any of the costs.
There is another asymmetry. The direct beneficiaries of the policies naturally have a concentrated interest in voting for the politicians. The costs are diffuse and poorly understood by the rest of the population. So while they bear the costs, they do not connect it with the policies and the politicians.
So in very simple terms, here’s the model. Groups A and B. Politician P determines that by robbing group B and giving it to Group A, Group A will definitely vote for P. Group B does not realize that it is being robbed. So group B does not penalize P. Politician P wins, and handles the cash register with very sticky fingers as long as it can. Strictly speaking, group A is voting to steal group B’s money — with the eager helpful intermediation of the politicians. This is democracy. Meanwhile, group A suffers in the short term, and both groups suffer in the long term. The only winner: the politicians that figured out how to buy votes using someone else’s money.
In the final analysis, a country is only as rich or as poor as its collective wisdom allows it to be. The politicians can be expected to make those decisions that are good for them, just like you and I make self-interestedly rational decision in our daily lives. However, we get to play with whatever little money we have; the politicians can play with billions and trillions that do not belong to them. So they are understandably less careful with billions than we would be with out few thousands. We are poor because we make poor choices and our poor choices arise out of ignorance.
It is all karma, neh?
Categories: Why is India Poor?