Pandemic and Power Grab

On a mailing list I was on someone asked if “this crisis going to increase Government role in society? That would be a terrible outcome!” That was back in April. My reply was the following. I am posting it here, for the record. It’s been four months since I wrote that, and unfortunately the government response has been as I had feared. [Begin quote]:

In a world of certainty, this much is as certain as it gets: the government will use this pandemic to grab even more power, push even more centralization of authority and greater political control over the productive capacity of the economy. This will further impoverish the people, and push the nation further along the road to serfdom. The babus and politicians are thrilled at the opportunity to increase their permit-quota-control-permission rule. They are salivating at the treasure they will extract without any concern for the blood they will inevitably extract out of an already impoverished people.

I predict that Modi will be doing things that will rival — if not exceed — the misdeeds of the great dictators like Stalin, Mao and Hitler. According to Stephen Kotkin, Stalin is the gold standard for dictators. Hitler dictated for a short 12 years; Mao for longer but did not have the military-industrial complex power. Stalin ruled for over 30 years and had the military machine.

My back of the envelope calculations show that at worst, the pandemic’s death toll (without a total lock down but with whatever locally appropriate preventative measures) would have killed about 2 to 5 million. But with what Modi has done, and plans to do, around 50 to 70 million Indians (mostly those at the bottom of the economic heap) will die in the next 10. These deaths will be from economic distress and deprevation that the government policies will impose on Indians.

Modi will make it a class conflict — the poor against the non-poor. He will pile on taxes on the non-poor class to give handouts to the poor. That is a shrewd political move since it will guarantee electoral victory. And he will go for nationalization of the kind that would in comparison make Indira Gandhi look like she was some sort of paragon of privatization. The greater centralization and politicization of the Indian industry will set India back a couple of decades. It isn’t going to be pretty.

Of course, people like us — the chattering classes and the intellectuals — have little to be concerned about. We are all rich enough to get by comfortably even if half our assets are taken away by the government. That’s not the worry. The worry is that the Indian economy’s productive capacity will be severely hit, if not fatally so, and the brunt of that will be felt disproportionately by the poor. Right now, just to take a small example, the child mortality in India is 2,500 every day. I estimate that that will see a 50 percent jump in about a few months. And that figure will not come down for at least 10 years. Doing the numbers is depressing.

It’s depressing that the Modi and his henchmen are so unconcerned about human suffering. Do they lack heart? Or do they lack a brain — they don’t know the harm they are causing? Or is it both? [End quote.]

In the end, people pay for the hubris of their leaders. Lacking humility, the leaders believe that they can control what is clearly beyond their comprehension. Adam Smith warned about “the man of system” who considers people to be like pieces on a chess board, to be moved and manipulated at will according to the whims and fancies of the man. But people are not inert matter and they suffer terrible tragedies inflicted on them by leaders who lack wisdom and humility.

Author: Atanu Dey

Economist.

11 thoughts on “Pandemic and Power Grab”

  1. Even Modi’s greatest supporter will not vouch for Modi’s humility. Humble, he is not. I agree with you on that.
    But there has been some pro-free-market moves by Modi during the pandemic:
    1. Unshackling the agricultural trade.
    2. Privatizing the railways, in parts.
    3. Pushing ahead with Air India privatization (hopefully it materializes).

    I can understand your anger when you write “I predict that Modi will be doing things that will rival — if not exceed — the misdeeds of the great dictators like Stalin, Mao and Hitler”. Your frustration shows when you write “he will go for nationalization of the kind that would in comparison make Indira Gandhi look like she was some sort of paragon of privatization”.
    But I have difficulty agreeing with your apprehensions.

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    1. About Air India privatization. I have been saying this for at least 15 years that it will be a cold day in hell when Air India is privatized. The reason is simple: the public sector airline is actually a private, free airline for the politicians, the babus and the employees and family members of Air India. They not only fly for free but they are treated like maharajas (it used to be the mascot of Air India.)

      Regarding unshackling agricultural trade. I don’t know the details of that but I am confident that nothing substantial has been done. Why? Because the shackling of the agricultural trade was not some random, ill-thoughout move. It was a calculated move to benefit the babus and their middle-men cronies. That incentive still remains. As long as the babus continue to rule over the Indian economy, it can never be that any reform that would hurt their interests will be undertaken.

      I hope that I am wrong in my prediction that Modi will wreak havoc on the Indian economy (more than he has already done) but I am afraid that I will be proven right. Why? Not because I am an astute observer of the Indian economy but rather because I understand the fundamentals of political economy. It’s like this. I don’t have to know the precise details of how a particular projectile was launched to be able to predict that it will fall back to earth. But how do I know that that projectile was not given escape velocity? That’s history. If no projectile ever attained escape velocity, it is safe to assume that this particular one is also sub-escape velocity. Only some distributions are fat-tailed; most distributions have extremely thin tails.

      Liked by 2 people

      1. I am afraid that I would have to agree with you on prospects of Air India privatization.
        I wonder why the government is pretending to privatize Air India when it does not want to. Does it think that it will impress any significant voting population by this gimmick? Why this charade for the second time? Will you like to hazard any guess?

        On a lighter note, will you like to have a bet? If by 2024, the government privatizes Air India (even by a bit or part), you buy me 1500 rupees Amazon-India gift coupon. If on the other hand, the Air-India-privatization bid meets the same fate as the last attempt, I will pay you 25$ Amazon-US gift coupon. What say?

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        1. The talk about privatizing Air India is meant to distract the stupid — which means the journalists. They don’t know any principles and therefore they are taken in by blatant lies. The journalists believe that Modi is the great reformer. Modi is no more a reformer than I am the Emperor of China.

          I would offer you a counter-bet. If the govt ever privatizes Air India, I will buy you a $100 gift certificate to any store of your choice. If Air India is still not privatized by 2024, you can buy me a $10 Amazon gift certificate. Just to clarify, even if you lose the bet by 2024 December, you could still win $100 if Air India is privatized later. My guess is that Air India will eventually die but it will not be privatized.

          Meaning, its assets will be sold and the firm shut down.

          Liked by 1 person

  2. I suspect that millions have already died due to starvation and other emergencies that come with absence of income. How crores of people who earn less than ₹30 a day could’ve survived total lockdown spanning 3 months beats my imagination.

    50% children under the age of 5 were malnourished when Indians were earning.

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  3. Hi Atanu,

    I’m willing to take a bet on the excess 70 million death figure. Which data series do you want to track? How are you seeking to track excessive deaths? What odds are acceptable to you?

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    1. Prakash, it’s just a partially educated guess that there will be tens of millions of excess deaths due to the ill-thoughtout hasty lockdown of the Indian economy. How can we calculate how many? Say that the actual number of deaths per year over some reasonable period (say from 2010 to 2019) and compute the projected death rates for the years 2020 through 2029 taking the trend into account. Then when you have the number of actuals deaths over that period (say in 2030), you estimate the excess deaths (after controlling for other known factors as the number of direct Covid-19 deaths.)

      Thus if the projected deaths for the period is N, and the actual is M, then (M-N) is the excess deaths that can be ascribed to the lockdown and other policy-induced deaths. I neither have the ability nor the desire to do this exercise. It’s just a guess, as I noted before. I am basing the guess on the trend. Indian policy makers have consistently made disastrous choices — and it’s unlikely that they will change their ways. I have estimated that India has suffered loss of wealth due to bad policies amounting to over $120 trillion — which must imply tens of millions of avoidable deaths. See this post.

      About betting odds. It’s distasteful to bet on human misery. I only hope that I am wrong, and if I am right, it’s a tragedy too gruesome to contemplate.

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      1. I understand. It’s only in the spirit of Bryan Caplan and Alex Tabarrok that offering betting odds clarifies one’s thinking that I offered this. I see some policies like the extension of the subsidised food scheme that act directly against the outcome that you claim. Comparisons with Hitler and Stalin shouldn’t be made lightly.

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        1. Prakash:

          I am against government intervention in the economy — which means the govt should get out of the business of subidies. Government subsidies imply slavery.

          Sure, if you enslave sufficient number of people, you can get many things done. But I will not support that sort of immorality.

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