states and markets (the case of India)

I could write a long post criticizing “neoliberalism” for widening gaps between rich and poor, undermining local cultures, damaging the biosphere, and restricting the sovereignty of democratic governments. I’d vote for the democratic left if, for example, I lived in Latin America. Yet I’m haunted by the example of India, where people who shared my values set the nation’s course from 1949 until the mid-1980s. Nehru and his fellow leaders of the Congress Party were democratic, civil libertarian, secular, nonviolent, pluralist, deliberative, and egalitarian. Opposing “globalization” before that word was coined, they tried to make India self-reliant and to help the least advantaged of their compatriots. It is at least possible that their well-intentioned policies caused hundreds of millions of people to live shorter, harsher, and narrower lives than they might have otherwise.

The following passage from Shashi Tharoor’s India: From Midnight to the Millennium (pp. 166-8) has stuck with me for several years:

The government’s indifferent attitude [in the 1970s] was epitomized by Prime Minister Indira Gandhi’s communications minister, C.M. Stephen, who declared in Parliament, in response to questions decrying the rampant telephone breakdowns in the country, that telephones were a luxury, not a right, and that any Indian who was not satisfied with his telephone service could return his phone–since there was an eight-year waiting list of people seeking this supposedly inadequate product.

Mr. Stephen’s statement captured perfectly everything that was wrong about the government’s attitude. It was ignorant (he clearly had no idea of the colossal socioeconomic losses caused by poor communications), wrong-headed (he saw a practical problem only as an opportunity to score a political point), unconstructive (responding to complaints by seeking a solution apparently did not occur to him), self-righteous (the socialist cant about telephones being a luxury, not a right), complacent(taking pride in a waiting list the existence of which should have been a source of shame …), unresponsive (feeling no obligation to provide a service in return for the patience, and fees, of the country’s telephone subscribers), and insulting.

Although some blame for this unresponsiveness should be assigned directly to Mrs. Gandhi and her ministers, the example surely illustrates a more general problem. Centralized state bureaucracies that deny market preferences tend to become arrogant. Of course, mid-20th century state-socialism and neoliberalism are not our only alternatives. There are various Third Ways, including efforts to decentralize democratic governance. Nevertheless, it’s sobering to consider the enormous waste that good intentions can cause.