Atanu Dey On India's Development

Institutions Matter, not Personalities

A few days ago in this weblog, I wrote about our wonderful reforms and wondered why we don’t ask what it was that made our economy so desperately in need of reforms. The causes are many. As they say, dhoondo ek, milenge hazaar. Yet there must be a core set of causes that essentially constrain the Indian economy. I believe that one of them is what I call the personality cult disorder (PCD).

Tavleen Singh in an Oct 26th Indian Express article titled Midnight Alley to Dawn’s Highway presents me with the perfect introduction to that. Her analysis is, as always, right on the money and worth reading. In that article, she refers to the refreshing change in the economic policies. Then she writes

My grouse against Nehruvian socialism is that this is precisely what it did not do. Instead of building the tools of empowerment it crippled the average Indian by teaching him to believe that all he needed to do was sit back and be a good boy (by voting Congress) and the state would take care of all his needs. This led to an entire generation of Indians growing up to believe that the state had a broom and a magic wand that would provide him with shelter, food and prosperity. In pursuit of this mad dream we continue to spend more than Rs 30,000 crore a year on rural development programmes that have mostly been named after members of the Nehru dynasty. Indira Awas Yojana, Rajiv Gandhi Schools and the Jawahar Rozgar Yojana, to mention only three. It is wrong to use taxpayers money as if it were a family trust but it accurately illustrates the family’s approach to development.

There you have it: an excellent example of PCD. Indians are obsessed with personalities. One manifestation of this is the naming of roads, for instance.

I have been paying close attention to street names since I am new to Mumbai. I observed that with very few exceptions, all roads are named after people. Each road will have stretches named after someone. Each short stretch of a road will have a different worthy named usually etched on a granite slab somewhere or the statue at an intersection. There they get their 15 yards of fame, so to speak. Of course, people simply ignore the idiocy and call the road by a simple name. So “Senapati Bapat Road” is simply “Tulsi Pipe Road”.

Contrast this with, say, the roads in the US. They are occassionally named after some personalities (Lincoln Expressway, Martin Luther King Jr Way, etc) but mostly they are not people centered. They will have their University Avenue, College Street, Telegraph Ave, 42nd Street, Avenue of the Americas, Vine Street, Cedar Lane, … and more recently Disc Drive, Micron Lane, Internet Alley, and so on. The important point is that they are not hung up on personalities.

You may ask, what is so terrible about the naming of roads after people. Nothing on the face of it, but it reveals a deeper dysfunction of the society. It indicates that we raise people on pedestals and value personalities and not institutions. My point is that institutions matter and not people. In India, we neglect institutions and that is partly responsible for the decay of our society.

Institutions matter because they are rule based. They are not dependent on subjective arbitrariness — the whimes and fancies — of personalities. Institutions persist and outlast individuals and therefore have alonger memory. They are also less likely to be hijacked by narrow personal interests and can pursue socially beneficial objectives.

When institutions are hijacked by personalities, they decay. The Indian National Congress was a worthy institution until the Nehru-Gandhi family made it into their personal fiefdom. The tranformation was tragic and it will continue to be a dysfunctional political party as long as it persists in elevating personalities over the institutional character of the party.

One can conjecture that it is the legacy of our feudal social system that is the cause of our dysfunctional emphasis on personalities rather than on institutions. After all, the raja ruled at his pleasure and did not bother with constitutions. The serfs realized that the law was basically whatever the raja said it was. Survival in this sort of a system depended on unquestioning loyalty to a person.

A modern highly complex economic system requires the rule of law, rather than the rule of men (or women). Arbitrary decisions based on personal prejudices cannot in general lead to socially beneficial outcomes. One can imagine an enlightened benevolent dictatorship but they are rare and rarer still is the possibility of a long succession of benevolent dictators. The odd raja may be good personally but his successors are likely to be rapacious murderers.

Sadly, rajas continue to exist in India. They go about in cars with led lights flashing. They consider themselves above the law (just another institution). They hand out or withhold favors depending on whether they personally gain from the deal. The license-permit-quota-subsidy raj is the only institution that these rajas find worthwhile.

It is a curious fact that some of these neo-rajas live in places named after previous plunderers of the land — Aurangzeb Road, Ghaziabad, Victoria this, King George that. How long will it be after the masters have left, that the slaves will declare themselves free?

  • http://www.NaveenBachwani.com/index.xml Naveen Bachwani

    It will be a long time before the slaves declare themselves free, Atanu. Ayn Rand writes about it in “Atlas Shrugged” where she speaks of the “sanction of the victim”.

    After decades of being ruled, and being treated like slaves, I think we as a nation have come to believe that there is no other way to live. And policies like the “License Raj” did not help break out of these barriers. Did you know that even today it costs about 30,000/- Rs. for a poor man to buy a “permit” that allows him to operate an autorickshaw on the streets of Bombay?! (Illegaly, of course)

    Street names are only one way the “rajas” get to exert their power on their citizenry !

    http://www.NaveenBachwani.com/

  • http://worldisgreen.rediffblogs.com/ Suhit Anantula

    How true!!!

    In college I rememeber being always attracted towards personalities. This manifested into understanding and learning about charismatic leadership and believing that it is a good way to managing companies.

    When I read the book “Built to Last” by Jim Collins I first saw the power of institution building. I did not recongnize the names of many CEO’s of these great companies but I could never forget the company itself. Jim continues this and proves in his next book too.

    Now I strongly believe that institutional building is the way forward!

    Suhit.
    Weblog @ http://worldisgreen.rediffblogs.com/

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