Atanu Dey On India's Development

The Tangled Web — Part 1

Death

Someone I used to know in California died rather suddenly. It was about 20 years ago. She and her husband were casual friends of mine. The perfect yuppie couple, they had everything going for them. Then she started having back pain. They were into fitness and perhaps the back pain was due to some sprained muscle while at the gym. A few visits to the doctors, a few more to chiropractors, a bit of muscle relaxants and pain killers, a few more visits to the medical establishments—a few months went by and the symptoms kept getting worse. Finally, it was diagnosed as cancer. She died within six months of that determination. It was later said that if they had discovered what the problem was, she might have had a fighting chance against the cancer. As it happened, she had lost too much time while her misdiagnosed symptoms were being treated.

That incident left a deep impression on me, not just because it involved the death of someone young and fit. The lesson was forced viscerally upon me: there is a distinction between symptoms and underlying causes. Since then I have been obsessed with always trying to distinguish between the two. Death observed even at some remove has a way of focusing the mind. I kept thinking about her death, and drawing lessons. Lesson 1: there is a distinction between being healthy and being fit. Around the time when the first symptoms appeared, she was definitely fit but she was definitely not healthy.

Because she was so physically fit it was hard for people to suspect that she was not healthy. Therein lay another lesson: things aren’t always what they appear to be superficially. I had always had a deep suspicion of superficialities since I am a card-carrying cynic. That death made me further convinced me that if I have to understand the world, I have to look underneath the surface very carefully.

Vagabond

As I said, this happened a long time ago. I was myself a young upwardly mobile professional working in product marketing at Hewlett Packard in the Silicon Valley. HP was the company to work for, California the place to live in. Life was good and the living was easy. Yet, something kept nagging me at the back of my mind. Having been born and brought up in middle-class India, I could not take the wealth I saw around me for granted. Why, I naively asked myself, was India so much poorer than this wonderful place that I lived in? The question was insistent and no doubt arose within me for some deep psychological reasons. It made me uncomfortable. Some of my friends and coworkers were Indians. I observed that they were not particularly interested in that question. I envied them their easy preoccupation with their work, the stock market, the real estate and which Indian restaurant served the best food.

It was not mere intellectual curiosity that forced the question of poverty upon me. I was (and still am) an emotionally sensitive person. I hurt easily. I am easily distressed by the sight of pain and suffering in others, leave alone personal pain and suffering. A great deal of needless pain and suffering is rooted in poverty. Naturally, one turns to books for answers. And then it occurred to me that perhaps I should take time off and explore India for a bit with new eyes. I sold my house, quit my job, and became a vagabond.

There is a reason for the autobiographical interlude here. It may look like I am rambling but trust me that there is a point.

I spent some years doing nothing in particular. I would wander around India, then wander around Europe, and wander a bit more in the US. In the US, thanks to the absolutely amazing public libraries, I got myself a continuing education. I highly recommend aim-less wandering as a systematic way of learning about the world. Those were the days of living the Zen life: eat when you are hungry, and sleep when you are tired. Those were also the days that I seriously started learning about Buddhism.

I had given myself five years to figure out what I would do next in my life. In my not so random reading, I found that there were some books that captured my attention and sparked my curiosity more than others. It turned out that these were written by economists. It began to dawn on me that this was so because the question that I was struggling with was informed by economics more than by any other discipline. And what I did not know about economics could easily fill a library. My education so far had been in engineering and computer sciences. It was not easy but I did get UC Berkeley to admit me to a doctoral program in development economics.

If you are looking for an easy program of study, forget economics. Though hard, studying economics is great fun. For my money, combinatorics and discrete math don’t hold a candle to game theory. Here’s a bit of gratuitous advice: learn game theory.

A Cab Ride

OK, I will spare you any more autobiography for now. But let me tell you what happened the other day on my way to Mumbai from Pune. Sometimes, when the mood strikes me, I take a cab instead of a bus or a train. You can hire a cab outside the Pune railway station. It costs around Rs 1,200 (approximately, US$30) for the 150 km distance, including tolls (about Rs 150). The easy part of the journey is on the highway, 90 km in an hour; the hard part is within the cities—two and a half hour for 60 km.

At the place where you get the cab, you are accosted by dozens of guys wanting to arrange your ride. Competition is fierce. These guys are not the cab drivers themselves. They are the middlemen. Haggling is the norm and it takes a bit of time and effort to finally settle the deal. After that, it is all very civilized. I generally ask the driver his name, where he is from, and other matters of interest as we drive along.

I asked how much he has to pay to the middlemen. I was fairly surprised when he said that he gets only Rs 800. I was taken aback that just for a few minutes of herding the customer, the middleman gets a third of the fare paid. Which means, that after paying toll, the driver makes around Rs 550 (or around US$16.) Out of that, diesel fuel for the journey costs around Rs 350. Subtract a minimum of Rs 200 for operating wear and tear, and the guy is left with the magnificent sum of Rs 150 (or around US$4.) That means, his average hourly wage for driving the car is Rs 40 (US$1.)

Makes you wonder why he puts up with getting ripped off of Rs 400 right off the top. I expressed my outrage. The driver took it in his stride. “Sir,” he explained, “the middleman really makes only Rs 50 or so. The rest he has to pay the cops.” That’s what they call the “hafta” or weekly payment. And does the cop on the beat get to keep it all? Not a chance. He has to pay his bosses up the line.

It is a tangled web of corruption that hurts most the ones that are hardworking. The implications are wide-ranging. Let me get to that the next time.

  • http://occamsrazr.com Ike

    Thanks Atanu –

    Too many times, the detractors of free markets point to examples such as this as “proof” that capitalism is a recipe for corruption, failure, and social injustice.

    It takes three big cultural milestones for a community or nation to prosper: the right to property, the right to freely trade said property or labor, and the rule of law to enforce agreements and contracts.

    It seems to have worked everywhere it has been tried.

  • http://acorn.nationalinterest.in Nitin

    Here’s a bit of gratuitous advice: learn game theory.

    Let me add on to that: read Games of Strategy, by Dixit and Skeath. It’s easier to read that Schelling (who you must read anyway if you are interested in nuclear deterrence, bringing up children and suchlike)

  • http://sudiptachatterjee.blogspot.com Sudipta Chatterjee

    Atanu, economics is fascinating for sure… any good place to start for a similar person with an undergrad degree in CS from India?

  • Krishnan

    When we have a Prime minister and politicians who threaten, blackmail and try extortion with leading businesses, is it suprising that cops do the same with taxi drivers ? Cops in this country are basically extortionists and the entire police system is one big extortion racket.

    On the road near my home, I see cops stopping practically every truck for hafta. The country is paying a heavy price in time and money by indulging these goons. Maybe, the electoral system needs to be modified with a “We vote for nobody” option and if “We vote for nobody” wins the election, there is no MP/MLA for that region. A few less goons in the system.

  • http://oltsm.blogspot.com Abhijit

    Hi Atanu,

    I remember talking this with you while you were in pune. You said that “You started thinking about why India is poor?”. However I couldn’t think of it then, so writing it now, since the opportunity is there. “We are poor because of the people and there is no other reason”. This is somewhat related to type -1 problems I have mentioned. When one spends his time boasting about the “५००० साल पुरानी संस्कृती” and not worry about the conditions in which he/she lives in, the problem lies there and it has to be addressed at that level (if at all people themselves want it to be addressed!)

    Regarding the Cab incident – “It is really unfortunate” is what I’d say. But thinking more about it.. here’s my reasoning for this.. A person makes more money for the “indispensibility”. In the example above, the driver and the middleman is not “indispensible”, the question to ask is how does one make the driver indispensible and the cop redundant..

    Corruption is just a symptom of inherently inefficient systems, and the systems themselves will never be efficient, unless people observe, evaluate and do something about the systems themselves. This again comes back to the original “type -1″ problems.

  • Apun Ka Desh

    Atanu,

    thanks for sharing a little autobiographical info. about yourself.

    Completely agree with you on what you generally say as to why we are Poor. But, this is the question i always ask –
    ‘How can we change this?’
    ‘Who can change this?’
    ‘Can i alone change this?’

    The answers to these questions seem to completely elude us.

  • Michael

    On game theory side,

    Raghunathan (of IIM, Ahmedabad) has a book on it called “Games Indians Play – Why We Are The Way We Are?”. He explains, with game theory and behavioral economics, why we behave so. A nice read.

    -Mike

  • Pingback: The Tangled Web of Corruption « YAB

  • bluefox

    Atanu – you talked about eco books that sparked your imagination – can you post their titles?

  • Vishal

    Atanu, a really good insight on why a taxi driver is poor. But I would advice, also to know why ploiceman in India is poor. A general policeman in a city like Pune gets somewhere between 5-6K which is obviously not sufficient, I am not saying that what they are doing is right though. What I want to say is that there is a need for reform in Police also!

  • DODO

    Atanu,

    Inspiring read.

    I was an engineer who changed to economics for similar reasons. But unlike you, now I got entangled again and joined corporate, but am trying hard to leave ( there are too many responsibilities, but will take the risk again).

    The thing you mentioned about Public Library system in USA is just great. We sorely miss decent libraries. I grew up in a town in WB where the library only contained translations of some russian fictions and the staff did not let anyone to get in and surf the library. Everyday staffs displayed some few books and we had to choose among those. The only decent library I came across was in my PG days and I spent almost 50% of my two years there.

    Sudipta,

    If you want to shift to economics in India, then I will urge you to look at ISI, DSE and IGIDR in this order.

  • Guru Gulab Khatri

    DODO, I too remember my days reading russian translation of children books in Bhilai steel plant Library and magazine likes “soviet bhumi” and titles like “ganga se volga tak”.