My apologies for not keeping in touch. I am afraid that this dry spell on my blog is going to continue for a couple of weeks more. I am on a road trip and the whole of the coming week I will be on the road to Yellowstone National Park. So I thought I would reply to a few recent comments on this blog.

In a comment to the post “Why Socialism Fails“, Rohit asks,

“Isn’t China Socialist? How is it working for them then?”

A few months ago I met an author who is writing a book on China. He was being shown around by a Chinese guide during a visit to China for research. They were checking out a gated residential area where the houses cost millions of dollars. The author asked his guide how it was possible to have such expensive housing in a country committed to communism. The guide said, “In China, we do what we have to do. If it works, we call it communism and get on with doing what needs done.”

That’s good old fashioned Confucian pragmatism. Deng Xiaoping was led by that spirit when he said, “No matter if it is a white cat or a black cat; as long as it can catch mice, it is a good cat.”

China is working because its leaders like Deng Xiaoping have brains, guts, spine, and vision — four things that are missing in India’s leaders in general but are particularly absent in Congress leaders. The lack of brains, guts, spine and vision is epitomized in the person of Dr Manmohan Singh.

See Prof Pranab Bardhan’s quote from Authoritarianism and Democracy:

India’s experience suggests that democracy can also hinder development in a number of ways. Competitive populism– short-run pandering and handouts to win elections– may hurt long-run investment, particularly in physical infrastructure, which is the key bottleneck for Indian development. Such political arrangements make it difficult, for example, to charge user fees for roads, electricity, and irrigation, discouraging investment in these areas, unlike in China where infrastructure companies charge full commercial rates. Competitive populism also makes it difficult to carry out policy experimentation of the kind the Chinese excelled in: for example, it is harder to cut losses and retreat from a failed project in India, which, with its inevitable job losses and bail-out pressures, has electoral consequences that discourage leaders from carrying out policy experimentation in the first place. Finally, democracy’s slow decision-making processes can be costly in a world of fast-changing markets and technology.

Bardhan is a keen observer of India and China. In 2003, I had posted excerpts from an essay of his titled, “Crouching Tiger, Lumbering Elephant.” Worth re-reading.

I recommend another article by Bardhan. In the Jan/Feb 2008 issue of Boston Review, he wrote, “What Makes a Miracle: Some myths about the rise of China and India“:

When I grew up in India, I used to hear leftists say that the Chinese were better socialists than us. Now I am used to hearing that the Chinese are better capitalists than us. I tell people, only half-flippantly, that the Chinese are better capitalists now because they were better socialists then!

Moving on, back to the comments. DK wrote:

It rewards a lack of merit. And since the majority would like to get something for nothing, they prefer Socialism. Of course you know this, but this point should have been brought out in your post.

This is also the reason why India remains, at its heart, a socialist nation. It is very difficult to convince someone with minimal knowledge of economics (which even our most “educated” people have) that competition and choice is good. We are hardwired to believe that there is always one single pie and more competition means that one’s own share of the pie will be reduced.

And the only way, we can challenge this is by making people (and I mean the ones who vote) very clearly understand that Govt. handouts and doles are simply a way of making them progressively and increasingly dependent on these. Again, the typical Indian would rather look at short term benefits rather than long term ones.

Thanks, DK.

Rex’s tongue-in-cheek comment was

“Socialism? But Chacha Nehru recommended socialism for India, therefore it must be good!”

No, can’t argue with that, can you? Chacha Nehru’s shit didn’t stink, if you were to go by what the followers of the Congress party say. India’s misfortune is that his followers continue to rule the land. It’s all karma, neh?

Thanks to Ketan for referring to Ayn Rand’s Atlas Shrugged. Agree totally.

Dinesh Darme started off his comment with

Incentives are ok. But upto a certain point. Just ask what compelled mathematicians, physicist, writers, etc to work much harder, to burn the midnight oil. It wasn’t fame/material riches/facilities. They did so because of their love for specific fields. They were in pursuit of knowlegde.

I think there is a simple misunderstanding here. The words “incentives” and “motivations” are not synonyms. We all are motivated by incentives. That is tautologically true. If the incentives are missing, we are not motivated to get things done.

Motivations can be internal or external. For a person to burn the midnight oil, regardless of the kind of work, the person has to be motivated. For some, the work is its own reward because they are internally motivated. Einstein wanted to know how the bits that make up the universe work. He was not really “working”; he was playing.

Most of us, especially in poor countries such as India (thanks to retarded leaders like our beloved Chacha Nehru), don’t have the luxury of doing things that are merely internally motivated. Most of us have to work, not play. But I do think that in the not too distant future, more people would have the opportunity to play. See my article, “The End of Work: An Essay on the Dawning of the Post-work World”, for a wild-eyed speculation of that future.

What sort of incentives work depends on what you need to get done. For motivating people to blow themselves up and kill infidels in the bargain, brainwash them with visions of virgins and rivers of wine. This will not work for anyone who is not brought up to believe in fantastically stupid ideologies.

For someone who has a few billion dollars of wealth, the incentive to make another million will not work. But an entrepreneur will work ceaselessly to make her first couple of million bucks.

Love, fame, money, affection: all these are powerful motivators but what works for one may leave the other cold. Still, like all living beings, we are motivated by “rewards” whether internal or external. Remove the reward, and you can be sure that the action will not take place.

Any system which neglects to take into account this fundamental truth falters and fails. The carcass of communism is proof that disregarding the fact that incentives matter is fatal.

Finally, Kaffir asks

Atanu, and what are your incentives (in the sense you used the word in your post) that keep you writing this blog?

Good question. I have mentioned this before but I am too lazy to dig up the references. So here it is in a nutshell.

I am a student of economics because I want to understand why India is poor. It bothers me that India is poor because I find the sight of poverty truly distressing. I feel sick to my stomach. Why? Because I empathize with the poor and I vicariously feel the pain. Why? Because I love comfort, I like good food and drinks, I love music and reading and visiting places — all of which I would not have had had I been poor.

I am primarily motivated by internal motivations. I strongly identify with Bertrand Russell’s motivation:

Three passions, simple but overwhelmingly strong, have governed my life: the longing for love, the search for knowledge, and unbearable pity for the suffering of mankind.

[See this.]

Money does matter to me but not too much. I don’t have too much of it, and neither do I have too little. I have just the right amount. I have no personal ambitions.

I write this blog because it is play, not work.

Be well, do good work, and keep in touch.