Public Policy : Samaaj Sarkara and Bazaar framework

May 28, 2024

My dear readers, I have a confession to make. This is that it has taken me long time to realise that the pursuit and understanding of economics is not a boring dry subject of numbers but a way of life and economic lens applied to everyday life can lead to far reaching positive outcomes in both material and spiritual well being. Having taken this off my chest I must also state that I am only beginning to take my first few baby steps in this field. So what do I write especially about a subject of which I am largely ignorant.

My interest in this has always been there, however at most times there was the doctor in me who was fed the simplistic theories of just doing one's job of caring and treating patients based on my training. Most of my communication with patients in my view has been spot on and despite average skills I have tasted moderate success in practice. My interest in politics and policies started after listening to Nani Palkhivala in 1977 at Shanmukhananda Hall about the Janata Government budget. This was perhaps my first exposure to economics and as an impressionable 16 year old I could not understand a lot of what was spoken, but Mr Palkhiwalla made things simple and his humour and satire made a dry subject come alive.

As the years rolled by I started understanding more and started reading more, yet till this day I am not clear about what is the right way of economic thinking. The Nehruvian years of state control, welfare state and public sector with 5 year plans with an intent to create a modern state was contrasted with Gandhi's Economy of Permanence a policy of decentralized local village self sufficiency based on a simple life. Book by E. F. Schumacher "Small is Beautiful" influenced my thinking.

Besides this I have seen but never understood the workings of the stock market and even as it seemed that the net worth of a stock or company is based on fundamentals of the performance of the company, the frenzy of the bonus shares declared by Dhirubhai Ambani was beyond my comprehension. People became wealthy by merely believing in the man and his vision. His wealth came from an ability to use his sharp business acumen and his ability to manipulate the system by using fair or foul methods. Reams were written about his battles with the Wadia's and how government policy changed rules for him to succeed. Today too the Adani Ambani duo has tentacles in the government and can amass wealth.

1991 and reforms with a technocrat Finance Minister in a government headed by one of the smartest and most non-charismatic Prime Minister changed the game and suddenly unleashed the true potential of Indian entrepreneurship and since then on a personal level I have started to understand public policy and reform.

The problem of governing a vast country like India and it's diversity make framing public policy a very difficult task and therefore there a huge gap between intent, governance and implementation of policy. The incentives of politicians is to win power and therefore they find it difficult to make bold reforms which even though unpopular in the short run have great long term benefits. The centralized form of Government means the state imposes rules from above and many of them lead to unintended negative consequences. The example of Prohibition, high income tax rates, bank nationalization, restrictions on foreign trade and capital investment, licence permit raj and demonetisation are all examples of policies which did more harm than good.

So it is now my endeavour to get into the framework of Samaaj, Sarkaar and Bazar with a citizen first approach is needed for us to meaningfully engage with the state. Very often we have talked about healthcare and a demand for higher public sector spending, universal healthcare and major concessions on infrastructure spends. How if we as citizens make theses demands without a deeper understanding of this nuanced economic thinking then we are not doing our duty. I do not think that we can master all this quickly but try we must.

A simple living concept of Gandhi is encapsulated in J C Kumarappa book Economy of Permanence. It talks of primacy of Samaaj, an economical model based local production, seasonal use, interdependence of neighbors and expand the circle to neighbouring villages and reduction of needs and aspirations. While much as I admire Gandhi this seems too simplistic for this complex world. Yet the other extreme of free market capitalist society creates inequalities on a scale where 1% of the top rich own 20% of world wealth. Why can the rich not plough back wealth into Samaaj voluntarily, why state cannot create a framework for the same without coercing the individual and taxing him over 30% of his earnings. Should Bazaar not exploit labour and pay him well so that there is enough wealth for individuals to spend and save and reinvest. So it is evident that this framework is the way to think and I am going to educate myself with these three books I recommend to my readers. I think that this thinking is practical yet spiritual and in line with the gospel of Jnana Yoga, Karmayoga and Bhaki yoga too.