Why this deficit of economic liberties in India?

It seems pretty evident that linear macroeconomic reforms (privatisation, reducing arbitrary powers and the size of the bloated government) broadly do not take place in India (borne out by the experience of the last 12 years). In fact, economic reforms happen only by stealth, as for the most part they aren’t welcomed by the public. Why should this be so?

At the root of every real reform is the philosophy of liberty as opposed to the current stranglehold by the state, viz., control. As David Boaz of Cato Institute (a libertarian think tank) put it, there are only two political philosophies, liberty and power, and these are opposed to each other. According to the Heritage foundation, India is mostly un-free, ranked at 143, inclined towards economic control and power as opposed to economic liberty and freedom.

Why is India un-free?

William Hazlitt once said, “The love of liberty is the love of others; the love of power is the love of ourselves.” The lack of economic liberty in India is partly to do with cultural and psychological reasons for wanting control and power. This is borne out by the following related facets.

Understanding wealth creation

First, appreciation of wealth creation which can be optimally achieved with centre-right economics (limited government) eludes most of the political class and people.

A former minister once said he benefited from an observation made by former prime minister of Singapore Goh Chok Tong, as he realised it was his card to get re-elected. Goh told him it did not matter whether more Singaporean or foreign airlines landed at Singapore’s airport; all that mattered was the jobs they created. He then realised that it wasn’t slots for Indian-owned airlines that mattered, but the jobs generated that counted, regardless of ownership. He had understood that Indians wanted jobs but he didn’t really grasp what was needed to do to create them.

As for the people’s attitudes, the Indian academic system is mainly geared towards literacy and numeracy rather than critical thought or reasoning skills. Rather, it emphasises rote learning, and with almost zero emphasis on economic liberty. Columnist Mihir Sharma has observed that in Hindi films (a barometer to gauge public perceptions), either one marries into wealth or is born into wealth — the idea of wealth creation does not exist. Hence, politicians are under no pressure to push for economic liberty. There is hardly any understanding of how nations or people get prosperous.

The second factor, government patronage, complements this lack of appreciation of wealth creation. A big government creates possibilities for the establishment to dole out patronage and act as benefactors. In the absence of a milieu that encourages wealth creation, the acme of one’s aspiration is a sarkari naukri or government job — a secure job for life, pension, power, and no performance anxiety. Indeed, in Uttar Pradesh, a man’s dowry increases on giving the administrative services exam.

The third factor is ‘power distance’ (in a psychological rather than physical sense) and its effects on governance. Higher power distance generally correlates to higher deference, and thus lesser questioning, accountability and freedoms.

India is at a high 77, while Germany is at a lower 35 in this respect. This contributes to poor governance in the developing world.

Fourth, extreme deference itself is a consequence of lower confidence in oneself. Psychology expert Nathaniel Branden says low self-esteem inclines people towards power/control.

Fifth, low self-esteem constrains one’s ability to cope with the world, or a state of haplessness. For the very poor, this haplessness leads to the mai-baap sarkar . For the middle classes a big government is erroneously and myopically equated with a strong state which makes them feel powerful. This constitutes pride for many, not necessarily a high GDP/capita.

Culture and mindset

In India, this stranglehold has ensured that the agenda of economic liberty has not really taken off. Noted philosopher, Francis Fukuyama believes India lacks ambition. A majority of Indians hold a Leftist view. They blame fate or karma as opposed to resourcefulness and responsibility for one’s own life/attitude/behaviour (conservative/centre-right).

Germany after reunification actually closed government departments/companies, whilst in India this can hardly be imagined.

Culture and mindset need to be taken into account while analysing events and phenomena.

The writer is interested in how social and religious ethos influences society and governance.