November 27, 2007

Politics of Envy

Link via an excellent post in Acorn on the origins of the tribal protest this weekend in Assam, India, and the shameful events that followed: The entitlement economy bites (Assam edition).

Entitlement politics is a cancer that is endemic to democracies. If unchecked, this cancer could rapidly spread through the social and economic fabric, and will ultimately destroy them. Liberal politicians everywhere are genetically predisposed to this cancer. In societies that are predominantly poor, the disease is almost always fatal. Acorn has correctly diagnosed that India is afflicted with this cancer. With 70% of its population mired in poverty, and ruled for decades by a bunch of die-hard socialists, the diagnosis does not come as a surprise.

Politics of envy is another name for this disease. With its unparalleled diversity, this billion strong nation can be sliced in countless ways — across caste, class, language, region, religion, and more. And, in every way it is sliced, one can come up with an overwhelming majority of have-nots, making it a politician's heaven. The egalitarian dreams of a socialist utopia etched into the Directive Principles of the Constitution of India, lends legitimacy to the politics of envy. Let the monkeys happily play their game of divvying up the spoils equitably between the cats, the country can go to hell!

A section of the Indian youth and middle aged populace has undoubtedly gained much from the post-91 reforms, but not at the expense of the poor. It is easy to ignore that they have paid for these gains with their blood, sweat, and sleepless nights in the call centers and data centers around the world. The politicians love to label these yuppies, not as hard working Indians, but as Hindus, Brahmins, Coolies of the Empire, Aryans, and what not. Anyone with a bullhorn and a placard that proclaims "Jobs for the Dalits", "Death to the Blasphemers", "Imperialists, Go Home" can instantly gather a crowd, and incite them into burning effigies of Ram, Bush, or even Greg Chappell! The message is that the gains are either by the virtue of their birth or the vice of their being accomplice to exploitation.

Spouting slogans like garibi hatao [vanquish poverty], growth with social justice, right to work, etc., will undoubtedly please those who are desperate without educational and job opportunities. They are designed to provoke the have-nots into burning buses, effigies, and worse, but offer little or no incentive to the investors. Jobs are created by investment. Investors require a competitive rate of return, before they'll part with their capital, and capital is foot-loose these days. If the investors expected labor to be unproductive, and worse, counter-productive, there are hundreds of hungry economies around the world to welcome their capital.

Economics of incentives and politics of envy are two faces of the same coin. If you placed the coin on a table with only the envy showing, incentives will disappear. Heck, what am I doing, lecturing a doctorate in economics on incentives?

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