"The thing that
differentiates man from animals is money."
—Gertrude Stein (American,
1874-1946)
Word for the day
Atemporal (adj)
Free from limitations of
time
Malice towards none
Is one of the finest Indian
actors of current times, Nawazuddin Siddiqui, following the path taken by the
likes of Om Puri, Raghuvir Yadav, and more recently by Kapil Sharma.
First random thought this morning
There are many Indian youth in their 20s and early 30s actively
participating in financial markets in various capacities, e.g., analyst,
advisor, investor, trader and even money manager.
Most of these youth may not have real life experience of rising
inflation and rates, a bear market in equities and bonds, financial crisis of
global scale, high volatility, etc.
It may be appropriate time for them to take a break and study the
past carefully and skill themselves in strategies for a market that may not be
too benevolent.
In pursuit of appropriate policies
I have cited this example, in one of my earlier posts. I would
like to reiterate it before I offer my views on the reforms in Institutions of
Economic Governance, that has been identified as one key area by PMEAC for
fostering economic growth.
Most of us would have encountered traffic cops hiding behind
trees, electric poles, etc., waiting for someone to commit a traffic crime like
jumping a signal or violating the prescribed speed limit.
It is usually annoying on an isolated road with scant traffic.
Some of us would have little motivation to obey traffic rules under such
circumstances. Many a times we even would not notice the traffic signal as
there is no traffic on either side of the signal. You leisurely cross the
signal and suddenly two cops spring up from nowhere waiving at you to pull
over. Thereafter usually some negotiations are pursued and a suitable deal is
arrived at.
But have you noticed that these traffic cops are usually not seen
where serious traffic jams take place every day morning and evening. Have you
ever seen a traffic cop filling a small two feet wide pit in the middle of the
road, that is causing traffic jam of several kilometers. At least I have not.
So where is the disconnect?
In my view, the disconnect lies in the orientation of the
personnel assigned the duty to manage the traffic on roads.
I did speak to some of them, asking "what is your primary
duty?" A majority of them said "to enforce traffic rules". No
one said "to ensure safety & security of people using the roads;
maintain smooth flow of traffic; and/or properly guide the road users".
None of them was aware of the bird named "right of way" on the road.
Prevention does not appear high in our priority of things.
Punishment is what we pursue vigorously.
This perhaps applies to the whole spectrum of the public
compliance management system - be it police, taxation, civic administration or
anything else.
One may argue that it's not only the public compliance system, but
the personal management also; as reflected in disease management at household
level (including overwhelming use of self medication).
Our schools teachers are also mostly focused on the "marks
obtained" by the students rather than focusing on the overall learnings
and personality development of the students, including inculcation of traits
like patriotism, nationalism and compliance.
Consequence is that we are popularly regarded as a society which
is cynical; argumentative; performs only when whipped; complies only for the
fear of punishment; and usually puts personal interest before the common
interest. The trust abyss between police/security forces and citizens is also a
consequence of this orientation.
Now coming to our main topic, it is pertinent to note what Joachim
Ahrens highlighted in his 2002 book titled "Governance and Economic
Development".
As per Ahrens, in the decades of 1980s and 1990s, the developing
world has experienced two events of lasting significance.
First, external shocks, particularly the debt crisis at the
beginning of the 1980s, hit the less developed countries (LDCs) and contributed
(along with underlying policy weaknesses) to economic stagnation, a decline in
real per capita income, and macroeconomic instabilities.
Secondly, a number of countries moved away from authoritarian rule
towards democratization.
Numerous countries in Latin America, Asia and Africa responded to
these shocks by abandoning their state-led development strategies mainly based
on import-substitution policies and embarking on market-oriented economic
policies emphasizing privatization and external liberalization, as the
challenge of economic policy reform became more complicated.
The coincidence of these historical processes raised the question
about the interaction between political and economic changes and the political
economy of policy reforms.
Since, the political, social and economic changes are obviously
strongly correlated, it is important to understand what kind of political
institutions are conducive to formulating, implementing and enforcing
appropriate economic reforms.
Moreover, since economists have usually treated politics and
institutions as exogenous, they have been observing the effects of policies on
economic development, but have generally no analyzed the determinants of policy
choices.
Meier (1995) identified a low level of savings, a foreign exchange
constraint, the lack of human resource development, and neglecting the
agriculture sector as significant constraints that limit the achievable rate of
economic development. Meier argued that an economy's ultimate success in
narrowing the gap between its actual and potential rate of development
critically depends on the political leadership's commitment and ability to
implement and enforce appropriate policies.
As Ahrens highlighted, these days it is widely accepted that the
stability of a government, the pursuit of appropriate policies and capacity for
sound public management are at the core of sustained development.
...to continue tomorrow
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