In this episode, Shruti speaks with Nitin Pai about storytelling through the lens of his book, “The Nitopadesha.” They discuss the lessons of Indian folktales for citizens and bureaucrats, the importance of civic education, when democracy does and doesn’t work, the effects of economic growth on individual prosperity and much more. Pai is the co-founder and director of the Takshashila Institution, an independent think tank and school of public policy based in Bangalore, whose goal is to champion India’s national interest and constitutional values. Pai previously worked in technology policy for the government of Singapore and played a role in the deregulation of the telecommunications industry and deployment of broadband infrastructure.
SHRUTI RAJAGOPALAN: Welcome to Ideas of India, where we examine the academic ideas that can propel India forward. My name is Shruti Rajagopalan, and I am a senior research fellow at the Mercatus Center at George Mason University. Today my guest is Nitin Pai. He is the co-founder and director of the Takshashila Institution, an independent think tank and school of public policy based in Bangalore, and has recently published the book “Nitopadesha.”
We spoke about the role of the citizen, the importance of rhetoric, India’s oral tradition, decentralized governance, public policy education and much more.
For a full transcript of this conversation, including helpful links of all the references mentioned, click the link in the show notes or visit mercatus.org/podcasts.
Hi, Nitin, welcome to the show. Thanks so much for being here. It’s such a pleasure to talk with you. We’ve had lots of conversations, but this is the first one on record. I’m thrilled that you’re here.
NITIN PAI: Shruti, I’m happy to be on your show where you’re giving people ideas about India.
RAJAGOPALAN: Lovely. You are transmitting those ideas, which we will get to in a minute. I want to start with your most recent book that you’ve published. This is called “Nitopadesha.” It’s hard to describe this book, but it’s very easy to read.
The way I have described the book is if Adam Smith and Elinor Ostrom and George Orwell and Martin Luther King and James Madison and so on were to write Panchatantra and Jataka tales, or the Aesop’s Fables, what you would get is “Nitopadesha.” Do you think that’s a fair description of the book?
PAI: Yes, because one meaning of the word “nitopadesha” is “lectures” or “teachings of policy.” To the extent that the luminaries that you mention somehow make it to the book and their ideas and their values make it to the book, yes: No nitopadesha would be complete without those people—the most important people we can think of, which have to go into a book about public policy.
RAJAGOPALAN: “Public policy” is a really loaded term in the sense that it means something very specific, typically, within the idea of a given state or nationhood and a particular kind of government and so on. I feel like the book goes a little bit beyond that in the sense that it might be helpful in teaching public policy or transmitting those ideas.
But the book is really about social cooperation. How can people live together in a society and achieve a certain level of well-being and happiness and social cooperation? Social cooperation is critical to that well-being and happiness. That has three dimensions: It has the dimension of an individual, it has the dimension of a citizen and it has the dimension of a market participant.
There are all these three dimensions, and really what the book or the stories in the book are about, or what they’re elucidating, is how individuals, or in the case of the book different species (like monkeys and boars and foxes and fish), take on these different roles as these different participants and what they learn from that experience.
Is that a good way to think about the book? Was that the effort?
PAI: That’s right. I think you’ve unpacked the contents really well. I like to look at it primarily as a book of citizen-craft. The word itself is unusual, because we have a lot of books of statecraft, right?
PAI: If you look at Indian philosophy, the colossus is the Artha-shastra by Kautilya, who predated Machiavelli by about 2,000 years, probably over 1,500 years, and was more Machiavelli than Machiavelli. Machiavelli is a kid with a lollipop in front of Kautilya.
PAI: A lot of books on political philosophy and statecraft since then have always been about instructing kings and princes. We have the Panchatantra (which you mentioned), another beautiful classic from Indian history and philosophy. All of us read Panchatantra stories when we were kids.
Panchatantra stories, for those who are unfamiliar with it, are like Aesop’s Fables. They’re about animals and human beings who live together, and then at the end of the day there is a “The moral of the story is . . .” We use these stories for moral education.
Only when I was 42 years of age—42 is a good year to get answers—
RAJAGOPALAN: For many reasons.
Dharma and Social Duty
PAI: For many reasons. At 42 years of age, I realized that the Panchatantra is also a book about statecraft. It was written for the education of princes. It was not for the education of individuals and citizens. Then there’s Hitopadesha, which is a version of the Panchatantra, which is also a book for the education of princes.
It’s quite startling that we don’t really have a book on citizen-craft. We have the dharmas of being an individual, of a householder, of a king, of a merchant and all of that, but not what it means to be a citizen. This book addresses that big gap. It fills that gap and says that “look, not only is there something called citizen-craft, there is something called the dharma of citizenship, which is the duties of a citizen.”
I think the word “dharma” is very hard to translate into English because what it really means is “to hold together.” It’s to hold together a relationship. When you talk about the dharma of citizenship, it’s about holding together the state, where there is the citizen (and a bunch of citizens, the citizens of the state) and the state machinery, which governs the citizens. Both these parties have a certain set of duties and the proper actions that [they] need to undertake in order to keep the state together.
I think the idea of citizen-craft is very important in these times because a lot of us have forgotten what liberal democracy is, because we’ve taken it for granted. It’s patrimony, it’s matrimony or whatever—it comes to us from our parents. We don’t really have to water these plants. We don’t have to take care of this garden. We believe that this garden will bear fruit and have nice flowers every year.
That’s not true. The garden needs tending. Liberal democracy is a lot of hard work—and the right kind of hard work is what this is about. Because you don’t want to do the wrong kind of hard work also. Because very often—I think we’ve seen this in India more than other places—is that institutions and individuals do the work which is assigned to the others. You’ll find the judiciary doing the legislature’s work, the legislature doing the executive’s work, the executive doing everyone else’s work and the citizens believing that “let’s take the shortest path to a solution.”
What I’m saying is, ultimately the citizen looks at this and says, “Let me take the shortest path to the solution. If the judiciary is going to give me the answer—so I’ll just go to court. Or if pleading with my local municipal councilor is going to give me the solution, I’ll plead.” Even citizens are unaware, and at some level don’t really care, what’s the right way to get what you want.
What happens is, when lots of people don’t take the right way to get what they want, you end up with a very broken system which stops working for most people, ends up becoming dysfunctional and—da da da da, as we see. The rest, as we know, is not history but current affairs.
RAJAGOPALAN: I think that’s a lovely way of putting it. But I feel like you are underselling the theme in the book a little bit, and I’ll tell you how I mean that. Everything you said I completely agree with—but the way we think about the role of the citizen in India is in a legalistic sense. There are these rules, and then the citizen must follow the rules. And in a very Gandhian and Ambedkarite sense, when the rules are unjust or they are bad, we must use the system to reform these rules, and we must be enlightened and we must agitate and so on and so forth.
The dimension actually I loved about your book is that this has nothing to do with duties in the legal sense. It has duties, not even—“morality” is also a loaded word, which is why I prefer “dharma,” but it’s about duties in the sense of just, we live in this world and we live with other people. So there’s a social duty. If I were to use an Enlightenment term, it is “moral sentiments,” as Adam Smith describes it.
He has, of course, the rules of justice, beneficence and prudence that he describes about how an individual should think about their role in society and markets and live the good life. Yours is more on that dimension. Somehow I feel like that’s a lesson that I don’t know if it was ever taught in India, but that is the part which has certainly been forgotten. Because everything we read on the role of the citizen, whether it’s in the form of duty or privilege, is always in a very legal sense or a legal dimension.
PAI: You’re right. Because I think with dharma, we always get lost in translation, right? Whether—“dharma” can translate into “duty,” “dharma” can translate into “morality,” into “ethics.” It can also translate into—
PAI: —“responsibility” or “religion” or a sect of religion, and so on.
The Structure of ‘The Nitopadesha’
PAI: What I think this book is doing is, you’re right: It’s trying to give you four dimensions of what it means to be a citizen. It’s divided into four books, the book one to book four—which Bibek Debroy feels is unusual because most of these classics have five books. He believes that there’s a hidden fifth book, which is to do with kama and love and sex, and I’ve been too prudish to include it. Well, it’s not true. There are four Vedas, right? So it’s not necessary that a text should have five books. There are four Vedas—unless there’s a fifth Veda about which we don’t know!
But anyway, there are four books, and the first one is really about the relationship between the citizen and the state and the relationship among citizens. It’s not just between the rulers and the ruled but also among the citizenry. How do you live together as citizens?
As you pointed out, I think the idea of different animals really points out to diversity. Some animals fly, some animals crawl, some animals swim and so on. There is a lot of diversity. And it’s how do you live together in a diverse society? How does a diverse society govern itself where it respects pluralism and individual differences?
The second book is really a book about economic policy. It’s about, what are the kinds of economic ideas that are important for prosperity and well-being? I love this word, which is in Indian philosophy, called “yogakshema.” It translates—and our translation is “happiness, well-being and prosperity.”
RAJAGOPALAN: Yeah. But it’s more than that!
PAI: It’s more than that.
RAJAGOPALAN: That’s a very basic translation—yes.
PAI: That’s a basic—but I think it brings out things. You’re talking about happiness, well-being and prosperity. It’s about enjoying the fruits of your action, about having the ability to enjoy what you’ve earned, what you’ve worked for. That’s yogakshema.
The second book is really about achieving yogakshema as a society. In a way, there’s a lot of Adam Smith in it. There’s this unseen spirit which guides the actions of the community of participants in markets. There are things about prices and price caps and so on. Those of us who like market economics will really love the second book. There are wonderful—
RAJAGOPALAN: My favorite is Rajnidatta, who said, “It is as the wise say: Good conduct is the balance of swartha,” which is self-interest, “and parartha,” which is public interest. I think this might be in book one. This was the one thing that jumped out, and I was like, “Rajnidatta is the Adam Smith of our time.”
PAI: Rajnidatta and Chandramani are the two crows who are wooing each other. Actually, Rajnidatta is serenading Chandramani, and Chandramani demands that he come back with a jewel—and I won’t reveal the rest.
The second one is about economic policy, which I think all of us will love, because it’s about price caps, about setting the price right, and what happens when the price is too high and what happens when the price is too low, and what happens when there is interference in the market, and so on. I think it’s something which you can use to teach economics in one lesson without actually using the word “economics” anywhere.
The third book is about ethical dilemmas. It’s about how as a citizen you are often confronted with two bad choices or two good choices, and you have to choose one of the two. Choosing the better of the two good choices or the less worse of the two worse choices is not easy. It requires practice, it requires application of mind and it requires you to have some kind of a moral compass. The third book talks about that.
And the fourth book is really about policy. It’s about how ideas translate into policies. It’s not about the government making policy; it’s about citizens looking at the options out there and saying, “What are the policies that should apply to us? What should we ask for?”
I always look at this as a typical old Indian story where there’s this person who prays to a certain god for 12 years standing on one leg and does a lot of penance and renunciation and so on. Then the god appears, the deity appears and says, “What do you want? I’ll give you a boon. What’s the boon that you want?” It’s very important to ask for the right boon!
RAJAGOPALAN: All of Hindu mythology, or all of those tales, are about how people asked for the wrong boon and gave themselves too much power, which eventually led to their downfall.
PAI: It’s there in Greek mythology as well—
PAI: —where you ask for the wrong thing, right? And then it comes back and bites you.
But I think, in a democracy, we are very often placed in situations where there are governments, there are public officials who want to do good, and then the citizens go and end up asking them the wrong things, right? In other words, the wrong kind of political pressure manifests itself in democracies, which then puts everything in the wrong footing.
So these are the four books. They’re written in the form of traditional Indian storytelling, which are labyrinths. There are stories within stories. It’s a little like the Arabian Nights. I suppose the Arabian Nights were also inspired by Indian storytelling.
PAI: There’s a labyrinth, and then you have to navigate it. But, unlike those very complex ones, I think the labyrinths here are fairly simple. You will find your way out of them. You won’t get lost.
RAJAGOPALAN: Each story is very short.
PAI: Each story—and it stands independently, so you don’t have to do everything at one sitting. But it helps if you do it at one sitting.
The other thing which is really interesting, which I like, is there’s a lot of mystery and there are a lot of riddles and puzzles. There are subtexts. It’s almost like reading the Asterix comic, sensing, “Hey, you know this name here? This name probably means something.” And there’s some mischief involved in the names of places and characters and so on. I think it gets interesting every time you read it. I like to look at it that way, that each time a reader reads this book, the reader finds something new, something curious, something puzzling, something which makes this person think a little more about what’s actually written there and why it was written.
Takeaways for Bureaucrats
The other aspect, which you haven’t touched on upon so far, is, of course, there’s the question about what must a citizen do or how must a citizen think about these questions. But it is also loaded with warnings and messages, subtext—and sometimes actual text—on how those who govern us must govern, right? What happens when bad diktats are issued by overzealous cranes, for instance, is an important lesson.
I feel like Vanaketu the mongoose sounds like Napoleon the pig from George Orwell, right? It’s at least the precursor to Napoleon the pig. So there are also very specific messages. The way it is written is to tell the citizens, “Hey, beware of these bad actors, or these people who assume too much power or too much authority, or who are hungering for a certain kind of power over other people.” It’s also a cautionary tale for those who govern us, that it won’t end well for them if they are in the world of issuing diktats.
What should people who work on policy, either those who are bureaucrats who are reading this book to themselves and their kids—I strongly recommend everyone reads this both to themselves and to their children, because I think they’ll see different dimensions. What should a bureaucrat take away from this? What should ministers or—you are in the state of Karnataka. If you know the chief minister or home minister of Karnataka happened to read the book, what should they take from this?
PAI: See, I think the first purpose of any book, right—any book, or a book of fables—is to serve as a mirror or a point or a trigger for reflection, right?
PAI: I think what happens is when people don’t read books, when people go about their lives just doing things, especially when you have—if you’re an ordinary citizen, like you and I, we have people who will disagree with us. If I were to say something, my wife, my kids, my colleagues will raise their hands and say, “This is a stupid idea. You shouldn’t be doing this.” Right?
What happens is, when you acquire some kind of political or social power, the number of people who can respond back to you and say that this is a stupid idea declines. Instead, you have the opposite. You have a lot of people who want to say, “Boss, you’re right. This is the best thing that’s happened.” Right? “You are such a genius. You are so smart. This is such a great idea.” Right? Because that is the way the system works. They want to puff you up because they have their own agenda. It also comes out in one of the stories in this book. How do you guard against this?
PAI: I think reading is one of the best ways to guard against this.
PAI: So the first thing, which anybody who reads this—it could be a person who’s the leader of a country or a legislator or a public official or just a person who is too full of himself or herself, right? “I’m an achiever. I’ve achieved so much. I’m the boss. I’ve got this prize. I’m really smart.” I think any one of us who feels like that at some point would do well to read something like this.
Because what it tells you is that “look, hey, look: pause, reflect, see what’s really happening here. Ask yourself the question that, Is this joke really about you? Is this story really about you? Where do you fit in? If you were in that same situation, how would you react?” I think that’s probably one of the best services any book can do to people in power, and especially a book like this, which is meant for people to reflect.
I think it’s meant for both sides, right? It’s meant for citizens, who must know what to ask and what to demand of people in power and how to behave with people in power, and also for those in power who need to know how to deal with citizens. The Vanaketu story, which you pointed out, it’s like Orwell, right? It looks like it’s out of “Animal Farm,” where one old, corrupt ruler is replaced by a very nice person. And power corrupts absolutely, and then in a matter of time the one very nice person becomes like the same old guy that he just had to replace, right?
In that story, it’s very clear that you have to hold the leaders’ feet to the fire. If you don’t criticize them, if you don’t give them negative feedback, then it’s going to go into their heads, and then they’re going to do the same old things which other rulers did.
There’s simple things like this: Hold the feet to the fire. Even if this leader is a leader whom you love, even if this person is someone whom you voted for, even if this person is someone whom you think is really the best answer we have, given the circumstances, you are still obliged to criticize that person. Because if you don’t criticize that person, you are not doing your duty—you’re not even serving the interests of your favorite leader, right? Giving them negative feedback is very important.
Things like this, I think they permeate the book. Sometimes they’re explicit, as you said, and sometimes they’re just between the lines.
RAJAGOPALAN: I have a broader question about these sorts of stories. When we are talking about Jataka tales, which comes from a Buddhist oral tradition; Aesop’s Fables, which is of course Aesop and in ancient Greece; Panchatantra—they’re all written thousands of years ago. In fact, it’s not even clear if they were ever written. At some point they became the written word, but largely these were stories that were transmitted from one generation to another through narrative, through the oral tradition. And I guess at some point someone decided to write them down, sort of like “Nitopadesha,” right?
It feels like this works very well for the Indian context, because, as a culture in South Asia, we are of the oral tradition, right? Until like a minute ago, almost, or maybe a few decades ago, most of the population was not lettered, and the main form of communication was really through the oral tradition. The oral tradition has a few advantages, which is, one does not have to be very well educated or well read to appreciate the broader points of the story.
But the disadvantage of the oral tradition is, they are only transmitted within small groups, right? India is already extremely endogenous, right? We are really a continent of lots and lots of small groups. That’s the way I would characterize South Asia. How do you think about “Nitopadesha” in that context? That it’s a wonderful extension of the oral tradition and the written word, and we can think about it as storytelling—but will this all get lost because we are a group of small groups?
PAI: No, I don’t think it’ll get lost. But you know, Shruti, since you’re on that topic, the Ramayana and the Mahabharata are the two big epics of India, which also were oral tradition until people began to write them down over a period of time. What you have now is like what in Southeast Asia we call a kueh lapis.
PAI: Which is like a layered cake, right?
PAI: There are layers of renderings on top of an old substrate, the old story. So the Ramayana and Mahabharata are the two big ones. But there’s a third one, OK? The interesting thing about the third one is that it’s substantially lost. It’s called the Brihatkatha. Right? It’s a great story. The Panchatantra is part of the Brihatkatha.
There is one extant translation of a version of the Brihatkatha, which was done in the 1890s. It’s on Archive.org and it runs into 80 or 90 volumes. This is like Tolkien and Harry Potter and Panchatantra and Aesop’s Fables and “Animal Farm” and everything thrown into it. It’s Brihatkatha, right? It’s the biggest of all stories.
PAI: Unlike the Ramayana and Mahabharata, it’s not spiritual or philosophical in that sense. It’s really about stories. It’s about fantasy. Some of them do have contexts where there are some moral of the story for kings and so on.
It’s believed that the Brihatkatha is lost. They have the Kathasaritsagara, which is a version of the Brihatkatha, which is there, which is available. Meena Arora Nayak brought out a translation, an abridged translation of it a few years ago, which is very interesting. I recommend everyone read them. It’s about fantasy. It’s about magicians and sorcerers and princes and flying vehicles and so on.
Now, on the issue of oral tradition and large numbers of communities, you’re absolutely right. The number of people who could read and write those things was small. But what really happened is that these oral texts or oral scriptures—it’s a contradiction in terms, right? “Oral scriptures”!
RAJAGOPALAN: Which may or may not have been textualized.
PAI: Yes! See, these oral things would diffuse across communities. You would have a version of that story in different communities. You would have a high version of the story which comes from a Sanskrit text, but you might have a popular version of the story which is in one of the local Prakrits and so on. It’s not that people didn’t know those stories, but people just enjoyed these stories and told these stories to each other in different forms.
It’s almost like open-source stuff. There is a GitHub version which is there, and then you can always download it, and you can make your own additions and subtractions and modifications and use it. There’s no restriction on using it in any way.
I really think that oral tradition has helped people insert a lot of contemporary modernity into those texts. Because, you see, unlike the Bible or the Quran, which is the word of God and it is immutable—and because it’s written, it is really immutable because there is a written version, which is the core version which you cannot change, right?
PAI: But if you have an oral tradition, you can always interpolate things. You can always put your masala inside, which is exactly what people have done, right? Even the Artha-shastra has masala, the Ramayana and Mahabharata have masala, the Brihatkatha has masala, “The Nitopadesha” has masala.
It allows people like me, and people like scholars at every period in history, to take what they think is important—in a contemporary sense is important—and insert it into the corpus of text that we have. And no one is the wiser, right?
PAI: Everybody believes that this is the Mahabharata which was written 2,000 years ago, but the latest parts of the Mahabharata probably are just 500 years ago.
Things happen—and I think that’s the advantage of an oral tradition: that you can interpolate. No one can come back to you—it’s like saying why there can’t be fundamentalism in Hindu philosophy. You can’t be fundamentalist because there are no fundamentals which are hard and fast.
RAJAGOPALAN: Yes. I would add one more thing, which is, unlike the written word—ancient text where the written word is the word—then it also gives a very large amount of power or authority to the interpreters of that word. Whereas what happens with the oral tradition is everyone is an interpreter, because everyone is both the listener and the narrator. The interpretation power diffuses, which is also an important subtext in public policy.
This will link to your day job, which is running the Takshashila Institution. But for too long a time, when it came to public policy, everything had gatekeepers and interpreters, and it was written in a particular technical speak and had to fit in the part of the central plan. The only people who could set up educational institutions were the government or specific minorities who had permission and so on. This, in some sense the oral tradition can also democratize, in that sense. Like, there is no gatekeeper and there is no interpreter, which, when it comes to moral tales, might be less relevant—or maybe equally relevant—but, when it comes to public policy, suddenly becomes extremely important.
PAI: Yes. In our case, it was the internet which was—the internet plus oral tradition which made it democratic.
PAI: I still remember when we were talking about Takshashila in 2009, and we said we want to create a public policy school and a think tank. People said, “So which government is going to support this?” We said, “Why do you want governments to support this?” They said, “Public policy outside government—who’s going to do this?”
Public policy was always seen as something which is administrative training for the people in the civil service or in the police and so on. You would do an entrance exam to get into the civil service, and then you’re in the civil service for life, and then you would be trained by people who are already in the civil service. It was always seen as a preserve of the government.
I think what we did with Takshashila—and I’m really happy that, after almost 12 to 15 years, it’s become a dream come true—that we’ve actually made it possible for ordinary people, professionals in various disciplines, people from all backgrounds to go and study public policy, to take an interest in it and study public policy, if not for anything but to be a good citizen.
That’s not all: once you study—when smart people study things, they do things with it, right?
PAI: We have alumni now who are in the media, who run nonprofit organizations, who are scholars and who are professors, academics of public policy and other places, who are in government, who have joined political life, who advise politicians. What I really like is this efflorescence of public policy knowledge within the Indian system, where it is no longer something which people in government do. It’s—you and I can do it; my kid can do it. And there are interesting things we can do after it.
I think that’s really nice. I don’t know whether it’s oral tradition or written tradition—but there is definitely a reading tradition, because in Takshashila you have to read.
PAI: In fact, I joke—I mean, maybe it’s not a joke; maybe it’s serious—that in many ways a Takshashila education is a scam, because what we really do is get people to read and learn by themselves. We just say that “hey guys, we are just around. We’re just telling you what to read and keeping tabs on what you do.” Really, the mileage really comes from reading. You read widely, you read different points of view, you read logic, you read reasoning—then you debate it out with your classmates and faculty. Then you arrive at some conclusions.
RAJAGOPALAN: Takshashila—I mean, first of all, I’m completely biased. I have served as faculty at different Takshashila courses, and they are some of my favorite people to lecture to because there’s this huge diversity. Unlike my time as a college professor, they weren’t forced to be in that class at 8:30 in the morning or something like that. These are typically evening classes. These are working professionals who are really excited to be there. They asked the best questions.
Takshashila has now managed to educate 10,000 students. Is that the—
PAI: Close to 10,000. Yes.
RAJAGOPALAN: Close to 10,000.
PAI: Depending on how I count it, it can be anywhere between 6,000 to 10,000.
RAJAGOPALAN: Let’s say 10.
The Takshashila Model
RAJAGOPALAN: What you’ve done, basically, is you run these lovely public policy certification programs, which can be done alongside a day job. These are all online, and you have a reading list, you have faculty, then you have guest speakers—the role I have served in the past. And you bring these students together. Each cohort forms its own community, and people stay in touch.
Then, out of each group, there are students there who are studying medicine. There are also people—I think my last group that I was a guest lecturer at, there were lots of people from the military. I’m not sure if there was a particular reason and that was the selection, but there were a lot of people from the military. They serve in the army, that’s their job. There are housewives. That’s what they say. They’re like, “Oh, I just want to learn more about the world. My kids are sleeping in the other room.” You have all these different people.
And then in every cohort, you will have someone like Pranay [Kotasthane]—Pranay is singular and unique and fantastic, but like him—where it sparks something in their mind, and they decide, “Oh, we really wish to do this as a career,” and then they go on to do this. There are a lot of students who’ve then gone on to—some of them have come to the United States. I’m in touch with them. They’ve gone to schools of public policy and so on.
You’ve obviously influenced a very large number of people in a very specific way and incubated them. When you started, was this the goal, and are you happy with how this has played out? Was this the way you wanted to conduct public policy education, and you figured out that this is the right model and this is the way to go, and you’re just going to keep doing this?
PAI: Yes. The model—from the beginning, the Takshashila model has been drawing inspiration from the old Takshashila, which is a cosmopolitan university town where it was an intersection of Hindu, Chinese, Persian, Bactrian, Central Asian cultures and sciences. It was really the Oxford or Harvard of that period. Our inspiration was, Can we do something like that for the 21st century? The model really is not so much to do the Washington or the Delhi, the Beltway system, where you’re trying to influence policy directly. Our model is to connect good people to good ideas to good networks.
You need good people who are smart, who are passionate, who have the right set of values, who have an open mind and who have the drive to go and change things. Equip them with the right set of knowledge and ideas such that—just teaching basic economics to a person has great, great externalities, because suddenly this person understands at a level how things work, and then you can help things change. Good people, good ideas, good networks and opportunities where they can make change.
Now, one of the early conversations I had with Pratap Bhanu Mehta was 2010, and we were talking about the Takshashila model and what I intended to do and how to run it. He said something which I still remember. He said, “You have to flood the system with good people.” Look at India. It’s 1.4 billion people. The union government alone is about 4.5, 5 million. If you exclude the railways, it’s probably 3 million people in the union government. Each state probably has about a million people in the civil service. Despite this, we are underserved.
We have the lowest amount of administrator-to-citizen ratio, the doctor-to-patient ratio or police-to-citizen ratio, fire-service-to-citizen ratio. Anything you look at, we are underserved. We are a huge country, and the number of people who are actually doing anything about public policy is small. If you were to produce 100 graduates every year, that’s not going to make a difference at all. We are producing about 1,000 graduates every year, and I still think that’s inadequate. But if you try and do 10,000 or 100,000 graduates, then, of course, you’re not going to be able to assure a certain level of quality.
For us, really, Takshashila wants and is doing what it’s doing, is creating thousands of people every year. But more importantly, I think we’ve inspired enough number of people to create public policy schools around the country, people who have deep pockets, people who are in the education space, people who think now that public policy is a career that will demand good people and money can be made out of it. There are commercial public policy schools which are charging decent amounts of money to teach people. I think that’s where the change is coming from.
We are really happy to share our secret sauce with anyone who wants to set up public policy schools, whether it’s in India or abroad. We are very happy to share this. We’ve done this largely with donor money, and I think we have an obligation to share that knowledge and the secret sauce with whoever wants to do a good job out of it. Ultimately, that’s how change happens. That you have people who are inspired, people who can go out and do interesting things, and you just need to set things on fire.
Takshashila’s Market Value
RAJAGOPALAN: There are two elements, I think. One of the elements that you haven’t mentioned and the other one you did. One is the bigger-picture question of what is our role in society, and what society needs and what we need in public policy and so on. You’re absolutely right, like Pratap. You need to flood the system. They need the primacy of ideas, which is incubated through individuals and networks and so on.
The second part of that is, at the end of the day, you are offering a certification program at a very basic level, and it has to give value to students. If it doesn’t give value, then they are not going to give you their time, let alone any basic amount of fees that you may charge for materials or something like that. I think what I have really appreciated about Takshashila is the value component of it. My own students who’ve done the GCPP [graduate certificate in public policy] course—one of my very close associates, Shreyas Narla, who works with us at the Mercatus Center and is a coauthor with me on multiple projects, is one of your alums.
I have heard in exceptional detail about how valuable each hour of the course is and how valuable those readings are. People go back to those readings all the time. I think oftentimes those of us who embark on very big-think projects and we try to change the world, we forget about the basic market value proposition. I think Takshashila has somehow managed to keep that at the center of all of it.
PAI: Yes. I think the—[chuckles]
When I said yes, I was happy to hear what you said.
Here’s the thing. It all starts with your objective. For us, Takshashila is anchored in India but global in outlook, in the sense that we are not looking at India as the end of the universe. India is a part of the world, and the world is part of the universe, and whatever we do should change the world and the universe as well. You need to start with that passion to say that “look, I can’t accept this state of affairs.”
India, at this stage of its growth and development, cannot afford to have lousy governance. We cannot have bad rules. We cannot have air pollution. We cannot have problems in our national security. These are suboptimal, and we should be able to solve them. I think the first value proposition we really represent is, people who are dissatisfied with the status quo come to Takshashila and find out two things: (a) that there are better ways of solving the problem, and (b) there are other people like you who are also interested in solving the problem.
These two things are the foundations of everything else, because you could say that “look, I’m not alone. I don’t have to reinvent, or I don’t have to figure out how to purify water in order to provide pure, clean water supply to people. It’s a solved problem. I now know that it can be done. I also know how to look at solutions. I know how to evaluate different types of solutions and decide what works best for me and for us in my community.”
That’s not all. There are 500 other people who are interested in the same problem and the same solution. What are the other people doing? Even if I don’t gang up with the 500 and do something together, I could see that one person has taken this particular approach to solving the problem, so why not I do the same? I can just emulate that model in my backyard.
What happens is there is solidarity in numbers. There’s solidarity in problem-solving. That, I think, creates the foundation for everything else. What happens is a lot of people, like your colleagues, go on to do higher education: master’s and Ph.D. programs in economics, public policies, social sciences, etc. A lot of others are so inspired that they decide to switch careers from a private-sector career to social sector, nonprofit organizations, NGO [nongovernmental organization] and things like that.
In the last five years—and this is really nice; this is really cool—a lot of people have decided that they have public policy careers within the private sector, because a lot of industry now is in a situation where it has to be aware of public policy. It’s unfortunate there’s a lot of government intervention and state intervention in markets everywhere in the world.
It’s not just India, but everybody’s doing it. That means private companies must know what governments are doing and must know how to deal with governments properly. That’s created a sunrise industry in itself. There’s also a lot to do with technology because a lot of the technology industries are new. They don’t have mental models. The political systems where they operate don’t have mental models. You have to engage with the political system, with society, to come out with governance architectures that work for your industry. A lot of people in the private sector are continuing to do wonderfully in their public policy careers within private companies.
RAJAGOPALAN: I think the state is so overwhelming in India. This is there recently in Pranay [Kotasthane] and R[aghu] S. J[aitley]’s book; Rohini Nilekani talks about it in her book. We think about the system as “samaaj,” “sarkaar,” “bazaar,” which is society, governments and markets. But governments (which is sarkaar) is overwhelming the other two areas.
To some extent, whether you are a schoolteacher or whether you work in a corporate job, or whether you’re a stay-at-home mom trying to figure out what school to send your kids to, or how to navigate some public good or clean water in the resident welfare association, it just feels like some minimum knowledge of public policy would be immensely useful because the government seems to be overwhelming every single aspect of life.
In some sense, the extent of government by itself has produced a huge demand for a course or an institution like Takshashila, which is unfortunate because that’s what it’s trying to fix! On the other hand, that seems to be one part or the source of the demand. It’s not really about the day job, the division of labor between tech versus economics or policy or something like that. It’s just, this is something that’s actually useful to everyone.
PAI: That’s why “The Nitopadesha”—that’s why the book came into being, because what you’re really talking about is, you don’t have to go to every citizen and say, “Here’s this book by Tyler Cowen; read economics.” Or “here’s this book by Douglas North” or even “by Pratap Bhanu Mehta” or whatever. It’s not possible. It’s not something which they can do, or it’s not something which they would want to do unless you put a gun to their head.
What does it mean to be a citizen? What does it mean to be a resident in an apartment complex? What does it mean to be a citizen in a new town? You just moved to a new town, and what does it mean to be there? These are some things which must come to you as part of civic education.
Unfortunately, civic education in India is dead because everybody does high school civics. Somehow it’s something which you have to just get done with. It’s about how old do you need to be to be a president of the country of India? It’s 35 years of age. OK, you’ve got five months—and move on. And everybody ignores civics because civics is such an ignorable subject. It’s such a technical subject. You just do multiple choice and you are done with it.
What civic education really has to be is about teaching people how to live with each other, right? What’s the morality of living with each other? What are the compromises that you need to make to live with each other, and why are those compromises necessary?
Civic education just doesn’t do this. I don’t know whether they do this in the United States, but certainly not in India. Although we do have curriculum: we do have a syllabus which says civics in seventh grade. Or the court legislature: they must teach constitutional values in every undergraduate program. Technically you have this in your syllabus. But only technically, because no one really pays attention to it.
We’ve got to find ways to make it available to a lot of people in a nonthreatening, nontechnical way. I suppose fables are a good way to get there because people remember them. You and I remember Aesop’s Fables; you and I remember Tinkle comics and Amar Chitra Katha and so on. Or Tintin—“tɛ̃tɛ̃ ” as my French-educated children tell me; it’s not [pronounced] “Tintin” but “tɛ̃tɛ̃”
The Role of Rhetoric
RAJAGOPALAN: Deirdre McCloskey has this wonderful book and also paper, “The Rhetoric of Economics.” That’s what the paper and the work is called. What she means there by “rhetoric” is not mere rhetoric in the sense of, oh, this is not just some manipulated or constructed narrative or something to dumb things down or to grandstand. In fact, rhetoric is the point, because it’s the primary means of persuasion.
Wordcraft is the tool that people use when it’s good rhetoric. That essay was written primarily for economists who have become extremely technical. This is like a modernist version of technical economics where everything is in Greek letters. We engage with human behavior, and basically what are extremely important social problems gets lost in some of that. How economists need to bring back the big exercise of persuasion through rhetoric.
I saw “The Nitopadesha” also from that lens, which is, it is not that—you don’t have to dumb down the law of demand to explain it to a child. The law of demand is the law of demand. Or the division of labor or separation of powers and all these important themes which are there in the book. It’s really a great rhetorical tool, so to speak.
Do you view the book as that kind of an effort? That’s part one of the question. The second is, more generally, because you are so deeply involved in public policy education in India, what is the role of rhetoric in public policy?
PAI: See, I would just shift the context of what you said from rhetoric to discourse. Rhetoric is part of discourse.
RAJAGOPALAN: Part of discourse, yes.
PAI: Now, the challenge is that any democracy is only as good as its discourse.
PAI: When you have good discourse, whether through rhetoric, storytelling, narratives, traditions, respectful debate—India, for example, has a tradition of respectful debate, Purva Paksha. When you read it, it’s very interesting. You’re supposed to accurately characterize your opponent’s arguments before you go on and deconstruct them. You are not considered a legitimate debater until you can give the best form of your opponent’s arguments first.
Unless you have systems and traditions where discourse is seen as something important, something which needs to be preserved and strengthened, the outcomes of society suffer—especially an outcome in a democracy suffers. Because how do you decide what’s important in a democracy? How do you decide the pros and cons or good and bad of issues? It’s only through discourse.
Digitizing and Democratizing Discourse
PAI: Now, what happens is when discourse gets polluted, when discourse gets destroyed, you end up destroying democracy. I think the big story of our age is really how in the early information age, discourse has taken a severe beating because of the social media as we know it today. The interaction between human psychology and networks has created a situation where you just can’t have a civilized debate anywhere in any country anymore. It’s very polarized; it’s just lobbing verbal grenades with each other and insulting each other and so on.
We’ve got to rescue discourse. Now, rhetoric is certainly one way to do this. A well-argued case can transform through rhetoric even if the case itself is weak. This is good lawyers, all the way from Cicero to the present day. Good lawyers do that. It’s an appeal to parts of your brain and parts of your cognition which are not only receptive to logic, right? To a lot of other things.
Narratives are others. How do you spin stories, grand-arc stories which can propel a certain kind of value system and which can then result in certain kinds of policies being adopted? Then there’s also traditions of debate. I think most democracies are losing their traditions of debate. Televising Parliament was a bad idea, I guess, because everyone is now acting as Hindi film stunt people, not as politicians, because you do stunts there and you don’t do debates. I think it’s—
RAJAGOPALAN: Yes, it’s just theater.
PAI: No, it’s not just theater—it is a boxing ring. It’s freestyle wrestling. It’s not just theater; it’s a blood sport in some ways.
I think we’ve got to rescue debate, rescue discourse. There is a story in “The Nitopadesha” which talks about it. Unless you as a society figure out a way to be nice to each other and improve your discourse, you’re going to get things worse every year.
How we can do this, I have no idea. I have many ideas, but I have no single idea. What I do know is that all of us, every one of us who has a platform—either as a podcaster, as a social media influencer, as a teacher, as a columnist, as a blogger, just a bloke who’s on Twitter—I think we have a responsibility to improve the level of discourse. If we don’t take that seriously, I think we are all done for.
RAJAGOPALAN: On discourse, I agree that we are very polarized. That’s not a quality judgment. That is just more a description of how things are.
But in terms of quality, I am always a little nervous talking about the quality of discourse. I worry that it’s a little elitist, in the sense that the entire purpose of the new Indian Republic exercise was to democratize education, was to democratize citizenship, have universal adult franchise, have everyone participate in the legal part of society.
Other parts of society, people are free to choose whether they participate or not. We’ve, of course, done our very best to democratize education. There is, of course, the constitutional right to education, but there’s also all these universal education mandates of the union government, all the state governments and so on. We had to scale this education to 1.4 billion people, which is hard to do with any kind of state capacity, but incredibly hard to do with the modern Indian state capacity. But the acceptable level was what was decided by the elites, and the education curriculum was based on what [Thomas Babington] Macaulay set 150 years ago.
The discourse is what it is. Now, in terms of quality, I worry that in the very short run there is a tradeoff between democratizing discourse, opening up different media like the internet, telecom, satellite television, satellite news channels, newspapers, blogs, everything. There’s a tradeoff between really democratizing both the medium of writing and the medium of publishing and between what is out there.
And as all the systems mature—not just India matures as a democracy, but also as we mature as the largest education provider in the world, as we mature as a healthier or a more mature newspaper community, or a more mature satellite news television, cable news community—I feel like the quality will improve.
So I’m always nervous about judging quality from where I’m currently sitting. Because I feel like the way to improve quality very quickly is to clamp down on who gets to enter and exit, and we don’t want that. And allowing everyone to enter on Twitter, which is a lovely thing—stand-alone—will also cause a very high degree of noise and terrible-quality babble. I don’t think that’s, stand-alone, a bad thing.
Democracy in the Information Age
PAI: Shruti, in the past few years, I’ve been interested in digital democracy. One of the things I’m working on is, how does democracy look like in the information age? Because the democracy which you have today, representative democracy, is an artifice of the industrial age. You have 500 people who have been selected, who are supposed to apply their mind and then vote on issues. The idea is that you make policies, you make laws by the consent—by the majority—it’s rule by consent; but the mechanism is of representative democracy, where you have some people who are elected and who function in parliament and do this.
How does this look in the information age? I don’t have fully formed thoughts to share with you right now, but one thing I found is that different parts of society do different things well in a democracy. Now, I’ll give you an example. If you want to characterize a problem—let’s say the problem of education or a problem of universal education. Now, if you consult a billion people, you’ll get a very rich, very deep, very, very comprehensive definition of the problem, because the more people you consult, the more issues they’ll add on. You’ll get a very complex, very rich idea of the problem.
But a billion people are not well placed to create solutions and probably not even well placed to select those solutions. What I mean by that is things like taxes. It’s very counterintuitive, right? A billion people can decide that taxes are not necessary. Of course, then we have zero taxation. I’m very scared of . . .
Brexit is another example. Suddenly, everybody gets to vote, and they say, “Oh, we decided to jump out of the European Union.” And now we say, “Oh my God, what do we do now?” I think there are challenges to direct democracy, in the sense that getting people to—especially a billion different people—to make solutions, design policies. It is an elite enterprise. Like it or not, it is an elite enterprise.
The Constitution of India was written by the elite, but it is not an elitist document at all. It’s a great example to show that a bunch of really elite—the elite in India in 1940 were probably eliter than the elite of India today, right?
PAI: Yet they created a document which is so far ahead of its time that, even if we designed it by popular work today, we probably won’t create something like that.
I think what is important is to figure out the best set of people or the best segment of society to perform a particular function. You want the masses to define the problem, give you a rich idea of the solution. You want the masses to decide who should have power. You want the masses to decide who should be a legitimate holder of power. Whom should we entrust political power with?
Political power and technocratic knowledge are not the same. So, Shruti and Nitin can probably design a fantastic tax policy for our country, but Shruti and Nitin might not be the kind of people which people want to entrust power to. These are two different things. I think digital democracy allows us options to separate this out for the first time in human history.
You could get a billion people in for certain things. You can get 50 million people for some other things. You can get 500 of economists to do certain things, and then you can get maybe 20,000 of the most politically—social leaders to be the political leaders. You can do all of these. I think it’s a fantastic space to work in, where you can reimagine what democracy ought to look like in the information age.
I think India is probably well placed to implement that, maybe gradually, but we are very, very well placed to implement that.
When Direct Democracy Doesn’t Work
RAJAGOPALAN: To be honest, I find the idea of 1.4 billion people coming together to decide anything quite frightening. You have a family; I have a family. We can’t figure out what restaurant we should go to for dinner, and then we end up going to the same place because we can’t come to an agreement. Everyone wants to go somewhere else, and we’re like, “Oh, this is one thing that everyone can agree upon, and we know we like it. We’ve been there before. Let’s just do that.” The idea that we all need to come together and agree upon things and that that is necessarily what democracy means is, one, that’s not clear to me or obvious to me.
The second is, I don’t even know if it’s a desirable goal with desirable outcomes. If we observe places where you have direct democracy and the referenda that work really well, it works very well on a very small scale, like the Swiss cantons; that’s where it works really well. And it works very well when there is a reasonable degree of homogeneity and a minimum standard of education, linguistic skills that everyone has, because the most important part of direct democracy and voting on a referendum question is to understand the question and for everyone to think that the question means the same thing that the other person thinks.
Now, we know with some post-Brexit literature that not everyone knew what it really means and that that common understanding was missing, though everyone spoke English. That’s exactly what you are alluding to: that that common understanding sometimes is an elite question and a matter of an elite education.
If it’s a tax reform question, you actually need to know something about public finance and economics. As opposed to if it’s a religious question, then you may need to either be practicing in that religion or maybe you need to be a scholar or a theologist or a priest. You need different kinds of expertise. The very few things that you need absolutely zero expertise for is to decide what level of a public good or service you choose to use.
In that sense, I feel like the model for India has to be small. Democratic decisions have to be small for it to make sense when they’re big. What I mean is, 99% of the problems that Indians face have nothing to do with the problems that other Indians face in other parts of the country. Except something like how to guard our borders or a space mission or tax policy, currency, macroeconomic stability, treaty formation—there are very few areas where everyone is in the same boat.
For everything else, when we talk about modern-day governance and democracy, the questions are very, very specific. I would say, actually, the way India needs to go is have thousands of local governments. And the very, very few things where agreement must come from everyone in the country, all the states and all the districts and all the Panchayati Raj and urban local bodies and so on, those are the things that you leave to the political and the elite and the technocratic class by representation.
To make it simpler, what I think we need more generally in terms of democracy in the digital age, and specifically for a country as large as India, is lots of smaller units of democracy and lots of experimentation.
India has exactly flipped that on its head. Some of this is a colonial heritage. Some of it comes from central planning, but we are extremely centralized. Everything from the design and the size of the toilet that will be dispersed comes from the union government. The whole thing is bonkers, the way we govern, which also leads to implementation challenges, and you’re familiar with all the problems.
I think federalizing, decentralizing—that is, I think, the key to democratic decision-making in the digital age. Though everything about digital age leads you to believe the opposite. It reduces transaction costs so much that you think everyone can talk to everyone, everyone can understand each other. Simply not the case, I think.
PAI: The thing is—put it this way. This insight has to contend with the reality that India does not have a culture of decentralized egalitarianism or decentralized equity. [B. R.] Ambedkar said, look, Gandhi’s ideas of self-governing villages would be terrible, because you don’t know what happens in those places. And it’s true. All of us have horror stories about RWA [resident welfare association] meetings where people just decide to take it upon themselves to do exactly what they want. We don’t have that tradition of egalitarianism at the grassroots.
We have traditions of governance at the grassroots. A panchayat, for example, is a tradition. There are very strong panchayats. Even if they’re not caste panchayats, they might be village panchayats or town panchayats. There’s a very strong tradition of governance at those. They’re not egalitarian. The equity dimension is very low. They’re very hierarchical. There are multiple conflicts of interests. There are social issues which we will find abhorrent which are condoned by panchayats and so on.
While a decentralized model is a realist answer to India’s governance problems, the realism is pretty devoid of idealism. In the sense that the values that we want to see—equality under the law is probably the first thing that goes for a toss in a panchayat, in various ways. It’s not necessarily because of Manu-dharma-shastra, that particular way. It depends on the power structure, the social power structure in different places. That basically determines how your panchayat works. That also determines who gets the first dibs on water resources, who gets the first dibs on markets, real estate and so on. That’s also finding its way into the constitutional panchayat system that we have. That’s social reality.
I think we have to find ways that can deal with these two contradictions at the same time. The fact that (a) decentralized democracy is probably the best way to govern India, (b) that decentralized democracy does not mean egalitarianism or anything that we see in the preamble of the Constitution. It’s the opposite thereof.
RAJAGOPALAN: It can be the opposite thereof. There I agree with you. I’ll tell you my two thoughts on that. The one thing that makes me optimistic, especially in 2023 relative to even 1950, when the Constitution was written, is freedom of movement. This is one of the constitutional guarantees that has not been subverted, except something like COVID, when we had this crazy lockdown. India still guarantees freedom of movement, and Indians migrate in the millions—in the hundreds of millions now, very soon.
Some of it is seasonal; some of it is complicated. It’s not like life is great after they have migrated, because they’re basically coming from very difficult circumstances: lack of education, lack of human capital, lowest in the social hierarchy and so on. But unlike when Ambedkar was debating Gandhi on this question, exit is a very realistic option from that den of localism that Ambedkar described in villages, which was not the case when—railways were relatively new when Ambedkar was having this debate (railways for humans as opposed to just cargo). I think that’s an important point to underscore.
The second point there is part of the digital democracy: We have 86%, 87% cell phone penetration in India. This is, again, not the den of localism at a time where you can’t find information and things won’t reach you unless the local power structure allowed those books and resources and TV news and things to reach you.
These are two important changes since when that debate happened. I don’t know if they would have had the exact same point of view if they were debating with those two important pieces of information or changes in society.
This second thing—and I don’t know if this makes me an optimist or a pessimist compared to you—I feel like, like everything else in society, democratic participation and behavior is something that can’t be taught, but it’s something that can be learned, and you can only have good democracy by doing it many, many, many times over. Which is why democracies that have crossed a threshold of a certain number of decades or years of being democratic just stay that way. Countries or states which every few years have devolved into a coup or have broken down, that fate keeps repeating over and over again.
I feel like we have learned some good behaviors as a democracy, especially the citizens—when it comes to voting, we vote in large numbers. For Panchayati Raj, we are now nearing 30 years. We are talking about five to six electoral cycles of Panchayati Raj in urban local bodies after the 73rd and 74th Amendment. Now, that’s not enough. Six iterations is very little in some sense. There is some sense in each of these communities that we are learning how to do this. Frankly, past a point, the only way how to learn how to do it better is to actually keep doing it.
Right now, what’s happened with Indian Panchayati Raj is, we’re very good at voting and appointing the leaders. We are good at following the rules. All the panchayats which are reserved for women or SC/ST [scheduled castes and scheduled tribes], we actually do manage to implement that. Earlier iterations had something called the pati sarpanch, where even though the women were elected, it was their husbands who were ruling. Newer iterations, I believe pati sarpanch is—now it’s just folklore. It’s almost disappeared.
We’ve had six iterations of this. Now we know that women can take charge and run the panchayat. Similarly, unless we give these municipal bodies actual fiscal revenue-raising power and revenue-spending power, they’ll never quite learn how to do it. I’m very optimistic about learning. I’m as pessimistic as you are about what is the reality in many of these panchayats and villages. And things are quite bad, and it’s not equitable. I’m very optimistic that they can actually learn how to do better.
I don’t know why. But that seems to be my—today’s optimism. It may change tomorrow.
PAI: No, no. I think there’s grounds for that, because I think one thing which is a strong driver towards growth development and better politics in India is the optimism that exists in society—optimism and hopefulness that exists in society—that things will get better over time. I don’t know why Indians have that, but lots of surveys show that we are the most optimistic country, nation, in the world.
That is a strength, because optimism creates the future that you want; it brings about the future that you want. If you’re pessimistic and you’re in despair, you are anxious, you create the future that you fear. So if you’re optimistic, you create—so in that sense, the vectors of hope, the vectors of optimism are India’s greatest strength, and they are largely responsible for the positive changes that you see.
As an engineer, I look at the first and the second derivatives also. How fast are these things happening? How are things accelerating? How can we accelerate things? Moving in one direction is fine, but for a person like me, I’m impatient. I want to see change within a generation, especially when it is possible to have prosperity within a generation, when it is possible for you to enjoy living standards and quality of life changing within a generation.
We know the solutions; we know how it’s done. China has shown, for example, how prosperity can be acquired in a generation. Now, there are lots of things which are wrong with the Chinese model. But take it out and look at it from a—if you go onto the planet Mars and look at what’s happening, here’s a country which has shown that you can do things within a generation.
Then I’m here and I say, “Look, why are we not doing it?” There is a moral imperative for you to do it as quickly as you can, because each day lost is a day—I mean, for you and I it’s fine, but for people who are not as privileged as we are, each day lost is a big loss.
RAJAGOPALAN: On this I do want to ask you one thing. This is both for you as a teacher of public policy and also someone who contributes to this discourse and has made this point many times over. There are a few of us who are in the same camp, which is that economic growth is a moral imperative. This is not one of those nice-to-have things. This is absolutely essential, and we’ve written similar arguments, both you and I and many of our colleagues.
Why is the idea—of economic growth being so important—so missing in the larger discourse, both on public policy and any kind of policy decision-making or discussion among citizens? It’s just not the topic of conversation in the air.
Earlier, my sense used to be, “Oh, these are very technical questions, and people may not know compound interest and how things compound and so on and so forth.” But I have seen that we are the generation—and most of Indians today, who are—two-thirds of Indians are younger than you and me, right? So all of them, they have very much reaped the benefits of economic growth at 5% or 6% per annum.
Why is this not a universal or near-universal demand? Why is it not the thing that is discussed every day on news channels or in op-ed articles? This always baffles me.
PAI: See, I think it’s because people don’t connect what they really want with the idea of economic growth. In the sense that maybe we can blame our friend Anupam Manur for the failures of this, that people don’t understand macroeconomics. People don’t understand that there is a macro economy.
Now, you talk to anybody in India, they are concerned about making more money tomorrow than they have today. Across the pyramid—and it’s not just in India; it’s everywhere around the world. I don’t think you’ll find any country where large numbers of people say, “Oh, we don’t worry about that. We don’t want to make money. We are happy.”
There is this funny bunch of people who are talking about “degrowth” in your side of the planet, but OK, they—
RAJAGOPALAN: They’re not funny. I think the word you’re looking for is “stupid” and “ill informed,” but we’ll use “funny” maybe.
PAI: Yes. Other than those funny guys with funny ideas, most people think that prosperity is something which they want for themselves and for their families and around them. Now, how do you connect prosperity at an individual level to this idea of economic growth as a policy goal that a country should follow? I think that connect is lost. I think it’s not a surprise, because in India or in Indian politics, any connect with a macro policy solution is always lost.
I want to have better roads outside my house, but transportation policy—I don’t care about transportation policy, right? I want to have a clean street outside, but no climate policy. How does climate policy . . .
So it’s like that. The macro is always lost in conversation. Maybe it’s because of the kind of polity we are; maybe it’s universal. I don’t know. But I don’t think that anybody in India or any part of—as I said, who says, “Look, we don’t want prosperity”? Everybody wants to be—prosperity. We have “shubh labh” written outside our houses, right? In almost every house in India, we have “shubh labh,” which is—what does it translate? “Shubh” is—“Shubh” is “good”?
PAI: Yes. “Shubh” is “auspicious” and “labh” is “profit,” so we are all asking for profits, eh? And Lakshmi is the goddess of choice of most families.
Aligning Self-Interest with Social Interest
RAJAGOPALAN: Yes and no, but I think this goes back to the starting point of our conversation on “Nitopadesha,” which is, when the gods show up before you, you must know what you ask for. I think that’s where I’m always confused as to why economic growth is not the No. 1 thing people ask for. Because there is a general sense that when the economy is doing well, there are more jobs, people make more money—so I feel like it could be one of two, three different things.
One thing could be they think that when they’re doing well, it’s all about them, and when they’re doing badly, it’s all about bad government policy or external factors. So that’s one possible—and this is a behavioral tendency, so it’s wholly possible that people think that way. The other is, of course, as you mentioned, there is a loss of transmission in the ideas between what causes economic growth at the macro level and what I think I’m immediately concerned with at the local level.
Both of these things put together still don’t explain to me why people are constantly demanding welfare entitlements but never economic growth. They never ask for shubh labh from the government. They have it outside their homes, and they worship Lakshmi. What they ask of the government is very, very specific welfare transfers: I want jobs reserved for my community or my gender or my age group. We want LPG [liquefied petroleum gas] subsidies or fertilizer subsidies. These are very specific demands. Indians do make specific demands. It just never tends to be economic growth.
PAI: I don’t have an answer, and I don’t even have a hypothesis, actually. The observation is simply this, that all demands we make tend to be about private benefit. This is that swartha-parartha [self interest-social interest] balance which we were talking about, which is there in the book also—that it’s all about swartha. People go to a temple and pray and say, “Look, if I get good marks in this exam, I’ll break a coconut.” Or “if I were to succeed in my business, I will give you a golden bell in this temple.” It’s always about me; it’s a deal that you’re cutting with God.
Similarly, it’s a deal that you’re cutting with government to say that “give me the welfare.” I’m not concerned about the macro; I’m not concerned about the parartha. So I can—and I think “The Nitopadesha” points this out—that you need to have this balance right; the swartha-parartha balance has to be right. I think it’s very askew. In most contexts in India, it is swartha which is a dominant motivation, and parartha is just an offset. You’re seldom worried about the interests of the collective. You’re always concerned about your own very narrowly defined private interests.
RAJAGOPALAN: Yes. And I would add one more thing to that, which is I think it’s fine for people to be concerned about the narrow individual or private interest, but I think what is missing more generally in the discourse is that self-interest can be aligned with social interest. It is only the question of the right institutions.
This is something that Adam Smith has pointed out to us, all the Enlightenment scholars many times over, that it is not that we fundamentally need to suppress or reform our self-interest; it is that we need to make sure that they align with the more general social interest or public interest. Markets will do that for the most part when it comes to allocating goods and services and increasing the size of the pie. You need very specific democratic institutions and checks and balances to make sure that the same thing translates into polity.
Of course you need social rules, norms—sometimes they tend to be religious rules and norms. Sometimes they can be very specific communities and regions that tell you how, even within society, individual interest can be aligned with social interest. And that’s also one of the larger themes in “Nitopadesha.” This Enlightenment value, I think, is what is missing in public policy overall: that it can be done.
PAI: Right. What I think is important is for us in India to have the most basic sense of Us that translates my family, my clan, my caste group, my state—and to say that all of us is the Us. The Us is not a small u but a big U. I think that probably is the missing factor. To the extent that we can get to the big U, a lot of these problems are easily solvable. How do you get to the big U? Don’t ask me; it’s above my pay grade.
RAJAGOPALAN: I don’t think it’s above your pay grade. I think it’s just a matter of the next book, “Nitopadesha” part two—or book five, as Bibek [Debroy] has been demanding. And hopefully we will get to some of those themes there.
But this was such a pleasure. I loved the book. I loved reading it. Thank you for publishing it and for coming on the show.
PAI: Thank you for having me on your show. Enjoyed talking to you. I think it’s triggered some thoughts which I have to now go out and work on. Thank you very much for that.