Thursday, December 25, 2008

Did you say anti-incumbency?

What is touted as the wisdom of the age can often turn out to be a myth at best; and self delusional analysis at best. One such 'carved in stone' wisdom is about the behaviour of the voter during elections. Virtually every political pundit in India has been ramming home the message that anti-incumbency is the single biggest factor behind electoral outcomes. There are many highly respected analysts who contend that about 80% of the governments in India are voted out because of anti-incumbency. I wondered about the so called power of anti-incumbency when Digvijay Singh won a second consecutive term way back in 1998. And of course, the communists in West Bengal had made a mockery of anti-incumbency as a factor; they have been ruling the state continuously for more than 30 years. But it is the latest round of assembly elections that makes me think that anti-incumbency is a grossly over rated factor. Out of the five states that went to polls, three saw incumbent governments winning thumping majorities.

Virtually all media and political pundits said the following things in the run up to the election: Sheila Dixit will be turfed out by voters angry with inflation, demolitions and terror; that Raman Singh in Chhattisgarh and Shivraj Singh Chauhan in Madhya Pradesh will lose badly and the Congress will storm back to power. We all know exactly the opposite has happened. Even in Rajasthan, the Congress failed to win a simple majority despite many RSS and BJP worthies working directly against Vasundhara Raje Scindia. And please remember, the BJP in Rajasthan won 78 out of the 183 seats it contested. Add the BJP rebels who won and the percentage of contested seats won by both the BJP and Congress is the same-about 48%. It is only in Mizoram that the Congress has stormed back to power on an anti-incumbency wave.

So where is this anti-incumbency wave and sentiment that routinely throws out about 80% of governments? Look at the last assembly elections in Assam; the Congress won despite the so called anti-incumbency. Look at Maharashtra; the same Congress-NCP post poll combination came back to power despite the best efforts of the BJP-Shiv Sena alliance. Look at Orissa. Naveen Patnaik stormed back to power in what could be a pro-incumbency verdict. Look at Karnataka. The BJP was an alliance partner in the previous government. Yet, it suffered no-anti-incumbency when it won a majority in the last assembly elections. The last time we saw a tidal wave of anti-incumbency in a major state was in 2003 when incumbent Congress governments in Rajasthan, Chhattisgarh and Madhya Pradesh lost badly. You could say Lalu Yadav and Rabri were victims of anti-incumbency during the last assembly elections. But that was after together lording it over Bihar for 16 long years! Unlike other pundits, I really can''t lay claim to any powerful new insights. But one thing I can say for sure is: please let us stop this humbug about the power of anti-incumbency and start looking at a possible new trend that could be called pro-incumbency!


Thursday, December 11, 2008

In Defence of Capitalism

Many of you might think I have gone bonkers for defending Capitalism at a time when financial cataclysm is creating mayhem across the world. After all, America symbolised Capitalism and it does appear as if Uncle Sam is being destroyed by Capitalism. You could say that it is de facto 'nationalisation' – the ultimate symbol of socialism – that is saving America from financial destruction and ruin. There is no doubt that without the Federal Reserve and the Treasury Department – both arms of the US government – the American economy would have collapsed by now. The titans of Capitalism – General Motors, Ford, AIG, Citi... – have gone to the American government with a begging bowl, pleading to be saved from the very beasts of Capitalism that they used to flaunt so proudly till recently. For all practical purposes, America has turned decisively socialist. Similar things are happening in Europe, Japan and other so called citadels of Capitalism. With all this as the factual backdrop, how can I claim that Capitalism is still the best option for economic growth, poverty reduction and overall prosperity? How can I make such a seemingly foolhardy statement when even drum beaters of Capitalism like Alan Greenspan are suffering from a spasmodic bout of Mea Culpa?

The answer is simple. In the rush to denounce 'Capitalism' and its wild excesses that have created this crisis, there is fundamental confusion over all important terms like Capitalism, Market, State and Regulation. What we have seen in America over the last two decades or so is not Capitalism in the classical sense; you could call it Crony Capitalism or 'Financialism'. American capitalism was triumphant when General Motors, General Electric, General Mills, to name just a few, were the standard bearers. America manufactured the best products, provided the best services and hence ruled the world economy. But then, it turned into 'financialism' where Wall Street rocket scientists kept creating bubbles and hoodwinking the world.

They were joined in the farce by credit rating agencies. And they deliberately fostered a lie that ''markets'' are always perfect and that the State and Regulation are relics of an old era. The problem was that vast swathes of the world bought this hideous lie. Regulation in America had become a joke over the last two decades, with the State and regulators brazenly siding with the fat cats. If regulation is absent or biased, then Capitalism loses its core essence. Imagine a game of cricket between India and Australia where Andrew Symonds is the Umpire. Something similar happened in America. And we are all paying the price. But please, do not denounce Capitalism and the market as the twin evils. They are far from perfect; but they still deliver the best results and will continue to deliver the best results as long as the players in the game of Capitalism are supervised by an unbiased referee who blows the whistle when there is a foul. What happened in America was a football match without a referee. Capitalism, like Cricket and Football, is a beautiful and sublime game. Do you blame football if the referee turns out to be blind and prejudiced? Will you blame Capitalism?