But the Crisis has Deepened and has Become More Entrenched (Part XIV)

Nobody for President

On 17th July 2017, India will elect a new President through a vote of the elected representatives. The two real choices are between Ram Nath Kovind and Meira Kumar. Afraid of looking completely ignorant, I asked a few people who Kovind is. No-one knew of him and people only vaguely remembered Ms. Kumar.

Adults and juveniles have been arrested in different parts of India for celebrating Pakistan’s victory over India in a recently held cricket match. They have been charged with sedition, a charge that has serious legal ramifications and can potentially send these people to prison for life. With the British gone for 70 years, India’s laws and institutions have lost all mooring to their rational anchors.

Photo credit: Amnesty India

India will get a complete nobody as its next President. Both candidates are from the Indian province of Bihar. If it were a country, Bihar with its 119 million inhabitants would be the 12th most populated in the world. With a GDP of USD 420 per capita, it would also be among the world’s ten poorest countries.

A scene from a slum in Patna, Bihar’s capital.

Photo credit: Yuri Birukov

Kovind is from the “lower caste” and is the choice of the Indian Prime Minister, Narendra Modi, who would like to make up for recent atrocities against the “lower caste”. While he is a nobody with hardly any public credentials and a yes-man to the system, Kovind is sympathetic to the cause of Hindu fanatics and has their support.

Why pull a passionate street fighter and rabble-rouser out of the street and place him in a position where he might compete with Modi for visibility? In a dystopia, being a nobody, having no personality, being a yes-man, having no passion for either money or a being a competitor for public visibility are “strengths” and qualifications.

The position of the Indian president is similar to that of the British Queen. It is a symbolic, but constitutionally crucial position. If the prime minister decides to impose martial law, he needs the president’s signature. With Kovind’s appointment, Modi will have installed the last yes-man he needed at the top of India’s institutions.

As I have suggested repeatedly in my earlier articles in this series, India is very rapidly moving towards becoming a police state, that will have Hindu fanaticism as its core identity.

The opposition party had to play the same game of chess to counter Modi’s move. So they picked another “lower caste” person from Bihar. She is another nobody, with no personality or spine except as a yes-woman to her backers.

To a populace not anchored to reason, if one votes for Hinduism, one will go for Kovind; and if one is pseudo-secular and wants to look pro-women, one will vote for Kumar. Kovind will very likely win for no other reason than the fact that Modi and his party BJP have higher support than Kumar.

Ram Nath Kovind, on the right, the next likely President of India, bowing and taking blessings from Yogi Adityanath, the Hindu fanatic Chief Minister of the Indian province of Uttar Pradesh

Photo credit: PTI

Cash is Back

I know many wealthy and so-called educated people who have never used a bank card. Many simply won’t trust a machine. Most are incapable of learning how to use the cards. With people tired of corrupt, untrustworthy and unpredictable banks and payment portals incapable of providing reliable services, cash is coming back with a vengeance.

The economy, however, continues to be stagnant. Businesses continue to fail. If not for economic reasons, businessmen have grown tired of corrupt and rapacious bureaucrats and an extremely uncertain regulatory regime. Look at an Indian businessman and you will see an unhealthy, tired, soulless person.

Even today, vegetables sell for half as much as they normally do. Are poor people going hungry? Do not expect news on this in the media, which must toe the line of the Indian government.

If food is so cheap, does it not indicate that poor people are unable to buy? Are they going hungry? Moreover, if farmers continue to suffer and cannot profit from their produce, what effect will that have on the future food supplies? [Ed. note: the collapse in food prices was originally triggered by the government’s overnight cash ban]

Money — even in fiat currency form — is the blood of the system. Once the blood flow was stopped, even if it is fully revived later, clots will have appeared and organs will have failed. That is happening in India today. Job growth was already stagnant, but the situation is much worse now, making India’s so-called demographic asset, which never was an asset, a massive liability.

Domino effects continue to work their way up the food chain. Formal and big businesses are beginning to show signs of stagnation. Members of the salaried middle class are losing their jobs, but they have so far failed to connect the dots and continue to support Modi.

The Digital Economy will Fail

In my last update on the demonetization fiasco, I explained why India’s attempts to go digital will fail. The Indian government’s attempt to force people to use banks and the plastic-card will fail. The attempt to enforce use of the national ID card will fail.

The reason is simple. If this digital technology actually made life in India easier, it would have been adopted without having to be brutally enforced by the government.

Big Brother has truly arrived – in India of all places. As the Hindustan Times reports, India’s government inter alia brazenly asserts that “privacy is not a fundamental right”. The cards are mandatory for all citizens, and since almost everything has to be linked to them (including bank accounts), no-one can afford not to apply for a card. As the Hindustan Times correctly notes: “Aadhar marks a fundamental shift in citizen-state relations: from ‘We the People’ to ‘We the Government’. If the rampant misuse of electronic surveillance powers and willful ignorance of the law by the state is any precedent, the future looks bleak”. [PT]

Illustration by Siddhant Jumde

Indian e-commerce companies will fail. In my last update I wrote about a ticket that I paid for online but never received. After more than 10 weeks, no-one knows where the money is and I must send someone to the bank every day to follow up on it.

The national ID card, Aadhar, is now virtually compulsory. All your bank accounts, tax returns, utilities services, etc. must be linked to it, or you will find your accounts frozen and “services” (passport, driving license, etc.) provided by government monopolies will be denied to you.

There is no law that allows the government enforce such a requirement, and in the past India’s Supreme Court instructed the government that any such enforcement would be unlawful. But then the court suddenly went quiet, a sign that institutions are now toeing Modi’s line.

For now, data is getting leaked and fake Aadhar cards have already started to circulate. Dirt poor people who have no food or clothes are now expected to know what “phishing” is — cases of fraud are on the rise.

Aadhar adds nothing useful to the lives of Indians, but it is certainly a useful tool for the evolving police state. As I have said in earlier articles, an Indian police state will probably be more akin to Zimbabwe than Nazi Germany.

Revamping the Tax System

India is completely changing its indirect tax system. A GST system will be implemented on 1st July 2017. This was originally planned to replace a plethora of national and provincial taxes, and was an attempt to streamline the flow of transactions and to remove taxes-on-taxes.

With a mere week left for the GST to roll in, not only businesses don’t know how it works, people in working for the government haven’t a clue either. There are already seven different rates, depending not only on the the types of products, but also the prices of those products.

The documentation requirements will be massive, even for small businesses, with more than forty tax returns required every year. There will be all kinds of complexities associated with the movement of goods within a company and time limit on claims for input taxes on inventory. In-house documentation must be completed every evening, in case the tax authorities decide to pay a visit.

The GST system being rolled out is much more complex than the system that exists today. The horrific problems that demonetization created since November 2016 will likely look like a walk in the park compared to what comes after the GST is implemented. I have never seen Indian small businesses this scared.

Early experiments in setting government priorities [PT]

Cartoon via Times of India

Even if the system were perfectly designed, there is simply an utter lack of skills in India; the human resources to administer this system don’t exist. There is failure written all over this scam scheme. The only safety valve are bribes, which will almost certainly increase.

While India is going through a lot of changes, astute readers may wonder how any of these changes are supposed to positively affect society. Why did India never focus on skills development, education and training, poverty alleviation, or the reduction of tyranny?

None of the above means that those suffering — which by now includes pretty much everyone, from the poorest to the richest — have turned against Modi. Quite to the contrary, Modi’s support base continues to increase relentlessly.

He has won one by-election after another. One must understand the core issues at play so as to avoid cognitive dissonance and confusion. Let’s untangle this mystery.

A Muslim woman is ruthlessly beaten up and forced to say words in praise of Hindu gods

Cows have become the symbol of Hindu fanatics. Lynchings of Muslims and people from the “lower castes” are becoming a daily event, as the genie of lawlessness is now out in the open and proliferating

The West and the Rest

India and many similarly poor and backward nations remain beyond comprehension until the reasons for the divide between them and the developed world is understood. Despite Europe interacting with India for the last 300 years or more, 50% of India’s citizens still don’t even have toilets. A similar number of people has still not discovered the concept of the wheel. Why?

Lead piping was already in use in the Roman empire 2,000 years ago. Lead and plastic piping to carry water supplies is now enormously cheaper, so why does a large proportion of the world still not have it? If nothing else, why can’t they at least transport water on simple wheels?

Photo credit: Kailash Mittal

Rural open air public relief facility for those still lacking sanitation [PT]

Photo via vishvagujarat.com

Indian railways and the post office are pretty much exactly the way the British left them, except that their quality has fallen enormously. If one tries to compare railway maps of India in 1947, when the country became independent, with those of today, one will struggle to detect much positive change.

Since the British left in 1947, Indian institutions have frittered away, have become corrupted and corroded. It feels as if there was not only a failure to maintain them, but as if an effort was made to systematically destroy them.

Institutions of the rule of law and governance mostly no longer exist. During British colonial rule, members of India’s middle class at least emulated certain Western values, even if they failed to understand the underlying principles. There is now nothing to emulate or look up to.

Let’s get to the core issues at hand, to appreciate how entrenched and almost intractable this problem is and why without the British to run it, India will continue to degrade.

What distinguishes societies of Europe (and their offshoots) from those of most of the poor, backward world is the conspicuous lack of the concept of reason in the latter. Anyone interested in understanding development economics, international relations or diplomacy must understand this to start to connect the dots and to understand why the world works the way it does.

Without the glue of rationality, financial and intellectual capital does not accumulate. Whatever financial capital exists has a strong tendency to get frittered away. In a very small way, intellectual enlightenment was starting to blossom in India under British administration.

In the absence of the lubricant of reason that the British provided, the concept of ideas has ossified and has degenerated into fanaticism and the rationalization of superstitions.

The true cow connoisseur looks beyond milk to other liquids provided by the sacred bovines [PT]

Photo credit:indiatimes.com

The individual suffers from tyranny and the encroaching police state, but he more than enables tyranny through his own beliefs, ideas and actions. He can neither see the consequences of his actions and ideas, nor reflect on the reasons for his predicament.

Moral instincts are absent in such a dog-eat-dog society mostly run on base instincts. Such a society that cannot self-reflect lacks empathy and is dominated by envy in public matters. Christian missionaries and the colonial British infused India with the concept of reason to some extent, but despite hundreds of years of work they achieved only a very small positive change. Even this is now being undone.

Once one thinks this predicament of India through — the prevalence of irrationality — one realizes that India’s problems are so entrenched, they may not be solved in a millennium (using this word without any exaggeration). Assuming someone rational somehow gets to lead the country, that is.

Didn’t We Say So

Until recently the mainstream media in the West mostly presented a glorious picture of India. They supported demonetization, the implementation of GST and the national ID-card. Multicultural in their worldview, they believed that institutions that work in the West must also work in poor, backward societies.

In its 24th June 2017 edition, the Economist finally woke up to the problems and the systemic risks posed by rise in Hindu fanaticism and India’s prime minister Narendra Modi. Some of my readers have asked me if they have been in discussion with me. Alas, no, for if they had been they would also have woken up to the fact that Modi is merely a symptom of India’s problems. The real problem is much deeper, more entrenched, and largely unsolvable.

The real problem of India is Indians and their culture. Once one wakes up to the entrenched problem of Indian culture, with its deep roots in irrationality, tribalism and superstitions, one realizes that the situation will likely continue to deteriorate, and may even lead to civil war and India’s disintegration. An irrational culture left to its own devices invariably reverts back to its medieval past.

Trump’s True Friend?

With Indian institutions falling apart, Modi and Kovind stand no chance of staying in command for too long. Given their irrationality, they cannot see the massive risks they are creating against their own power and privilege.

As I write this in the last week of June 2017, Modi is on his way to Washington. In a tweet Trump has called Modi “a true friend.” Trump’s brand of “conservatism” may have US economic interests in mind and an understanding of the threat that immigration poses, but Modi’s “conservatism” has a totally different meaning: It is only about narrow-minded Hindu nationalism and tyranny.

Whether it likes it or not, the US will eventually get sucked in, as India continues to become more fanatic and hence more unstable – and eventually starts to fragment. Trump would do well to ignore Modi, to prevent Modi from marketing his welcome in the US in India as US support for his fanaticism.

Modi has no interest in India’s economy. Instinctively he is a bully and a tyrant. His dictatorial nature is becoming a catalyst hastening India’s downfall.

Smoothing things out Modi-style [PT]

[Earlier updates on the demonetization fiasco and a dissection of Indian institutions and culture are linked here].

Edited by PT

Image captions by PT where indicated

Jayant Bhandari grew up in India. He advises institutional investors on investing in the junior mining industry. He writes on political, economic and cultural issues for several publications. He is a contributing editor of the Liberty magazine. He runs a yearly seminar in Vancouver titled Capitalism & Morality.

Dear Readers!

You may have noticed that our so-called “semiannual” funding drive, which started sometime in the summer if memory serves, has seamlessly segued into the winter. In fact, the year is almost over! We assure you this is not merely evidence of our chutzpa; rather, it is indicative of the fact that ad income still needs to be supplemented in order to support upkeep of the site. Naturally, the traditional benefits that can be spontaneously triggered by donations to this site remain operative regardless of the season - ranging from a boost to general well-being/happiness (inter alia featuring improved sleep & appetite), children including you in their songs, up to the likely allotment of privileges in the afterlife, etc., etc., but the Christmas season is probably an especially propitious time to cross our palms with silver. A special thank you to all readers who have already chipped in, your generosity is greatly appreciated. Regardless of that, we are honored by everybody's readership and hope we have managed to add a little value to your life.

Bitcoin address: 12vB2LeWQNjWh59tyfWw23ySqJ9kTfJifA