Thoughts on economics and liberty

Anna, Arvind Kejriwal’s book, Swaraj, although interesting, is NOT the solution to India’s problems!

A few hours ago, in a speech, Anna Hazare promoted Kejriwal's book, Swaraj, thus:

Anna Hazare says that after reading Arvind Kejriwal's book 'Swaraj', one would realise that it is the government that has lost its focus and not the anti-corruption movement. [Source]

I discussed some of the key issues arising from this book/ worldview here. Do read it. In addition, I've gone through Kejriwal's book, and although it raises many problems, its solutions are based on a belief that every socialist policy should remain the same, merely become more decentralised in implementation.

I take this one example, Education. This is what Arvind says:

In a village government school, if a teacher does not teach properly or decides to come late to school or prefers not to come at all , no action can be taken against him, even if a complaint is filed to this effect.

In the same way all schools have shortage of teachers. One teacher teaches 200 to 300 children. Sometimes only one teacher teaches children of at least three or four classes at the same time. This type of education is ineffective and wasteful for children. In the name of education a mockery is going on.

Today the schools are in bad shape. Teaching is not proper; the children do not have desks to sit, water to drink, fans and urinals are not available. Whenever complaints are sent to the government then no action is taken on those complaints.

We visited Khijuri village in West Bengal, where the Sarpanch told us that though the village had received rupees six crore from the government, they could not construct a school which was badly needed and would have cost them only rupees twenty lakhs. This was because this money was tied up under various scheme of the government, for instance, the pension fund or construction of houses under the Indra Vikas Yojana or for some other scheme.

The teachers who are employed even today they do not teach properly. Some come only at the end of the month to collect their salaries and some who come, sit under trees and pass time gossiping with each other instead of teaching and the children then play.

Every aspect of life and living is controlled by a government department.

Contracts are awarded for, example, towards repair and maintenance of electrical work in all schools directly at the state level. The contractor carries out sub standard, shoddy work and sometimes not what was required. But the payment for this work is forced upon the sarpanch who is helpless.

Under RTI (Right to information) act it was found that in many a schools, up to class ten, of Jharkhand state have not a single teacher. In Vamani higher secondary school, Kanuga, Saraikela, Kharsawa has 310 children but not a single teacher. In a school of Siroom there are 435 children in ten classes but there is only one teacher, that too for Bangla language. Currently it is the duty of the state government to provide teachers in school. Many a times people in the above mentioned places wrote to the state governments but no answer ever came.

This is not news. I was Secretary of Assam Government's education department in 1993-94, before Arvind joined the civil service. The problems with the education system are well known to EVERYONE.

But now look at Arvind's solution:

What do you think who loves a child more, his mother or the secretary of education? It is evident that it is the mother. So how do you assume that the villagers would decide that they do not want education for their children, health services for sick and the aged? They would naturally want schools for education and hospitals for the sick and want all means of development of their village.

The gram sabha should have the power to stop the salary of a teacher who is not coming to the school or not teaching properly.

If power is given to people then they would look at the problem of shortage of teachers in gram sabhas meeting and employ more teachers that are needed. They would not be required to write to state government to create more posts, fill more vacancies and employ staff. They will decide this issue in the gram Sabha meetings and employ themselves as many teachers as may be needed.

If gram sabhas are empowered then the teachers would be accountable to them and the teachers would be subjected to questioning. If need arises then the gram Sabha could punish them, too. The gram sabhas will have the power to make teachers tow their line.

If government decides to send free fund then people can, in a gram Sabha, decide what essential things are to be provided to the children in school. They will be able to take direct decisions. They would not be obliged to seek some officer’s consent or from a politician or will not be obliged to seek permission from the state government.

A law should be enacted that transfers all works related to the village along with government agencies that provide services and wealth that falls under village jurisdiction. The fund required for maintaining the wealth, to carry out works and expenses of the agencies along with government employees should be transferred to the gram panchayat.

In 2002 an amendment was brought about in the law that governed panchayati raj. A provision was made that if a government employee did not perform his duty properly then by calling gram Sabha they could vote to stop his salary. This had some positive effects. Some examples are given below.

We went to many schools of villages in Amrawati Block of Chindwara District. Earlier the teachers did not come to school. They used to come on the last day of the month to collect their salaries. When this law came into effect, the villagers called the gram Sabha where they took a joint decision that the salaries of teachers should be stopped. For two months salaries were stopped but from third month the teachers started to come regularly. It was such a simple solution. If power is given to the people directly, they will take care of their own development.

What's the problem with this solution?

Arvind Kejriwal knows that engineering takes time to learn. It is a discipline. Similarly, public policy takes time to learn. It is a discipline.

Arvind Kejriwal's book, unfortunately, does NOT display necessary policy knowledge – of (a) the principal agent problem, (b) implications of public choice theory, and (c) the availability and use of local knowledge in society through the price system.

As a result of this, his solutions do not tap the market. They do not tap self-interest. They continue with existing socialist policies.

Arvind's work does not demonstrate a clear theory of state, either, which might help Arvind (and Anna) clarify whether a government needs to directly manage education or not.

So what's the solution?

Well, the solution is multi-facted, but involves the government getting out of the supply of education. Yes, the government must ensure that each child receives the highest quality education, but that means incentivising the MARKET to do it.

How this can be done has been detailed in BFN.

About an hour ago I spoke at some length with Justice D.S.Tewatia of Team Anna who advises Arvind. He is currently reading a copy of BFN that Ram Atri provided him, and believes the book is very persuasive. I've asked him to explain it to Arvind once he finishes reading it. I don't know whether (or when) that will happen, but it is something that Team Anna needs to get its head around, rather quickly.

I'm happy to explain these basic issues at great length over the phone to any member of Team Anna.

The key point, Mr Hazare, is that good intentions DO NOT mean much in the field of public policy. It is a deep understanding of how we can maximise the benefits from properly channeling human self-interest, that will make all the difference on the ground to MILLIONS of oppressed, unfree people.

It is time for young bright people like Arvind Kejriwal to do some serious reading on public policy and discuss with those who understand how GOOD GOVERNANCE works.

I've offered to help, but Arvind needs to open his mind to the fact that he may need to change MOST of his solution.

There are excellent people available in India to assist, including key members of the Freedom Team of India, but also Gurcharan Das, Parth Shah and Barun Mitra.

Somnath Bharti, key FTI member, has been representing Team Anna in its court cases. Ask him!


I'm thinking of making comments directly in a Word version of Swaraj. Here's some initial work.

Sanjeev Sabhlok

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17 thoughts on “Anna, Arvind Kejriwal’s book, Swaraj, although interesting, is NOT the solution to India’s problems!
  1. allwyn

    This is seriously shocking and stupid of arvind! What the hell is wrong with him!! He is IITian how come he never came across Milton Friedman or this or Atanu’s blog. I can assume that he’s been a real patriot during his 20s and today he is around 42(maybe) and all this years he just didn’t google enough. I am 21 which is probably half his age and I think I definitely can make better policies than him.
    Reading his solution on top is such a headache. He really thinks all those panchayat fools mostly thugs and thakurs who frequently ban girls from using cell phones and wearing jeans and support honor killing can take care of supervising a school or teachers. What’s stopping them from becoming corrupt? or at the same time perhaps ban girls from attending school altogether!
    Add to it the same school problems ail muncipal shools in mumbai too and last I checked we don’t have panchayat here in mumbai so what does he recommend..not that I want to know! If this is his solution for education what does he have to say about railways, infrastructure, poverty elimination. I am sure he must have discussed some stupid ideas about them in that book. I think its safe to come to the conclusion that he’s not much of a reader at all.
    IIT library must be full of books like one above.
    WHAT A WASTE!!!!

  2. Aware Indian

    “Arvind should keep his mind open and listen to others” is a paradox in terms. If Arvind was really like the above, Team Anna and IAC’s anti-corruption movement would not have become the focus-less, vision-less, friend-less and supporter-less whimper that it has been reduced to today (compare to exactly 12 months back and look at the enormous public goodwill that they have squandered away). Arvind frequently rants about how “Everything is rotten” and “Everybody is corrupt” — he should probably add “Everybody else other than me is an idiot” to his chant to truly reflect his attitude.

  3. Shailesh

    i am not a blind Arvind follower (infact, i sort of agree with ‘aware indian’s comment above) but sanjeev – do you really think the book Swaraj is about socialist ideas/government intervention?

    the book focuses on ‘decentralization of power’. He does give an example of govt school but his clear message is that, for every problem, the affected group of people should, thru their immediate respresentatives, experiment and figure the preferred solution within the basic framework of the nation’s constitution. You may dislike this form of democracy as too direct / decentralized but this definitely is massively pro-individual liberty.

    You hail a socialistic romney as pro-liberty just because he, like many Americans, is aware of that terminology and claims to be a liberal.

    On the other hand, you denounce a liberal/semi-liberal Arvind as a socialist just because he, like most Indians, in unaware of the liberal terminology and mistakenly calls himself left of centre

  4. Sanjeev Sabhlok

    Dear Shailesh

    I’m afraid you’ve missed the nub of my argument. I’m not at all criticising decentralisation. I’ve repeatedly and vigorously advocated it (but it must be done systematically, not the way Arvind suggests). Do read BFN (local government in chapter 6).

    I’m talking about Arvind’s underlying assumption (evident from the school example) that gram panchayats must have a role in hiring/firing teachers, etc. That they must become managers of schools. That’s socialist.

    Gram Panchayats are a form of GOVERNMENT, not the market. Let that be very clear to all.

    So all Arvind is saying: take money from taxpayers, then give it not to the state government but local government. Still the government.

    He doesn’t ask why rich landowners with crores of rupees of untaxed land and assets should be subsidised by ANYONE. Why should his children get free schooling? He doesn’t ask how we’ll ensure quality of the school system. He trust the government (gram panchayats), NOT parents.

    In brief, he advocates MORE OF THE SAME. Just decentralised to the gram panchayat level.

    He has not questioned why the government (and ANY level) should run any school?

    To get my point (which I suspect you won’t from merely reading this note), I strongly recommend you read the school education model in BFN which is 100 per cent private and relies on PARENTS to ensure school quality.

    In almost aspect of life, there are things the government should get out of doing, since it does it so badly. That’s not the message we are getting in Swaraj. We are getting the message: KEEP ALL SUBSIDIES GOING, BUT GIVE THEM TO GRAM PANCHAYATS.

    I said Arvind doesn’t show any understanding of three things: (a) public choice (b) principal agent problems and (c) price system. Neither does your message show any understanding of these three (although I know you are extremely well qualified, compared to Arvind, in fields closer to public policy).

    If you had read what I’ve been saying, you’d have immediately picked up Arvind’s socialist bent of mind.

    He is NOT a liberal by any stretch of imagination. He believes in government solutions, not citizen freedom.

  5. Shailesh

    Thanks for response Sanjeev.

    Will read your reco but I am reasonably sure your preferred solution is similar to mine (no govt. involvement except subsidizing primary education thru education vouchers or, maybe, a simple all purpose cash transfer)

    Arvind’s solution (giving the cash to Gram SABHAS – not Gram Panchayat – and letting the parents decide the best approach) needs improvement but is way more liberal than our current system or what most ‘experts’ in India recommend.

    i know you are for decentralization and that’s why I try to highlight that Arvind’s book is more about decentralization and less about socialism. Raised in socialist India and probably not familiar with the work of liberal scholars, he is not aware of the theories, etc…hence, he doesn’t denounce socialism / hail liberty…he starts off from a socialist understanding of things but the solution he arrives at using his experiences and common sense is more liberal than socialistic..without he himself realizing that he is somewhat of a ‘liberal’.

    I agree he should read the good work in this area…if he does, he will surely appreciate liberal ideas more (many of us have gone thru this process in different ways).

    My only humble request to you is to look at the common ground rather than focusing on the smaller differences.

    Apologies if I am trying change your (confrontational/provocative) style…maybe this is just for your blog.

    However, I do plead that you relax your insistence of only working with groups/people that completely subscribe to the classical liberal school of thought AND the FTI approach to entering Parliament.

    Both are fine but the years/decades you wait for agreement from enough good leaders and voters may probably be too long for suffering Indians

  6. Sanjeev Sabhlok

    Dear Shailesh

    Yes, I recommend vouchers based on income levels.

    Re: “giving the cash to Gram SABHAS – not Gram Panchayat”, that’s not really possible. The Gram Sabha is nothing but the assembly of all adults in the village. An assembly has no bank account, no legal standing, no secretariat, etc. The Gram Panchayat is the formal body (local government) with its own elected official and secretariat – and bank account, etc. Hence to operationalise Arvind’s concept funds will need to be given to the Gram Panchayat.

    But that’s a matter of detail. The key point is is that it not an improvement over the current system since it merely imposes an impossible burden on the one man part time half-educated secretary of the village. There are over 600,000 villages in India and it is crucial that Gram Panchayats be involved in monitoring things but they can’t be given the task of professional hiring, firing, etc. of teachers. The market can organise that on its own. Vouchers/ funds can be ensured to the poorest parents with the Gram Panchayat monitoring the process.

    Yes, I’m keen to get moving on reforms in India. I’d have never left if my efforts of 1998-2000 had borne fruit. And yes, I’m very blunt, even provocative. That’s because we need TOTAL CLARITY in our vision and goals for India before we can work together.

    Forgetting the term “classical liberalism” all one is saying is – let there be less government more liberty. And let’s insist that EVERYTHING a government does is fully justifiable on first principles. Thereafter, what the government does, let it do well.

    This requires a basic conception of the state and citizen. These agreements are crucial before entering into details.

    I trust you’ll agree that being blunt and very forthright on such basic things is crucial. Else we’ll end up with an unworkable khichri like the Janata Party of 1977.


  7. sanchit singh

    Thank you Sanjeev! I have no doubt that you are not one of the blogger who needs to twist and spice up the facts or report something that is not a common understanding, just to create hype and sensation. I admire you for that, and more so because you are exactly one of those guys, who thinks as much for the nation and state level issues as what Team Anna or Kejriwal are doing today! I only wish your teams can join hands and work for a smart plan that is workable and effective. I wish you luck, and hope to read more such informative articles/blogs from your side in future!

  8. sasi kumar

    Sir i am living in a small village which has only 200 population. Our panchayat is our neighbour village which has minimum 400 strength. In the grama sabha the decision may be in the favour of them being highest strength. What we can do ? according to your law.

  9. Sanjeev Sabhlok

    Good ideas should win, but good ideas need to persuade others. So go and persuade your neighbouring village.

  10. Dr. Munish Raizada

    Good article and subsequent discussion (comments)!
    Sanjeev: I have one more question.
    In the schemes of things that Arvind has suggested ( and let us assume for a moment that we go by that), do you think all the local decision-making by Gram Sabha is really practical? Per him, even the elected Sarpanch has to abide by the decision taken by Gram Panchayat. In other words, Gram Panchayat will work like a Legislative Assembly throughout the year, taking up bills (issues) and deciding upon them. In other words, he is advocating direct democracy.
    When we have a Panchayat (Sarpanch and penches) duly elected, why not give them a chance of decision-making and implementation, rather than everything being decided by Gram Sabha? Will it be an effective model of governance or will it create anarchy?
    Pl opine!

  11. Sanjeev Sabhlok

    Arvind has something like Greek democracy in mind. I have only very slight difference of opinion on various models of direct democracy at the village level.

    My issue is not with local government, which I also support (subject to practical feasibility, etc.) but WHAT a government should have the power to do in the first place.


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