Thoughts on economics and liberty

Who is Arun Maira? What are his policy leanings?

Someone asked the above question.

I dug around a bit and have come to the following findings:

He is not a systems thinker. He had extensive business experience, including in the Tatas, then chaired BCG India. These are impressive achievements. BCG is good and one would presume they understand how systems of accountability are designed within a businesses (although BCG is not a human resource but a strategy specialist so may not understand these things).

However, any understanding of incentives within business obviously didn’t translate into any understanding of government and its systems. At no place in his writings that I’ve quickly browsed through does he mention any need of fundamental reforms of accountability in the governance system, and the corruption that is rampant among politicians. He uses techno-jargon and waves his arms about, as any superficial economist would do.

It appears to me he is out of his depth when it came to understanding government systems and their incentives. At one place he even says India’s performance is not due to its being a democracy since other democracies (he cites Germany, but one could equally consider Australia) do so well. He totally fails to pay attention to the difference in incentives built into different democracies, therefore is left with empty exhortations, including to business.

In his exhortations to business he fails to realise that businesses in India are corrupt not because they like being corrupt but because only the corrupt are rewarded. Instead he is busy exhorting businesses to not “corrupt the political brass“. That’s absurd! Businesses are powerless in the face of politicians. How can they corrupt anyone? They are FORCED to pay up.

The sum and essence of his idea is this: “India has a management problem resulting in economic problem” [Source]. This is a really stupid idea – but is commonly prevalent among the ignorant. Apparently smarter managers will fix India.

Instead, of course, this is all about incentives – and incentive in India are totally skewed, thereby pushing out the competent and promoting the corrupt and incompetent + crony capitalists.

It might well be possible for someone to advise a private company without understanding incentives (although I fail to understand how anyone could competently do so), but it is impossible for anyone to say anything meaningful about governments without deeply understanding incentives.

I suggest that Mr Maira read BFN – which provides a COMPLETELY DIFFERENT perspective to his worldview. It will be educational for him to realise that India’s governance incentives MANDATE corruption at the highest level, and incompetence throughout the entire system.

Sanjeev Sabhlok

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