The Long Road

In the long run all policies turn bad

A public policy is designed to address a problem that’s here and now. If the problem weren’t urgent, the state would have demurred. That isn’t a bad idea. ‘Do nothing’ or ‘indulge in rhetoric’ are often sound public policy choices for the state. The need to act often stems from the urgency of the problem on hand. The policy is then designed based on any of the classic approaches in policy making (Bardach, Howlett & Ramesh etc). One of the steps involved is to ‘project the outcomes’ of the policy recommendation. This involves quantifying the benefits, forecasting future scenarios, testing the policy and intuiting undesirable side effects.

Now, it is humanly impossible to predict all the future scenarios and the likely undesirable side effects of any intervention. Many of these emerge over time through a combination of change in the ecosystem or arrival of other factors that you hadn’t foreseen. My hypothesis is if you let a policy run for a long period of time (more than 20-30 years) untweaked, its undesirable side effects will outweigh its benefits. All the benefits would be internalised, and policy architects will be questioned (best case) or condemned to ignominy (worst case) because of the long-term societal costs.

In India the classic example of this hypothesis is the contemporary view (post 2000s) we have of the Nehruvian statist model of economic development that was adopted after independence. It is difficult to sit here 70 years later and appreciate how the policy analysts would have viewed the terrain and the resources available to them then. The policy might have worked for about 10-15 years when the state was the only agent with resources. It should have merited a serious relook in the mid-60s when the undesirable side effects of state overreach and inefficiencies were beginning to hurt. Instead we deepened our statist impulses and by early 70s the evidence of complete failure of the Nehruvian model was staring at us. The policy by itself wasn’t bad for its time. But we let it run unchecked long enough for it to turn bad.

The story of the Green Revolution is somewhat similar. It wouldn’t be overstating things to say India was down on its knees in 1965 with the double blow of war and famine. Agricultural productivity was low and a booming, hungry population had India at the mercy of US for food aid. Over a period of 3 years, M.S. Swaminathan, C. Subramaniam (union minister of food and agriculture) and Norman Borlaug developed India’s modern agricultural development policy that focused on high-yielding varieties of hybrid seeds and intensive usage of chemical fertilizers. Over 25 years, the per hectare output went up 3 times, the wheat production increased 5 times and most other food grains output went up 2-3 times. By conservative estimates, the policy saved over 200 million Indians from starvation and malnutrition. But by 80s, the undesirable side effects of Green Revolution started to show. The benefits of increased farm productivity were collared by rich landlords while small holders were immiserated. The environmental costs were huge. Excessive usage of fertilizers destroyed the soil and poisoned the ground water. Keith Griffin summed it up as “the story of the green revolution is a story of a revolution that failed.”

Borlaug remained sanguine in the face of such criticism. In his outstanding book, The Prophet and The Wizard, Charles Mann writes how Borlaug had only one question for his critics: what’s their counterfactual?  Where would those developing countries be today if their population growth remained the same and they didn’t have the gains of Green Revolution?

I’m in the Borlaug camp. You can design a policy to solve for a pressing problem on hand. You project the cost and benefits that are identifiable then and you make your trade-offs. The expectation is future policy analysts will keep an eye on the side effects and tweak the policy over time. To over-weigh future costs that aren’t clearly visible now while overlooking the dire needs of the present would be catastrophic. It is better to err on the side of caution to address today’s needs. You may be judged poorly by the future, but they didn’t have to contend with the equivalent of Sophie’s choice that you did.

You have to reconcile with the idea that in the long run any policy recommendation will turn bad.

Is the world overreacting in its response to Covid-19?

There’s a school of thought that believes the global response to Covid-19 is not in line with any conclusive evidence about the spread and mortality rate. Our overreaction will hurt the economy badly and we might lose more lives and have more livelihoods impacted because of it than the pandemic. This argument has waned in the recent days, but it still retains some currency.  

While it maybe true we haven’t got scientifically conclusive data about mortality or R0 (spread), I find this argument specious. The counterfactual of not doing anything could be a humanitarian disaster on an unprecedented scale. Also, the economic impact can be controlled through specific monetary and fiscal policy steps. These might lead to hard times for a few quarters or even years and might be viewed as a ham-fisted policy reaction a few decades down the line but that’s a risk worth taking.

In any case, all policies turn bad in the long run.

Lastly,      

We are gradually stepping into a complete national lockdown mode. This is the time to do all that you couldn’t because you didn’t have time (yeah, right). Read that book. Watch that movie. Write that screenplay. Learn something new – coding, crochet, casting.

Cooking? Chinese, maybe.

Maybe not

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