The best analysis of “Manmohan Singh’s ‘In the long run we all are dead’ speech

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long run dead
Courtesy: . REUTERS/B Mathur

In the movie, Angels and Demons, when the Camerlengo (the temporary head of the Vatican Church) requests the Cardinal to abort the conclave (the joint meeting of all the Cardinals to elect the new Pope), given how the Vatican City was under the threat of a bomb created with anti-matter, the Cardinal, quite casually, asks the Camerlengo to rest his faith and the fate of all the souls in the City in God, and tells him that each one of us is heaven bound, eventually. Taken aback, the Camerlengo discards his advice and remarks over his recklessness, calling him a man who has already sought the blessings of a long luxurious life. Ignoring the complete context of this movie, one can focus on this small exchange to make sense of what our former Prime Minister discussed in the Rajya Sabha a couple of days back. Quoting Keynes (one of the prominent names in Economics in the 20th Century), he remarked, that in the long run we all are dead. For Dr. Manmohan Singh, an economist from Cambridge, the opportunities for rural people, the constraining of people hoarding money illegally, and the development of the biggest democracy of the world were a slave to a shallow intellectual thought, which was, in the long run we all are dead. One can be glad economists like our former PM were not fighting against Hitler in the 2nd World War, or else, who knows, we would all be living in a world being controlled by fascists.

Dr. Manmohan Singh, in the absence of the Gandhi Family, made a compelling speech in the Rajya Sabha. One wishes that this majestic delivery of dialog came when it was essentially required. The country was being plundered in the name of democratic rule by leading Ministers and relatives of the Congress, and then, that ‘Economist from Cambridge’ rested his action in silence and the honor of his office in the whims of Congress Party President. Coming back to the present, the speech focussed on the informal sector and agriculture, and how both had been impacted by demonetization. He also asked if there were any countries where people had been asked to undergo similar inconvenience, or about any country where people were required to deposit their money without being able to withdraw it. Clearly, that ‘Economist from Cambridge’ chose to ignore the importance of research and forgot how countries in times of despair requested their citizens to ration their food, and how those citizens honored their responsibility towards the country by cutting down on their food intake (The British in World War-2). Allow me to remind you that there is no plastic substitute for food. Dr. Singh mentioned about the plight of the rural people who were suffering due to demonetization and the anticipated fall in GDP. We shall return to all these aspects later in the article, but first, let us dig into the phrase that gave every shallow intellectual and stooge of the Congress in the media a mini-orgasm; ‘In the long run we all are dead’.

‘In the long run we all are dead’ is a phrase with multiple interpretations. To begin with, shockingly for some, and surprisingly for many, the phrase ‘in the long run’ doesn’t depict calendar model or time as the way we see it in an economic terminology.

However, this did not deter Keynes from using the laymen meaning of the phrase to criticise his predecessors who believed that a market unhampered by recession would continue to grow and thus solve the problem of unemployment. Instead, the term ‘in the long run’ is always used in the context of a specific model, which in the case of Dr. Singh, we can safely assume was demonetization. Therefore, the ‘long run’ in the model of demonetization would be when all the variables within the black money hoarding and trading structure are accounted and adjusted. The variables of the demonetization structure could include the number of people who don’t pay their taxes, the inflation in property prices, the gold trading that goes on in bullions, terrorists and Naxalite funding, people in the informal sector, corruption and state and national levels of bureaucracy, the need for inclusion of the rural people in banking and technology, and so on. All these factors would have to be adjusted to perfection for the model to work in the long run. The adjustment could take months, years, or even decades, depending upon the implementation. Turns out, if in this given economic terminology we all are dead in the long run, aren’t we dead in the short run already?

 

Let us take another example to understand the phrase ‘in the long run’. For instance, the government starts levying taxes on every bar of chocolate you buy. Given how chocolate is consumed, you would expect a sharp rise in the government revenues in the long run. As taxes on chocolates come into play, many people would opt for candies or sweets instead of chocolates, thus shifting away from chocolate consumption. Therefore, in the medium run, we could see a decline the demand for chocolates, and eventually, a decline in their production too. Therefore, instead of chocolate production, companies would now go in for candy production, thus signalling an effect of the long run, that is the change in the production process in the long run. Every policy, like demonetization, is going to have a short, medium, and long run, and it is not possible for any policy to have a unanimous support, and therefore, the decision for their introduction, execution, and implementation would and must be dictated by the prospects of welfare to the country they are being introduced in. Even demonetization had a negative impact on the bullion gold traders, people who had invested heavily in the property for returns, and the ones who had piled up stacks of currencies at their place, and therefore, it is pointless to expect a complete support for the move. Even Dr. Singh couldn’t hold back from saying that the objectives being targeted are right which is integral to policymaking. Long or short run, if I have to be dead, it shouldn’t be from terrorism.

The phrase ‘in the long run’ offers us a lot to introspect about. What Dr. Singh meant was that we don’t need such short-term reforms that cause immediate distress for something that would benefit the nation in the long run. Clearly, Dr. Singh added the quote from Keynes to supply weight to an argument made in favor of the burden that is being shared by the population of this entire nation. A decade from now, when the world would have adapted to cashless transactions, our rural population and traders would struggle with currency because we were not ready for 50 days of distress. A decade from now, we all shall be the victims, emotionally and physically, of a terrorist attack, and when the report from an SIT would come, it would say that the terrorists had stocked enough money to carry out their dreadful operations, about which we were not ready to do anything because an underachiever thought that we all are going to be dead in the long run anyway. While Keynes made the argument of ‘in the long run’ for a specific business model that might have dealt with unemployment benefits, Dr. Singh casually used it to dictate the fate of a nation that makes up for 18-20% of the human population. Turns out, curbing black money is much bigger than looking at what the prospects in the long run have in store for us. Kejriwal can keep fantasizing about a deal between the PM and Paytm, but on a personal level, as the citizen of India, I’d want every vendor in the Golden Temple or the Taj Mahal to have Paytm or any prominent mobile wallet as a mode of transaction while selling to travelers. Along with going cashless, it is also about having the rural people inculcated in the tech advancements of our nation. ‘Sabka Saath, Sabka Vikas’, eh?

 

Let’s talk about distress now. Last week, Times of India carried out a short news report in their print edition about a marriage that was called off due to lack of cash. The bride’s family couldn’t pay for the greed harbored by the groom’s family, and therefore, demonetization, not dowry, became the nucleus of criticism. In areas of Delhi, people were paid to stand in ATM queues to cause distress. Alongside, one cannot deny that a certain number of deaths might have occurred due to demonetization, even though it seems far fetched to link them both (not that far-fetched for Mayawati). However, it would be important for the government to have a crackdown on every hospital that refused to accept the old currency notes. This was one the major flaw in the entire implementation process and led to a dent in the credibility of operations of the NDA Government. Let us now move to the other aspect of distress which was being faced by the middle-class population. A few days back on Quora, I came across an answer from a serving IAS officer about their lifestyle in which she mentioned about the inability of a civil servant to own property the right way. As someone who makes decent money himself, I can’t think of owning a house, given the inflation that was prevailing in property rates. Is this not distress? Does an hour of standing in an ATM queue balance the inability of not being able to purchase property for one’s entire life? Leaving it as a matter of perspective, let us now remind ourselves that only 4% of the population pays their Income Tax. Isn’t that distress and given how most of you reading this would witness 100 years of an Independent India in your lifetimes, and yet, we are far from having a basic infrastructure for all our citizens. Isn’t the inability of our corruption free government to raise the bar of infrastructure have something to do with people not paying their taxes? Distress is a matter of perspective, but for Dr. Singh, some distress is ‘more equal’ than the others. To be honest, I don’t want my kids to question me about the lack of toilets or schools in rural India or question our integrity and ability as citizens to bring a change because we were not ready for some ‘distress’.

Dr. Singh also mentioned Agriculture. While some farmers have managed their way through this period, there also those who haven’t been that lucky. However, there is one aspect of Agriculture no one discusses or the mention of which doesn’t find its way in each evening briefing from the Lutyens’ media. This aspect is especially for the ones who think that every bit of black money is stashed in Swiss Bank Accounts ending with number 83 and 84. Here is some background; in the financial year of 2015-16, 0.5% of the GDP, that is an amount close to 73,000 Crore Rupees was set aside for fertilizer subsidies. 70% of this amount, that is close to 51,000 Crore Rupees was set aside for urea, one of the prominent fertilizers. It is important to note that urea meant for only agricultural use is subsidized, and therefore, there exists a black market eager to divert the subsidized urea to commercial and non-agricultural uses. A large chunk of it is supplied to Nepal and Bangladesh, that is an estimated 20,000 Crore Rupees worth of subsidized urea goes directly to these two countries, leaving the government to suffer from the loss. In percentage, 40% of urea was lost to smuggling in 2012-13, and 4 years later, the amount would be greater only. This leaves our farmers in distress, with over 50% of them having to buy urea at an expensive price from the black market. The price of the black market is 60% more than the normal price, while the normal price is 1/3rd of the import price (the government is taking care of the deficit). Given how farmers suffer each year to extreme weather conditions, an extra and extravagant amount to be spent on urea is a huge distress. The rich farmers get their hands on excessive urea, while the poor ones are left with whatever they have, thus leading to adverse effects in both the cases on the soil and our nation’s agricultural productivity. Only with urea, a single aspect, a black market thrives that causes the government to lose 20,000 Crore rupees each year. To put things in perspective, on an average, the government requires 5000 Crore Rupees to deal with floods across India each year. So, are we ready to let our soil rot in the ‘long run’ with declining agricultural production?

Dr. Singh mentioned about the informal sector and its plight, but what he and all other media houses forgot was the Global Competitiveness Report from the World Economic Forum which clearly highlighted India’s major economic problem in the exclusion of its informal sector from the economy. Even though India moved up to the 39th place, a 16-position jump from the last year, and the second in the last two years after the coming of the NDA Government, the exclusion of the informal sector is a big problem. As a country that boasts of the strongest growth rate in the G20 countries, it needs to do more to inculcate its informal sector in the economy. Let us take the example of PG Owners in the National Capital Region. As told by one of my friends, some PG owners are only accepting payment in cash, and many of them hide their PG Business as that leads to commercial rates on electricity and other civic amenities. To cut it short, the informal sector is not just only about the vendors on streets, even though some of them make more money than a Software Engineer, but also about the likes of these PG Owners, rich street food business tycoons and so on. I also got into talking like other bloggers with the domestic workers in my society and office, and leaving one, each of them had an account through the Jan Dhan Yojana scheme. The ones left out are now looking to have a bank account before the inception of the next financial year. According to the Global Competitiveness Report, after Tax Regulations (GST would take care of this in the next financial year), Corruption is the next big problem hindering development in India, and what better way to tackle corruption than demonetization?

Coming to the GDP, which experts have suggested would go down by 0.5% in the second half of the ongoing financial year. While the GDP could suffer in the short run with long-term benefits, one cannot disregard the assistance that demonetization would offer to reduce inflation and in the reduction of the fiscal deficit. The spending would surely go down this year, but in the long run, the situation would be normal. Will the issue of urea along with other issues pertaining to black money be resolved in a day or a year? No, they wouldn’t be, this is a step in the right direction. Many who contributed to the process of nation-building in the 20th century did not see an Independent India, and yet, they did what they had to do because it’s not about us being alive in the long run, but leaving something for those who would be. Unfortunately for Dr. Singh, the ‘long run’ is quite similar to the calendar time and therefore, not many would embrace an argument so shallow in reasoning and ambition. For the ones who were happy being an underachiever and puppet in the hands of a powerful few, the thought of eventually being heaven bound does make a lot of sense, but for the ones who want this country to be a global superpower, the sky is the only limit, with or without heaven.

Again, PM’s lack of formal and foreign education was the center of criticism. To answer this I shall quote my own update from Facebook, if an education degree was a gateway to sustained success, America would still have horse shit on its roads and the world wouldn’t know of Assembly Line Production; Romeo and Juliet would be unreal; Tom Sawyer wouldn’t have been an integral part of our childhood; Churchill would have allowed Hitler to invade Britain; Black Slaves would still be a reality; and Sharjah wouldn’t be the best memory of the 90s for all Cricket fans. If you dislike PM Modi for his policies or party, you are entitled to, but if you hate him because he was a ‘chaiwallah’, you surely have wasted 15 years of schooling and additional years of college. Fortunately, the country isn’t interested in wasting that kind of time when it comes to curbing corruption.