Recapitulation (Part XVI, the Last) Since the announcement of demonetization of Indian currency on 8th November 2016, I have written a large number of articles. The issue is not so much that the Indian Prime Minister, Narendra Modi, is a tyrant and extremely simplistic in his thinking (which he is), or that demonetization and the new sales tax system were horribly ill-conceived (which they were). Time erases all tyrants from the map, and eventually from people’s memory. According to the Global Slavery Index, an estimated 18 million Indians, equivalent to half the total population of Canada, are bonded, modern slaves. Photo via patrika.com My interest has been mostly to use these events to document the underlying causes of such utter missteps, which technically must be called stupid,
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Recapitulation (Part XVI, the Last)
Since the announcement of demonetization of Indian currency on 8th November 2016, I have written a large number of articles. The issue is not so much that the Indian Prime Minister, Narendra Modi, is a tyrant and extremely simplistic in his thinking (which he is), or that demonetization and the new sales tax system were horribly ill-conceived (which they were). Time erases all tyrants from the map, and eventually from people’s memory.
According to the Global Slavery Index, an estimated 18 million Indians, equivalent to half the total population of Canada, are bonded, modern slaves.
Photo via patrika.com
My interest has been mostly to use these events to document the underlying causes of such utter missteps, which technically must be called stupid, and to explain how the real disease runs much deeper and much wider, and that no solutions for this can be found in the next elections.
My interest has been to explore the socio-cultural foundations of India that keep it perennially poor, wretched, and diseased, a state from which it never seems able to escape. I have attempted to dissect the unwitting tendency of Indians to destroy any material or civilizational advantages, which in the last 300 years have all accrued as products of extraneous events: Free gifts of Western experience and civilization, management skills, and technology, all offered on a platter.
Vegetables being washed in sewage water. This gives shine and color to vegetables. But do you really want to eat vegetables washed in human excreta? Even for such basic commodities, one must look for a trustworthy seller. In a tribal society, big institutions simply do not work.
I have attempted to show that now that since the British left 70 years ago, Indian institutions have continued to fray, degenerate, degrade, and fall apart. The British left a robust judiciary, a university system, and parliament in place. Except for their facades, all these institutions are now soulless shells, something that politically correct intellectuals at the IMF, the World Bank, etc., completely fail to see.
The math is very simple: If Western institutions are to be imposed on India, such institutions must be run by Westerners as well. The corollary is also very simple: Without the British running India, India cannot continue to exist the way the British left it.
A minister in the government watering plants in heavy rain. This would be a joke, but knowing that these people rule India I consider it a tragedy. The photo shows C. P. Singh at a tree planting event on 17th July 2017 [your editor needs to chime in here: Indian politicians cannot claim sole ownership of the proud tradition of watering plants in the middle of a rainstorm. As we have reported in Drowning the Fir , the presidents of Turkmenistan and Belorussia have also not shirked their baby tree soaking duties just because there was a downpour. The plant in question was solemnly victimized near the Palace of Independence in Minsk last year [PT].
Photo via jansatta.com
India’s institutions must over a period of time realign themselves to reflect the underlying character of India’s society. That character, alas, is tribal and irrational, which the British, missionaries and Western education were only able to affect positively to a marginal extent over the 200-300 years of their influence. India must revert back to its medieval, tribal institutions, its violent, irrational way to “communicate” and deal with its problems, and never-ending internecine conflicts.
The future of India looks extremely grim, Modi and the recent events are nothing but passing symptoms of this. The British also left a certain way of thinking and social behavior among the middle class in India. One important aspect of this was the pride a minority in the middle class felt about freedom of speech. This is the last but rapidly crumbling pillar of the British heritage, which I want to address in this last article of this series.
Madhya Pradesh, a province with a population of 81 million, introduced compulsory flag hoisting in schools in January. From November 2017, when teachers take roll-calls in class rooms, students will be required to shout, “Jai Hind” (Victory to India, a battle cry, but also carrying strong Hindu religious connotations). All Western institutions implanted in India are mutating to cater to the underlying tribalism. “Nationalism” is not underpinned by any values in the Indian mind, but relates merely to an arrogant, geographical concept. Western-style schools are mere indoctrination centers. What India needs is critical thinking, not the mindless recitation of slogans and sound-bites. Such slogans and religious indoctrination numb the minds of these kids, making them worse than the uneducated masses. The weight of indoctrinated beliefs is such that after a certain age they are totally incapable of any individuality or capacity to think. They merely parrot what they are told. Adults incapacitated to think react with anger when reasoned with, and become tools of demagogues. Indian demography is a major liability, and very likely cause of the next international humanitarian crisis.
Photo credit: Majeeb Faruqui / HT
Demonetization: Now Officially a Failure
On 8th November 2016, India’s prime minister Modi appeared on TV to announce that a few hours later 86% of the monetary value of currency in circulation (Rs 1,000 and Rs 500 bills, about US$15 and US$7.50 respectively) would no longer be legal tender. This sent hundreds of millions lining up upside the banks to convert their unusable cash into legal tender. The government had made absolutely no preparation. The replacement currency bills had not been printed yet, in a country where 95% of consumer transactions happened in cash.
The knee-jerk move was a rather childish decision taken by a few senior politicians with little consultation with banks or economists. The problem was not just that they took a wrong decision it was also that they thought they could take such a decision without appropriate checks and balances. These are the same people who control the nuclear button and rule a population of 1.35 billion people.
Without a “monetary” system, the economy rapidly went into a state of trauma. Tens of millions were rendered jobless, as neither employers had the cash to pay salaries and input costs, nor did buyers have the cash to buy their products. Scared of the turmoil, even those who had cash avoided all unnecessary expenses.
A memorable “don’t panic” moment on the road to fully digitized Nirvana… [PT]
Factory and shop workers preferred to line up outside the banks to convert other people’s money for a lucrative commission. Wealth-creating activities came to a standstill. Vegetable prices crashed by as much as 50% as poor people who had lost their jobs were buying less. Farmers had to destroy their produce. Factories closed. A vicious cycle was set into motion.
People were given until the end of December 2016 to deposit their banknotes. They were required to use the banking system, which was clogged by then. The banks were also acting as extended arms of the tax office. Digital payment systems were run very unprofessionally and banks suddenly started to charge unapproved commissions and fees.
While the government wanted its largely illiterate population to go digital, it took the central bank another eight months to report how much of the demonetized currency had been deposited. While this number will be updated and increase in the next report, they have admitted that more than 99% of the currency has been returned. This figure is quite ironical, as a lot of people — in tribal and rural areas with no access to banks and those holding cash outside of India — failed to deposit their cash.
It is easy to conclude that effectively more than 100% of the extant cash was deposited with banks. On 9th November 2016, when I went to convert a part of my cash into legal tender, the person in front of me was found to have counterfeit cash. He managed to get his cash back by applying his influence on the manager. He very likely deposited his cash later in a rural bank where machines to check counterfeit currency do not exist.
In short, demonetization failed, it caught no black money, and quite hilariously, it actually helped to launder counterfeit currency by transforming it into legal tender. This was on top of the massive assault that the economy had to bear.
A sad moment: holders of “black” and counterfeit money receive the terrible news of imminent demonetization… [PT]
None of the Objectives Achieved
Despite the fact that government expenses — largely unproductive and often counter-productive — are up hugely, and statistics are being manipulated, India’s official GDP growth rate has fallen significantly, to 5.7%. In due time this will worsen significantly, for India is stagnating and very likely regressing.
Absolutely none of the claimed objectives behind demonetization have been achieved. As soon as people got hold of cash, they went back to their old ways of transacting. People are now storing more cash under the carpet than they did ever before. Corruption has increased hugely. The situation in Kashmir is extremely unstable. Terrorism is up; and India narrowly avoided a war with China.
Goons destroying shops with Chinese (or what they think to be Chinese) products as the tension builds up at the border. Ironically, as in the West, Chinese products are everywhere in India — the tools used by goons are likely made in China as well. For almost a month, Indian and Chinese troops stood face to face, and in at least one case fought with bare arms and rocks. China’s GDP is more than five times that of India. Both countries have nuclear capabilities. I am not in a position to know which side was in error, but Modi desperately needs to distract Indians and the international media from economic stagnation. Was he looking for a scapegoat?
One must revisit the fundamentals of Indian culture. Indian society is tribal and irrational. It simply cannot plan and undertake big projects, unless they are heavily subsidized. There is a reason why more than 50% of Indians still use open spaces as toilets. There is a reason why in virtually all of India, sidewalks, ambulances, fire-brigades, and roadside garbage cans — things that are considered elementary services in any society — are conspicuous by their absence.
Tribal and irrational people also lack moral instincts, empathy and compassion. Members of the so-called educated Indian middle class have no interest in the suffering of poor people. Even after they have emigrated, they soon forget how desperately they wanted to leave India. They strive to make India look good in the eyes of foreigners, not for the sake of India, but in the hope of vicariously making themselves look good.
Those who have gravely suffered due to demonetization still — and ironically, increasingly — support Modi. India lacks the history of revolting against tyranny, as people merely adjust themselves to the new ecology. India’s kind of drudgery and wretched poverty, which makes it worse than some of the poorest countries on the planet, does not come easy in this modern age of technology.
Nothing fazes the common man in India… a R.K. Laxman cartoon (see also further below) [PT]
As any person with a basic understanding of probability, data security and the realities of India would have seen, India’s centralized ID system, Aadhaar, was going to turn into a disaster. About eight million fake ID cards are known to have been issued. They cloned fingerprints, etc. There simply isn’t such a thing as “fraud-proof” in the real world. The card is used for all kinds of tyrannical intrusions, although the benefits are yet to be discovered, for the poorest are still running from post to pillar to get a few rupees promised to them.
Photo credit: B. Das / AP
The new GST system has been an unmitigated disaster. There is a plethora of rates. There is a minimum of two filing requirements per month, and a requirement to upload invoice details to a server, which keeps crashing. Two months after GST was imposed in an unplanned way, no one — not even those in the government — knows what the rules really are, which keep changing to boot [ed. note: India’s GST rules are simply impossible to interpret in some cases; the chaos businesses are faced with is described in this Reuters article – for instance, the different parts making up a personal computer are taxed at different rates. What to charge for a laptop, which is a single unit? No-one seems to know. In the meantime the government has been forced to cut its planned infrastructure spending, as tax revenues have come in almost 50 percent (!) below plan. [PT].
The Genie of Violence is Out
What terrorism and corruption mean in the Indian context requires one to dig deeper. India’s governing principle is fear, delivered by irrational representatives, who are elected by an uneducated and superstitious populace, all driven by their tribal affiliations, unanchored to reason or morals. In this predicament, no solution to what looks like terrorism and violence to the rational eye can work.
Corruption is another curious issue. What looks like corruption to the West can hardly be called corruption in the Indian context. India’s society is not based on moral calculations, but on expediency. What is good for the tribe is what is considered right. Western institutions based on the rule of law simply do not work under such conditions.
People support “anti-corruption” drives as long as they are beneficiaries of them, but will refuse to honor them when they can be “corrupt” for their own gains. It is virtually impossible to find an Indian— both in the public and the private sector —who will forgo gains from corruption when he can get away with it.
Anyone who thinks that violence and “corruption” can end in India lives in a fool’s paradise. As the institutions the British left behind continue to fray in India, corruption and violence will actually get much worse over time, regardless of short-term noise.
According to Indian laws this is illegal. But so what? Constitutions and laws are mere ink on parchment. For a culturally tribal society, there is no escape from such a medieval existence, and in India’s case, regression towards it. Stricter laws will not help. Democracy certainly does not help, for this case is indeed a case of democracy in action.
Violence is an inherent part of the Indian psyche and social arrangement. In an irrational society, violence and might is the deciding factor. Honor killings, misogyny, misandry, the caste system, and incest have forever been a part and parcel of Indian life. These things happen mainly because the perpetrator does not even know that what he is doing is wrong. His perceptions are based on his tribalism, not any concept of morality.
Gauri Lankesh, a journalist, was shot dead on September 5, 2017. While no motive is known, Hindu nationalists have increasingly targeted journalists and writers for voicing their views. Even anti-superstition activists have been murdered. Fanatics have created convenient sound-bites, which are now well-accepted by the irrational populace (particularly the so-called educated): “pseudo-secular” (read, pro-Islamic terrorism), “presstitude” (read, prostituting press), “anti-national” (read, does not go along with Hindu-fanaticism), “libturds” (read, leftists; in the Indian context right-wing is about religious fanaticism or ultra-nationalism), etc. Contrary to the popular perception in the West, India is a violent society. Reporters Without Borders ranks India among the three most dangerous countries for journalists in the world, below Pakistan and Afghanistan.
Photo: Facebook page of Gauri
Freedom of Speech
When the British left India, it was assumed to be a democracy. What people hardly noticed was that those left in political positions had been mostly selected by the British. Those the British left in power, their children, and now even their grandchildren, are gone by now. Modi represents a complete break from the British legacy.
India’s tribalism is now in full force. The concepts of individual liberty and freedom of speech were completely alien to the societies of South Asia. They still are. Might is right was and is the ruling principle.
During colonial times, elite Indians were trained and educated in the UK. English rapidly became the language of those who wanted to be seen as sophisticated. British mannerisms were rapidly accepted by the who’s who crowd.
Even the most uneducated tried their best to drop as many English words into their local languages as possible. Today, local languages spoken in India are heavily larded with English words. Close relatives talk to each other in English, even if their mother-tongue is a local language. Even when their English is rather weak, they still use it as much as they can.
Indian dresses have mostly gone out of fashion, particularly in urban areas. Every middle class Indian aspires to go to least one foreign country if he wants a place in his social circle. He must have English music blasting away in his car. He must watch English movies. And he should never ever be seen reading a non-English book — although reading habits are virtually non-existent in India. If you speak your local language without larding it with English words, you are seen as a backward slob.
Apposite cartoons by the late R.K. Laxman, a famous Indian cartoonist (the unperturbed “common man” on his bed of nails further above was also drawn by him; he invented the “common man” cartoon figure in 1957, which became a highly popular staple of his work). [PT]
Indians never understood that it was not the form, the facade or the clothing that gave massive success and superiority to the British. It was the British frame of mind, which was anchored to reason, which allowed them to navigate the world, optimize their position, and benefit from it. Indians have adopted the packaging, but they have not only forgotten the substance, but lacking the concept of reason, they could not even see the substance.
One very important aspect of British social behaviorism that was accepted as a sign of sophistication in India was freedom of speech. At least among the formally educated, even if they had no comprehension why freedom of speech was important, some learned to approve of it. You could find flaws in a person’s religion and not have to worry about giving voice to your finding.
Contrary to Pakistan, Sri Lanka or Bangladesh, freedom of speech managed to survive much longer in India. India wasn’t much better in other human indicators, but its massive ethnic, lingual, regional, etc. diversity meant that there were far too many inner conflicts for the any single dogma to become powerful enough to take a position against a small minority that held on to its views.
India’s respect for freedom of speech — as was the case in Pakistan and Bangladesh — lacked the foundations of reason, respect for the individual, or craving for liberty. With time, as the distance from British rule has grown, this once deeply inculcated social behavior has slowly but surely begun to dissipate.
Over the last few years, suppression of freedom of speech has picked up pace. Western media portray India as the place of Gandhi and yoga. This is quite erroneous, particularly when the last classical liberties are now waning in India.
In this series of articles that started with my expose on what was happening on the ground during the demonetization of 86% of monetary value of Indian currency, my key interest has not only been to show what was happening but most importantly to explain why it was happening.
My interest has been to show that without the British to run them, Indian institutions are now rapidly regressing to their pre-colonial, quasi-medieval, tribal past. Indian culture is tribal and irrational. It simply cannot maintain, let alone create, institutions of the type the British left behind.
Freedom of speech is one of the last surviving major pillars of the British legacy, but it has weakened significantly and is rapidly crumbling further, with Modi as a major catalyst.
R.K. Laxman gets the final word – the Indian space program decided to take advantage of the common man’s resilience… [PT]
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.