Third, contrary to what Keynes said, the long run does catch up with you. Most of the issues we have focused on have been about short-term boosts to growth. And the temptation to take the short cut is still dominant in our discourse. Growth will not, contrary to what some economists claim, take care of the environment. Our air and water are now irretrievable, imposing huge costs. Health and morbidity directly affect productivity. Power is susceptible to the illusion that the way to signal you are doing something is by throwing money at it. This might work in infrastructure and energy. But money is not the biggest issue in three transitions a new government has to accomplish: the transition from deals-based to rules-based capitalism, the transition from welfare to jobs and productivity, and balancing growth and sustainability. Even in education, money is not the big issue: institutions and pedagogy are. We don’t pay attention to them because their complexities puncture our hubris.
Fourth, macroeconomic credibility matters. The previous government made three mistakes born of hubris: that the laws of macro economics will not apply to India, that growth is India’s birthright and does not need to be nourished, ad hoc administrative interventions on everything from tax to regulation will not take a toll. But macro economic credibility once lost is hard to regain. This is because it is as much about a psychological projection of assurance about the future as it is about numbers.
Fifth, power itself creates a form of intellectual closure. One of the most disfiguring things about the Congress was the way it enfeebled intellectual culture within government and party. It was not overt censorship, but the creation of a culture where only what people thought leaders wanted to hear percolated up. Never had a leadership so cocooned itself in its own platitudes, so much so that even in the shock of defeat there is no thinking. But the insidious thing about this intellectual closure is that it can happen without direction. It is more likely to happen in a structure where all power is dependent on the top, no one stands on their own ground, intellectual or otherwise. The government was done in because it had no honest brokers left within its own system. Even someone as savvy and well-meaning like Nitish Kumar was done in by the fact that he began to believe in his own mystique, and forgot the contingent social alliance that made him possible.
Sixth, power is a function of projecting credible narratives over time. One of the big transitions governance has to make is replacing discretion with public reason. If the reasons why government is doing something are not apparent, half-believable, even correct decisions can become a liability. Indian governance systems are not used to public reason. In an age where transparency pressures are great, stealth will always carry the odour of suspicion. It is better to explain fully up front, than to have to explain away ex post.
Finally, there is hubris in continued…