Distractions in politics are a fascinating concept. For the longest time, I've seen them as the purest form of Realpolitik. An act carried out purely for the maintenance and the propagation of power. It's easy to mask it under guises, but at their heart distractions, misdirections and manipulations work on the same principles of smoke and mirrors that drive most moves carried out to gain power. There is, however, real value in them for the greater good. Like the proverbial placebo, sometimes the belief that things are likely to get better does make things get better. In the economic context of politics (as shockingly underrated context), uninvested money held in reserve flows back into the market, the courageous see enough opportunity to build businesses, the established see better chances of expansion and start hiring driving towards greater risk and with that, potential reward. Hope drives commitment. And commitment drives progress. You cannot produce without at the fundamental level setting resources into action. In a conceptual sense to progress as an economy is to produce more and possibly to produce more efficiently. And that takes resources, whether it is oil or cement or salt or manpower. And what is money if not the correlated representation of resources? A dollar is at once a few kilos of Cement, a few litres of petrol and possibly a few grams of gold at once but only ever one of them. Depending on your needs, wants and tastes. That's all it is and conversely that's exactly what it is. To be more precise hovewer it is the ability to command those resources. At its heart a dollar is a license to command 1/80 trillion (The global gdp) of the world's resources as we value them. The value of something may vary by location but the net value of everything as valued by the people who trade in it on the net (Because price varies ever so slightly from place to place and person to person) and use it sits at that princely figure.
The reason why then, that the placebo works is because it encourages people to do things they wouldn't do if they saw the truth. If we need to get a stuck wheel moving in a stagnant economy it often takes a few lemmings jumping off the cliff to start things off before one or the other business built in the bad economy takes off, setting things in motions. Of course, nobody wants to be the lemming (A creature famed for its apparently suicidal behavior) in business. If the people don't have jobs and don't have the money to buy the product the factory is likely to fail, making little sense for investment. But without investment, you cannot have growth. It is a vicious cycle. Money uninvested is the equivalent of resources hoarded. Cement in a warehouse and Oil in a refinery stored in drums does no good for the world if no cars are driven and bought and buildings and factories built. Without these things we don't produce more and end up with no growth, irrelevant of the money we print. When you lose money, it is these resources that you're losing, if the factory is run into the ground, all that iron ore for the machines and concrete for the construction are now worthless and rotting. To reuse some of that would take even more resources like heat to melt the iron to reshape it in the form of coal or other incendiary materials. As such then we have lost value, what we built is worth less to the world than it could have been in say a better run factory.
In a sense then it makes sense to manipulate perceptions to drive optimism. In the greater picture, the greater commitment you drive the better it is for the economy. Or is it? If there is a fundamental disease at the heart of the beast it might take more than a jog to fix it. The more you commit, the more you are vulnerable. There is a reason reserves are maintained in war. As the great German general Carl Von Clausewitz theorized there are no certainties in war, merely probabilities. As such there are no certainties in economics either, merely possibilities and their probabilities. If the business is really likely to fail, then you have put all those resources in harm's way by encouraging the investment. You end up setting risk calculations off a fair bit. In the big picture, this means more businesses will fail than expected. When they fail, and enough of them are likely to fail if the situation is dire enough at the fundamental level due to some truly fundamental problem, (Inefficiencies in governance, excessive corruption, threat of violence and social discord as some possibilities) then all those failing resources are likely to drag you down.
It is a prevailing theory that the '08 crisis was less devastating to some extent in India partly by the widespread spendthriftiness of the Indian populace and their investments in gold. A relatively stable if slow-growing investment which is known to weather recessions well. This, if true is a classic example of the benefits of not committing and the values of committing. The west was leveraged and committed to the hilt, with a large percentage of the populace and even the governments in Europe and the US in deep debt on housing loans and the like, driving aggressive growth and prosperity. But the growth was built on a rotting core of inefficient lending. Nobody was producing enough value to exchange it for buying those houses. They were built, priced and paid for on a lie. If you're not producing as much as you're receiving, someone is paying for it. And they're eventually gonna stop or run out. And so when it fell apart, all those inefficiently committed resources were worth shite. In India, a lot of people it seems had a reserve of uncommitted resources in the form of gold. They were sitting around doing nothing. As such they could do no good for the economy when we were growing. All that value in the form of cash could have been sitting in our companies as investments or our banks who would have further invested it or even government bonds to build roads. But instead, the gold bars and necklaces and the occasional bangles sat in lockers doing for the most part nothing. But for all the good they did, they were unlikely to disappear in there. Considering that there was a rotten core at the heart of the economy the optimism, then was misplaced and it was best to pull back resources and carry out emergency surgery (Regulations, arrests, taxes variations and the like) on the economy before declaring it safe to further commit. The Indians in their general emotional love for gold seemed to have carried out this wise measure (Without the surgery bit it would seem) holding back resources from what it turned out was a toxic bet. Hovewer a toxic bet is a toxic bet and it eventually pays off. We didn't exactly go scot-free on the crisis and the fundamental issues in the economy would bite us in 2011 as growth would take a hit. Nonetheless, gold made for a strong shield for the Indian economy and also a great deadweight. Better deadweight than a bomb, I guess.
In recent times we have seen little dearth of distractions, whether it be the boorish behavior of Trump and his glorious tweets (History shall remember them, for better or for worse) or the suspiciously timed CAA crapshoot. The law itself I have no interest in, but the timing is fascinating. The Modi government has carried out every distraction in the playbook all the way to manipulating the numbers (Changing the GDP metrics for better or worse but definitely raising the numbers on the net) and passing laws that if nothing else acts definitely as a distraction. It is a ploy right out of the Chinese playbook (Heavily accused of manipulating numbers among other things) and by that, I mean that only as a compliment. If done right, the Chinese have proven that controlling perceptions can drive aggressive growth. That among a slew of measures. Of course controlling information only goes so far. The Chinese economy is a beast built on far more legs than one. But it seems to help considering their absolute obsession with controlling the flow of information and the perceptions it builds. Going back some time the Chinese attack on India in the war of 1962 was carried out under the cover of the Cuban Missile Crisis with the US too deeply engaged in a near deathmatch with the Soviet Union to bother with non-client states like India. Conveniently ending the war in a unilateral ceasefire and pullback at the conclusion of the crisis.
It's fascinating because Nehru is always accused of short-sightedness in the assumption that the Chinese wouldn't attack. On the other hand the attack was truly a foolish thing to do under any but the most precise circumstances. The assumption that those circumstances would never arrive was the real flaw in thought process, and that is a far more common flaw for a person to have. It's almost defensible, perhaps. Especially when you consider the inefficiency of money spent on an idle defensive military that brings no plunder or loot. Especially in a poor country. The Romans would learn that lesson to the extent that it would bring their civilization down almost all on its own. Perhaps there is wisdom to be had even in wrong decisions.
Nonetheless, can you blame a man for not preparing for the impossible? The Cuban Missile Crisis was after all a once in a generation event. A statistical anomaly. Give it enough time however and by the very laws of probability that deem it improbable, a statistical anomaly becomes a virtual certainty. Throw enough dice and every combination is a certainty. With every moment being the equivalent of a fresh die being thrown into the works, it starts to stack up pretty quick. Nonetheless here again we see the power of a distraction done right (Quite fortuitously for the Chinese). So if we are to look at the recent set of events we have seen and the reaction to the economic downturn from the lens of a distraction from other troubles far more prevalent, you start to see a fascinating problem.
If the condition of the economy is cyclical (A bunch of bad decisions made in the good times paying off in good time. The classical arc of history) and not something systemic (Say a certain cash suction act carried out in the recent past massacring businesses like chickens at the poultry farm) Then this makes great sense. A placebo is what we need. If however, it is a systemic problem then we are throwing money into the incinerator. Potentially good money joining bad money in an unholy purging of the economy. The government has been pushing an image of goodwill, barely acknowledging the downturn and if they were more competent at it we'd believe them. But claiming Ola and Uber are killing car sales has only so much mileage. And claiming onion prices don't matter cos you don't buy them, well the less said the better. That itself is sad. Even the propaganda here sucks. The CAA then rides in like a horse-mounted knight in (very) shining armor distracting us from a growth rate that might be as low as 1.5 percent (Improbable that that number holds up to serious scrutiny, but when the official facts are manipulated anything seems to go, even the words of an often inaccurate Subramaniam Swamy) which is developed country levels. They might have bitten more than they can chew on this one with the protests but it sure is effective. Like killing a fly with a flamethrower. It's not wise to kill bad news with more bad news. The one thing worse than an anemic economy is an unstable and arbitrary one. Then we're right into Afghanistan, Iran and Iraq territory (A purely economic point). By the time we're out of this crapshoot, the economy should hopefully be turning around. But then what is the fascinating problem I was talking about? Well, it goes down to the fundamental problem with lies. For it is the level I've found most effective to operate at. What is the greatest threat that comes with a lie?
Remember the last lie you've told. Could be a white lie, a perfectly decent one. But it must have been believed. Remember the last effective lie you told. The bigger the better. There is a mechanic to it. The best way to tell a lie is to absorb it. To let it flow through you as if it were the absolute truth. As if you were convinced of it. And for the moment you are convinced of it. I remember the moment I had the epiphany as clear as day. I remember stating to someone I had so much work done when I had done none. I remember smiling to myself thinking about all the work that I had done and that the position I was in was tenable on ending that call. And then I remember catching myself. It was jarring. No work had been done. All of it was left. The greatest threat in a lie has nothing to do with the act itself. For all the threats that that may bring the greatest threat is that one may believe it oneself.
It remains the most puzzling of human phenomena, so much of history driven by irrational foolish acts that from even the objective perspective of only known information at the time were carried out foolishly. Delusion remains the most fascinating and underrated of human phenomena. We never consider it because we cannot perceive it. It seems so unnatural to be blind to the truth. Especially when it stares us right in the face dancing around with pom-poms and with loud music playing in the background. It's easy to ignore something one has no interest in, especially when there are images of glory and victory beyond. The possibility that things will remain as they always have been or as they currently seem to be. The assumption of Homeostasis as it is called is intoxicating. And yet it is tempting, tugging at us constantly. Did the CEO of WeWork not see that he was making foolish deals that simply could not pay off. That there was no profitable endgame to his business plan. Maybe he could, maybe he was malicious in his attempt to steal from investors, but I have come to prefer the alternate perspective. It would take something to fool that many people. But to believe in it oneself, that makes all sorts of lies easy. In effective conmanship the first man you have to con is yourself. It's the sort of victory that comes with a ticking bomb. Like Napoleon and his blustering confidence. The same confidence that drove him to challenge all of Europe drove him to march into Russia. Tick Tick Tick Boom. Bernie Madoff should've known that his investors would come calling someday. That was a bomb, that simply had to go off. But in all the money and the sex and the occasional gold chains, it's a hard thing to see. It's easier to see only what you like. To turn the lie into reality, until it comes crashing down, and it very often does. But in Modi's case, that lie he talks about is our reality. When the leader falls to that common sickness that is delusion, it is the people who suffer. It is the men who serve under his command that often take the blow. It might be the greatest threat we face. The lies are all good, and the tricks and the smoke and the mirrors all decent and acceptable maneuvers but never forget the pulsing truth underneath all the shimmer. The country isn't doing well. Spread optimism and hope but work underneath the hood in silence, lest the car may blow up while you rev on the accelerator. A torn gasket is probably better fixed than ignored. Who knows what the truth may be. Perhaps we truly have a master at the helm. I certainly used to think so. I thought we finally had someone who could see what mattered. The big picture leader that long term growth often requires. And everything seems to line up but nothing seems to work. And it does well then to remember under these circumstances that it is a man that is at the helm. With all the flaws and strengths and tendencies that come with it. It's not a symbol or a character or a set of ideas on an agenda as we chose to or want to see it. Or rather as we're tempted to see it. It's a complete person with all the creaking mechanisms and beauties that come with it. And he might be a damn good one, perhaps the greatest man in the nation for that role, but I doubt he is anything more than that. And that's something, isn't it?
No comments:
Post a Comment