Friday, April 17, 2009

On coalition governments

Mr.Venkatesan Vembu argues over at DNA that Shaky coalitions make for good economies:
For starters, it's no coincidence that the time-cycle of India's move into a higher orbit of economic growth matches pretty closely the period when coalition arrangements have come to occupy centre-stage at the Central level.

Virtually all the economic opening up and reform programs that enabled this speedier growth were carried out when motley, multi-party coalitions were in power: this is just as true of Congress-led arrangements as of those led by the BJP or the extremely nebulous and politically malleable "United Front".

But Mr.Vembu doesn't explore the reason behind this counterintuitive (seemingly) occurence.

Leglislatives tend to be mammoth inert beasts. So any "reform" is naturally difficult- be it positive or negative. The advantage with unstable coalitions is that, a single party may not have the power to inflict serious damage to the economy. In Henry David Thoreau's words, "No government is better than a bad government."

Compared to the motley crew assembled at the center in the last four parliaments, the INC led government of 91-96 had a fairly stable constitution. Although Dr.Manmohan Singh or Mr.P.V.Narsimha Rao may claim the credit for liberalisation and thereby kick starting the deteriorating economy, it is a fact that situation forced their hand. The governments following '96 didn't have to shift radically from the set precedent.

Unfortunately, of late the parties seem to have discovered a new formula. Where as at one time they might have tried to stop the attempts by the other parties to introduce legislation, now by scratching each others' backs they are able to side step competition and force through policies whose (harmful) effects leave no corner of the country untouched. Thankfully, their teamwork skills are just as deficient as their other skills.

Recent growth of regional parties is also a welcome step in the direction of decentralization of power. If the "national" parties had empowered the individual by having in place a system of consistent feedback with a strong ground level cadre, they might not have suffered this fate.

In this context, I find our Prime minister's laments like "independents are spoilers" and "Regional parties are like tax barriers" laughable. Sir, they are not tax barriers or spoilers but competing suppliers and you just fear competition like any other supplier because it will benefit the consumer at your cost. By saying that, you are either being dishonest or have a suspect understanding of very basic economics.

It remains to be seen if we can grow in spite of the erroneous policies and a fractured polity incorporated into our state or if circumstances force our hand once again in the future.

PS: The arguments were made for organised dilution of power through the organisational hierarchy ultimately translating into empowerment of the individual. This is not the same as dilution of power by setting up an extra-constitutional towers of power.

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