The Modi magic: Why voters kicked out liberal economics along with Cong

India has delivered a mandate that even the most optimistic BJP estimates or the most pessimistic Congress projections would not have expected. All Lok Sabha elections till date, perhaps with a good measure of logic, have been viewed as a series of state-level elections. But this time, I believe a few critical national level issues drove voters towards providing the BJP with a thumping majority even while handing down a drubbing to the Congress. The latter probably provides a much greater clue than the former.

So what could be the top causes of this verdict? Narendra Modi's ability to articulate a development vision and his track-record of delivery, corruption in UPA-2, Rahul Gandhi's lack of drive and ability to connect with voters, the Congress' high command culture, etc, have all contributed to this result. But missing in all of this is the economics of Manmohan Singh and his coterie of bleeding-heart liberals, including Montek Singh Ahluwalia, Jairam Ramesh, P Chidambaram, et al. Under the nonsensical idea of "inclusive growth", all that the Congress has done is promote the culture of begging-from-the-government, destroying the morality of work and denying the pride of earning one's living.

Before much else, we need a basic clarification of terms: the term "liberal", which is very different from "classical liberalism" that is fairly close to libertarianism, is a very positive sounding word. But the economics underlying it all is anything but positive. I have heard many educated politicians (in my lexicon, they would be categorised as "economically illiterate") proudly calling themselves liberals without even understanding what the word means. Liberals (or, more accurately, neo-Keynesians) essentially think through their heart and believe that it is the duty of government "to provide" for citizens and micro-manage the economy through fiscal as well as monetary measures.

In a democracy, this ideology essentially degenerates into massive deficit spending, welfare handouts, devaluation of the currency and a loss of industrial competitiveness. The average citizen becomes a zombie (a phrase coined by Bill Bonner to represent people who get more from the government than what they produce through their work) and though they probably hate the fact that they have become zombies, their helplessness makes them dependent on "liberals" for basic sustenance.

Growth is inclusive: I am no fan of the BJP, though their nearer-to-conservative economic agenda is a lot better than the overt liberal agenda of the Congress. But what Modi has shown is that growth in itself is inclusive. Inclusiveness comes from providing a platform of growth to entrepreneurs that creates employment opportunities for marginalised sections; inclusiveness does not come from handing out free food, water and money. The latter only converts full-bodied citizens to supplicants who are dependent on government for their very survival. Not only does it create negative contributions to the national output, i.e. taking out more from the system in the form of consumption while providing very little in the form of production, it also alters the behavioural and work ethics of the population.

What about the other factors?

Not even a diehard Modi supporter can deny that corruption and crony capitalism exists in BJP governments, though probably not to the the extent and degree we saw under UPA-2. Nor can one deny a small high command culture in the BJP (though it's one that's earned and not because of a genetic lottery). But the stark difference between the two parties is the economic vision that they offered to voters. Modi's was a development vision about eradicating poverty while Manmohan Singh and Rahul Gandhi offered a vision of providing free food and money. There is no doubt what the voters preferred. Even zombies do not prefer to continue as zombies, if they have an option.

A large part of Modi's charisma comes from work delivered on the ground, which makes his speeches believable. For sure, he needs to move much more to the right and reduce the role of the state in a much greater way. But at least he has taken the right steps, while all that the Congress has done is to actually transfer even greater power to the government from the citizens.

Similarly, a large part of Rahul's incoherent ramblings can be attributed to having not done anything worthwhile. A solitary hut visit or tearing up a legislation does not provide the work experience required to understand the problems facing the country - or its solutions. In the absence of solutions and a vision, the voter could see little in Rahul that was noteworthy.

What about TN and WB?

If development sells, why did the "Modi magic" not work in Tamil Nadu and West Bengal? After all, both Jayalalithaa and Mamata Bannerjee are liberals - the latter far more so than the former.

In the case of Tamil Nadu, though there was no vision for development offered by the AIADMK, the opposition offered even less. The BJP was junior partner to a party that promised free daily vegetables to every house if voted to power. That would be a true vision for a "liberal" and hence the BJP tie-up was an ideological disaster. So even with a reasonably long party history in Tamil Nadu, the BJP must be ruing the alliance - they probably would have done a lot better had they limited their partners to just MDMK and, perhaps, IJK.

In the case of West Bengal, I think it's only a matter of time before the BJP occupies the position of main opposition party. There is very little ideological difference between the Left, Mamata and the Congress and so I sometimes wonder why they are so vehemently opposed to one another? All three parties practically revel /take pride in poverty and in perpetuating the same. West Bengal is ripe for a development-oriented party that turns the old maxim - what Bengal thinks today, India thinks tomorrow - on its head: "What India thinks today, Bengal will think tomorrow."

What the Congress/AAP need to do

What should Congress and the Aam Aadmi Party do? I am not talking about effecting a change at the top; that's not possible and if it happens by some miracle, Congress will not survive as a single party. But more than changing the leaders, it's more important to change their "liberal" ideology. Being a bleeding heart liberal is a sure-shot way to disaster in a country that's aspiring for development, employment and progress.

As far as I can see, the Congress will change neither its leaders nor its ideology. So the country is ripe for a repositioning of the other "liberal" party - AAP. Despite claims and statements of not being constrained by ideology, AAP is a liberal party. Arvind Kejriwal's CII speech was a remarkable exception, but almost everything else that AAP has done till date points towards its liberal leanings.

Hopefully, the contest the next time around would be between two conservative parties - each vying to "out-right" the other. Of course, having a libertarian party in the mix would be the icing on the cake. Definitely interesting times lie ahead. Who knows, just as the independence movement delivered a Gandhi to India, the economic upheavals around the corner might propel "a Ron Paul" to the top.

About the Author

Shanmuganathan "Shan" Nagasundaramis the founding director of Benchmark Advisory Services - an economic consulting firm. He is also the India Economist for the World Money Analyst, a monthly publication of International Man. He can be contacted atshanmuganathan.sundaram@gmail.com


Published Date: May 22, 2014 10:05 am | Updated Date: May 22, 2014 10:05 am

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