The HINDU Notes – 06th May 2020 - VISION

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Wednesday, May 06, 2020

The HINDU Notes – 06th May 2020

πŸ“° It’s time for a virtual judiciary

It will not only reduce costs but also lead to speedy disposal of cases

•During the nationwide lockdown imposed to contain the spread of COVID-19, it has become clear that many activities can simply be done online. Over the last decade, Indians have embraced technology in a greater way than ever before. We all have apps on our phones — Amazon, Flipkart, Swiggy, Uber, Ola, Zomato, etc. — that help us procure various goods and services. Today, in these exceptional circumstances, ‘work from home’ is a concept whose time has come like never before. Many offices are gearing up for the new normal of staying at home and working, as restrictions are expected to continue for an indefinite period. This brings us to the question, how can we use technology to ensure speedy disposal of cases?

Many hurdles

•The pendency of cases in various courts in India is staggering. The Economic Survey of 2019-2020 dedicates a chapter to pendency of tax cases and revenue cases. The Survey mistakenly argues for more court infrastructure and judges to solve the problem. On the contrary, the existing infrastructure is grossly under-utilised. There are tribunals such as the Income Tax Tribunal that function only half-day most of the time. To make matters worse, most courts are closed for Christmas and summer vacations. Judges are not accountable for efficiency and performance. Thousands of Indians cannot afford to go to court as legal costs are high and legal procedures are complicated.

•It is a fact that most tax matters do not necessitate personal hearings. Tax cases reach tribunals and higher courts after lower authorities record all the facts. The High Courts and the Supreme Court deal with issues or interpretation of the law. The bane of the court system is that lawyers on both sides need to be physically present in court. Cases are often adjourned due to various reasons. It is in this context that we make the case for a virtual judiciary.

•In such a scenario, we can submit all the papers via mail. The judge can decide the case based on all the available information. Wherever the judge requires clarifications, he or she can seek the same through email. Typically, the judge, after considering all the material available, can pass a draft order and send it to both sides for any comments which they may want to provide. Thereafter, the judge can, after considering the comments, pass the final order. This will enhance the quality of the judgment and also eliminate obvious errors.

An efficient judiciary

•The use of the court hall to decide such matters is superfluous. Not only will a virtual judiciary result in substantial savings in costs but will also lead to speedy disposal of cases. The productivity of lawyers will increase substantially as visits to courts and long waiting hours will be more an exception than a rule. If this practice is extended to other civil cases, efficiency will double, even treble, in judicial functioning.

•The fact that the jurisdiction of a court is defined by geography makes no sense in matters such as taxation and company law. The change to remote, non-personal electronic court hearings will change this. All judges should be empowered to handle any case, wherever it originates. This will result in multiple advantages — the principal one being better utilisation of manpower and infrastructure by equitably distributing the work. Also, malpractices will be limited as there will no longer be familiarity between lawyers and judges in a city.

•While India grapples with a crisis on the health and economic front, we need to think out of the box. We need a change in mindset regarding the way we work. Imagine the overall savings and extent of improvement of the judicial ecosystem if 70% of the cases get decided without going to court? If vested interests are kept aside and collective will to initiate what is for the common good takes precedence, a virtual judiciary can become a part of our lives.

πŸ“° Boost wages to stimulate India’s growth

The economic crisis can be overcome only by raising the consumption of and investment for the poor

•Impoverishment among English workers during the early years of the Industrial Revolution had prompted Leicester framework knitters to frame this resolution in 1817: “… if liberal Wages were given to the Mechanics in general throughout the Country, the Home Consumption of our Manufactures would be immediately more than doubled, and consequently every hand would soon find full employment” (cited in E. P. Thompson’s The Making of the English Working Class, 1963).

•One of the moving images from today’s India is of migrant workers suddenly feeling desolate in their places of work and desperate to return to their villages, in the aftermath of the COVID-19 outbreak. The helplessness felt by the workers as seen from those images calls for nothing short of a radical rethink. We need to plan for an economic growth driven by rising — and not stagnant — wages, and a development model that is dispersed far and wide across the country, and not centred in a few big cities.

Patchy data

•Out of India’s total workforce of 471.5 million, only 12.3% are regular workers receiving some form of social security, while the rest are mostly casual workers or petty producers surviving under various degrees of informality (figures for 2018). A vast majority of migrant workers belong to the category of informal casual workers. Available data on the size of the migrant workforce in India are rather patchy. According to the 2011 Census, there were 54.3 million persons (workers as well as non-workers) in the country who migrated from one State to the other. The ‘heartland’ States of Uttar Pradesh, Bihar, Rajasthan and Madhya Pradesh accounted for 48.9% of these inter-State migrants, much higher than their combined share in India’s population (of 36.8%).

•Workers migrate from villages to urban centres as the growth of rural incomes has not kept pace with the rising numbers and aspirations of the young in the countryside. Those engaged in agriculture and allied activities as a share of the combined workforce in U.P., Bihar, Rajasthan and Madhya Pradesh fell to 49.1% in 2018 from 64.1% in 2005. This meant that, between 2005 and 2018, 19.3 million persons left agricultural work in these four States alone and sought job opportunities elsewhere.

•Workers’ shift out of agricultural occupations as well as out of their rural bases is set to accelerate, unless new economic opportunities are created in the countryside.

•A majority of the workers who leave villages find themselves in the bottom rung of the urban economy, earning a precarious living as drivers, factory workers, security guards and domestic helpers. Their livelihoods are directly or indirectly linked to economic activities that cater to the demand from the relatively affluent in India and abroad (such as from industries producing sophisticated IT products).

Widening the demand base

•Even as they work long hours often under exploitative conditions, informal workers manage to earn and consume only very little. According to the official consumption-expenditure surveys (for 2011-12), the richest 5% accounted for as much as 64.4% of the value of overall consumption of durable goods (such as of furniture or refrigerators) in urban India. The share of the poorest 50% was only 13.4%.

•The COVID-19 pandemic is set to cause long-term disruptions to the existing structure of demand dominated by the consumption of a privileged few. Economic activities have now been halted for weeks on end, and no end seems to be in sight for the downward slide in export demand, which began with the U.S.-China trade tensions. Businesses in India and elsewhere are concerned that even after the lifting of the lockdown, they will have to operate at a fraction of their installed capacities due to the sagging demand conditions.

•The crisis in the economy can be overcome only by widening the sources of demand, by raising the consumption of and investment for the poor. Consider, for instance, the setting up of industries linked to food processing or affordable housing in rural areas. The multiplier effects of such investment will be huge. Food processing can help boost farmer incomes, reduce food spoilage, create rural employment and, above all, improve the availability of nutritious food to the needy.

•Broadening the demand base requires policies that differ fundamentally from conventional economic ideas. The mainstream argument has been that firms should try to reduce costs by squeezing wages. But cutting wages will shrink markets further and deepen the crisis during a depression. Instead, firms should assist in raising workers’ wages and incomes, and thereby, in enlarging the size of the markets. Even with higher wages, profit rates will not dip because the larger demand allows firms to utilise their capacities better.

Increase government spending

•For rejuvenation of demand, it is critical that governments increase spending on the economy, in areas such as infrastructure and innovation. Government spending can boost the “animal spirits” of the private investors, as had been suggested by John Maynard Keynes amidst the great depression of the 1930s.

•The ideas of Keynes and his followers had helped to fuel an unprecedented economic boom in the U.S. and European countries for almost three decades after the end of the Second World War in 1945. A striking feature of this ‘golden age of capitalism’ was that the real wages kept rising, providing the much-needed succour to the working classes, who had long suffered due the war and the inequalities of the depression years.

•Battered by an oppressive economic system and now by an unpredictable virus, India’s working classes deserve long-lasting relief and comfort. What is needed is a massive expansion in government spending, which will uplift workers’ skills as well as their incomes and purchasing power. This will include investments in healthcare, education, roads, rural infrastructure, agricultural research, public transport, and so on — perhaps similar in scale and ambition to the post-war reconstruction efforts in western nations following the Second World War.

•A grave challenge to future growth are the ageing demographic structures in most parts of the globe. In such a context, the rising numbers of the young in India, especially in its northern and eastern States, offer a potentially new source of demand that could sustain the economy over the next few decades. Lifting the wages and the spirits of the wearied Indian worker could just be the dose required to bring cheer to the Indian and the global economies.

πŸ“° Pathways to a more resilient economy

Following the pandemic, the redesign of economies, businesses, and lives must begin with questions about purpose

•When complex systems come to catastrophes, i.e. critical points of instability, they re-emerge in distinctly new forms, according to the science of complex systems. The COVID-19 global pandemic is a catastrophe, both for human lives and for economies. Economists cannot predict in what form the economy will emerge from it.

•Machines do not have the capacity for emergence. Once built, their capabilities inevitably reduce with increasing entropy. On the other hand, living systems evolve and acquire new capabilities over time. Fritjof Capra and Pier Luigi Luisi point out in The Systems View of Life: A Unifying Vision that among all living species, humans have a special ability. Only humans consciously develop new concepts, new scientific ideas, and new language in their search for new visions. Institutions of governance are human inventions for directing human endeavours and for providing stability. Thomas S. Kuhn explained in The Structure of Scientific Revolutions why new ideas are invariably resisted by prevalent power structures in societies. The scientific establishment determines which ideas are worthy of admission. The King’s advisers do not want outsiders to dilute their influence in the court. The Establishment resists change. Therefore, fundamental reforms of ideas and institutions in human societies are always difficult, until a crisis.

Challenging principles

•The COVID-19 catastrophe has challenged the tenets of economics that have dominated public policy for the past 50 years. Here are seven radical ideas emerging as pathways to build a more resilient economy and a more just society.

•“De-Growth”. The obsession with GDP as the supreme goal of progress has been challenged often, but its challengers were dismissed as a loony fringe. Now, Nobel laureates in economics (Joseph Stiglitz, Amartya Sen, Abhijit Banerjee, Esther Duflo and others) are calling upon their profession to rethink the fundamentals of economics, especially the purpose of GDP. A five-point ‘de-growth’ manifesto by 170 Dutch academics has gone viral amidst the heightened Internet buzz during the lockdown. Goals for human progress must be reset. What should we aspire for? And how will we measure if we are getting there?

•Boundaries between countries are good. Boundary-lessness is a mantra for hyper-globalisers. Boundaries, they say, impede flows of trade, finance, and people. Therefore, removing boundaries is good for global growth. However, since countries are at different stages of economic development, and have different compositions of resources, they must follow different paths to progress. According to systems’ theory, sub-systems within complex systems must have boundaries around them, albeit appropriately permeable ones, so that the sub-systems can maintain their own integrity and evolve. This is the explanation from systems science for the breakdown of the World Trade Organization, in which all countries were expected to open their borders, which caused harm to countries at different stages of development. Now COVID-19 has given another reason to maintain sufficient boundaries.

•Government is good. Ronald Reagan’s dictum, “Government is not the solution... Government is the problem”, has been up-ended by COVID-19. Even capitalist corporations who wanted governments out of the way to make it easy for them to do business are lining up for government bailouts.

•The “market” is not the best solution. Money is a convenient currency for managing markets and for conducting transactions. Whenever goods and services are left to markets, the dice is loaded against those who do not have money to obtain what they need. Moreover, by a process of “cumulative causation”, those who have money and power can acquire even more in markets. The “marketization” of economies has contributed to the increasing inequalities in wealth over the last 50 years, which Thomas Piketty and others have documented.

Justice and dignity

•“Citizen” welfare, not “consumer” welfare, must be the objective of progress. In economies, human beings are consumers and producers. In societies, they are citizens. Citizens have a broader set of needs than consumers. Citizens’ needs cannot be fulfilled merely by enabling them to consume more goods and services. They value justice, dignity, and societal harmony too. Economists’ evaluations of the benefits of free trade, and competition policy too, which are based on consumer welfare alone, fail to account for negative impacts on what citizens value.

•Competition must be restrained: Collaboration is essential for progress. Faith in “Darwinian competition”, with the survival of only the fittest, underlies many pathologies of modern societies and economies. From school onwards, children are taught to compete. Companies must improve their competitive abilities. Nations too. Blind faith in competition misses the reality that human capabilities have advanced more than other species’ have, by evolving institutions for collective action. Further progress, to achieve the Sustainable Development Goals for example, will require collaboration among scientists in different disciplines, and among diverse stakeholders, and collaboration among sovereign countries. Improvement in abilities to share and govern common resources have become essential for human survival in the 21st century.

•Intellectual property belongs to the public. The earth’s resources must be conserved. We are living in an era of knowledge. Just as those who owned more land used to have more power before, now those who own knowledge have more power and wealth than the rest. Intellectual property monopolies are producing enormous wealth for their owners, though many were developed on the back of huge public investments. Moreover, powerful technologies can be used for benign or malign purposes. It is imperative to evolve new institutions for public ownership of technologies and for the regulation of their use.

Purpose of enterprises

•The paradigm shift necessary after the crisis will not be easy. There will be resistance to shifts in social, economic, and political power towards those who have less from those who have more within the present paradigm.

•The financial crisis of 2008 was a crisis of liquidity in the system. Recovery was achieved by putting more fuel into the system. The system then moved on; in basically the same shape it was before. COVID-19 has revealed structural weaknesses in the global economy. Putting fuel in the tank will not be sufficient. The vehicle must be redesigned too. While global attention understandably is focused on relief and recovery, this is the time to design for resilience.

•The economic system cannot be redesigned by domain experts devising solutions within their silos. Such as, trade experts recommending new trade policies, intellectual property experts recommending reforms of intellectual property rights, and industry experts recommending industry policies. All the pieces must fit together. Most of all, they must fit into the new paradigm, which will be very different to the one in which the experts had developed their domain knowledge.

•Innovations are required at many levels to create a more resilient and just world. Innovation is essential in the overall design of the economy. Innovations will be required in business models too, not just for business survival but also to move businesses out of the 20th century paradigm that “the business of business must be only business”. Changes will also be necessary in our life patterns, our work and consumption habits, and in our personal priorities.

•The redesign of economies, of businesses, and our lives, must begin with questions about purpose. What is the purpose of economic growth? What is the purpose of businesses and other institutions? What is the purpose of our lives? What needs, and whose needs, do institutions, and each of us, fulfil by our existence?