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Non-Coercive or Voluntary Societies

This page is the result of a mind-blowing class I took under Prof. Ron Howard (Dept of MS&E, Stanford University) on "Designing a Free Society." We are unbelievably entrenched in coercive structures than we would like to know. This page is an attempt to look at current events with a different lens, that of a non-coercive, voluntary society, that lives on the maxim, "Peaceful, honest people have the right to be left alone."

Sunday, March 26, 2006

 

Heading for Disaster

The Govt. of India has decided to support reservation in the private sector. Here is the reference.

Govt to go ahead with quota in pvt sector
http://www.expressindia.com/fullstory.php?newsid=64984

I think this represents a lack of creative thinking and would take us toward disaster. Here's a piece that reflects my views.

HEADING FOR DISASTER

The goal of improving social opportunities for underserved communities is a laudable one, and we must appreciate people in society who think this is a worthy goal. The question is, are laudable goals to be implemented in a coercive manner under the power of the gun, conceding that this is really the only power a government has? We must be very careful when involving the government in solving social problems.

China is a glaring example of what happens when governments get involved in restoring social equity - an era of unprecedented brutality under the euphemism of "cultural revolution," policies that were intended to control the population that have now ended up creating a huge vacuum in the workforce, and land redistribution that was supposed to be equitable that resulted in the deaths of millions of landowners at the hands of their fellow villagers, who died later by the millions due to a nationwide famine that devastated their "commune farms," which were surprisingly owned by the state (see the Economist, May Issue). China has recognized this, given the smart and talented people this country has, and the government has recanted many of these steps, even going so far as to publicly acknowledge policy errors. At the time, they were making the best decision given the information they had. Does India have such an excuse today, seeing the effects of such government intervention?

Let's examine how India's latest move squares with the following maxim, "Peaceful, Honest People Have the Right to be Left Alone." We define "peaceful" as people who do not use force or threaten the use of force against others, except in self-defense. We define "honest" as people who have not commited fraud over an implicit or explicit contract. We assume for the rest of this essay that this maxim is the hallmark of a free society until we find a better maxim, else we have more fundamental problems.

Entrepreneurs, who are in the business of making other people happy and getting remunerated in exchange, fit the bill of "peaceful, honest people" insofar as they have not coerced anyone into buying their services or products. Then, they have the right to be left alone and not coerced into hiring people using criteria that they may not share.

If there is social inequity, then it needs to be a problem that is owned by the people. We wouldn't want to be idle critics of the government, so here is a different way of looking at this problem. Most information technology companies in India compete at the global level today. Their biggest prolem is finding talent as there is tremendous competition over the best individuals. Companies need to wake up to the fact that their battleground has to shift from capturing the best trained talent to training people to be the best with competitive contracts that secure their services.

While this has happened in the past with companies such as Tata Consultancies requiring new employees to sign bonds, with competition heating up, prospective employees have other options with companies that do not require bonds.

Then, it becomes a question of where the "bond" idea would be seen as a positive opportunity instead of a constraint. And common sense would tell us that it would be in underserved communities, whose existing options are much worse. Once this is recognized, our IT companies would look at underserved communities as a gold mine. Mind you, not all of the raw material in a gold mine yields gold. But the ones that do yield gold make it worth your while to get into the mining business.

Once this thinking sets in, companies will rush in to attract talented minds in underserved communities. Imagine a contract, "We will fund your child's high school and college education if your child agrees to sign a contract to work for in a 2-5 year period. Should the contract need to be broken, here is the amount that will have to be refunded."

In the interest of making the most money out of people in the shortest amount of time, companies would have to give the best training possible to such children, so that the work they do is of the highest value possible. Companies can also get creative. Instead of requiring a fixed number of years, they can provide training in a niche area which they alone serve, and ensure that they have a wide talent pool to pick from when the time comes.

One has to only see how corporates woo poor students by looking at them as valuable future options. For example, Microsoft provides its development platform either free or at heavy discounts at various universities so students can become experts by the time they graduate, and form a ripe pool to recruit from, thus lowering recruitment costs.

Many organizations give "freebies" with an intention to create a future market. For example, this was behind the success of Unix as an operating system with Sun Microsystems making it free for students, who would then want to use it when they started professional work, in addition to creating a pool of people who they could hire. At Stanford University, every company provides steep discounts on student software in the hope that they are creating future communities for their products. Yahoo and Apple are engaged in a battle over the music download market and students get the best deal in the process, with Yahoo providing a year's worth of free downloads, with the hope of getting loyal future paying customers.

Now, pro-reservation thinkers will argue that people have benefitted in the past from reservation. Their arguments are not without merit. Let us examine some of them. First, people who have benefitted under reservation are now doing things that they could not have done earlier due to lack of opportunity. Second, we cannot have laws that are fair to all, it is the way of the world and if someone loses out, too bad.
We can only try to be most fair to the least served communities. Third, a non-coercive system will only benefit the smart, who can take care of themselves anyway. Fourth, the fact that many beneficiaries of reservation have improved economically under reservation proves that reservation was a good decision to make and we should continue it.

The first argument is valid. Some beneficiaries of reservation are indeed doing desirable things that they would not have done otherwise. We must note that the idea of reservation is not being objected to. If you believe that reservation is important to restore equity in society, then more power to you! In your organization, you can have reservation based on sex, caste, class, height, weight and whatever other criteria you wish. However, the problem arises only when you impose your criteria on someone else.

For instance, cigarette smoking is bad and you don't like it. So you can abstain, and use your free will to ensure it is not permitted in your house. You will not frequent restaurants that allow smoking. But do you really have the right to decide that this standard must be coercively imposed in every house, however laudable it might be? People making this argument routinely overlook the fact that reservation is eminently possible in private institutions on a voluntary basis. Most Catholic schools reserve seats for their community and open the rest to others. And that actually works great for everyone. Boys-only schools voluntarily commit sexual discrimination and it works great as do girls-only schools.

The second argument says that the least served people should get the most opportunities. Imagine the principal of a girls-only school deciding that enough was enough. As girls have traditionally been underserved, all schools in India must have 75% reservation for women in order to restore the equity, until the number of educated girls equals the number of educated boys (who knows how you would track that). After all, female education is a laudable goal, right? If you were to make the second argument, then you really should not have a problem with this situation. You would be within reason to point out that this is an extreme extension. The only way we can test a universal principle is by taking it to the extreme. If you take the maxim to its extreme, all peaceful and honest people will be left alone. No problem. But if you take social equity to it's extreme, we land into all kinds of difficulties. When people are quick to point out that you can't be fair to all sides in this issue, they are absolutely right. However, the conclusion that we must "live with it" is an excuse for not thinking deeper. If we can't have a "fair" law, then why must we have a law at all? What would a system without such a law look like? Are our conclusions based on scientific experiments or socio-political biases? If we truly care about underserved communities, we cannot afford to be unscientific about this. We must explore with a scientific mind.

The third argument that only smart people will benefit from a non-coercive system appears to be a convincing one. However, it is really a facade for a paternalistic and condescending view of society. It is easy to fall into this trap. The acclaimed philosopher Bertrand Russell once noted that when a piece appeared in the British press that only 10% of the population was intelligent, people agreed as everyone counted themselves in the intelligent 10%. Such self-deception is prevalent in all societies, including India. It is high time we stopped assuming stupidity of the masses. Let's take a look at our neighboring state, Bangladesh, which almost everyone agrees is worse off than India. Every year, this country either suffers drought or flood or both. Decades of aid has only devastated the country further as the agendas of donor countries trump the real needs of the country, according to Dr. Mohammed Yunus, the man who turned the field of economics on its head with his experiment in this country. Dr. Yunus believed that "poor" people were extremely creative and could solve their own problems. Their only problem was, no one trusted them. So he decided to trust them and lend them money. The result was the formation of the legendary Grameen Bank, which has by now disbursed over $1 billion of loans, and has a recovery rate of 99.1% (more conservative auditing brings this down to 85% which is still extremely high for its segment), matching some of the most astute banks in the United States. Even the most basic study of this experiment will reveal that their process involves getting people to solve their own problems. The Grameen experiment is being replicated all over the world, including India, though it was botched up initially when the Goverment got involved. It is now being tried by private enterprises like Unitus and the reports have been very positive.

The final argument that because some people have benefitted from it implies it was a good decision and should be continued is a highly fallacious one. One cannot judge a decision from the outcome but only from the process used to arrive at the decision. If we knew outcomes, we really wouldn't have a decision to make. Once this logic is understood, we will quickly realize that we cannot condemn the creators of reservation - at the time, they thought this was the best way to introduce equity, hence it was a good decision indeed as they were consistent to their preferences and the best information available. But we know better now, and it is naive for us to ignore the evidence in front of us. Affirmative action (or reservation) research in the United States has shown that reservation has not had the intended effect on the self-confidence or performance of beneficiaries.

The evidence shows that underserved communities have not been able to utilize their opportunity and do poorly, even with the best of resources at hand. If these studies were to be repeated in India, we should not be shocked with similar findings, for these have been empirically reported. One has to only wonder why it is that in Tamil Nadu, year after year, Brahmin children perform exceedingly well, while being a tiny minority (estimates put them at less than 3% of the population) and having all quotas against them? Logic would have us institute reservation for Brahmins in Tamil Nadu as they are the minority. Strangely, reality does not concur with logic and the state offers 69% reservation for underserved communities. Inspite of a much lower set of opportunities, how do Brahmin children do so well, an observable and acknowledged fact by all, especially the politicians of the state who clamor for more reservation? We need to find answers to these questions so we may replicate them for children of other communities and have them be as self-reliant.

To summarize, there is no objection against reservation of any form undertaken on a voluntary basis. However, coercive reservation is fundamentally flawed, ineffective and creates more problems than it solves. It also diverts our attention from non-coercive, voluntary approaches, that would have been tried a long time back had people not thought that the government was taking care of it. The decision makers who introduced reservation made a good decision that was consistent with the best information available to them and their preferences. Why can't we follow their footsteps and be consistent with our preferences and the vastly better information available to us today?

Comments:
Somik, this is a comprehensive and well reasoned article. One of the best I have read in clearly addressing the many dynamics surrounding the issue. But what hope do we have for a positive outcome when the government is hell bent on providing instant gratification for the people who THINK they stand to benefit from these policies. These guys make up half our vote bank and the government will serve itself very well in implementing these coercive policies.

The situation reminds me of a quote that I saw on a T-shirt during my recent trip to China - "Never trust democracy".
 
I'm closely following news/views/articles/comments on 'Mandal-II' since april 6th.
intially I was 'anti-reservation'..but after reading articles regarding other side of 'Mandal-II', My stand changed..and now I support Reservation in ALL the fields.Why?
(A)because, nearly 90% of the 'Open category Seats' at IIT/IIM/AIIMS/NID/NIFT/IIHM are offered to those who can afford-
(1) >Rs. 1,00,000 for coaching(in case of IIT/AIIMS/NIT/Top-10 Med colleges).
(2)>Rs.1,00,000/4,00,000[in case of IIM's]('Fact:nearly 70-75% seats at IIM's are offered to Engg. graduates'.Now of these 70-75% nearly 15-25% are grabbed by graduates from 7 IIT's & 15-25% by graduates from NIT's/Other Govt-funded Colleges,So Rs.1,00,000 for 30-50% and most of the rest 25-40% by graduates from Pvt. engg. colleges where most of the students pay ~Rs. 4,00,000 for their 4-year-Education).
(3)>Rs.2,00,000 (in case of NID/NIFT/IIHM,for those with high-profile-Convent-Education perform better when it comes to Aptitude test/GD-PI for 'Govt-funded Design/Fashion/Hotel management' Institutes).
.....So it means that even 'Open-Category' ppl have 'Reservation in between them' in place..it also means that most of the 75% 'open-category-seats' in famous govt-established institutes are repeatedly used by the 'Rich Open Category'(5% of the Indians) and the 'Poor Open Category'(10~16% of indians) gets only a miniscule of these Seats.[This is my Counter-argument to "Children of Quota-beneficiary Govt-officers will repeatedly grab most of the Reserved Seats" raised by our Anti-Reservation activists.......comeon ppl!!when this practice prevails even in 'Open-Category'.why deprive 'Non-open category' ppl from this...and if want to eradicate this evil from our society then all of First eradicate the evils of 'NRI/Management quota' which I'm going to discuss in my next point].

(2)Nearly 15-25% seats in most of the famous Private Engg/Med/Management institutes are Reserved for the applicants whose Parents can either offer 5-50 LAKHS as Donation/Capitation fee or use their 'Political connections'...most of times these students thoroughly 'Njoy!' their Time at college and then join the Big Engg-firm/Hospital/Business of their Parents/Relatives...Now tell me,Why you anti-reservation supporters don't challenge merit of these Engineers/Doctors/Managers?

(3)Although Financial/Intellectual/Cultural WEALTH/Success of a person depends upon his/her own efforts but most of us will agree that this success can not be achieved without using 'Resources' of his/her 'Country'.
.....Now,as per Govt-approved-Reports nearly 79-85% population of India comprises of 'OBC+SC+ST'. whereas Only 15-21% of Indians come under 'Open-Category'.
....so we the 15-21% of the Indians are using most of the Country's Resources and when the Majority(79-85%) of Indians are asking for their 'Proportionate-Share' in the Country's resources ..we are protesting/yelling..why ppl why? haven't we heard of "Vasudhaiv Kutumbkam-all the world is but one" culture or are we chasing Jungle's Law-'Survival of fittest'?

Be Warned & allow 80% of the ppl to get 50% of the 'Resources'....otherwise they will no more tolerate us 20%-Kicking India at first opportunity-'Open-Category' ppl!!!

Thanking you for bearing by comment,

an 'Open Category' pre-final year undergraduate student @ IIT kharagpur
 
If you're really an IITian (or not), then I'd be curious to hear what you have to say about my arguments. I am quite familiar with the usual argument supporting coercion, and I have addressed it in my piece.
 
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