The Telegraph
Since 1st March, 1999
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- Tax the perpetrators of injustice and subsidize the afflicted

“Something is rotten in the state of West Bengal.” The statement cries out for an explanation and I shall provide it indirectly by borrowing a trick from Tom, the narrator in Tennessee Williams’s play, The Glass Menagerie. Tom presented truths in the pleasant disguise of illusions. I shall do something similar, but stay clear of illusions and appeal, instead, to sterile economic reasoning to analyse issues apparently far removed from economic problems.

My purpose is best served by discussing two real life examples chosen from this state, one horrifyingly profound and the other bordering on farce. The curtain cannot be raised though, before I introduce, by way of minimal stage prop, a concept from economic theory to aid me in my enterprise.

Among the spanners that prevent the smooth functioning of a market economy, the pride of place is occupied by the notion of an externality, which may be positive or negative. The classic example of a positive externality is one of an apple orchard located next to a beekeeping farm producing honey. The bees help pollination in the orchard. The beekeeper therefore gives rise, unintentionally, to a positive advantage external to his firm by contributing to the orchard’s output free of charge. In a market economy, however, the beekeeper has no incentive to bear the cost of improving his neighbour’s productivity. Yet, if he did take the beneficial external effect of his activity into account and increased the scale of his operations, social output of honey as well as apples would rise, thereby improving the welfare enjoyed by consumers beyond levels guaranteed by self-seeking operators in a free market economy.

At the other extreme lie examples of negative externalities, a typical case being the damage caused to a downstream fishery by a water-polluting chemical firm located upstream. The operation of the latter creates extra costs for the former, which, once again, selfish market agents ignore. The way out of the mess is to tax the producer of chemical waste and pass on the proceeds to the fishery. The tax will act as a disincentive to pollution and the corresponding subsidy would help the fishery bear the cost of keeping the river fit for fish breeding. In a similar manner, the economic solution to the apple-honey problem lies in taxing the orchard to subsidize the beekeeper. The latter would then find it worth his while to augment the bee population, thus raising both the honey and apple output.

The stage now is set, economic concept-wise, and we stand ready to move on to my examples, even though they do not qualify strictly as economic problems. The first example is rooted in the fact that the state government has enjoyed absolute power for thirty years now. From any society’s point of view, however, there is nothing more challenging to its welfare than an unchallenged supervisor of its well-being. Humanity discovered this elementary piece of wisdom centuries ago, or else the word democracy would not have found its way into dictionaries. Yet, interestingly enough, it is democracy, even if dented occasionally by unfair practices, that has helped the Left Front government retain its hegemony in the state.

Absolute power engenders absolute corruption and, in West Bengal, the institution that has been the most serious victim of the virus of corruption is the police force. For years now, it has survived with practised skill, submerged neck-deep in the filth of corruption, aided and abetted by political bosses. Stories abound regarding police malpractices and far from acting as the agent for law enforcement, it has earned for itself a dubious distinction of being the ultimate threat to the state’s law and order. The brutal treatment meted out to Rizwanur Rahman, reminiscent as it is of Gestapo-style terror, exposes the depth of vulgarity the police force has descended to under the auspices of a doting home ministry. But it is an open secret that Rizwanur’s case is not the only instance of police malfunction. The recent past has witnessed numerous cases of the public transport system going berserk, leading to daylight murders of innocent men, women and children. It is hard to believe that the police are powerless to bring the culprits to justice.

A corrupt police department spreads corruption amongst the public much like the upstream chemical factory. It poses a threat to decent existence that can, in the end, destroy the very root of civil society and lead to anarchy. Sooner or later, the citizenry is bound to take the law into its hands and destroy any meaningful institution of governance in West Bengal.

What then should be the solution to the problem' The economic model suggests taxing the perpetrators of injustice and subsidizing the afflicted. For the case under discussion, this amounts to an overhaul of the entire police system by handing out exemplary punishment, the memory of which will act as a deterrent to misbehaviour on the part of policemen in the future. Mere transfers or retrenchment of high officials will not serve the purpose. Society needs to be assured that the innocent man who lost his life has been adequately avenged. No punishment of the sort appears to be under contemplation, nor any acceptable compensation to the shattered family, not to speak of keeping the public posted on the current state of Priyanka Todi. One suspects that over time the issue will be pushed stealthily under the carpet. This is not a surprising tactic on the part of the ruling party. Its comrades in Delhi have initiated precisely the same technique to slow down and finally obliterate all evidence of progress made under the nuclear deal with the US.

And now to pass on from the ghastly to the ridiculous, I refer to a half-finished story I reported on in these columns a few weeks ago. It concerned the state-sponsored education system, to which I was introduced in my capacity as a visiting lecturer at Presidency College. In response to the severe criticism faced by the college during the autonomy debate, I had attempted to bring to public attention some of the college’s worthy achievements. However, I had been careful to note that all departments in the college do not fall in the same category.

What caught my attention in the weaker departments was the propensity of more than 80 per cent of the students to stay away from classes and internal examinations with implicit support from the departmental administration. Presumably, the students consider the teachers incompetent and the teachers, in turn, lack the confidence to stand up and protest. I find nothing remotely criminal in the students’ behaviour. However, I do consider this to be an example of a social cost resulting from minority misconduct. The cost arises from the fact that the empty classrooms could have been occupied by students who were rejected admission into the college. The infrastructure provided by the college could be utilized better by possibly more committed members of the rejected group.

How the commitment of a student can be tested in advance can be deliberated on, instead of the matter being disposed of as irresolvable. And while that process is on, the shirkers can be awarded corrective punishments. They could be replaced by candidates rejected earlier, or, if this sounds too harsh, they should be fined at penal rates, such as one lakh rupees per year, and the proceeds used to expand the capacity of the college to absorb responsible students and teachers.

The logic of negative externalities suggests this course of action. Unless such steps are initiated, it serves little purpose to advertise grants received from the department of science and technology. If insiders enjoy the right to keep the facilities unemployed, laboratories, classrooms or equipment supported by such grants constitute a waste of public resources and discrimination against less privileged students.

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