Of the five recent Indian state assembly elections – in Uttar Pradesh, Punjab, Goa, Uttarakhand and Manipur – the BJP either won outright or formed a ruling coalition in four of them. Only in Punjab did the party strike out, and this was easily foreseen. I think it is time to begin to speak of Modi making India – and himself – ‘antifragile’.
The most stupefying electoral result was from Uttar Pradesh. At the conclusion of my last post I cautiously guessed at a 60-70% chance of Modi (and I purposely say ‘Modi’ rather than ‘BJP’) winning in UP. It transpired that an unprecedented landslide in Modi’s favour gave the BJP 312 seats (excluding alliances) out of a 403-seat Vidhan Sabha. This is almost unbelievable, especially when the doom-laden predictions of electoral oblivion – heavily predicated on the ‘disastrous’ demonetisation of late 2016 – are taken into account.
What are we supposed to think now that the opposite of what the (hostile as usual) ‘experts’ predicted has yet again happened? Clearly the overwhelmingly positive verdict from ordinary Indians on the anti-corruption ‘demonetisation’ measures cannot be denied.
The more I think about it, the more I see Modi’s top secret surprise offensive against the corrupt and privileged class in India as unalloyed genius. The Indian high establishment and their allies in the media and political class in the Western world squealed and screamed when the notes (which constituted a substantial amount of their ill-gotten gains) were withdrawn, rendering their cash-based slush funds nearly worthless. It was an instant ‘redistribution’ of wealth: while it might not have made the poor richer, it certainly made the undeserving rich a lot poorer almost overnight. This wasn’t money that was ever going to be used for productive purposes in the country; it was cash that was going to further erode the social and business fabric by means of bribery and corruption. Good riddance to it.
The black propaganda was that Indian society was collapsing, mutinous, and that people were not going to survive without their banknotes; whereas the truth was that there was barely any disruption – and where there was it was cheerfully borne by ordinary Indians – and new replacement notes were being issued so efficiently that by the end of January 2017 things were back to normal. And the poor had great big smiles on their faces, as I believe we can see from the election results.
Demonetisation made Modi seem again a friend of the ordinary Indian, and also proved him to be personally incorruptible and not allied to the bakhts and babus in Delhi, which was always the fear of Modi’s supporters and the hope of his critics. In all, maybe half a dozen people in the whole of India knew about the planned withdrawal of the old notes. It was a manoeuvre that depended on utter secrecy and so, in its very essence, provided the electorate with evidence of Modi’s honesty and probity.
Even more significant than that, though, is the phenomenon that Nassim Taleb has come to define as ‘antifragility’, the features of which I think Modi’s India is beginning to display. Taleb’s insight was that many things are fragile in the sense that they are damaged by shocks after a certain point. They can be very fragile – like overleveraged economies, or political regimes that look stable but are enforced violently and might also break violently. They can be robust, which is to say they can withstand shocks (again, up to a certain point). Or something can be antifragile, which is to say that it actually benefits from being shaken and shocked: the more you try to hurt it, the better it gets.
Demonetisation seems to me to be a proof case that whatever is happening in India, it is benefitting from shock and change rather than withstanding or being damaged by it. Modi laid the ground for the note withdrawal by providing ordinary Indians with online bank accounts, which increased their access to capital funds and improved economic efficiency – and meant that cash was already less important than before. It is estimated that after bouncing back from the note withdrawal, the Indian economy might actually grow by about 1% because of these blended-in measures.
Likewise the new Goods and Sales Tax (GST) which is predicted to add another couple of percentage points to GDP, is also going to make its progress through the legislature with more ease now that the state parliamentary elections have been won – in part due to Modi’s demonetisation measures. Modi – and this is just one example of what he is enacting – is setting in motion a virtuous cycle of antifragile improvement. Each time he does something he is roundly condemned by the media in India and abroad, and then the ‘expert’ voices are proven wrong and India subsequently gets a little better. Modi himself is proven to be antifragile: I remember during his campaign to become prime minister, how his popularity improved after every attempt by the Congress media to blacken his name. They slandered him so much that he won by a landslide!
One thing that Taleb claims is vital to antifragility is smallness: the bigger something is, the more fragile it tends to be. An elephant only has to stumble and its weight can cause it to break a leg, whereas a mouse can fall from quite a height and happily scurry on its way. Likewise administrations, likewise banks, likewise interconnected and interdependent systems, such as economies.
Now, India may be a huge country but Modi’s philosophy is localism. He said to me again and again that local people – panchayats in villages, administrations in states – should be trusted to run things rather than being told what to do from Delhi. Local knowledge is more antifragile than a ‘top-down’ way of doing things, than orders from on high. And the evidence is that this is exactly what Modi is trying to develop in India: more local responsibility and autonomy. He never liked the Delhi bigwigs, and this will be good for antifragile India.
One other thing Modi does that Taleb recommends, and which has to do with the whole ‘bottom-up’ way of organising successful antifragility, is the idea of tinkering and trial and error, the ethic of ‘bricolage’ and happy failure that leads to unexpected breakthrought and positive ‘black swans’ through what Taleb terms ‘optionality’ and ‘convexity’ – being open to serendipitous occurences. Great inventions and discoveries are almost never planned for from headquarters; they come from experimentation at a lower, local level. Again, this is something that Modi not only has always practised in his leadership and management style (letting officers pursue their own ideas and telling them not to worry about screwing up), but also something he was always doing himself as he was growing up. He was always trying things out and finding new ways, and new and better ideas, even if it was just washing the family laundry cleaner.
The establishment hates it, but India loves it. And India is becoming more and more antifragile.
2017 state election results: