The Elephant Paradigm – Gurcharan Das – Review

 

The intent of the title ‘Elephant Paradigm’ is to convey the idea that India possesses immense strength but can only move in a slow pace, comparing with the attributes of a Chinese Tiger, our nation is unlikely to run at fast pace to reach economic superiority. Being the only nation wherein democracy preceded capitalism, we lost over 4 decades being immersed in socialistic policies. GD points out that its clear that communism or socialism is now an established failure model and capitalism with all it’s flaws is the only one that improves the quality of life while pulling millions out of poverty.

Some of the events are interesting to note, like in 1993, the seventy third amendment led to local elections being held for the first time across all Indian villages and municipalities. This resulted in three million legislators being elected out of which close to 1 million were women. Such a massive local democratic exercise is a record on a global front and it was believed that a lot of positive outcomes will bloom across the country. However, as we track the progress over the next 5 to 10 years, we notice that Panchayati Raj isn’t a panacea though it’s a better practice in comparison to other models.

By the turn of the twentieth century, only 13 nations covering less than 15% of global population were democratic and by the first year of twenty first century we had 87 democratic nations covering around 70% of the global population. This certainly augurs well for the human population at large.

Interestingly, liberalism or global free trade was very much in practice between 1870 and 1914 during which anyone can move to another country without a passport and establish their business. However, WW1 changed that scenario and it has taken more than half a century to get the world economies start global trade practices though there are duties involved to balance the equation with local business.

Taking our focus towards bureaucracy, a range of countries like Japan, South Korea, Singapore and China progressed because of an efficient government officials. In China, the bureaucracy chases top companies in North America and Europe to invest in their country, making it easy to establish a set up, run business, create jobs and generate profits over a period of time. In short, bureaucracy has been an enabler in these East Asian countries. However, the puzzling part has been that IAS officers are considered to be top talents across the nation owing to the hard selection process but they are considered least efficient across East Asian countries. GD with his thirty years of corporate experience in P&G has also found it difficult to navigate through the bureaucracy and pained him to note that none them truly understood his business but had enough power to stop it. May be politics isn’t the only reason for the inefficiency.

The other major aspect is to highlight how government run businesses proved to be a drag in the economy. By the mid nineties, Doordarshan was a clear leader with 5 times more ad revenue than cables and satellite system. However, by the end of the decade Doordarshan was earning just 1/3^rd in ad revenue though it possessed 70 million viewers which was twice the user base than all the private entities put together. This is by far the fastest dethroning of a national market leader.

In another case, it is estimated that Indian railways overemploys by a factor of 1:3 or 1:4 which means there is one railway employee who has no role for every 3^rd or 4^th one. Considering the fact that Indian railways employs 13 – 14 lakh human resource, the paradoxical count of jobless but employed Indian railway resource runs in lakhs. Clearly, private entities can do a better job in not just running an efficient, profitable business but doing it cheaper as well.

Power is another industry wherein government entities suck as well. Going by an estimate, State Electricity Board (SEB) employees steel 30% of the nation's power. If governments want to control price points of certain key industries then creating a competitive environment is the answer. At the end of the day, government entities should focus on being an enabler and not an executioner.

There was an interesting observation by GD, in any of the developed economy business and economic news dominated the front pages of the newspapers. However, he was surprised to note that Indian news media was stuck with politics as a front page content, referring that there needs to be a definite shift in placing economy on the forefront of the nation rather than politics.

One of the key attributes of a successful democratic government is in winning by a super majority and having a two party system, which is the case in US and UK. However, it was surprising to note that Germany has been functioning on coalition government for a few decades now. The key reason has been that the constitution provisions only positive vote of confidence i.e an alternate alliance has to be formed to bring down the existing one.

The untapped area has been the wealth associated with PIO (Person of Indian Origin), back in early 2000’s it is estimated that twenty million PIO’s possess wealth encompassing the entire GDP of India. Just the thought of such massive numbers and potential impact if PIO start investing in Indian business is mind-blowing.

Overall, GD’s Elephant Paradigm gives enough political and economic events to point out that capitalism is the way forward. At the crux of it, the book is an outcome of numerous economic and business related articles written by him. As you read the book, you certainly get the impression that it doesn’t necessarily relate to a common flow of an idea or theme, we can categorize a lot of topics to be potpourri. However, it gives interesting insights to dwell upon and I have a highlight a few of them above.

Good read !