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The Constitution is Broken.

Long live the Constitution!

Rajesh JainFree A Billion

rajesh@fab2020.com

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Even the smallest person can change the course of the future.

- JRR Tolkien, writing in “The Lord of the Rings”

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“Change the course of the future”

• 1995: IndiaWorld — an electronic information marketplace to connect Indians worldwide– Reached millions of Indians via India’s 1st Internet

portal– Sold in Nov 1999 for $115 million, among Asia’s

largest Internet deals

• 2011: Niti – Project 275 for 2014– BJP 282

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Make no little plans; they have no magic to stir men's blood and probably themselves will

not be realized. Make big plans; aim high in hope and work.

- Daniel Burnham

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“Make no little plans”

To create a Prosperous India,Free A Billion Indians by 2020

via a Rules Revolution

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Questions to consider

• Why are we all not 10X richer?

• Who is our greatest enemy?

• What is needed to counter this enemy?

• How can we do it?

• Who will do it?

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A short tutorial

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How our world works

1. What is the most basic activity among people?

2. What is the system in which it takes place?

3. What is the signalling mechanism?

4. Why do we need government?

5. Where are the rules of government encoded?

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How our world works

1. What is the most basic activity among people?– Exchange

2. What is the system in which it takes place?– Market

3. What is the signalling mechanism?– Price

4. Why do we need government?– To do things we cannot do individually

5. Where are the rules of government encoded?– Constitution

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It is not from the benevolence of the butcher,

the brewer, or the baker that we expect our dinner,

but from their regard to their own interest.

- Adam Smith

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The most important single central fact about a free market is that no exchange takes place unless both

parties benefit.

- Milton Friedman

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Building blocks - 1

• Economy: is about individual persons, their individual preferences, their individual goals and objectives– Not collectives and groups– Individuals focus on their self-interest– No such thing as a collective self-interest

• Voluntary exchange (trade) in markets– Exchange makes all its participants better off– Incentives matter– Prices as signals; “order produced from freedom of choice”– Spontaneous order; Invisible hand– Human action not human design

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Building blocks - 2

• Government: a set of institutions we create for collective decision-making to do things we cannot do individually (or privately) – Needed for some collective goods – national defence, rule of law, enforcement of

contracts, and a limited set of public goods– Politics is the activity of persons in the context of such institutions

• Government is an agent of the people, who are the principals– As the people’s agent, government is charged with a certain set of duties – and only those

duties – it must perform to the satisfaction of the people

• Constitution: The contract between the people and government. – A set of rules which specifies what the government must do, what resources are available

to it to carry out those mandatory duties, and the restrictions on what the government is prohibited from doing

– It places the people as the ultimate decision makers who have effective, though indirect, control over the government

– The rules need to be made under veil of ignorance / uncertainty

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Economics in one lesson

The art of economics consists in looking not merely at the immediate

but at the longer effects of any act or policy;

it consists in tracing the consequences of that policy not merely for one group

but for all groups.

- Henry Hazlitt

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World economic history

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17

19601963

19661969

19721975

19781981

19841987

19901993

19961999

20022005

20082011

20140

5,000

10,000

15,000

20,000

25,000

30,000

ChinaIndiaSouth Korea

Per Capita GDP – India, China and South Korea (current $)

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The rich have got richer, but the poor have done even

better…Despite the doubling of the world population, even the raw number

of people living in absolute poverty has fallen since the 1950s.

- Matt Ridley

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The rich got richer, true. But millions more have gas heating, cars, smallpox vaccinations, indoor plumbing,

cheap travel, rights for women, lower child mortality, adequate nutrition,

taller bodies, doubled life expectancy, schooling for their kids, newspapers,

a vote, a shot at university, and respect.

- Deirdre McCloskey

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Poverty is notIndia’s destiny

Prosperity is not a zero-sum game

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India has failed to prosper on every index of development

• Per Capita GDP (as per World Bank)– 1980: India $271, China $183– 2014: India $1630, China $7594

• Index of Economic Freedom 2016: India 123/178• Global Competitiveness (WEF 2015): India 55/140• Ease of Doing Business (WB 2015): India 130/189• Transparency Corruption Index 2015: India 76/168• Global Innovation Index 2015: India 81/141• Human Development Index 2015: India 130/188• World Happiness Index 2015: India 117/158

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Different people? Or…?

• Individuals differ. All humans are not created equal. But sufficiently large groups of people are quite similar to other large groups of people.

• It is not true that Americans are naturally intrinsically better than Indians – at least not to the extent that Americans have a per capita income of 40 times that of Indians.

• What is different between Americans (or Germans or Scandinavians) and Indians is that they operate under different rules.

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Why is India still poor?

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A look at India

• Airlines• Telecom

• Education• Health• Agriculture• Criminal Justice• Doing Business

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Our greatest enemy is the interfering government

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Government is the great fiction, through which

everybody endeavours to live at the expense of everybody else.

- Frederic Bastiat

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The welfare state is the oldest con game in the world. First you take people's money away quietly and then you give some of it back to

them flamboyantly.

- Thomas Sowell

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Public Choice theory informs us

• Public choice is the study of political behaviour using the tools of economics– Analyse politicians, bureaucrats and voters

• A set of theories of governmental failures, as an offset to the theories of market failures that had previously emerged from theoretical welfare economics.

• Public choice is like the small boy who said that the king really has no clothes.

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The general lesson is that if some part of government fails in its function, it will most likely be given greater funding and power.

Of course, the purpose of this is not to reward failure; the thinking would be that more money and power will enable the agency to solve the

problem. But the effect is that government grows when social problems grow, and thus it is not in the government’s interests to solve

society’s problems.

- Michael Huemer

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Every election is a sort of advance auction

of stolen goods.

- H. L. Mencken

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Politics without romance

• Same self-interest drives everyone– Politicians: get re-elected– Bureaucrats: expand turf (budget)– Voters: stay rationally ignorant

• Median Voter

• Iron Triangle: mutually-beneficial 3-way relationship between elected politicians, bureaucrats, special interest groups – Concentrate benefits, diffuse costs

• Corruption = Monopoly + Discretion - Accountability

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The top priority of an elected official is usually to get re-elected, and that requires a steady stream of

favorable publicity to keep the official’s name before the public in a good light.

The opening of any major new facility, whether urgently needed or not, creates such political

opportunities by attracting the media to ribbon-cutting ceremonies, for example.

Filling potholes, repairing bridges, or updating the equipment at a sewage treatment plant creates no

ribbon-cutting ceremonies or occasions for speeches by politicians.

- Thomas Sowell

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It is folly to think that "better men" elected to office will help us much,

that "better policy" will turn things around here.

– James Buchanan

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Insanity: doing the same thing over and over again

and expecting different results.- Albert Einstein

There is nothing so useless as doing efficiently that

which should not be done at all.- Peter Drucker

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Change rules;not just rulers

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Two stage process of determining rules

• Constitutional stage: when the top-level rules are chosen – The constitution has to enumerate the limited powers of

the government. This is so because the government is not the sovereign — the supreme ruler or ultimate power.

• Post-constitutional stage: in-period rules selected– These are more flexible for meeting contingencies, more

particularised in their operation and less permanent than the constitutional rules

– The in-period rules may change from period to period but they have to be consistent with the constitutional level rules

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A good set of Constitutional rules to create a limited but strong government

• Non-discrimination. The government is prohibited from discriminating among citizens

• Liberty. The government cannot abridge any freedom that citizens have as their birthright

• Justice. The government protects all citizens from coercion and delivers timely justice

• Non-interference. The government must not interfere in voluntary exchanges among citizens

• Limited government. Government must not engage in commercial activities

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A look at India’s Constitution

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Comparing US and India ConstitutionsAmerican Constitution Indian Constitution

Created in 1789 1950

Time taken Fewer than 100 days Almost three years

People involved 55 299

Length (in words) 4,543 117,369

Amendments 27 100

Amendments per year 0.1 1.5

Amended last in 1992 2015

Veil of ignorance/uncertainty Yes No

Separation of Powers Clear demarcation of powers among the three organs

No separation of powers between executive and legislature

Federal Structure States have greater freedom and autonomy

Much more centralised decision making; overlapping jurisdiction

First Amendment Guaranteed absolute free speech Restricted free speech

Per Capita GDP (US $) 54,195 1,582

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India’s Colonial and Socialist Constitution is inconsistent with the idea of Freedom

• No fundamental right to property• Limits on many freedoms, including speech• Discrimination (violates principle of generality)• Unreadable because of legal language and length

• How Freedom was taken away from the Constitution– Origins in British 1935 Government of India Act

• 250 of 395 Articles lifted verbatim from colonial era rulebook– Socialistic leanings of the Constituent Assembly– Sweeping amendments by Nehru and Indira Gandhi– Judicial interpretations through the years made it worse

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How Jawaharlal Nehru and Indira Gandhi undermined freedom in the Constitution

• The reason for the constitutional decline in India is that the formal institutions of socialist planning were incompatible with the Constitution.

• The political actors undermining the constitution were pursuing socialist planning to its logical conclusion.

• In the process, rule of law, federalism, property rights, separation of powers and the independence of the Indian judiciary were adversely affected.

– Shruti Rajagopalan in “Incompatible institutions: socialism versus constitutionalism in India”

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India needs a modern Constitution to create a platform for prosperity

For India to change its trajectory, to move out of the trap that it is in for so long,

the rules of the game have to change. The constitution of India has to be re-written.

Change the rules, change the game.

- Atanu Dey

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The “Father of Indian Constitution” had grave doubts a few years after its birth

• Sir, my friends tell me that I have made the Constitution. My answer is that I was a hack. What I did was against my will.

• ... I said that I wanted to burn the Constitution…The reason is this: We built a temple for a god to come in and reside, but before the god could be installed, if the devil has taken possession of it, what else could we do except destroy the temple? We did not intend that it should be occupied by Asuras. We intended it to be occupied by the Devas. That is the reason why I said I would rather like to burn it.

– B R Ambedkar in Parliament in 1953 and 1955

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A New Constitution for India by 2020

The Second Republic

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It is incredible how as soon as a people becomes subject, it promptly falls into

such complete forgetfulness of its freedom that it can hardly be roused to

the point of regaining it, obeying so easily and so willingly that one is led to say, on

beholding such a situation, that this people has not so much lost its liberty as

won its enslavement.

- Etienne de la Boetie

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If you want to build a ship, don't drum up people to collect

wood and don't assign them tasks and work, but rather teach them to long for the endless immensity

of the sea.

- Antoine de Saint-Exupery

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Imagine…

• In the 2019 Lok Sabha elections, the only way for parties (and their candidates) to win is by pledging support for the New Constitution

• This ensures the support needed to replace the Constitution– Two-thirds majority in Lok Sabha and Rajya Sabha– Half the state legislatures

• On Jan 26, 2020: the Second Republic is born as India gets its New Constitution

• Question: how to influence the voting and get the party pledges in the 2019 elections?

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Logic of collective action:Unite and vote as one

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The disruptive innovation for change iscollective action via a united vote bank

• In democracies, the vote is the only weapon• A single vote is useless – makes no difference to outcome• But what if a united vote bank of all these votes was created

as a pressure group…• …where the members voluntarily agreed to vote as one?

• Average winning margin in an election is ~10%• Can make a candidate win or lose if vote bank size is more

than average winning margin

• Constituency that is invisible, inarticulate and unorganised now becomes visible, gets a voice and is organised

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Building the voting bloc

• Get 20% of India’s voters to vote, and vote as one

• Need grassroots organisers in every neighbourhood to persuade, unite and turnout

Committed, 34

Floaters, 8

Wasted , 10

Did Not Vote, 28

New Voters, 20

Voters

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Free A Billion (FAB)

• Changing Minds: Create a demand for freedom and changing rules– Link bad outcomes to interfering government– Create support for a new Constitution for India

• Channelling Votes: Aggregate large numbers into a united vote bank– Get 200 million (20%) who will vote, and vote as one– Build a grassroots organisation with local leadership

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FAB2020 roadmap: rules revolution

• Prosperity is not a zero-sum game• Our greatest enemy is the interfering government• Change rules, not just rulers – at all levels of govt• India (and our cities) need new Constitutions• Create a 20% pan-India bloc for 2019 elections• Ensure a new Constitution for India by 2020

Ideas

• Economics• Classical

Liberalism• Public Choice

Plan

• Constitutions• Cities• Campaign

Constitutions

• Nation• State• City• Ward

Action

• Voting Bloc• Community

Organisers• Mobile App

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How can you help free a billion

• Know more? Visit: fab2020.com• Twitter: @freeabillion• Facebook: facebook.com/freeabillion

• Intern with us? Email: intern@fab2020.com• Join full-time? Email: join@fab2020.com