What makes leaders like Modi get away with wiping out 2% of India's GDP in the name of demonetisation?
Modi must be held personally responsible for having wiped out two per cent of India’s GDP.
Who would have thought that the duly-elected leader of the world's largest democracy would act in the manner Prime Minister Narendra Modi did on November 8 last year? Without consulting his Cabinet, Parliament, or the Reserve Bank of India, PM Modi announced his government would scrap 86 per cent of the currency in circulation.
In a speech that shocked the nation, the prime minister said: "To break the grip of corruption and black money, we have decided that the Rs 500 and Rs 1,000 currency notes presently in use will no longer be legal tender from midnight tonight…(these) notes hoarded by anti-national and anti-social elements will become just worthless pieces of paper."
There was no mention in the speech about the nature of his decision: Was it a considered move, or, as many now suspect, just a whim? Of the outcome there is no doubt: it was the equivalent of shooting out the tires of a wide body aircraft just as it was gathering speed for take-off.
Like the aircraft would have, the Indian economy crashed, killing uncounted numbers of innocents and causing grievous wounds across the board.
Also evident in Modi's assertion is he believed that any citizen who held these currency notes is a crook. Here is a leader, elected by a huge margin, suggesting his voters are "anti-national and anti-social elements?"
In the event, Modi must be held personally responsible for having wiped out two per cent of India's GDP, destroyed the informal labour sector and ruined the lives of millions of poor Indians.
Other leaders elsewhere have also displayed cavalier disregard for democratic values and constitutional norms. Interpreting their mandate as a blank slate handed to them by voters who are "victims" of global and national elites, such leaders have redefined the rules of engagement with citizens and institutions.
To understand the ascendancy of leaders like Modi, it is vital to take into account two global factors: the huge technological advances in connectivity and its profound impact on institutions, and second, the impact on citizens of the massive shift of the global job market to China.
The dramatic increase in connectivity facilitated by the Internet flattened space and time; people began to communicate with each other instantly using phones and computers. In almost no time at all, the Internet undermined the post office, a vital government institution with a monopoly over communications.
Similarly, government-controlled or -regulated telephone networks were superseded by the explosion in cellular telephony.
In the blink of an eye, these connectivity platforms were enriched by value-added features such as search engines, entertainment options, retail trade systems, financial services, you name it. Above all, this rich content broke the monopoly on information that government institutions enjoyed. It was a hammer blow from which they are still to recover.
A weakened institutional framework proved no match for the huge economic changes underway. Pressured by financiers ("Wall Street") for greater returns, businesses ("Main Street") that were already looking at global markets and supply chains began to shift manufacturing for labor cost arbitrage.
First off the block to move operations to cheaper labour markets were information technology firms and garment companies, among others. Next in line were equipment manufacturers serving the telecom, computer, electronics sectors.
These trends were exacerbated by the adoption of automation technologies such as robotics and expert systems. The resultant job losses among the blue-collar populations were the source of discontent that quickly targeted the entire "elitist" edifice.
Mixed with dog-whistle appeals to racial bigotry, sectarian hatred and class divisions, populist leaders emerged to feed the victim mindset for electoral gain.
In Turkey, in India, in the Philippines, in Britain, even in the USA, elections threw up leaders who practised no restraint, catered to the lowest common denominator and vaulted to power.
The root cause of this electoral earthquake is the rapid and disruptive spread of technology coupled with iniquitous outcomes of globalisation.
At first, only a few segments of the population were marginalised. However as financial priorities increasingly dominated this sector, the discontent grew to include the traditional working classes while restricting upward mobility in the middle classes, who are the iron-frame of democratic and free societies. The new leaders do not inspire confidence. Unable to cope with the challenges of governance, these populists quickly turn despotic. As such, the threat to civil society goes beyond the politics of bigotry and corruption to actual challenges to the constitutional order.