The corner Bhelpuri guy

There’s this guy who sells Bhelpuri off a cart that he usually stations at the street corner 100 metres from home. His wife (I think) sells platters of cut fruit from another (taller, and covered) cart stationed next to him.

I don’t have any particular fondness for them. I’ve never bought cut fruit platters, for example (I’m told by multiple people that I’m not part of the target segment for this product). I have occasionally bought bhelpuri from this guy, but it isn’t the best you can find in this part of town. Nevertheless, every afternoon until mid-March he would unfailingly bring his cart to the corner every afternoon and set up shop.

He has since fallen victim to the covid-19 induced lockdown. I have no clue where he is (I don’t know where he lives. Heck, I don’t even know his name). All I know is that he has already suffered a month and half of revenue loss. I don’t know if he has had enough stash to see him through this zero revenue period.

The lockdown, and the way it has been implemented, has resulted in a number of misalignments of incentives. The prime minister’s regular exhortations to businesses to not lay off employees or cut salaries, for example, has turned the lockdown into a capital versus labour issue. Being paid in full despite not going to work, (organised) labour is only happy enough to demand an extension of the lockdown. Capital is running out of money, with zero revenues and having to pay salaries, and wants a reopening.

Our bhelpuri guy, running a one-person business, represents both capital and labour. In fact, he represents the most common way of operating in India – self employment with very limited (and informal) employees. Whether he pays salaries or not doesn’t matter to him (he only has to pay himself). The loss of revenue matters a lot.

The informality of his business means that there is pretty much no way out for him to get any sort of a bailout. He possibly has an Aadhaar card (and other identity cards, such as a voter ID), and maybe even a bank account. Yet, the government (at whatever level) is unlikely to know that he exists as a business. He might have a BPL ration card that might have gotten him some household groceries, but that does nothing to compensate for his loss of business.

If you go by social media, or even comments made by politicians to the media or even to the Prime Minister, the general discourse seems to be to “extend the lockdown until we are completely safe, with the government providing wage subsidies and other support”. All this commentary completely ignores the most popular form of employment in India – informal businesses with a small number of informal employees.

If you think about it, there is no way this set of businesses can really be bailed out. The only way the government can help them is by letting them operate (even that might not help our Bhelpuri guy, since hygiene-conscious customers might think twice before eating off a street cart).

One friend mentioned that the only way these guys can exert political power is through their caste vote banks. However, I’m not sure if these vote banks have a regular enough voice (especially with elections not being nearby).

It may not be that much of a surprise to see some sort of protests or “lockdown disobedience” in case the lockdown gets overextended, especially in places where it’s not really necessary.

PS: I chuckle every time I see commentary (mostly on social media) that we need a lockdown “until we have a vaccine”. It’s like people have internalised the Contagion movie a bit too literally.

Post-Covid Stimulus

There are two ways in which businesses have been adversely affected by the ongoing Covid-19 crisis. Using phrases from my algorithmic trading days, let me call this “temporary impact” and “permanent impact”.

For some businesses, the Covid-19 crisis and the associated lockdown means about three months or so of zero (or near-zero) revenues. There is nothing inherently unsafe about these businesses that makes their sales take a “permanent hit” after the crisis has passed us by. Once the economy opens up again, these businesses can do businesses like they used to before, except that they are staring at a three-odd month revenue hole at the top of their P&L.

The second kind of businesses are going to be “permanently impacted”. They involve stuff that are going to be labelled as “unsafe” even after the crisis is over, and people are going to do less of these.

For example, bars and restaurants are going to see a “permanent impact” because of the crisis – people are not going to relish sitting in a public place with strangers in the next one year, and a large proportion of restaurants will have to go out of business.

Similarly any industry associated with travel – such as transport (airlines, railways, buses), hotels and taxis will see a permanent impact from the crisis. Real estate is also likely to be hit hard by the crisis. For all these sectors (and more), even after the economy is otherwise back in full swing, it will be a very long time before they see the sort of demand seen before the crisis.

Now that distinction is clear (I mean there will always be sectors that will sort of lie in the borderline), but at least we have a classification, we can use this to determine how governments respond to stimulate economies after the crisis.

Based on all the commentary going around, it seems like a given that governments and central banks need to do their bit to stimulate the economies. The collapse in both demand and supply thanks to the crisis means that governments will collect less taxes this year than expected. So while to some extent they will be able to possibly borrow more, or monetise deficit, or set aside money from other budgeted items, the funds available for stimulating businesses are likely to be limited.

So what sectors of the economy should the governments (and central banks) choose to spend this precious stimulus on? My take is that they should not bother about businesses that will be permanently impacted by the crisis – at best, the money will go into delaying the inevitable at some of these companies, and if structured in the form of a loan, will be highly unlikely to be unpaid.

Instead, the government should spend to stimulate sections of the economy where the impact of the crisis is temporary – in order to make the crisis “more temporary”. By giving cash to sectors that are going to be fundamentally solvent, this cash can be more assured to “travel around the economy”, thus giving more of the proverbial bang for the buck.

This essentially means that sectors most affected by the current crisis should not get any help from the governments – this might sound counterintuitive, but if the true intention of the government stimulus is to stimulate the economy rather than helping a particular set of companies, this makes eminent sense.

Oh, and in the Indian context, this seems like the perfect time to “let go” of Air India.

Why Trump Will Retain Power

One piece of news that might have gone unnoticed in the middle of all this Covid19 news is that Bernie Sanders has suspended his campaign to be the Democratic nominee for this November’s American Presidential elections. So it looks highly likely that Joe Biden will take on fellow-septuagenarian Donald Trump.

Thinking about it, it doesn’t matter which Democrat takes on Trump. He is going to win. I suspect that Sanders realised this as the covid crisis was panning out, and so decided to fold.

Essentially what the Covid-19 crisis has been largely positive to things that American conservatives traditionally value, and showed the perils of some of the things that American “liberals” have traditionally valued. As a consequence of this, we will find that people who are on the margin (I’m told there are very few fence-sitting voters in the US, compared to India for example) are likely to shift more conservative.

In fact, everyone will become a little more conservative (in the American sense) after this crisis is over (though most Americans have such extreme political opinions that this won’t matter). And that means that in this year’s elections at least, the Republicans are going to win. So assuming he remains healthy, Trump has four more years in the Oval Office.

So what are these “conservative and liberal values” that influenced by this crisis? Let’s make a laundry list.

  • Borders: Open borders, at state and national level are a favourite of liberals (except, in the American context for some strange reason, for skilled labour immigration). They are great for economic growth, but also for pandemic growth. We are surely likely to see tougher border controls (maybe Brexit will be followed by Nordexit? Can’t be ruled out) continuing post this crisis.
  • Cities: Conservatives are all about urban sprawl, owning McMansions and commuting by car. Liberals bat for high density cities and public transport. The tail risk of high density cities as being higher risk for pandemic spread (which had largely been hidden following the rapid advances in medicine in the first half of the 20th century) has been exposed.
  • Families: When you are isolated you would rather be living with your family (“near and dear ones” as some like to put it). The lockdown has been hardest on people living alone or living “with roommates”. American conservatives are all about marrying early and staying married and “two parent families”, which means fairly low chances of living alone. On the margin, people are likely to rediscover “family”.
  • Individualism: Sort of related to the previous one. This is something that is likely to affect me as well. Liberals have been about “breaking free of the community” and living by and for yourself. Crises like this one make you realise the value of having a community, and cultivating relationships in good times that might come of use in bad. So we are likely to see less individualism.Related to this, liberals are far more likely than conservatives to cut ties with families on account of their political leanings. The pandemic might force a rethink on this.
  • Privacy: Countries that have managed to suppress the disease to great extent (such as Singapore, Taiwan, Hong Kong and South Korea) have done so by increasing surveillance on their citizens. As Raghu SJ wrote in this excellent blogpost, countries are facing an “impossible trilemma” in terms of protecting citizens’ privacy, containing the disease and protecting the economy.
    And he wholeheartedly agrees that privacy is the one thing that should be sacrificed now. I’m thinking he’s not alone. Moreover, instruments like Aadhaar and Aadhaar-linked bank accounts, which was vociferously opposed by privacy fundamentalists, can be of excellent use for fast direct transfer of benefits now (that India, which has this infrastructure, is only doing a tiny stimulus is another matter).
    Going forward, people will be more willing to trade off privacy (which a lot of us are already doing with Facebook, etc.) for superior service, and privacy fundamentalists will get less attention.

There are some mitigating factors as well.

  • Church attendances will go down, since religious gatherings have been shown to be a reliable source of infection spread.
  • The health crisis can mean that some sort of Obamacare might make a comeback.

On the balance, though, at least in the social sense, you can expect Americans to become more conservative. Move to smaller towns and suburubs (greater remote working will aid this), keep factories in the US (a favourite Trump theme) and become more family oriented. While all this may not last for too long, it should be enough to win Trump this year’s election.

It doesn’t matter how well or badly his government handles Covid-19.

I deliberately decided to not talk about India, since I’m not sure there’s that much of an ideological difference between political parties here. But similar trends, at the personal level, are likely to happen here as well.

The Two Overton Windows

If you want to appear intelligent when discussing something about public policy, you could do worse than uttering the phrase “Overton Window”. The Overton Window, “invented” by one Joseph Overton, suggests that there is a “range of policies acceptable to political mainstream”.

And so you frequently have political commentators talking about the Overton Window “shifting” whenever a new political idea (or person) comes to the fore. This was bandied about much when Modi became Prime Minister of India, or when Trump became President of the US, or when Jeremy Corbyn became the Labour Party leader.

While “shifting Overton window” is something you come across rather often in policy discourse, my argument is that with the rise of subscription media, the Overton window is not shifting as much as it is “splitting”. In other words, we now have not one but two Overton Windows.

Without loss of generality, let us call them the “Jamie Overton Window” and the “Craig Overton Window”. Since both the twins are right arm fast bowlers, it doesn’t matter which brother is associated with which Overton Window.

So how did we get here, and what does it mean for us?

We started with the classic Overton Window. Let’s assume that all politics can be reduced to one axis (if we do a Principal Component Analysis of political views, the principal axis is certain to account for a large share of the variance, so this is not a bad assumption). So the Overton Window can be referred to by a line which the shifts.

As long as the world was “ruled by mainstream media”, this Overton Window kept moving back and forth, expanding and contracting, but it remained united. And then with the start of subscription ad-free media (maybe a decade or decade and half ago), the Overton Window started expanding.

The “left media” (that’s a convenient term isn’t it?) started admitting stuff that was left to the then Overton Window. The “right media” started admitting stuff that was to the right of the then Overton Window. And so over time, the Overton Window started expanding. And things can’t get into the media Overton Window unless they’re part of the mainstream political Overton Window.

The thing is that as the media became subscription-heavy and hence biased, political ideas that were once on the fringe now got a voice. And so the Overton Window got larger and larger.

Until a point when it got so unwieldy that it split, giving rise to Jamie and Craig. The image on the right is an approximate illustration of what happened.

And once the Overton Window split, there was no looking back. They started moving away from each other well-at-a-faster-rate. The Jamies could not come to terms with the policies of the Craigs, and vice versa. Political analysts and commentators started getting associated with the Jamie and Craig camps.

For a while, a few commentators continued to write for both sides, but the extreme fringes, which were getting more and more extreme, started overreacting. “How can we have someone who has written 10 articles for Craigs write for us”, the Jamies asked. “Most of our commentators are Craigs, so we might as well become a Craig newspaper”, the other side reasoned.

And that’s where mainstream media is going. The Overton Window has split down the middle. Crossing this gap is considered a crime worse than crossing the floor in Parliament.

Sadly, it is not just media that is getting Jamie and Craig. Mainstream politics reflects this as well, and so across countries we get political opponents who just cannot talk to each other, since everything one says is outside the Overton Window of the other.

Maybe the only way this can end is by going across axes, or inventing a new axis even. With the current spectrum politics, there is no hope of the two Overton Windows coming to meet.

 

Why Border Control Is Necessary

India is shutting down its domestic flights today in order to stop the spread of Covid-19. This comes a day after shutting down the national railways and most inter-city buses. States and districts have imposed border controls to control the movement of people across borders.

The immediate reaction to this would be that this is a regressive step. After a few decades of higher integration (national and international) this drawing of borders at minute levels might seem retrogade. Moreover, the right of a citizen to move anywhere in India is a fundamental right, and so this closing of borders might seem like a violation of fundamental rights as well.

However, the nature of the Covid-19 bug is that such measures are not only permissible but also necessary. The evidence so far is that it has a high rate of transmission between people who meet each other – far higher than for any other flu. The mortality rate due to the illness the bug causes is also low enough that each sick person has the opportunity to infect a large number of others before recovery or death (compared to this, diseases such as Ebola had a much higher death rate, which limited its transmission).

So far no cure for Covid-19 has been found. Instead, the most optimal strategy has been found to prevent infected people from meeting uninfected people. And since it is hard to know who is infected yet (since it takes time for symptoms to develop), the strategy is to prevent people from meeting each other. In fact, places like Wuhan, where the disease originated, managed to stem the disease by completely shutting down the city (it’s about the size of Bangalore).

In this context, open borders (at whatever level) can present a huge threat to Covid-19 containment. You might manage to completely stem the spread of the disease in a particular region, only to see it reappear with a vengeance thanks to a handful of people who came in (Singapore and HongKong have witnessed exactly this).

For this reason, the first step for a region to try and get free of the virus is to “stop importing” it. The second step is to shut down the region itself so that the already infected don’t meet the uninfected and transmit the disease to them.

Also, a complete shutdown can be harmful to the economy, which has already taken a massive battering from the disease. So for this reason, the shutdown is best done at as small a level as possible, so that the overall disruption is minimised. Also different regions might need different levels of shutdown in order to contain the disease. For all these reasons, the handling of the virus is best done at as local a level as possible. City/town better than district better than state better than country.

And once the spread of the disease has been stopped in a region, we should be careful that we don’t import it after that, else all the good work gets undone. For this reason, the border controls need to remain for a while longer until transmission has stopped in neighbouring (and other) regions.

It’s a rather complex process, but the main points to be noted are that the containment has to happen at a local level, and once it has been contained, we need to be careful to not import it. And for both these to happen, it is necessary that borders be shut down.

Why Activists Should Not Be In Government

Back in 2008, Salil Tripathi had argued in an article for Pragati (RIP) that human rights activists need to be unreasonable (check page 5 of this PDF). He had written:

[…] they see their role as defending the indefensible, so that the rest of us won’t suffer at the hands of a government with authoritarian tendencies. If they were to begin appearing reasonable, they’d lose resonance. More important, nobody will be speaking out for the innocent who will otherwise go to jail.

While Salil was talking especially about human rights activists (his own profession), this is broadly true of all activists in general. It is their duty to be unreasonable, since in a lot of cases they will be defending the indefensible.

If you are an environmental activist, for example, you will want to take unreasonable positions in favour of environmentalist causes. As Salil goes on to write in his old piece, the job of being reasonable belongs to somebody else.

They may even be selective – nothing prevents from others to pick up cases and causes these individuals do not. Let the think tankers and policy-makers become practical. Because otherwise, everyone will support the idea of safety-over-liberty, and we would all be losers.

That activists need to be unreasonable also comes from Graham Allison’s political resultant model. The basic idea is that every government decision is a function of all the positions submitted to it. You can think of the final direction of the decision as being the vector sum of all the positions submitted to the government. In this case, the job of the activist (human rights or otherwise) is to present the unreasonable and extreme case in favour of the activism, with the full knowledge that the government will go with a sort of political resultant.

So what happens when an activist comes into government? Remember that the activist is coming in with years of experience of taking extreme and unreasonable positions. Taking the “resultant” and the “reasonable view” has always been someone else’s job.

The risk of such a person being in government is that they could abandon the process of taking the “resultant” (which is what governments are expected to do), and continue from within government the process of going with the unreasonable policies and politics. That, however, makes for bad government and doesn’t give the people what they deserve.

As politics has been getting more and more extreme over the years (read this lovely essay on how louder politics is making it more unreasonable, drawing from sound theory), activists have been throwing their hats into the ring. Mainstream politicians have been endorsing extreme positions rather than taking them as just one of the inputs.

The problem is that such extremism isn’t how a government usually operates, and doesn’t make for good policy. Hence, activists shouldn’t really be part of the government.

News, Subscription, Advertising, and Bias

Dibyendu Mishra and Joyojeet Pal of the University of Michigan have some very interesting research out on the political bias of Indian news publications. Rather than do complicated gymnastics such as NLP, they’ve simply looked at the share of articles from each news publication that is retweeted by BJP and non-BJP publications, to draw out a measure of their bias (see link above for methodology).

They have made a nice scatter plot (the other axis is how “popular” these news outlets are in terms of the number of articles retweeted), and looking left to right, you can see the understood (by politicians) bias of various Indian news publications. As Helmet pointed out on Twitter, the most “centrist” news outlets seem to be the Times of India and the Economic Times, both from the Bennett, Coleman and Company group, who people crib about for “being too commercial” and “having too many advertisements”.

This reminds me of another piece of analysis that was in the news a few months ago, about how subscription-driven online news has led to news outlets being politically polarising. For example, Zach Goldberg did some analysis of frequency of words/phrases in the New York Times that are associated with the extreme left.

Note the inflexion point sometime in 2012 or so, around the same time when the NY Times put up its paywall.

David Rozado has a more comprehensive picture (check out his nifty tool here).

The idea is this – when newspapers depended on advertising for most of their funding, they needed to be centrist. Taking political sides meant that large mass-market advertisers wouldn’t want to advertise in this newspaper, and the paper would thus lose revenues. Hence, for the longest time, whatever the quality of the reporting and writing was, news outlets strove to be reasonably politically unbiased – taking sides would mean a loss of money.

Once digital took off, and it became clear that digital advertising wouldn’t really sustain the papers, they started putting their content behind paywalls. And subscription revenues meant two things – news outlets weren’t as beholden to advertisers as they used to be, and it was easier to get paying subscribers if you had a strong ideology. Moreover, online you can provide targeted advertising (rather than mass-market), so you can get away with being biased. And so with the coming of paywalls, newspapers started becoming far more political as the New York Times graph above indicates.

In India, there haven’t been too many publications behind paywalls, but media is evidently getting more and more polarised over time. Papers and channels are branding themselves (implicitly) as being pro or against a particular political party, and that is driving their viewership.

While these media outlets are good for fanbois (and fangirls) of particular ideologies, the ideological bent has meant that it has become harder to get objective news.

And that’s where money, and advertising, comes in.

The positioning of ToI and ET in the middle of the Indian media ideological graph is interesting because they belong to a group that is brazen about commercialisation and revenues (from advertising). And in terms of news objectivity, that’s a good thing. Since ToI and ET are highly money minded, they want to get as much advertising as possible, and in order to attract mass marketers, they need to not be biased.

Taking a political stand means pissing off people belonging to the opposite political persuasion, and that means less readership, which means less advertising revenues. And so if you read the editorials of these newspapers (I read ET everyday), you see that they maintain a careful balance of not appearing too biased in favour or against any party. And you see them raking in the advertisers while more biased (and “ideological”) competitors are forced to request for donations, or put up paywalls restricting their readership.

Putting it another way, there is no surprise that ToI and ET are not biased in their news, and are retweeted by politicians of all persuasions. It is the classic money-driven media model, and that is the one that is capable of providing the most objective news.

War, Terror and Leaderless Protests

A while back, I’d written on this blog that the phrase “war on terror” is incorrect since terrorism is not a war (actually I have written two posts on this topic. Here is the second one). A war is a staged human conflict with the aim being a political victory, and wars inevitably end in a political settlement, which in chess terms can be described as “resignation, rather than check mate”.

The issue with terrorism is that it is usually a distributed method. There is no one leader of terror. You might identify one leader and neutralise him, but that is no guarantee that the protests are going to end, since the rest of the “terrorist organisation” (a bit of an oxymoron) will keep the terror going. With a distributed organisation like a terrorist outfit, political settlements are impossible (who do you really settle with), and so the terrorism continues and there is no “victory”.

It is similar with spontaneous leaderless protests that have become the hallmark of the last decade, from Tunisia and Egypt in 2011 to Occupy Wall Street to the recent anti-CAA protests in India. To take a stark example with two protests based in Delhi, the Anna Hazare protest in 2011 was finished in fairly quick order (it started two days after India won the World Cup, and finished two days before the IPL was about to begin), while the Shaheen Bagh protests against the Citizenship Amendment Act have been going on for nearly three months now.

The difference between these two Delhi protests is that the first one (2011) had a designated leader (Anna Hazare, and maybe even Arvind Kejriwal or Kiran Bedi). And the protestors effectively followed the leader. And so when the government of the day negotiated a settlement with the leader, the protest effectively got “called off” and ended abruptly.

The Shaheen Bagh protests don’t have a designated leader to negotiate with (at least there are no obvious leaders). The government might try to negotiate with or round up or be violent to a handful of people who it thinks are the leaders, but the nature of the protest means that this is unlikely to have much effect since the rest of the “decentralised organisation” will go on.

In that sense, protests by “decentralised groups” are attritional battles where no negotiation is possible, and the only possible end is that the protestors either get bored or decide that the protest is pointless (that’s pretty much what happened with Occupy). Each member of the protesting group takes an independent decision each day (or night) whether to join the protest or not, and the protest will die down over a period of time (how long it will take depends on the size of the universe of people participating in the protest, overall interest level in the protest and how networked the protest is).

From that point of view, a leadered protest (like the Anna Hazare protest) can end suddenly (so everyone can go watch the IPL). A leaderless protest dies slowly and gradually (stronger network effects among the protestors can actually mean that the protest can die a bit faster, but still gradually).

There are claims on social media and WhatsApp groups that the communal violence in Delhi on Monday and Tuesday was designed in part to intimidate the Shaheen Bagh protestors to stop the protests. Even the violence was “successful” in achieving this objective, the leaderless nature of the protest will mean that it will only end “gradually”, more like a “halal process” rather than with a “jhatka”.

Distribution of political values

Through Baal on Twitter I found this “Political Compass” survey. I took it, and it said this is my “political compass”.

Now, I’m not happy with the result. I mean, I’m okay with the average value where the red dot has been put for me, and I think that represents my political leanings rather well. However, what I’m unhappy about is that my political views have been all reduced to one single average point.

I’m pretty sure that based on all the answers I gave in the survey, my political leaning across both the two directions follows a distribution, and the red dot here is only the average (mean, I guess, but could also be median) value of that distribution.

However, there are many ways in which people can have a political view that lands right on my dot – some people might have a consistent but mild political view in favour of or against a particular position. Others might have pretty extreme views – for example, some of my answers might lead you to believe that I’m an extreme right winger, and others might make me look like a Marxist (I believe I have a pretty high variance on both axes around my average value).

So what I would have liked instead from the political compass was a sort of heat map, or at least two marginal distributions, showing how I’m distributed along the two axes, rather than all my views being reduced to one average value.

A version of this is the main argument of this book I read recently called “The End Of Average“. That when we design for “the average man” or “the average customer”, and do so across several dimensions,  we end up designing for nobody, since nobody is average when looked at on many dimensions.

External membership of unions

The ostensible reason for the violent crackdown on protesting students at Alighar Muslim University and Jamia Millia Islamia last month was the involvement of “outsiders” in these protests. In both cases, campus authorities claimed that student protestors had been joined by “outsiders” who had gone violent, which forced them to call in the cops.

And then the cops did what cops do – making the protest more violent and increasing the damage all round, both physically and otherwise.

I’m reminded of this case from a few years ago from some automobile company – possibly Maruti. The company had refused to recognise an employee’s union at a new plant they were starting, because of an argument on the membership of non-employees in the unions.

The unions’ argument in that case was that external (non-employee) membership was necessary to provide the organisational and union skills to the union. If I remember correctly, they wanted one third of the union to consist of members who were not employees of the firm. The firm contended that they wouldn’t want to negotiate with outsiders, and so they wouldn’t recognise the union with external members.

I don’t remember how that story played out but this issue of external membership of unions, whether student or employees, is pertinent.

At the fundamental level, unions need to exist because of the balance of power – the dominance in favour of an institution over an individual employee or student is too great to always produce rational outcomes in the short term (in the long term it evens out, but you know what Keynes is supposed to have said). The formation of unions corrects this imbalance since the collection of employees or students can have significant bargaining power vis-a-vis the institution, and negotiations can result in more rational decisions in the short term.

The problem I have is with external membership of unions. The problem there is that external members (who usually provide leadership and “organisation” to the unions) lack skin in the game, and the union’s incentives need not always be aligned with the incentives of the employees or students.

Consider, for example, the protests in the universities last month which became violent. The incentive of the protests would have been to peacefully protest (to register their dissatisfaction with a recent law), and then get back to their business of being students. The students themselves have no incentive to be violent and damage stuff in their own institution, since that will negatively impact their own futures and studies at the institution.

External members of the unions don’t share this incentive – their incentive is in making the union activities (the protest in this case) more impactful. And if the protest creates damage, that can make it more impactful. The external members don’t particularly care about damage to the institution (physical and otherwise), as long as the union’s show of strength is successful.

It is similar in organisations. It is in the interest of both the employees and the management that the company does well, since that means a larger pie that can be split among them. The reason employees organise themselves, and sometimes go on limited strikes, is to ensure that they get what they think is a fair share of the pie.

The problem, of course, is that negotiations aren’t that simple, and they frequently break down. The question is about what to do when that inevitably happens. Each employee has his own threshold in terms of how long to strike, and at what point it makes sense to back down and accept the deal on the table.

In an employee-only union, the average view of the employees (effectively) guides when the strike gets called off and the negotiations end. External members of the union lack skin in the game, and they have a really long threshold on when to back down from the strike. And this makes strikes longer than employees want them to be, which can make the strikes counterproductive for the employees.

One infamous example is of the textile mills in Mumbai in the late 70s, and early 80s. There was massive union action there in those times, with strikes going on for months together. Ultimately the mills packed up and relocated to Gujarat and other places. The employees were the ultimate losers there, either losing their jobs or having to move to another city. If the employees themselves had controlled the union it is likely that they might have come to a settlement sooner or later, and managed to keep their jobs.

In the automobile case I mentioned earlier, if I remember correctly, the union demanded that up to 33% of the membership of the union be comprised of outsiders – a demand the company flatly refused to entertain. Now think about it – if external members control a third of the union, all it takes is one fourth of the employees, acting in concert with the union, for something to happen. And there is a real agency problem there!