Why Uber/Ola is Nehruvian

According to Ramachandra Guha’s India After Gandhi, the ostensible reason for India adopting a statist/socialist/planned approach was the scarcity of capital.

With capital being scarce in the newly independent country, Jawaharlal Nehru had reasoned that in order for the country to develop, whatever capital existed had to be deployed in the most productive manner possible. A free market for capital would end up deploying capital where it wasn’t required the most, denying more critical sectors of capital. A planned economy, on the other hand, would result in more efficient usage of capital.

While India has developed significantly in the 70 years since independence, it is still not completely out of the woods. Poverty remains high and India’s per capita income is at the lower end of the spectrum. Thus, while capital may not be as scarce a resource as it was in 1950, effective deployment of capital is still necessary to ensure India’s continued economic growth.

From this perspective, think of the car. When at rest, it is adding no economic value apart from making itself available to its owner (and its owner alone) at a point of time when the latter needs it. From this perspective, the economic value that the parked car adds is almost entirely in terms of “option value”.

A parked car also consumes valuable economic resources, with the most important being the real estate it stands on. This particular resource is so important that it forms an important form of urban regulation in most markets (a building or a business needs to have a certain minimum number of parking spaces and so on).

Moreover, the two common axes on which the value of a car is evaluated are age and distance travelled. Considering that the car adds economic value only in terms of the latter – when it helps transport someone, depreciation of the car in terms of age is entirely uncompensated. On this account, too, a parked car is a dead weight loss.

It is not hard to see, thus, that a parked car is an enormous waste of capital; capital that an emerging economy such as India could very well utilise elsewhere. Yet, the large number of cars in the country that are standing still at any point in time show that despite being an overall inefficient use of capital, a large number of people value the inbuilt option value.

Back in the time when Nehru had his way, he had solved the problem in his own unique way – by limiting the number of cars that could be manufactured and sold in the country, which automatically put a limit on the number of parked cars. In this technologically advanced day and age, however, we don’t need such drastic measures.

All we need is a restructuring of economic incentives such that the option value of a parked car goes down. And what better incentive than to provide the option to summon a car on demand? While this summoned car might have a higher marginal cost per trip than an owned car, taken in aggregate it leads to a significantly lower cost.

Thus, the Nehruvian answer to the inefficient capital wasted in parked cars would be to encourage services that allow you to summon a car on demand. In other words, services such as Uber and Ola fulfil a Nehruvian objective by freeing up capital that was being earlier wasted in parked cars. There is data to show that such services have resulted in a decline in growth of car ownership.

Given that Uber and Ola follow the Nehruvian ideal of reducing wasteful capital, it is baffling that the government in Karnataka, which belongs to the Congress party which is based on Nehruvian ideals, or the government in Delhi, headed by the Nehruvian Arvind Kejriwal, were to campaign to clamp down on such Nehruvian services.

There might be some tremors under Shanti Van.

Community and age of marriage

I’ll be 26 within two weeks time. In fact, if you go by the Hindu calendar (which sacrifices short-term accuracy for long-term precision) I’m already 26. One question people constantly ask me when I bump into them is about when I plan to get married. Most of my friends also belong to the same approximate age group. When we meet up, discussion frequently veers towards “market entry”. About the arranged marriage market.

One common thread of discussion is “you belong to XXX community. you should’ve already fathered two kids by this age” or “you belong to YYY community. it’s ok even if you don’t get married for another six years”. Which makes me wonder why people from different castes and communities get married at different ages.

The Hindu scriptures divide a man’s life into four stages. At the end of the first quarter, which is brahmacharya, the boy is supposed to get married, and become a gRhasta. This division of life into four quarters in the Hindu scriptures is a clear indication that our ancestors knew about the Quarter Life Crisis so long ago. And they has prescribed a simple antidote to it – marriage. Yes, I admit that different people would feel the QLC at slightly different ages, leading to a small variation in marriage age. However, there seems to be no reason as to why this should depend upon one’s caste.

For one to get married, one needs to earn enough in order to support a partner and still lead a fairly comfortable life. Typically, you won’t want a quality of life that is much inferior to what you were leading at your parents’ place, before you moved out. When you are still a bachelor, you might be willing to accept a lower quality of life in order to maybe further your career. However, by the time you get married, you want to be closer to the quality you were used to in childhood.

We need to remember that the caste system was initially intended to divide people based on their occupation. Thus, it is fair to assume that even fifty to seventy years back, when most people more or less “lived within their caste”, people from similar castes were likely to take up similar kind of careers. Some would choose to join the family business, others would go out to set up their own business, a few others would join the government, and some others would join the army, and so on.

You need to notice that each kind of occupation promises its own kind of cash flows, and so in each of these types of professions, you take a varying amount of time in order to reach the standard of living of your parents.

If you observe, in most parts of India, the people who get married the youngest are typically people who belong to Lala communities. Once you choose to become a Lala, you forego an income, and live on pocket money. And it’s your family which decides how much pocket money you get, and typically your father and uncles and so on won’t want you to live an inferior life to theirs. And so your standard of living is always equal to that of your parents’. And you get married quickly.

Then you have people who work for a salary. If you look back, back in the 50’s and 60’s, the only employer (there wasn’t much of a choice in this) was the government. And irrespective of what degrees you had, or what colleges you went to, you were subject to a pay scale based on number of years in the job. And your salary would typically start off obscenely low. And it would take ages for you to reach the standard of living of your parents.

So that explains it. I know I haven’t taken any data points in between, but I suppose it shouldn’t be too tough. Lalas always live at the same standard as their families, and are thus eligible to marry the earliest. People working for salaries had no choice. They had to wait till the sarkar paid them enough to reach the same standard of living as their parents. And they married really late.

It is all because of Nehruvian socialism, I tell you. In case India was more capitalist back then, more people would’ve gotten rich enough to marry sooner. And this caste-based distinction in age of marriage wouldn’t have existed.

So the next time someone brings up some caste or community related stuff when encouraging or discouraging you to get married, tell them that it is all Nehru’s fault. Talk to them about our great scriptures, and their recognition of the Quarter Life Crisis. Argue from the point of view of your own QLC so as to conveniently hasten or postpone marriage. I’m sure that the scriptures, properly invoked, won’t fail you.