How should Bill Carmichael's transparency project be pursued now?

 

Unfortunately, few readers of this blog will know anything about Bill Carmichael or his transparency project. My main purpose here is therefore to explain who he was and why the question I have posed above is worth considering.

W.B. (Bill) Carmichael died recently at the age of 93. In his obituary,  Gary Banks, former chair of the Australian Productivity Commission, described Bill aptly as “an unsung hero” of the Australian Public Service (APS).

In my experience, most members of the APS who are working on economic policy like to claim that they are contributing to the well-being of the public at large. However, I find it difficult to accept such claims unless the people concerned can demonstrate that they are actively seeking to either undo mistakes that governments have made, or to discourage governments from making more mistakes.

Bill Carmichael made a huge contribution in helping to undo mistakes that Australian governments made over many decades in insulating much of the economy from international competition. His efforts in support of trade liberalization have helped Australians to enjoy greater benefits from trade and greater productivity growth than would otherwise have been possible.

Alf Rattigan’s right-hand man

Bill’s contribution to trade liberalization was largely behind the scenes, helping Alf Rattigan, the former chairman of the Tariff Board, to pursue his reform efforts. Rattigan argued successfully that tariff reform was required because industries that had been given high levels of government assistance to compete with imports were inherently less efficient users of resources than those requiring lower levels of assistance or none at all.

As Gary Banks’ obituary indicates, Bill played an important role in developing strategies, writing the key speeches that Alf Rattigan delivered, dealing with difficult bureaucrats, and engaging with economic journalists who were highly influential in informing politicians and the public about the costs of protection and the benefits of international competition. Bill’s contribution reached its pinnacle in the early 1970s when the Industries Assistance Commission (IAC) was established with an economy-wide mandate to ensure greater transparency to processes for provision of government assistance to all industries.

Bill eventually became chairman of the IAC. However, in my view, his most important contribution was made in helping to establish the organisation and ensure that it had access to the professional economic expertise it required to undertake research and produce quality reports.

Bill’s transparency project

Bill Carmichael’s interest in the transparency of trade policy did not end after he retired from the IAC in 1988. My reference to Bill’s transparency project relates specifically to the efforts he made during his retirement to bring greater transparency to trade negotiations. These efforts were made in collaboration with Greg Cutbush, Malcolm Bosworth, and other economists. The best way to describe that project is to quote some passages from an article in which Bill suggested that Australians are being misled about our trade negotiations and agreements. The article, entitled ‘Trade Policy Lessons from Australia’,  was published by East Asia Forum in 2016.

Bill wrote:

“The goal of trade policy is not limited to increasing export opportunities. Nor is it just about improving trade balances. Rather trade policy is about taking opportunities to improve the economy’s productive base. When assessing a nation’s experience with bilateral trade agreements, this is the test that should be applied.

In each bilateral agreement Australia has completed to date, projections of the potential gains for Australia, based on unimpeded access to all markets of the other country involved, were released prior to negotiations. These studies did not, and could not, project what was actually achieved in the ensuing negotiations. The quite modest outcomes for Australia from those negotiations meant the projected gains conveyed nothing about what was eventually achieved. Yet the projections were still quoted to support the agreements after they were signed, as though they reflected actual outcomes.

This approach to accounting for the outcome of trade agreements has meant that Australia has missed opportunities for productivity gains. So how, given Australia’s recent experiences, can trade policy and negotiations be better conducted in future?

Australia cannot change how it negotiated its agreements with the United States, Japan, South Korea and China. But policymakers can refine their approach to future negotiations. Australia’s trade policy should be guided by a model based on its conduct in the Uruguay Round of trade negotiations. The Uruguay Round confirmed that the domestic decisions needed to secure gains from unilateral liberalisation and those required to secure the full gains available from negotiations have converged.

The negotiations in the Uruguay Round took place at a time when former prime ministers Bob Hawke and Paul Keating were reducing Australia’s barriers to trade unilaterally. Their productivity-enhancing reforms were subsequently offered and accepted in the Uruguay negotiations as Australia’s contribution to global trade reform. Consequently, Australia secured all the gains available from trade negotiations: the major gains in productivity from reducing the barriers protecting less competitive industries, as well as securing greater access to external markets.

This was the kind of win–win outcome negotiators should seek from all trade agreements. It made a substantial contribution to the prosperity Australia has since enjoyed.  …

In future trade negotiations, the Productivity Commission — Australia’s independent policy review institution — could provide a basis for market-opening offers by conducting a public inquiry and reporting to government before negotiations get underway.”

In a subsequent paper, publicly endorsed by a group of trade economists, Bill argued:

“If we are to close the gap between trade diplomacy and economic reality, we need to respect three lessons from experience: first, a major part of our gains from trade agreements depends on what we take to the negotiating table, not what we hope to take away from it ; second, liberalising through trade negotiations cannot be pursued simply as an extension of foreign policy ; and third, … future bilateral agreements should be subject to cost-benefit analysis before ratification.”

How should Bill’s project be pursued?

I raise this question without much optimism that greater transparency of trade policy can be achieved in the short term. There is no more reason to be optimistic that the Department of Foreign Affairs and Trade will suddenly become receptive to ideas that challenge its claims about the benefits of trade agreements it has negotiated than there was to be optimistic that its predecessor, the Department of Trade and Industry, would be receptive in the 1960s to the ideas of Rattigan and Carmichael which challenged the protectionist orthodoxy of that department. Added to this, it is difficult to ignore signs that protectionist sentiment is on the rise again in Australia in the wake of the Covid 19 pandemic and fears that a further deterioration in international relations could lead to disruption of international shipping.

Nevertheless, as Bill might say, none of that should stop us from pursuing longer-term goals.  I hope that some people reading this will feel motivated to think constructively about how Bill Carmichael’s transparency project could be pursued as a longer-term exercise in institutional reform.

Who was Erasmus and why should we care?

 After I stumbled across that quote a few days ago, it struck me that Erasmus might have something relevant to say to people living today.

However, before I discuss the context in which Erasmus made that statement, it might be helpful to provide some relevant background information about him.

The man and his vocation

Erasmus was born around 1467 and died in 1536.  William Barker, the author of a recently published biography, Erasmus of Rotterdam: The Spirit of a Scholar, tells us that Erasmus had become famous by the time he reached his mid-fifties. Erasmus was a prolific author. The rise of the printing press helped him to establish an international reputation during his lifetime. At that time it was possible for a humanist scholar – one steeped in the literature and culture of ancient Greece and Rome – to have fame equivalent to that of an Einstein or Stephen Hawking in more recent times.

Although Erasmus was a priest, he remained independent of the church hierarchy. Patrons offered gifts and allowances, which he accepted, but he was not dominated by any person or institution. He had an aversion for scholastic theology, believing that the words of the Bible show the message of Jesus more clearly than could any scholastic commentator. He based his famous translation of the New Testament on ancient Greek manuscripts because he believed that some of the original reports written by followers of Jesus had become distorted in the official translation used at that time.

In addition to his Translation of the New Testament, Erasmus’ famous works include The Praise of Folly, and his compilation of Roman and Greek proverbs. The Praise of Folly takes the form of a speech by Folly, seeking to persuade us that she is basic to all our lives. Barker sums up the book as follows:

“The work begins with social criticism, a kind of genial mocking, but it ramps up to direct attacks on various interest groups in the political, intellectual and religious worlds, and, in the amazing final move, suddenly turns inwards, and pulls the reader towards the abyss found in the complete loss of self through a total religious faith.”

As I see it, theological disputes were a particular focus in this book. Erasmus wrote:

I [Folly] am often there, where when one was demanding what authority there was in Holy Writ that commands heretics to be convinced by fire rather than reclaimed by argument; a crabbed old fellow, and one whose supercilious gravity … answered in a great fume that Saint Paul had decreed … “Reject him that is a heretic, after once or twice admonition.” And when he had sundry times, one after another, thundered out the same thing, … at last he explained it thus … . “A heretic must be put to death.” Some laughed, and yet there wanted not others to whom this exposition seemed plainly theological … . “Pray conceive me,” said he, “it is written, ‘Thou shalt not suffer a witch to live.’ But every heretic bewitches the people; therefore …”.

Erasmus’ book of proverbs was also a vehicle for social criticism. For example, in his revised version of this book, his commentary on the proverb, “War is a treat for those who have not tried it”, is a passionate essay praising peace and condemning war. Barker notes, however, that Erasmus’ condemnation of war was not unbounded. He approved of war against the Turks during the 1520s when they had reached the outskirts of Vienna.

Context of the quote

The context of the passage quoted at the top of this article is explained by Paul Grendler in his article, ‘In Praise of Erasmus’ (The Wilson Quarterly 7(2) Spring 1983). The plea, “Let us not devour each other like fish” was in response to an attack by his former friend Ulrich von Hutten, who had become an associate of Martin Luther. Erasmus welcomed Luther as a fellow reformer in 1517 when he began to criticize greedy churchmen and the worship of relics. However, as Luther’s criticism of Catholicism became more abusive, Erasmus counselled moderation. Luther would have none of it:

“You with your peace-loving theology, you don’t care about the truth. The light is not to be put under a bushel, even if the whole world goes to smash”.

The papacy was not inclined to stand idly by while Luther “led souls to hell”. So, Europe went to smash!

Erasmus continued to try to mediate between Catholic and Protestant, asserting that he found much to admire in Luther while disagreeing with him about predestination. The Catholic response was that “Erasmus laid the egg that Luther hatched”.

Unfortunately, Erasmus was unable to persuade the contending parties to refrain from warfare. If political institutions had provide greater support to Erasmus’ message at that time, perhaps it would have been possible for Europeans to have avoided a few centuries of pointless religious warfare.

Contemporary relevance of Erasmus    

William Barker laments that the old discourse of humanism seems to have been eclipsed:

“Something has happened to the humanities and the old discourse of humanism in our time. The ideal of Erasmian humanism – a cosmopolitan, well-educated Republic of Letters – has moved to the margins of our cultural life. A shift in political, ethnic, gender and ecological values has led to a change in the cultural hierarchy.”

Nevertheless, he still sees Erasmus as relevant to the culture of our times:  

“Despite our hesitations and the new trajectories in our literary culture, there are aspects of Erasmus that still survive for us, that take him outside his historical moment and the programmatic frame of humanist education. We can still turn to him for his irony, laughter, and the free exercise of social criticism.”

I agree with all that, but I also see Erasmus’ message about refraining from war over theology as being highly relevant today. When Erasmus was alive, contending parties engaging in theological disputes were obviously willing to use coercive means to impose their will on their opponents. Today, not much has changed. Extremists among contending parties engaged in ideological disputes are still willing to use coercive power to impose their will on their opponents.

Few people who live in the liberal democracies have any difficulty condemning the authoritarianism of dictatorships which seek to prevent individuals from exercising freedom of conscience in their religious observance. However, there are many people among us who unwittingly engage in similar authoritarianism themselves. I am thinking particularly of politicians who are so certain of the correctness of their ideological beliefs that they struggle with the idea that those with opposing views are entitled to exercise freedom of conscience.

The exercise of freedom of conscience over the status of human embryos is the example that comes most readily to mind. I wrote about his in the preceding post. At one extreme, we have politicians claiming that pharmacists who refuse on conscientious grounds to supply medications that could be used to induce abortion are guilty of some kind of civil rights violation. At the other extreme we have politicians arguing that under no circumstances should it be lawful for a woman to exercise freedom of conscience to terminate a pregnancy.

Will this conflict end in open warfare? The only reason I can see for ideological and theological authoritarianism to result in less violent outcomes today than occurred 500 years ago is the existence of democratic political processes. Unfortunately, in some liberal democracies those processes may no longer be sufficiently robust to provide contending parties with appropriate incentives to moderate their extremist agendas.

at this time, those who regard freedom of conscience as of utmost importance should remember the efforts of Erasmus to promote peace 500 years ago, and endeavor to be more successful than he was. “Blessed are the peacemakers …”.

How did a trading company come to rule India?

 

Spencer went on to suggest that trade would have been more successful in the absence of the privileges that the British government had conferred on the East India Company (EIC):

“Insane longing for empire would never have burdened the Company with the enormous debt which at present paralyzes it. The energy that has been expended in aggressive wars would have been employed in developing the resources of the country. Unenervated by monopolies, trade would have been much more successful.”  

Prior to my recent visit to India I was aware that classical liberals like Herbert Spencer were critical of the East India Company. Since my visit I have become an expert on all matters pertaining to Indian history. Just joking!

I can only claim to be able to sketch the outlines of the story of how the EIC ended up ruling India. I think the story is worth telling as a case study of the unintended consequences of government intervention in international trade.

Spencer was correct in identifying the importance of the EIC’s links to the British government as an important determinant of its behavior, but the context in which it operated also needs to be taken into account.  The most important element of context seems to me to the rivalry between European powers to obtain advantage in trade with India.

Portugal came first.

Perhaps you can recall from school history lessons that Vasco da Gama sailed to India around the Cape of Good Hope in 1498. This was the culmination of voyages of discovery by Portuguese sailors, including the important contribution of Bartolomeu Diaz, who had rounded the Cape some years earlier.

The Portuguese government was heavily involved in this exploration, and in what followed. In his book, The Portuguese in India, M.N. Pearson relates how the king, D. Manuel, invited da Gama to command the expedition when the latter happened to wander through the council chamber where the king was reading documents.

After da Gama’s voyage, the Portuguese court debated whether they should use force to seek a monopoly in the Indian Ocean or be peaceful traders. They chose force. Their aim was to try to monopolize the supply of spices to Europe and to control and tax other Asian trade. There was, of course, a great deal of trade in the Indian Ocean prior to Portuguese intervention, much of it controlled by Muslims (from India as well as the Middle East).

The Portuguese built forts in India to protect their trading activities. Some local rulers saw advantage in giving the Portuguese permission to establish forts, but they often used force. Goa was conquered in 1510. The Portuguese obtained permission to build a fort at Diu in 1535 (and had ceded to them the islands that today form Mumbai) because the sultan of Gujarat, Bahadur Shar, wanted Portuguese help after being defeated by the Mughal emperor, Humayon. The Portuguese obtained Daman from the sultan in 1559 and immediately began construction of the fort at Moti Daman. Building of St Jerome fort (my photo below) commenced in 1614, but was not completed until 1672.

The Dutch eclipsed the Portuguese early in the 17^th century.

The Portuguese were unable to prevent competition from the Dutch because the latter were “better financed, better armed, and more numerous”. The Dutch blockaded Goa from 1638 to 1644 and again from 1656 to 1663.

The Dutch East India Company was founded by the Dutch government in 1602, not long after the English formed the EIC. Both organisations were granted trade monopolies, and combined private investment and the powers of the state in a similar manner.

In the early 18^th century there was fierce rivalry between the Dutch and English over the spice trade in Indonesia. That ended with the English quietly withdrawing from most of their interests in Indonesia to focus elsewhere, including India.

The transformation of British activities in India

In the 17^th century, the EIC established trading posts in Surat, Madras, Bombay and Calcutta with permission from local authorities. The French India Company offered increasing competition during the latter half of the 17^th century and into the 18^th century.

The initial objectives of both the EIC and the French were commercial, but their conflicts in Europe spilled over into India. The British sought to fortify Fort William in Calcutta against potential attack from the French. In 1756, the French encouraged the nawab of Bengal to attack Fort William. After the fall of Fort William, the surviving British soldiers and Indian sepoys were imprisoned overnight in a dungeon where many died from suffocation and heat exhaustion. The prison became known as the Black Hole of Calcutta. The number of fatalities is disputed, but the incident seems to have provided impetus for the EIC to seek to wield greater political power in India to protect its commercial interests.

My photo of the Black Hole monument in the grounds of St John’s church in Kolkata.

 

EIC forces led by Robert Clive (Clive of India) retook Calcutta in 1757 and went on to defeat the nawab and his French supporters at Plassey. Clive’s victory was aided by a secret agreement with Bengal aristocrats which resulted in a large portion of the nawab's army being led away from the battlefield. The person responsible for this treachery, Mir Jafar, was rewarded by being installed as nawab. Clive rewarded himself and EIC forces from the Bengal Treasury.

A few years later, as governor of Bengal, Clive arranged for the EIC to collect land tax revenues in Bengal by appointing a deputy nawab for this purpose. The conquest of other parts of India was planned and directed from Calcutta. Amartya Sen has noted:

“The profits made by the East India Company from its economic operations in Bengal financed, to a great extent, the wars that the British waged across India in the period of their colonial expansion.”

Consequences and responses

The worst consequences of EIC rule became evident during the Bengal famine of 1770. The company was apparently more concerned to maintain land tax revenue than to relieve to the suffering of peasants.  Its policies contributed to the massive loss of life during the famine. Adam Smith presumably had that in mind when he suggested in Wealth of Nations:

“No other sovereigns ever were, or, from the nature of things, ever could be so perfectly indifferent about the happiness or misery of their subjects, the improvement or waste of their dominions, the glory or disgrace of their administration; as, from irresistible moral causes, the greater part of the proprietors of such a mercantile company are, and necessarily must be.” (V.i.e 26)

By reducing the agricultural labor available to generate taxable income, the famine caused the EIC to experience a subsequent loss of revenue. The British government provided financial relief to the company but arranged to supervise it. Regulation of the EIC was further increased in 1784, when British prime minister William Pitt the Younger, legislated for joint government of British India by the EIC and the government, with the government holding the ultimate authority.

The British government seems to have been engaged in an ongoing balancing act to placate both supporters of the EIC, including investors and former employees, and its critics, including prominent individuals like Edmund Burke and Adam Smith.  

Pitt’s India Act stated that to pursue schemes of conquest and extension of dominion in India are “measures repugnant to the wish, the honour and the policy of this nation”. Perhaps that was an honest statement of the British government’s policy objective, but it is doubtful that it had any impact on the extension of British dominion in India.

Fortune seekers

During the 18^th century, India was seen as offering opportunities for young British men to obtain a fortune, become well-connected, and to marry well.

Lachlan Macquarie, who (in my opinion) ultimately become one of the best of Australia’s colonial governors, expressed views, while a young army officer serving in India, that may have been fairly typical.

In his biography of Macquarie, M. H. Ellis notes that in 1788 Pitt and his followers had cramped the style of young army officers in India by reducing their allowances. Macquarie recorded in his diary: “ … our golden dreams, and the flattering prospects we had formed to ourselves in Britain, of soon making our fortunes in the East, must now all vanish into smoke; and we must content ourselves, with merely being able to exist without running into debt” (p 18).

Macquarie’s hopes for a change in fortune rested on being called to active service. He had his wish during the third Anglo-Mysore war. The war ended after the 1792 Siege of Seringapatam led to the signing of a Treaty in which Tipu Sultan surrendered half of his kingdom to the EIC and its allies. Macquarie noted that news of the cessation of hostilities “damped the spirits of every one who wished the downfall of the Tyrant and hoped to have the satisfaction in a few days more, of storming his capital”. The storming of Tipu’s capital would presumably have offered the prospect of looting, but Governor-General Cornwallis managed to maintain the morale of his troops by announcing payment of a “handsome gratuity in lieu of prize money”.   (Ellis, p 39)

India’s civil wars

Disunity within India was another important element of the context in which the EIC ended up ruling India. British colonial expansion occurred at a time when the power of the Mughal empire was declining, with much of its territory falling under the control of the Marathas. In the south of India, the rulers of Mysore and Travancore were also powerful. The EIC sided with different rulers in different locations at different times. For example, at the time of the Third Anglo-Mysore War, referred to above, the Marathas were allies of the EIC. That war occurred because Tipu, an ally of France, had invaded the nearby state of Travancore, which was a British ally.

Why did EIC rule end?

In 1813 the EIC lost its monopoly over British trade with India. The opening of access to competing traders seems to have been partly attributable to growth of the free trade lobby in Britain.  

In 1833, the EIC was reduced to the status of a managing agency for the British government of India. The government took over the company’s debts and obligations, which were to be serviced and paid from tax revenue raised in India.

EIC rule of India finally ended following the Indian Rebellion of 1857, which is now also referred to as the First War of Independence. I took this photo at an Indian airport.

 

Colonial rule was formally transferred to the Crown in the person of Queen Victoria in 1858. The British government took over the Indian possessions, administrative powers and machinery, and the armed forces of the EIC.

In my view, EIC rule ended because the company had a hopeless business model. The company was obviously successful in conducting wars in India, and some employees of the company made fortunes as a consequence. But the company’s attempts to service debts incurred by imposing taxes on the people of India were inherently problematic. Such taxes made it inevitable that the company would incur high ongoing costs to put down rebellions. The EIC’s conquest of Bengal raised expectations that colonial rule might be a profitable activity for the company, but it became incapable of surviving without government financial backing only a few years later.

Was a better option possible?

 John Stuart Mill - in his role as a spin doctor employed by the EIC rather than an eminent philosopher - opened his last ditch defence of the EIC by pointing out that at the same time as the company acquired a “magnificent empire in the East” for Britain “a succession of administrations under the control of Parliament were losing to the Crown of Great Britain another great empire on the opposite side of the Atlantic”. (Mill is quoted more fully by Richard Reeves in John Stuart Mill, Victorian Firebrand, p 258.)

Mill was obviously attempting to present a persuasive case to British politicians at a time when most of them perceived “empire” to be a desirable objective.

These days, people who want to defend the empire-building activities of the EIC in India are more likely to suggest that the institutional legacy of British rule, including a united India (if you overlook the tragedy of partition) would otherwise not have been possible. Amartya Sen has pointed out the weakness of that argument:

“Certainly, when Clive’s East India Company defeated the nawab of Bengal in 1757, there was no single power ruling over all of India. Yet it is a great leap from the proximate story of Britain imposing a single united regime on India (as did actually occur) to the huge claim that only the British could have created a united India out of a set of disparate states.

That way of looking at Indian history would go firmly against the reality of the large domestic empires that had characterised India throughout the millennia. …”

Summing up

The East India Company came to rule India as an unintended consequence of British government intervention seeking trading advantages over other European powers. This intervention occurred against the background of previous involvement in Indian trade by Portuguese and Dutch governments, and in the context of intense rivalry with the French government’s trading company.

The East India Company’s schemes of conquest and dominion were made possible by disunity within India, which provided it with opportunistic allies. However, the company’s business model of taxing subjugated Indians was not capable of generating sufficient revenue to service debts incurred in subjugating them and maintaining order. Rather than let the company fail, the British government became increasingly involved in directing its activities, and ultimately displaced it.  

What makes Meghalaya an interesting place to visit?

 

It is worth visiting Meghalaya just to see waterfalls, such as Nohkhalikai falls, shown above. Located near Cherrapunji, this is tallest waterfall in India. Visitors are likely to be told the sad story of Ka Likai, after whom the falls were named. However, I will not spoil the experience for you by attempting to summarize the story here.

There was a cultural element to much of my sight-seeing in Meghalaya. That was certainly true of my visit to double-decker living root bridge at Nongriat, which I described in the preceding article on this blog as one of the highlights of my trip to India.

In this article I will further discuss my experience of sightseeing in Meghalaya, endeavoring to highlight cultural aspects. My focus is the east of Meghalaya, the part of the state I visited.

Area visited

This map might help those uncertain of the location of Meghalaya. The Indian state of Meghalaya is in India’s north-east, next to the Indian state of Assam, north of Bangladesh, and south of Bhutan.

Upon arrival at the airport in Guwahati (Assam) I was driven to Shillong, where I stayed for 2 nights. After a day of sightseeing to the east of Shillong, I visited a sacred forest on the way to Cherrapunji. I stayed in Cherrapunji for 3 nights, and saw many different things in that general area.

In what follows I will present a few photos to give some broad impressions before making some observations about culture and history of the Khasi people. 

Impressions

Shillong is a busy place. This photo is of tourists and locals at the main shopping centre, called Police Bazar.

This photo shows a scene that is fairly typical of the people and countryside as seen from roads east of Shillong.

Hilltop cultivation seems fairly common in the east of Meghalaya.

Krang Suri Falls are located in the Jaintia Hills east of Shillong. This waterfall may not yet be on the main tourist circuit, but there were quite a few Indian tourists there when I visited.

We stopped off at the Mawphlang Sacred Forest on the way from Shillong to Cherrapunjee. The photo is of an old Australian being shown around the forest by a local guide.  

This is the place in the sacred forest where bulls were once sacrificed to appease the gods. Although bulls are no longer sacrificed, the forest is still treated with great reverence. Nothing is allowed to be removed from it.

The Church of the Epiphany at Mawlynnong was founded in 1902. This village has had a strong tradition of Christianity since Welsh missionaries came here in the 19th century. Mawlynnong has been declared the cleanest village in Asia. Locals link their cleanliness to Christianity, apparently taking to heart the idea that cleanliness is next to godliness.

This photo of people engaged in a dart throwing competition was taken along the road to Dawki (on the Bangladesh border). It reminded me of something similar that I saw a decade ago when I visited Bhutan.

Culture and history

The majority of people in the east of Meghalaya are Khasi. They speak a Mon-Khmer language -the indigenous language family of mainland Southeast Asia - and their ancestors are thought to have migrated from that part of the world.

The inclusion of Meghalaya, and other states of the north-east as part of India, may have more to do with the legacy of British colonialism than with historical links to India. From a Khasi perspective, the central government of India replaced the colonial government of the British. Khasi enjoy a measure of local political autonomy via councils which they elect.

English is an official language of Meghalaya and is widely spoken there. Local guides and hotel staff were all proficient English speakers.

Mr Dipankar - the guide who accompanied me in Meghalaya, spoke excellent English. The only communication problem I became aware of arose when he was not present. I had been invited to have a meal with Hermina Lakiang - a historian associated with the North-Eastern Hill University in Shillong - and had arranged for my driver, Mr Simitar, to take me to her home. I knew that the driver had poor English, but I was slow to understand why he was having difficulty following the verbal directions that the professor was giving him about the location of her home. I later learned that they didn’t have a language in common. The driver was from Guwahati, and had no knowledge of Khasi, and the professor had not advanced her knowledge of Hindi beyond the rudimentary level she had attained at school. There was no reason for her to become a proficient Hindi speaker.

I am most grateful to have had the opportunity to have Hermina Lakiang explain some aspects of the culture and history of the Khasi to me. My understanding was greatly improved as a result of our discussion. However, the views presented below are my own – and the improvement of my understanding of Khasi culture and history was based on little knowledge to begin with.

Khasi follow a matrilineal system of inheritance, with the youngest daughter eligible to inherit the ancestral property. The youngest daughter is apparently expected to learn from mistakes made by her elder siblings.

The majority of Khasi are now Christians, but their ancestors believed in a Supreme Being as well as other deities of water, mountains, and other natural objects.  

Christian missionaries were much less successful in other parts of India, where most people are adherents of Hinduism or Islam, or in neighboring countries where Buddhism prevails. So, how did the Khasi manage to avoid being conquered and converted to Hinduism, Islam, or Buddhism, before British colonial rule exposed them to Christianity?

The most obvious answer is that Khasi are located in hilly regions that were relatively easy to defend and not particularly attractive to potential invaders seeking land that was easy to cultivate.

However, as Sanjib Baruah points out in his book, In the Name of the Nation (2020, 29) the Khasi only became confined to the hills after confrontation with the British East India Company in 1789.

Edward Gait, a British colonial administrator, included a chapter on the “Jaintia Kings”, in his book entitled, A History of Assam, which was first published in 1906. (During the colonial era, the whole of the north-east region of India was referred to as Assam.)

Gait’s account suggests that the Jaintia kings ruled the Sylhet region (now in Bangladesh) from around 1500. These kings had Hindu names, but Gait suggests that the religion and culture of the people was never much influenced by Hinduism. He cites some evidence that matrilineal system of inheritance was still followed by the Jaintia royal family.

Concluding comments

In the light of the observation made earlier to the effect that the inclusion of Meghalaya in India was a legacy of British colonialism, it is worth mentioning that some colonial administrators had expressed fears of what might happen to the culture of the Khasi following transfer of power to Indian hands. Sanjib Baruah cites Robert Reid, a former governor of Assam, among those who had argued in the 1940s for continued British control of the “Hill Areas” on paternalistic grounds (29-30).

The experience of the last 70 years has demonstrated that the fears of British colonists of what might happen under Indian control were unwarranted. As Baruah notes, the colonial safeguards to protect the people in those areas were largely retained and placed under the supervision of elected bodies following decolonization.

The impression I gained from my short visit is that Khasi people are proud of their cultural heritage, and that many are eager to defend it.

What have you been thinking about this year?

 

I expect that many readers of this blog will have spent some time this year thinking about the response of governments to the COVID-19 pandemic. That is a topic I have been thinking about, but I have not previously blogged about it this year. I wrote about it on this blog in March and October 2020. With the benefit of hindsight, I think that what I wrote then is defensible, although not particularly illuminating.I set out to write something about the costs and benefits of lockdowns a few weeks ago, but got sidetracked into considering the WELLBY approach to assessing the value of a human life. I thought I might write on that topic in this article but after some additional reading I have decided to adopt less ambitious objectives. My objectives are to consider:

• why there is disagreement on such basic issues as whether lockdowns work;
• whether it would be desirable to have a uniform regulatory approach in all jurisdictions; 
• what we should learn from policies adopted in East Asia; and
• how we should be thinking about government intervention.

Do lockdowns work?

I don’t think disagreement about the effectiveness of lockdowns can be attributed solely to the ideologically blinkers of the participants in policy debates. Some people who are not ideologically opposed to much other government regulation – including Paul Frijters, Gigi Foster, and Michael Baker (authors of The Great Covid Panic) claim that lockdowns do not prevent deaths. On the other side of the debate, some classical liberals who are opposed to much government regulation, nevertheless saw merit in lockdowns - at least during the early stage of the pandemic - to buy time to enable hospitals to prepare for an influx of patients requiring treatment.

The reasoning behind lockdowns is that if you can get people to stay far enough apart from each other, they cannot infect each other. The most obvious problem in getting people to stay at home that is that they need to go to shops to buy food and, in some instances, to deliver health and other “essential” services.  

Lockdowns seemed to suppress virus transmission in Australia in the first half of 2020. In October 2020 I suggested that the combination of self-isolation, shutdowns and lockdowns had worked well in April and May of that year. I have become more pessimistic about the efficacy of lockdowns in Australia this year.  Lockdowns seem to have become less effective in Australia in presence of more infectious strains of the virus, and a decline in public support for lockdowns which was particularly evident in Melbourne - the world’s most locked down city.

Some evidence from other parts of the world suggests that lockdowns have never been effective in reducing death rates. For example, despite its relatively elderly population, Florida did not experience higher death rates than other regions of the United States after abandoning lockdown policies.

The chart shown above (based on a survey conducted by YouGov, an international research data and analytics group) suggests an important reason why the effectiveness of lockdowns is likely to depend on context. Willingness to comply with such regulations is much higher in some countries than others. I think the relatively high compliance level in Australia reflects strong public support for the regulations rather than the substantial penalties that applied if non-compliance was detected. The regulations were difficult to police even in the presence of strong public support, and would have been impossible to police if blatant non-compliance had become widespread.

Would it be desirable to adopt a uniform approach in all jurisdictions?

Differences in support for regulation and associated differences in willingness to comply, are good reasons for different approaches to be adopted in different jurisdictions.

Frijters et al suggest a more fundamental reason why a diversity of approaches is desirable. After noting the value of state-level experiments in the United States, including the minimalist policies adopted in South Dakota, the authors suggest:

“The provocative takeaway is that the intelligence of a whole country is enhanced when it contains communities adhering to truths completely opposed to those of the intellectual elites. That takeaway is, moreover, a deep lesson from history that Western countries have embedded into their institutions over centuries. It has been remarked upon before by historians that competition between radically different systems leads Western countries to learn faster than more centralised places like China.”   

What should we learn from the policies adopted in East Asia?

The experience of East Asian countries in preventing deaths from COVD-19 has been held up as example for others to follow. For example, an article by Mingming Ma,  Shun Wang, and Fengyu Wu, published as Chapter 3 of World Happiness Report 2021, concludes as follows:

“In general, we find that the relatively successful story of the five East Asian regions, compared with the six western societies, can be attributed to the stronger and more prompt government responses and better civic cooperation. Except for Japan, all of the East Asian governments implemented more stringent mobility control and physical distancing policies, as well as more comprehensive testing and contact tracing, especially at the early stages of the outbreak. A summary of the government interventions and anti-COVID measures in the East Asian regions indicates that a combination of strong government response systems, early and rigorous mobility control, extensive screening, testing, contact tracing and isolation, coordinated resource allocation, clear communication, enforced self-protection practice, and supportive economic measures are important in fighting COVID-19 outbreaks and resurgence.”

The five East Asian jurisdictions referred to are China, Hong Kong, Taiwan, Japan, and South Korea. The six Western countries included in the study for comparative purposes were France, Germany, Italy, Spain, the United Kingdom, and the United States.

 The authors seem to be suggesting that all the East Asian jurisdictions adopted stringent policy responses.

Frijters et al reach a different conclusion using the same data on policy stringency in a study published in Chapter 3 of The Great Covid Panic. The authors group countries and regions into three categories, Minimalists, Pragmatists, and Covid Cults, on the basis of the stringency of the average stringency of their policies during 2020. They found that the minimalists had far fewer claimed Covid deaths than either the pragmatists or the cults and that the pragmatists accumulated only a little over half the death rate of the cults.

It is interesting that most of the East Asian jurisdictions referred to in the first study were classified as either minimalists or pragmatists. Taiwan and Japan were classified as minimalist, and South Korea was classified as pragmatist. The United States and most European countries were classified as cults, along with China, Australia and New Zealand.

It is certainly difficult to maintain that stringency has been a major factor explaining the relative success of policy responses in the East Asia region.  I am not sure what other conclusions can be drawn, except that further study will be required if we are to learn from the experiences of countries adopting different policy responses.

How should we be thinking about government intervention?

Many politicians and other commentators seem to imply that apart from lives lost (or saved) the only other factor that needs to be considered in evaluating policy responses to COVID-19 is their impact on GDP. Far too little account is taken of the future consequences of increases in public debt that have been incurred to support people during lockdowns and the psychological impacts of restricting social interactions for long periods.

When freedom is mentioned by advocates of stringent regulation, it is often viewed as something frivolous that must be sacrificed to prevent deaths from Covid. That is the way a bureaucrat might view the options if given prevention of deaths from Covid as a key performance indicator (KPI). Within that mindset, freedom must be sacrificed to a sufficient extent to ensure that lockdowns work. Prevention of deaths from Covid is seen as being of utmost importance. Just as some soldiers have claimed that they had to destroy villages in order to save them, the single-minded advocates of lockdowns seem to be willing to destroy people’s lives in order to save them.

I am not implying that freedom is more important than health, or that liberty is more important than human flourishing. I am just suggesting that it is unhelpful to view the issues in that way.  

About 15 years ago, after reading some of the writings of Douglas Rasmussen and Douglas Den Uyl, I realized that it makes no sense to think in terms of a need to choose whether priority should be given to liberty or to human flourishing. Human flourishing does not exist apart from the flourishing of individuals, and the flourishing of individuals is not possible without opportunities for self-direction. Once we recognize the importance of self-direction to individual flourishing, that poses the question of what rules of the game – or political / legal order - would allow greatest opportunities for individual self-direction. Liberty is the answer! The protection of individual liberty – or the natural rights of individuals – provides the context in which individuals can flourish in different ways, provided they do not interfere with the rights of others. (You can find further explanation and links to the works of Rasmussen and Den Uyl in my book, Freedom, Progress, and Human Flourishing.)

Recognition of the foundational role of liberty doesn’t tell us what rules of the game should apply in a pandemic. However, it does tell us that we should be looking for rules of just conduct that would provide an appropriate balance between the different interests of individuals in getting on with their lives and avoiding exposure to infection.

The discussion earlier in this article suggests:

• The most appropriate rules in any society must depend, to a large extent, on the degree of support for them.
• A diversity of approaches in different jurisdictions is highly desirable to provide greater opportunities to learn from the experience of others.
• Different interpretations of the East Asian experience suggests that some caution is required to ensure that we learn the right lessons from the experience of others.

How useful is the WELLBY concept in assessing the benefits and costs of alternative policies?

 

There are good reasons why public policy discussions often revolve around the benefits and costs of alternative policies. Discussions that begin with the consideration of rights often require participants to acknowledge conflicting rights and to weigh up consequences in a search for the principles that can most appropriately be applied.

For example, consider what followed when I suggested recently in a discussion of the merits of lockdowns to counter the spread of COVID19 that such policies should be assessed against the principle that individuals have a right to direct their own flourishing, provided they do not interfere with the similar rights of other people. The latter part of that assertion implies a willingness to consider whether infected people who spread disease are interfering with the rights of others. At an early stage of the discussion, I acknowledged that it would be a step too far to insist that everyone has the right to recklessly endanger the lives of others. I argued that there should nevertheless be a presumption in favour of freedom, and that those who advocate restriction of freedom should be required to demonstrate that the benefits clearly exceed the costs.

That illustrates how the discussion of benefits and costs tends to rule the roost in civilized discussions of public policy. An exchange of different views about rights can be enlightening, but endless repetition of conflicting assertions about rights does not qualify as civilized discussion in my view.

A WELLBY (or Wellbeing Year) is equal to a one-point increment on a 10-point life satisfaction scale. If you assessed your level of life satisfaction as 8/10 in 2019 and 7/10 in 2020, that would be a decline of one WELLBY.

I began thinking about the WELLBY concept while considering how it is possible to measure the costs and benefits of lockdowns, but in this article, I will focus on the usefulness of that concept rather than on the question of whether benefits of lockdowns could ever exceed the associated costs.

Assessing the psychological cost of lockdowns

Indicators of subjective well-being are obviously relevant in assessing the psychological costs associated with policies that require people to stay at home. Available evidence suggests that lockdowns caused a decline in average life satisfaction of about half a point in the UK and similar countries in the
period to March 2021. On that basis, Paul Frijters, Gigi Foster, and Michael Baker estimate that lockdowns cause loss of life satisfaction to the general public in the U.K. of 41,667 WELLBYs per million citizens for each month of lockdown. This estimate is in Chapter 5 of their book, The Great Covid Panic, 2021.

I think that is an appropriate use of the WELLBY concept. If anyone knows of a better way to assess the psychological costs of lockdowns, I would be interested to know what it is.

Frijters, Foster, and Baker incorporate several other items in their assessment of the costs of lockdowns. I will consider one of those later, but I want to turn now to use of the WELLBY concept in the assessment of the main hypothetical benefit of lockdowns, namely lives potentially saved.

Assessing the value of a life saved

Richard Layard and Ekaterina Oparina have published a provocative article using a WELLBY approach to assess the monetary value of preventing the loss of one year of human life (Chapter 8 of World Happiness Report, 2021).

Layard and Oparina begin their discussion by observing that the average WELLBY is 7.5 in advanced countries. On that basis, they claim that preventing the loss of one year of the life of one person saves 7.5 WELLBYs.

The authors draw upon information on the relationship between income and life satisfaction in order to assess the monetary value of that loss. After some discussion of relevant research, they suggest that a coefficient of 0.3 is an appropriate measure of the impact on life satisfaction of a unit change in absolute log income. With average income of $30, 000, the loss of $1 is equivalent to 1/100,000 WELLBYs (0.3/30,000). It follows, they suggest, that “we” should be willing to pay up to around $750, 000 to save a year of life (7.5 WELLBYs).

Layard and Oparina point out that the $750, 000 would be shared over the whole population. Nevertheless, it still seems an extremely large sum to pay to prolong a life by just one year.

One possible source of error is that life may have no value for people with very low life satisfaction, for example those with a rating less than 2/10. If you assume that a life year is equivalent to 5.5 WELLBYs (7.5 minus 2.0), the estimated sum that “we” should be willing to pay to prolong life by one year is reduced to $550, 000. That still seems implausibly high.

The estimate could be further reduced by taking account of the fact that the people who are most vulnerable to COVID19 often have pre-existing ailments that would tend to reduce their life satisfaction, and many of those in nursing homes would be unlikely to live another year in any case.

However, let us return to the question of whether $550,000 is a plausible estimate of what “we” should be prepared to pay to prolong by one year the life of a person with an average life satisfaction rating. An alternative way to approach the issue of determining the monetary value of a year of life is to consider estimates of the impact of changes in healthy life expectancy on average life satisfaction. Regression analysis suggests that the addition of one year to healthy life expectancy adds only 0.033 to average life satisfaction (Table 2.1, World Happiness Report, 2019). The income loss providing an equivalent loss of life satisfaction is only $3,300 (0.033*100,000). That strikes me as an implausibly low estimate of the value of a year of life.

My view of what is a plausible estimate of the value of one year of life is not based solely on my own gut feelings. The assumed value of a life year in cost-benefit analysis typically ranges from $50, 000 to $250, 000. Those assumptions are based on surveys asking people how much they would be willing to pay to extend their lives and estimates of amounts people need to be paid to accept jobs involving greater risks to life.

Estimates of the value of a year of life within that range seem to be broadly consistent with community expectations. Some groups may lobby for lives to be valued more highly in assessing whether life-saving drugs should be subsidized by governments. However, I don’t see large numbers of people suggesting that they would be willing to pay higher taxes to fund that.

There seems to me to be a fundamental problem in attempting to assess the value of a life-year from the relationship between average income and average WELLBYs. As I explain in Freedom, Progress, and Human Flourishing, psychological well-being is just one of the basic goods of a flourishing human. When you ask individuals open-ended questions about how they are faring, their responses are not confined to the extent that they are “satisfied” with life. They are likely to talk about whether they are achieving their aspirations, the state of their health and their personal relationships. If you ask a person who already has high life satisfaction why they aspire to earn a higher income, they are not likely to claim that they expect a higher income to enable them to become more satisfied with their own life. They are more likely to say that they want to put some money aside for various reasons, for example to assist with education of children or grandchildren, or to have something to fall back on in the event of illness.

If an individual is faced with a decision about whether to use accumulated wealth (or to mortgage their house) to purchase an expensive drug that might prolong their life for a year, the quality of that extended life (WELBYs) is not the only factor that they are likely to consider. The choice they make may well give consideration to their desire to improve opportunities available to the next generation of their family. There is an intergenerational choice involved in placing a value on an additional year of life.

What value should be placed on the lives of potential humans?

Frijters, Foster, and Baker include among the costs of lockdown the shutting down of the in-vitro fertilization (IVF) program during lockdowns in the UK because it was deemed to be a nonessential service. This resulted in about 30 fewer IVF births per million citizens per month of lockdown.

The cost of disruption of the IVF program is not critical to the authors’ conclusion that the cost of lockdowns exceed the benefits. Nevertheless, in my view there is a strong case for it to be taken into account. Potential parents clearly place a high value on the new lives that the program makes possible.

However, the methodology which Frijters, Foster, and Baker use to estimate the cost of disruption of the IVF program is a straightforward application of the WELBY concept to value lives. They calculate that each of these potential humans could be expected to enjoy 480 WELLBYs during his or her life – each is assumed to have a value equal to 6 WELLBYs and to live on average for 80 years. With the loss of 30 IVF babies per month, that amounts to the loss of 14,400 WELLBYs worth of human well-being per month per million citizens.

The reasoning is impeccable if you accept the utilitarian assumptions associated with use of the WELLBY concept to measure the value of a human life. Within that framework, if government policies prevent potential humans from being born, that diminishes the sum of human happiness by the amount of happiness they would have enjoyed during their lifetimes.

I have already indicated that I don’t accept that people value their own lives exclusively on the basis of WELLBYs. However, if I have not yet persuaded you to reject the WELLBY approach to evaluation of lives, you may wish to consider the following possible outcome of applying that approach.

Let us suppose that a government is considering a ban on all forms of contraception and seeks the services of some utilitarian advocates of maximization of human happiness to evaluate the costs and benefits of the proposal. It seems reasonable to predict that the utilitarians would conclude that the additional births resulting from the policy change would result in a large net increase in WELLBYs, and therefore an increase in the sum of human happiness. The more, the merrier they might say!

Conclusions

The WELLBY concept has a useful role to play in evaluation of some policies that have an impact on psychological well-being.

However, the valuation of lives according to the number of WELLBYs individuals might enjoy seems to be at variance with the approach that individuals take in making choices in relation to extension of their own lives. That approach to valuing lives is widely at variance with the approach most people in advanced countries adopt in considering the value of potential lives of the many additional humans that they could bring into the world if they felt inclined to do so. It counts the lives of potential people as having equal value to the lives of the living.

The WELLBY approach to valuation of human life should be rejected.

Postscript

A survey conducted by UBS has provided relevant information on the proportion of wealth that investors are willing to sacrifice for additional years of life. The survey covered 5,000 wealthy investors in 10 countries. On average, those with financial wealth in the $1 to $2 million range indicated that they were willing to give up 32% of their wealth for an additional decade of healthy living. That may seem a lot, but amounts to only $32,000 to $64,000 per annum when spread over 10 years.

Those figures are far lower than the $750,000 (discussed above) that an application of the WELLBY approach to life evaluation has suggested that “we” should be willing to pay to save a year of life.