"To skip a line, to find parking, to get your concierge to buy something, to negotiate a safari booking that needs to get changed, to get a customised menu to eat, to argue against an unjust traffic stop, it goes on and on."
I cannot tell you how much i related to this line. I don't even know if most Indian's notice it, a bit like do fish notice water. The first time i noticed it was when I came back to India after having been in america for 2 years.
I think the most unfortunate part of this is the game theoretic dynamic, where following the rules will just put you at a loss. Not cutting the line will just result in being slow. This then leads to a culture that valorises the negotiation skills - you are a genius if you manage to do some jugad and not follow the rules.
"Every time someone has to spend effort doing a 1:1 negotiation they lose time and efficiency. Horribly so."
Well said. The libertarians dreaming of constant peer-to-peer negations fail to recognise the power of centralised exchanges. Centralised exchanges with many buyers, many sellers, and a trusted relatively efficient market price greatly reduces stress, energy and time that would otherwise be spent trying to find a good deal. Over-the-counter is overrated. Exchange-traded is underrated.
Centralised exchanges have the following additional advantages over bilateral negotiation:
- better price transparency
- more liquidity
- reduced search costs
- reduced transaction costs
- reduced enforcement costs
- reduced counterparty risk
In other words, for the assumptions of microeconomics to hold, the goods should be exchange traded.
Being pro market is old hat. I'm pro markets.
(Ps, The right to freely transact outside of exchanges is important too. Bilateral negotiation has markets beat in terms of freedom. But the choice between trading through an exchange or trading bilaterally gives more freedom than either on its own.)
(Pps, London is a nexus of markets and has been since 1670. That is why they are and were so successful.)
(Ppps, Stretch goal for humanity:
Until we have web-based commodity markets for every top-100 container port in the world, and over a dozen firms performing arbitrage between them, humanity is not on the efficient frontier.)
In my experience, it all just requires strict implementation of laws and nothing else. The 'culture' changes in few years or decades if you have to pay fines or your car gets detained a couple times.
People talk about the traffic chaos and indiscipline being unique to South Asians but people everywhere are more alike than different.
If you have lived all your life in a system that rewards breaking rules to get things done and nobody gets punished for anything, it becomes a habit to not care. Parents teach their kids this is how it works here and you shouldn't be idealistic otherwise you'll get left behind etc.
It takes time and strict enforcement of laws for some years to change the behaviour.
Along with high-trust/low-trust, I think there's simply a cultural level of "what is acceptable." It's acceptable in the US for an escalator to be out of order for several days or even weeks. People will work to fix it, but at the standard rate of effort: putting in a requisition tomorrow, scheduling the repair for next week, working normal hours to get it done, etc. But it is _un_acceptable in Switzerland and Japan, so people will work beyond their usual workday, get called out from their homes, etc., to fix them faster. This isn't orthogonal to high-trust/low-trust, granted, but it's also not the same.
I still remember from years ago an economist saying that society advances when it increases the number of things it can do without thinking about it. That idea has stuck with me although I have long forgotten the economist's name.
This reminds me of the difference between sleek modern architecture and more traditional architectural styles that have a lot of detail...with the bilateral negotiations being analogous to architectural detail. I can imagine that without them you could feel like something is too sterile, empty from an aesthetic perspective.
Re: "What causes the average driver in Indian roads to treat driving like a game of water filling cracks on the pavement? It's not trust, it's the lack of an agreed upon equilibrium. There's no norms to adhere to."
Yes, there is - or was - a norm to adhere to. I learned it in 1984 from ICRISAT's research director, Kanwar Lal Sahrawat. He taught new ex-pat arrivals at ICRISAT: "In the US you go on the right, in the UK you go on the left, and in India, you go on what is left". So it was - and still is.
Super interesting and insightful read! I wonder why Indian culture has struggled to develop norms. It might be partly due to poor state capacity but then I don't know how Japan managed to build a better culture around norms even though Japan was poorer than India after WWII.
One possible explanation is that Indian society is far too diverse and fragmented which makes it harder to establish norms. The risk is that increasing wealth in the near-term might lead to more fragmentation especially with the modern technology and social media patterns.
It does have strong norms it just hasn't bled into the kinds of communal thinking that's needed for these particular domains useful for economic growth.
I was speaking with my family about _exactly_ these points yesterday - it's actually kind of scary/funny. Switzerland & Japan, Acemoglu, low vs high trust societies
In Bangalore now, sometimes getting to work by car takes several hours more than it should - no exaggeration. It's raining heavily this week, and road infrastructure in many places is not built for it - school/work is affected because of water blocks
Progress being "constantly held on a leash" is exactly right. But not just by informal institutions, which as you say will improve; but also by conscious and willing neglect of what matters most, in favour of greed/corruption. It will be interesting to see which side wins out
Sidenote: living here is exciting because both the real/digital worlds are always in obvious change, the shop you used as a road-marker last week has been replaced, scaffolding is always up and everyone is building/hustling. Quite different to other large cities in my experience
Thank you, Rohan. Incredibly important topics. It’s crystal clear that one party in the U.S. has no intent to improve the lives of ordinary people. Please vote, and use your brain.
Drat, I forgot that pseudoerasmus has a protected twitter account. The text of the tweet read "In some ways India is AR’s poster child for a weak state. Society is very strong in India compared with the state, and many oppressive social and cultural practises thereby endure."
Alice Evans doesn't have a protected account, so you could read her thread instead:
"To skip a line, to find parking, to get your concierge to buy something, to negotiate a safari booking that needs to get changed, to get a customised menu to eat, to argue against an unjust traffic stop, it goes on and on."
I cannot tell you how much i related to this line. I don't even know if most Indian's notice it, a bit like do fish notice water. The first time i noticed it was when I came back to India after having been in america for 2 years.
I think the most unfortunate part of this is the game theoretic dynamic, where following the rules will just put you at a loss. Not cutting the line will just result in being slow. This then leads to a culture that valorises the negotiation skills - you are a genius if you manage to do some jugad and not follow the rules.
Loved this combo of reflection cum model fitting cum prediction with a travel journal side serving - you should do more of these.
Thank you!
OMG did somebody actually build an airport terminal that isn't a plain white/grey Apple-store-like design? I'm impressed!
Wish I'd taken more pictures now. It's gorgeous!
"Every time someone has to spend effort doing a 1:1 negotiation they lose time and efficiency. Horribly so."
Well said. The libertarians dreaming of constant peer-to-peer negations fail to recognise the power of centralised exchanges. Centralised exchanges with many buyers, many sellers, and a trusted relatively efficient market price greatly reduces stress, energy and time that would otherwise be spent trying to find a good deal. Over-the-counter is overrated. Exchange-traded is underrated.
Centralised exchanges have the following additional advantages over bilateral negotiation:
- better price transparency
- more liquidity
- reduced search costs
- reduced transaction costs
- reduced enforcement costs
- reduced counterparty risk
In other words, for the assumptions of microeconomics to hold, the goods should be exchange traded.
Being pro market is old hat. I'm pro markets.
(Ps, The right to freely transact outside of exchanges is important too. Bilateral negotiation has markets beat in terms of freedom. But the choice between trading through an exchange or trading bilaterally gives more freedom than either on its own.)
(Pps, London is a nexus of markets and has been since 1670. That is why they are and were so successful.)
(Ppps, Stretch goal for humanity:
Until we have web-based commodity markets for every top-100 container port in the world, and over a dozen firms performing arbitrage between them, humanity is not on the efficient frontier.)
In my experience, it all just requires strict implementation of laws and nothing else. The 'culture' changes in few years or decades if you have to pay fines or your car gets detained a couple times.
People talk about the traffic chaos and indiscipline being unique to South Asians but people everywhere are more alike than different.
If you have lived all your life in a system that rewards breaking rules to get things done and nobody gets punished for anything, it becomes a habit to not care. Parents teach their kids this is how it works here and you shouldn't be idealistic otherwise you'll get left behind etc.
It takes time and strict enforcement of laws for some years to change the behaviour.
Along with high-trust/low-trust, I think there's simply a cultural level of "what is acceptable." It's acceptable in the US for an escalator to be out of order for several days or even weeks. People will work to fix it, but at the standard rate of effort: putting in a requisition tomorrow, scheduling the repair for next week, working normal hours to get it done, etc. But it is _un_acceptable in Switzerland and Japan, so people will work beyond their usual workday, get called out from their homes, etc., to fix them faster. This isn't orthogonal to high-trust/low-trust, granted, but it's also not the same.
I still remember from years ago an economist saying that society advances when it increases the number of things it can do without thinking about it. That idea has stuck with me although I have long forgotten the economist's name.
Sounds like they were probably paraphrasing Alfred North Whitehead.
This reminds me of the difference between sleek modern architecture and more traditional architectural styles that have a lot of detail...with the bilateral negotiations being analogous to architectural detail. I can imagine that without them you could feel like something is too sterile, empty from an aesthetic perspective.
Re: "What causes the average driver in Indian roads to treat driving like a game of water filling cracks on the pavement? It's not trust, it's the lack of an agreed upon equilibrium. There's no norms to adhere to."
Yes, there is - or was - a norm to adhere to. I learned it in 1984 from ICRISAT's research director, Kanwar Lal Sahrawat. He taught new ex-pat arrivals at ICRISAT: "In the US you go on the right, in the UK you go on the left, and in India, you go on what is left". So it was - and still is.
Super interesting and insightful read! I wonder why Indian culture has struggled to develop norms. It might be partly due to poor state capacity but then I don't know how Japan managed to build a better culture around norms even though Japan was poorer than India after WWII.
One possible explanation is that Indian society is far too diverse and fragmented which makes it harder to establish norms. The risk is that increasing wealth in the near-term might lead to more fragmentation especially with the modern technology and social media patterns.
It does have strong norms it just hasn't bled into the kinds of communal thinking that's needed for these particular domains useful for economic growth.
I was speaking with my family about _exactly_ these points yesterday - it's actually kind of scary/funny. Switzerland & Japan, Acemoglu, low vs high trust societies
In Bangalore now, sometimes getting to work by car takes several hours more than it should - no exaggeration. It's raining heavily this week, and road infrastructure in many places is not built for it - school/work is affected because of water blocks
Progress being "constantly held on a leash" is exactly right. But not just by informal institutions, which as you say will improve; but also by conscious and willing neglect of what matters most, in favour of greed/corruption. It will be interesting to see which side wins out
Sidenote: living here is exciting because both the real/digital worlds are always in obvious change, the shop you used as a road-marker last week has been replaced, scaffolding is always up and everyone is building/hustling. Quite different to other large cities in my experience
Lovely read Rohit. I wonder if the substitution of formal rules and norms with informal negotiation also leads to "jugaad"?
Classic lose-lose prisoner’s dilemma, without a strong authority or cultural norm enforcing the collective over self.
Cultural norm is the curious one there. It does shake loose a lot of benefits, when and if we can make it.
The jugaad cuts both ways.
It totally does!
Thank you, Rohan. Incredibly important topics. It’s crystal clear that one party in the U.S. has no intent to improve the lives of ordinary people. Please vote, and use your brain.
"At least one party" is how this non-voter would put it.
India appearing to falsify Acemoglu's "Why Nations Fail" appears to have inspired "The Narrow Corridor". https://x.com/pseudoerasmus/status/1179783875612102656
The link seems to be broken? Quite possible it breaks Acemoglu's book though, it's not very rigorous.
Drat, I forgot that pseudoerasmus has a protected twitter account. The text of the tweet read "In some ways India is AR’s poster child for a weak state. Society is very strong in India compared with the state, and many oppressive social and cultural practises thereby endure."
Alice Evans doesn't have a protected account, so you could read her thread instead:
https://x.com/_alice_evans/status/1180444276817383424