Understanding the creature called AAP

December 2013 has been an eventful month that has sprung a new credible entrant called AAP into the Indian political space. It is still early days, and the potential impact of this entity on the national scene is unclear. This article sticks it neck out and tries to analyze the potential impact of AAP on the nation; especially for readers espousing centre right politics. The past few weeks have seen centre right supporters (primarily BJP and its allies) pour a lot of vitriol on social media against the AAP Government in Delhi. This emotional reaction is understandable consequent to the drama surrounding Delhi elections.

Centre right supporters have been critical on AAP for SMS based decision making process on whether to assume power with the support of Congress or not. They have also been critical on the austerity stunts of usage of public transport, shunning of red beacons and government bungalows. Few have also devoted their scrutiny towards the initial policy decisions of 50% electricity tariff reduction (up to 400 units) and free water of 680 litres (for only existing piped connections). While such microscopic scrutiny of the functioning of AAP government in Delhi is certainly exciting, it does not help us understand AAP as a political entity.

In some ways Centre right supporters have been misled by the mainstream national media to focus on these trivial issues, while the real developments of concern have gone completely unnoticed. Although many may disagree with me saying this, but I think it is high time they stop putting Kejriwal’s government under such close scanner. Not only is it leaving a bad taste in the minds of politically undecided voters, it is also diverting valuable energy away from important items that require focus. To truly understand what AAP is, we should give Kejriwal and his government a break and instead focus attention on what Prashant Bhushan and the other senior members of the AAP think-tank have been doing.

Amidst the cacophony in MSM surrounding the Delhi government formation, AAP has quietly managed to move several coins unscrutinized. How many of you noticed that Prashant Bhushan was missing on the day of Delhi swearing-in? How many of you are tracking the whirl-wind tour undertaken by Bhushan and the other think tank members all over the nation, for the past two weeks? How many of you read about Bhushan’s meeting with the disgruntled CPI(M) veteran VS Achuthanandan in Trivandrum ? How many of you noticed his statement about CPI and Loksatta being the only honest parties in India? How many of you (outside TN) heard about the meeting between Anti-Kudankulam activist Uthayakumar and Bhushan? How many of you heard about the drive to enrol 1 Lakh members in the Orissa unit of AAP? These are some of the items that require careful attention to understand the creature called AAP.

It is undeniable that the success of AAP in Delhi has made them darling of left leaning MSM. Their larger agenda of diversification across the country is currently underway. The approach taken by AAP think-tank to quickly scale-up the party nationally is interesting. Their current plan appears to quickly integrate the PUCL affiliated left-leaning NGOs, so-called human rights groups in various states, and other minor leftist groups & think-tanks which were alienated by the mainstream communist parties. The unification of these groups under the umbrella of the AAP is targeted to be completed before the 2014 poll dates are announced. This plan may appear extremely aggressive, but IS viable!

Those centre right supporters who live in their cuckoo world and think that AAP can’t scale up so quickly before the 2014 elections in fact need a wake-up call! Just look at your neighbourhood (in whichever state) on how many such groups exist! These groups have been vocal on local issues and typically get fair coverage in the local/regional media in the various states. Just imagine, if all these groups were to come together within 2 months under the umbrella of AAP? What kind of a monster are we looking at?

Short-Term Concerns

I can hear those doubting Thomases who are dismissing the idea of such unification because these state groups lack a common national agenda, are strongly embedded in sub-regional nationalism, and are primarily concerned only with local issues. This is where you miss the point, because a centralized, hierarchy-based policy structure followed by traditional political parties would never allow for such unification. However the philosophy of federated organizational structure, right up to a mohalla, as espoused by AAP, is well suited for such unification.

The decentralized structure can in fact accelerate this process, because there is a lot of value for these groups to come under the AAP umbrella. Let me explain why! Imagine there is a “single issue” based local NGO that operates in your neighbourhood today. Their strength is their collective commitment towards that “single local” issue. Their biggest weakness is that their voice isn’t listened to by the common people & mainstream media outside their catchment area; be it taluq, district or state. Now imagine, if they get to keep the same level of decision making powers, same level of focus towards that single local issue, but instead get a huge bonus of MSM attention under the banner of AAP? Isn’t this a Godfatherish offer that is too good to refuse?

Some other critics may argue that such unification may not fructify before 2014 summer and even if it did, it’s too late to materially alter the ground. Believe me, it is not! The biggest stumbling block to meet the deadline before 2014 summer is getting access to these geographically diverse groups. However since these groups are all involved in some sort of litigation or other at various courts, the platform of PUCL readily provides such an access. Hence the only constraint is the lead-time of negotiation. If the offer is as good as it appears to be, do you realistically expect a lot of resistance?

One has to agree that such local NGOs have very little time to influence their catchment population to switch from dominant political parties to instead vote for AAP. But who are the target voters for these local NGOs? One, they have an established base of people who are deeply influenced by that local issue. Their second target is those that are likely to choose the NOTA option. The third and the most significant group of concern are the urban, politically neutral voters who are influenced by the brand image of AAP and the 24×7 media coverage. Even if AAP wins only a handful seats across the nation, this momentum is severe enough to trigger a serious vote split. The past results have showed how a 5 – 10% vote split reverses results in several urban constituencies. Hence the threat of AAP playing spoiler is true & real, far beyond the realms of Delhi, that can’t be dismissed by centre right thinkers.

Long-term concerns

More than the short-term concerns of 2014 elections, the long-term concerns are worrying; not only to centre right thinkers, but also for all political parties and the common public. We shall primarily focus on the espoused federated organizational structure of AAP and derive insights from it. The power of the federated structure is that, it allows for nimbleness to quickly respond to local issues. I suppose AAP will setup a mechanism of information flow (reverse direction – bottom to top) which will allow their central leaders at state or national level to add their weight behind selected issues. The TRP hungry MSM will also be happy to latch on to such issues raised by AAP central leaders.

This is in sharp contrast to the setup of other political parties, where local leaders need several layers of approvals before organizing a protest against a local issue. Consequently the political brownie points scored by AAP over others will make a huge difference in the long run.

So what is in this for common people to be concerned about? Isn’t such a setup actually good for the common people as their local issues have better chance of getting addressed? This is where a deeper technical analysis and understanding of the federated structure is required, by applying principles from organization theory and new institutional economics.

Firstly, vesting of decision making power at the local level is not conducive for control from the top. For example, let’s assume Kanyakumari unit of AAP is against a particular development project. No matter what are the repercussions to other districts / regions / states, any centrally mediated decision is simply unviable. In fact the federated structure would make the central leadership of AAP take a neutral stand at best, or simply go with the vociferous stand of Kanyakumari district unit. For all practical purposes, a protest once launched by a local unit, will not stop & cannot be controlled by the central leadership; including Kejriwal himself.

The biggest concern is that the concept of greater common good (or utilitarian principles) that underlies our current societal decision making process will be lost! In summary, we would have thousand Frankenstein monsters that pull our country in different directions. As a society we will face decisions that are not taken with a view of greater good, or worse an exaggerated version of decision paralysis.

Have you wondered why all large organizational structures are hierarchy driven and bureaucratic in nature? Take for example the government, army, or large private organizations like Tatas, Infosys, Mahindra etc. The secret of this organizational design is to achieve efficiency in decision making, and the ability to control from the top towards goal congruence.

The federated organizational structure of AAP is antithetic to this idea. Aren’t there successful organizations that have a bottom-up structure? There certainly are examples around, but they are far & few. These examples have enormous scalability challenge (that is far lower than what AAP is targeting) and have only worked when member selection is extremely homogenous and careful (very unlike the AAP model). To summarize, a federated organizational structure of the size AAP is targeting, is a recipe for anarchy!

Thirdly, we often to fail to appreciate the amount of wisdom went in while creating our constitution. There is a purpose in the separation of roles of responsibilities between the various constitutional arms and the checks & balances built into the system. The concept of democratically elected/selected agents (MPs, MLAs, Public Prosecutors, and District Magistrates etc.) allows our constitutional arms to exercise control over their daily routines, and make decisions within a reasonable time-frame; keeping in mind the best interests of the principals (people). The system also has got in-built mechanisms for checking accountability of the agents towards the principals. Critics may argue that this system is broken because the agents are not putting the best interests of the principals; in fact AAP states this as their raison-d’etre. However the approach to fix this is not to get the principals to directly look after their own interests, because the transaction cost associated with such a social structure can be mind-blowing!

To illustrate an equivalent, if a private limited company (PLC) had 10 million shareholders, why do we appoint a board of governors to scrutinize the performance of the top management (agents), and not ask every one of those shareholders (principals) to do it? Because if everyone did the monitoring then the transaction cost involved would result in enormous inefficiency and entirely cripple the business. Hence our wisdom suggests that, we appoint an honest bunch of board of governors who continuously monitor the performance of agents.

Of course periodically the audited results & annual reports are shared with all shareholders for additional whetting. Reverting to the example of the government, the bodies such as CAG, CBI, CVC, Lokpal, Election commission, Judiciary etc. are like board of governors doing the monitoring job for the principal shareholders like us. If they are not performing their job properly (which is the public grievance espoused by AAP), then the suggested remedy is to further empower these bodies, improve the quality of people selected for these bodies, and make them submit detailed agent performance reports to the principals. Initiatives such as judiciary reforms, police reforms, citizen’s charter further help in disciplining the behavior of agents.

Contrary to monitoring enhancement demands of Team Anna (IAC), AAP moots the idea of a federated decision making structure for legislature, executive and judiciary (click here to see details). This is an attempt to move the monitoring function directly to the principals. Hence the resulting enormous transaction costs have the ability to cripple the entire government and undo the wisdom of the designers of our constitution.

Besides the issues related to organizational structure, the left wing economic policies espoused by AAP think-tank will sadly take us back to the 1970s. Euphemistically in the name of critical policy review, several policy decisions made (since 1991) on industrialization, land reforms, globalization of supply chains, labour laws, import/export controls etc. are at the risk of getting reversed. Furthermore the economics of socialism which has been proven worldwide to be unsustainable in the long-run may re-emerge under the avatars of license raj, higher taxes for the urban rich, anti-corporate policy roadblocks and subsidies towards non-productive asset creation activities.

If you want a sample of what this means to the nation, look at what DMK and ADMK have done to Tamilnadu in the past 10 years. In order to fund unsustainable freebies such as TV, Mixer, Grinder, Table fans, free power and several other social welfare pensions/subsidies, the government had to enter new profitable businesses. Consequently TN government has already monopolized liquor retailing and sand quarrying. They have also got into cable TV distribution. They are contemplating entering into granite quarrying.

Leaving aside the ethical side of government running such businesses, economics wise the whole process creates enormous inefficiencies in the system. Going back to the PLC equivalence, the principals (people) appoint agents (top management) to run the firm, so that they are free to engage in their daily routines. The agents get a fair rent for performing this duty. However socialism increases the rent so much that, principals have to continuously outsource more & more of their daily routines to the agents, in order to justify the rent. This is a vicious cycle that will only stop when the agents take care of everything the principal does (cradle to grave), only to discover that there is no rent to be extracted! Hence the economic model mooted by the AAP think tank is not only unsustainable, but also creates headroom for more corruption & red-tapism. It is time to think, is this the direction we want to go?

The urban youth (many born after 1991) flocking to join AAP need to be educated about the horrors of India in 1970s. But beware it can get even worse, as we not only have an Indira Gandhi version of socialism; but also bundled with it, comes a ruling party that has legitimized a loosely federated naxalbari type organizational structure. If you want a consolation, they lack firearms!

Conclusion

The rise of AAP can have dramatic short and long term consequences for both centre right supporters and the nation as a whole. Hence it is in the best interests of centre right thinkers to understand & appreciate what kind of a creature are they are dealing with. The objective of this article is not to scare-monger, because the full effect as discussed above may not play out; if AAP does not practice a federated structure as they claim to.

So in some ways we can only wish that AAP does not experiment (or) go full haul with their idea of federated structure. But as far as the short term agenda of centre right thinkers is concerned, they are best advised to desist getting stuck on Kejriwal and the drama in the Delhi government. They should instead turn their attention towards the activities of the think-tank and advise political parties like BJP to plan counter strategies.

If BJP continues to dream about a pan-India NaMo wave and hope to enmasse encash on the Anti-congress votes, they will only end up silly in May 2014. What they will instead get is a UPA-3 government whose leash will be firmly in the hands of leftist think-tank of AAP.