Ji Haan, Minister

by on March 2, 2017 at 7:22 am in Economics, Law | Permalink

One of the unfortunate legacies of British colonial rule in India is a permanent civil service that tends to subvert any change that it deems against its interests, even when such change is promoted by elected officials. This is one reason why change in India is often two steps forward, 1.9 steps back. A case in point is India’s newly passed Goods and Service Tax (GST).

The GST was supposed to solve a long-standing problem of Indian intra-national trade. Unlike say the US common market, Indian states erect tariff and non-tariff barriers against the products of other states. As a result, production is allocated inefficiently–Indian firms with high costs hide behind barriers and produce too much while Indian firms with low costs can’t expand sales to other states and so produce too little.

(Canada, by the way, also has this problem. It’s often cheaper for a Canadian firm to ship to the US than to another province in Canada. You can find similar problems in Southern Africa where it is cheaper for South Africa to import produce from South America than from Zambia, as this excellent video discusses.)

trucksIn addition to the inefficient allocation of production, barriers to internal trade have also raised India’s transportation and logistics costs.

At the Walayar checkpoint in southern India, lines of idle trucks stretch as far as the eye can see in both directions along the tree-lined interstate highway, waiting for clearance from tax inspectors that can take days to complete.

Delays are so bad that textile entrepreneur D. Bala Sundaram has stopped sending his trucks to the international container terminal at nearby Cochin, instead diverting them hundreds of kilometres to a smaller regional port and onwards via Sri Lanka…

Overall:

Two-thirds of India’s freight travels by road. But only 40% of the travel time is consumed by driving, according to the World Bank. The rest is spent on waiting at state border checkpoints, paying state government levies and dealing with regulatory bureaucracies that vary from state to state.

The sad irony is that India spends billions improving its roads only to force its trucks to stop at state border checkpoints, sometimes for days, undermining the gains from the investment in roads.

The GST was going to simplify all this with a single umbrella tax creating one-tax, one-nation. Alas, the dream is being subverted. The law created a GST council of federal and state ministers and through this council the GST is rapidly becoming more complex and convoluted. First, one-tax was changed into four and with numerous exemptions the final number may end up being more like seven or eight.

Second, as I witnessed traveling between Uttar Pradesh and Rajasthan recently, the trucks are still lining up and may continue to do so:

The revolution the proposed goods and services tax (GST) promised might not be all that rosy because it would be hobbled by the need for an e-permit to be flashed at inter-state borders as the states insisted the old analogue practises continue.

The states seem to have gotten their way and will continue with the old ‘permit raj’ system, undermining one the biggest gains of GST.

The E-permit, by the way, sounds modern but don’t be fooled. Like India’s e-visa there is really nothing e about it–it’s just modern labeling for an old system.

Eventually the GST will be beneficial to India but it’s two steps forward, 1.9 steps back.

1 jim jones March 2, 2017 at 7:34 am

Let`s blame the British for creating the United States

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2 White Supremacist March 2, 2017 at 12:12 pm

Ahh, I can roam the whole internet, but I always know which comment blog to call home…

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3 athEIst March 2, 2017 at 9:16 pm

British colonists founded 13 colonies. The US created itself against considerable opposition from the British government.

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4 William Weeks March 2, 2017 at 9:54 pm

Lol people still believe there were 13 colonies. That’s cute. If you could direct me to the charter for the colony of Delaware, I would be much obliged.

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5 Nebfocus March 2, 2017 at 7:36 am

As an expat in India, I laughed at all the international press celebrating the GST. This outcome was (sadly) obvious.

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6 Saturos March 2, 2017 at 8:03 am

Does Dani Rodrik have an argument for why these internal barriers can actually be welfare-enhancing, then?

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7 mulp March 2, 2017 at 10:39 am

“As a result, production is allocated inefficiently–Indian firms with high costs hide behind barriers and produce too much while Indian firms with low costs can’t expand sales to other states and so produce too little.”

When costs are too high, workers spend too much, thus the inefficient firms sell too much.

The efficient firms make sure workers buy less thus reducing the demand reducing how much is produced.

Economies are zero sum.

Removing trade barriers allow the efficient firms who pay their customers too little to grow to sell in other regions to progressively impoverished the workers consuming too much because their wages are inefficiently high.

Ie, the wealthy in Ohio have been made poor by becoming unemployed by efficient imports from Asia.

Workers can’t become better off buy not buying what they produce in order to “put money in their pocket” buying cheaper goods from cheaper workers. Zero sum: your pay can’t exceed your payment for what you produce.

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8 rayward March 2, 2017 at 8:18 am

India is a former colony, and colonizers were more concerned about the transportation link between the colony and the colonizer (to transport goods between the colony and the colonizer) than the transportation network within the colony. That phenomenon has held back development of many if not all former colonies.

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9 Pshrnk March 2, 2017 at 9:14 am

I’ve driven 43 of the lower 48 states and do not recall seeing more than minor delays at the occasional state line weigh station. If memory serves we were a colony.

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10 Axa March 2, 2017 at 10:03 am

There were 13 colonies, not 48 😉

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11 George March 3, 2017 at 1:23 am

There were 13 colonies is a myth. The Pennsylvania governor ran the counties of Delaware.

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12 msgkings March 3, 2017 at 12:34 pm

Fake (colonial) news!

13 Chip March 2, 2017 at 10:50 am

In 1848 there wasn’t a single mile of track in India so it’s quite a puzzle how colonization held back development.

Rail was a boon to Indian trade and civilians alike.

“The Indian proved an ‘inveterate traveller,'” writes Nalinaksha Sanyal. “In the first five years passenger journeys increased fivefold from about 535,000 to more than 2,700,000, and this rate of progress was kept up for another five years. Between 1864 and 1869 these rose from 11 3/4 millions to 16 millions.”

At the opening of the Bombay-Calcutta line in 1870 (what, a passenger line across India and not directly to ol’ blighty?) Viceroy Lord Mayo said:

“it was thought desirable that, if possible, at the earliest possible moment, the whole country should be covered with a network of lines in a uniform system”.

The most cursory of Googling will reveal that the British presence in India triggered improvements not just in rail but education, life expectancy, poverty eradication and dozens of other metrics.

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14 shrikanthk March 2, 2017 at 11:14 am

The gains in Indian per-capita income in the course of the 19th century were very marginal. Sure, British rule did not impoverish India. I don’t buy that nationalist argument. But it is also wrong to portray British rule as some golden age of sorts.

Sure, there were improvements in life expectancy, but not as impressive as the gains realized in Europe in the same timeframe. And a lot of these gains had a lot to do with major technological breakthroughs as opposed to British Raj per se.

And education is tricky. Indian literacy rate was below 20% in 1947. Was it higher back in 1800? Possibly. Traditional quasi-religious Hindu education structures were dismantled and the secular education system that took its place was too inadequate and small in scale.

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15 tjamesjones March 2, 2017 at 11:51 am

if you close your eyes really tight and put your fingers in your ears, you can probably convince yourself that somehow modernity could have come to India via the quasi-religious Hindu education structures, or somesuch nationalist path which takes your fancy. But deep down you know it’s not true, and some pointless argument about per-capita income changes or life expectancy or 1800 literacy can’t obscure the fact that the Raj was the path to modern India, which for all its faults at least now has roads and trucks to tax.

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16 shrikanthk March 2, 2017 at 12:49 pm

You are mistaking Industrial revolution with British imperialism. The former was an unqualified good thing. The latter not a necessary condition for the industrial revolution.

Japan had an industrial revolution that India or Egypt escaped though European involvement in domestic affairs was far greater in India and Egypt than in Japan.

Let’s not mix things up.

And no. It’s not my fancy. It is a fact that per-capita incomes barely budged for much of 19th century (nothing wrong with that….they haven’t budged for much of human history anywhere in the world). But let’s not turn British imperialism into an angel on a white horse. I am not a nationalist who decries it as an evil force. But it wasn’t angelic either.

17 So Much For Subtlety March 2, 2017 at 6:40 pm

shrikanthk March 2, 2017 at 12:49 pm

It is a fact that per-capita incomes barely budged for much of 19th century (nothing wrong with that….they haven’t budged for much of human history anywhere in the world).

So you have searched and searched until you have found a metric that makes British rule look pedestrian. That looks a little dishonest. If Indian per-capita incomes grew at about 1% a year during the 19th century, it was because Indians chose to turn their growing wealth into more children. They preferred more sons to more factories. The population grew enormously – that is, India as a whole was much richer.

But let’s not turn British imperialism into an angel on a white horse. I am not a nationalist who decries it as an evil force. But it wasn’t angelic either.

And to top that you resort to a strawman. No one is saying that the British were angels. Although I might claim they cared more about India – and did more good for ordinary Indians – than any government before …. or since.

18 chip March 2, 2017 at 4:34 pm

No one said Golden Age. Straw man arguments are lame.

India’s per capita GDP rose about 14% in the second half of the 19thC. Not huge but the population went from 178 million to 284 million in the same period.

Life expectancy increased by 11 years in that time as the British introduced quinine for Malaria, national vaccination programs against diseases like small pox and improved polluted water supplies.

And it’s worth looking at India before the British arrived. The Mughals, Marathas and Persians slaughtered each other for centuries. One 6 hour battle in 1739 saw 30,000 men, women and children killed.

Was British rule altruistic? Of course not. Was it better than life before they arrived and lead to significant modernization of India. Certainly yes.

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19 shrikanthk March 2, 2017 at 7:25 pm

“That looks a little dishonest. If Indian per-capita incomes grew at about 1% a year during the 19th century, it was because Indians chose to turn their growing wealth into more children”

That’s just wrong. The population growth in 19th century pales in comparison with the population growth since independence. Indian population has almost quadrupled (yes …more than tripled) since 1947. Yet…i repeat yet…that didn’t stop per-capita incomes from increasing by a factor of almost 5! So let’s stop using malthusian arguments.

I thought MR readers are too smart to fall into the Malthusian line of thinking.

“Life expectancy increased by 11 years in that time as the British introduced quinine for Malaria, national vaccination programs against diseases like small pox and improved polluted water supplies”

Sure. What has this got to do with imperialism. We can have technological progress even without imperialism. Does India owe “Western civilization” a debt for these technological innovations? Yes. BUt that doesn’t necessitate imperial rule. Western civilization owes India several debts too. The decimal number system for instance. Mistakenly referred to as “Arabic” numerals. But HIndu numerals to be precise. The West did not have to succumb to Oriental rule for these advancements to spread. But these technological and intellectual breakthroughs and their exchanges have little to do with imperial rule.

“And it’s worth looking at India before the British arrived. The Mughals, Marathas and Persians slaughtered each other for centuries. One 6 hour battle in 1739 saw 30,000 men, women and children killed.”

Sure. The British Raj was definitely a marked improvement in terms of administrative nous and efficiency compared to what immediately preceded it. Fair enough. I never denied that. I ain’t constructing the strawman that British rule was particularly evil..

20 Chip March 2, 2017 at 11:03 pm

You seem to suggesting that India’s Mughals would have transformed India with western technology better than the British Raj did.

Why? What did they do to improve living standards up until colonization – or should we specify British colonization because the Persians, Hindus, Muslims and Brahmins were violently colonizing each other for centuries.

And while pre-British rulers maintained large militaries and fought frequent vicious wars, the British governed mostly peacefully, often with isolated unarmed officials overseeing hundreds of thousands of people. At its peak the British had no more than 70,000 troops in a nation of almost 300 million people.

Why? Perhaps because the average illiterate Indian at the time recognised what highly educated people today cannot – that British governance wasn’t so bad.

21 shrikanthk March 3, 2017 at 6:01 am

“Brahmins were violently colonizing”

I don’t know where you get this from.

“Why? Perhaps because the average illiterate Indian at the time recognised what highly educated people today cannot – that British governance wasn’t so bad”

I never said it was the worst option that India faced in late 18th century. I am not the one lambasting British rule. You guys are the ones who have been extra-touchy at a harmless comment by Tabarrok on British bureaucratic culture in colonial India.

22 Thiago Ribeiro March 2, 2017 at 8:32 am

“As a result, production is allocated inefficiently–Indian firms with high costs hide behind barriers and produce too much while Indian firms with low costs can’t expand sales to other states and so produce too little.”
Otherwise we would hear the giant sucking sound of jobs crossing the borders.

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23 Troll me March 2, 2017 at 5:30 pm

And leave everyone you know to go to a play where you know no one and cannot speak the language?

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24 WillS March 2, 2017 at 8:44 am

“One of the unfortunate legacies of British colonial rule in India is a permanent civil service that tends to subvert any change that it deems against its interests”

One of the other legacies is a democratic system of government that has had nearly 70 years to reform the civil service but has been unable to. A more interesting post would examine why.

WillS

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25 Thiago Ribeiro March 2, 2017 at 10:40 am

The Indians being Indians, they are not ready for self-rule and they were not seventy years ago. We told you so and I tell you again.

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26 Hazel Meade March 2, 2017 at 11:05 am

Nonsense. Everyone has this problem, even Americans. We can’t get the states to allow health insurance to be sold across state boundaries. Judging by recently elections, maybe we should be petitioning the Queen to please step in because we’re obviously too stupid for self-rule.

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27 Thiago Ribeiro March 2, 2017 at 2:03 pm

You cannot really compare a country which has problems with the finest points of interstate trade (it is not even a measure of organization – Brazil has fewer problems with interstate trade because we didn’t have a federal structure) with a country that can’t deal with trucks.

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28 Hazel Meade March 2, 2017 at 11:03 am

I agree. We see this problem everywhere, really, where the bureaucracy colludes with entrenched interests to break the economy up into little regulated fiefdoms. It happens all over America, in the form of occupational licensing where licenses don’t cross state boundaries, and there are other examples. States will, whenever they can find an excuse, ban imports of good from other states. See eggs in California. Inter-state trade barriers within the US exist. We’re just lucky that the federal government generally smacks that down because it wants that power for itself, so we end up with a fairly uniform system of federal regulation instead of a piecemeal state-by-state system.

I think the interesting conversation is about how we design a political system to counteract those problems. How do you prevent local, concentrated interests from outweighing dispersed national interests?

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29 Itsallrigged March 2, 2017 at 3:33 pm

Yes. Any thoughts on how to design the political system?

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30 chuck martel March 2, 2017 at 5:27 pm

“How do you prevent local, concentrated interests from outweighing dispersed national interests?”

Why would you want to do that?

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31 Troll me March 2, 2017 at 5:33 pm

Harmonized standards.

But very often there is legitimate disagreement about what people want, so harmonized standards can alos be anti-democratic in ways that have negative effects on wellbeing.

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32 Chocolate Seller March 2, 2017 at 8:45 am

1. It is not four (or “end up being 7 or 8”) taxes instead of one tax. This phrasing is misleading as there is only one tax on any particular item under GST (as opposed to multiple taxes currently). These are different categories of taxes and any particular commodity will be taxed at only at one particular rate. Not really complicated and does not really dilute the benefit of proposed GST.

2. You are right about the state entry checkpoints and e-permits though. If implemented like this, it dilutes a lot of the benefits. There is still hope that state entry checkpoints will be removed.

Running a small-to-mid business here in India with customers across the country (and globe). Documentation for supplying into some states is more cumbersome to than export (international) documentation. Simplification of procedures is the biggest attraction of GST (along with the other benefit that “organized” players like us get a more level playing field with the “unorganized” sector).

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33 Thiago Ribeiro March 2, 2017 at 10:44 am

“for supplying into some states is more cumbersome to than export (international) documentation. ”
Which may end up being a good way to incentivize Indians to export instead of to destroy each other’s job. As an old motto says, “exporting is the important thing”.

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34 Troll me March 2, 2017 at 5:36 pm

“any particular commodity will be taxed at only at one particular rate”

Sounds a lot to me like multiple taxes.

You have an identifiably Indian way of “explaining” your way around the truth to present it as something other than it is. It seems you have yourself convinced as well.

If the same rate applies to all goods, there is one rate. If different rates apply to different goods, there is more than one rate. The fact that multiple rates are not applied to the very same good (5% from Monday to Friday and 10% on weekends? – I’m not sure how you’d quite manage) does not therefore mean that there is one rate.

Many does not equal one.

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35 Ritesh Banglani March 2, 2017 at 11:31 pm

The distinction is not hard to understand. Earlier, for the same good different states had different tax rates and compliance requirements. So when you crossed state boundaries you had to pay the difference and show documents specific to each state. Now that goes away because the tax rates and documentation are standard across the country. Compared to where we were, this is a massive achievement.

It is also worth examining if a single tax *rate* is a good idea. Why should, say cigarettes be taxed at the same rate as food? It does create some bureaucracy to verify what good you’re actually selling, but the benefits outweigh the costs IMO.

One tax across the country is a laudable goal. One tax rate, not so much.

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36 Troll me March 3, 2017 at 5:09 pm

For the case of taxes on cigarettes, separate it into two things.

1) A GST at a single rate that is charged on ALL goods.

2) If there are reasons for special treatment, such as an additional tax specific to tobacco products, or for certain products classes to not be taxed, then make the case.

This sounds like a recipe for tinkering and micromanagement which is well beyond the capacity of the Indian state to manage, especially in consideration of the presently limited ability of the central state or sub-national governments to contrain practices which lead to suboptimal results at the aggregate level due to things like fiefdom thinking, etc.

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37 The Other Jim March 2, 2017 at 8:51 am

>One of the unfortunate legacies of British colonial rule in India…

Yeah. They’ve only had 70 years to address this.

Let’s keep blaming the British til at least 2150.

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38 Anonymous March 2, 2017 at 8:57 am

> One of the unfortunate legacies of British colonial rule in India is a permanent civil service that tends to subvert any change that it deems against its interests, even when such change is promoted by elected officials.
I think there’s a much more relevant example much closer to home — as in, within a few miles of the Washington monument. Democrats even sort of acknowledge this when they are attacking the “red” government, e.g. http://www.bostonglobe.com/ideas/2014/10/18/vote-all-you-want-the-secret-government-won-change/jVSkXrENQlu8vNcBfMn9sL/story.html

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39 Pshrnk March 2, 2017 at 9:16 am

Did Modi promise to “drain the swamp”?

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40 Troll me March 2, 2017 at 5:42 pm

Not so directly.

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41 Bill March 2, 2017 at 9:20 am

I can’t comment today

Because

I am meeting with the Russian Ambassador.

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42 Bill March 2, 2017 at 11:08 am

But, tommorow I won’t remember what we talked about.

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43 Harun March 2, 2017 at 11:16 am

After that, I’m flying to Berlin to give a campaign speech.

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44 Steve-O March 2, 2017 at 10:10 am

Does Canada have this problem more than the US? VAT/sales tax rates vary within Canada (by ~10%), just like in the US.

US states have different labor, product labeling, environmental, etc. regulations that can shift production from where it would otherwise take place.

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45 John March 2, 2017 at 10:15 am

There is a surprising amount of touchiness in these comments over the perceived slight to British colonial rule of India. Folks, the British Empire no longer exists, its feelings can’t be hurt. And there are far more damning things to be said about British colonial rule than a passing (and accurate) comment on the legacy of the Imperial Civil Service.

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46 Hazel Meade March 2, 2017 at 10:47 am

Good comment. I get that leftists blather on and on about the evils of the West, Europeans, colonialism and imperialism to a tiresome extent, but continually responding in a hypersensitive manner to the idea that white Europeans might have done some bad stuff in the past makes it seem as if, well, “thou doest protest too much”.

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47 Turkey Vulture March 2, 2017 at 11:05 am

This isn’t really accusing Europeans of doing anything bad, just that there is a bad consequence of a potentially neutral or even good thing that they did. “You established a civil service!” isn’t really a damning statement. I think the touchiness is a perception that the colonial legacy is being used as an excuse for failing to make reforms in the present. I think such excuses deserve ridicule, but I don’t think it is really being used as an excuse here.

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48 John March 2, 2017 at 12:53 pm

Past afflictions don’t excuse present failures, but they can illuminate them. Since colonial history is such a touchy issue for some people here you could instead look to the overreach of another unelected administrative state untouched by colonialism: Japan. The Meiji Restoration created a powerful and entrenched bureaucratic apparatus that has resisted reforms and occasionally stymied initiatives of democratically elected leadership. This was not originally a bug but a feature: modern day Japanese bureaucracy has its roots in the emperor’s privy council, which served to buffer the emperor’s actions from the democratically elected parliament. It is perfectly legitimate to say that the modern Japanese bureaucratic state is one of the more unfortunate legacies of the Meiji era. It excuses nothing, and helps illuminate the root cause.

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49 Turkey Vulture March 2, 2017 at 1:55 pm

I don’t disagree that they illuminate, and you can’t tell a proper story of how India ended up where it is today without including colonial history. It is the placement of blame that people are reacting to. I don’t think Alex is placing much, if any, blame on the British here, and is instead blaming the entrenched interests of the civil service (in addition to just making a blameless descriptive claim about India), so I think people are being overly touchy.

Mencken said that “All mammals, in truth, seem to have an inborn tendency to identify causation with volition. They are naturally pugnacious, and life to them consists largely of a search for something or someone to blame it on.” As a corollary, I’d say that while we look for something to blame, we are also very sensitive to seemingly misplaced blame by others.

50 Ricardo March 2, 2017 at 2:31 pm

It is common enough among American libertarians and conservatives to attempt to tie contemporary political problems to historical developments before WWII. The New Deal and Woodrow Wilson are favorite topics (and, of course, liberals have their own equivalents). There is certainly a double standard at work if these same people cannot accept that contemporary problems in India might have their roots in the country’s history.

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51 Turkey Vulture March 2, 2017 at 2:48 pm

If their problem is with a descriptive claim that colonial Indian history is part of why India is what it is today, while they are willing to claim that American history at the same historical distance is why we are what we are today, then yes I’d agree that is a double standard.

Such a double standard may be underlying some of the sentiment. But I think the reaction is primarily to thinking the colonial history is being used as an excuse for failing to reform a system that can still be changed today. In that case, there’s only a double standard if they are blaming American history for the situation today and using it as an excuse for failing to make present-day reforms — like if they say “What can we do? New Deal, Woodrow Wilson, etc. etc.”

52 Hazel Meade March 2, 2017 at 3:55 pm

I think the touchiness is a perception that the colonial legacy is being used as an excuse for failing to make reforms in the present.

That’s the only possible motivation for being touchy about colonial history, is it?

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53 So Much For Subtlety March 2, 2017 at 5:50 pm

Blaming British colonialism is a sub-set of the usual Leftist nonsense of blaming White people for everything. Blaming any non-White person for anything would be racist. Most White people hear this dog-whistle and know what it means. But it is more or less compulsory in academia and among the Left. So naturally every Indian problem must be the fault of colonialism.

My favorite example is how the rampant homophobia of Africans and places like Jamaica is somehow the fault of the British.

54 The Other Jim March 2, 2017 at 9:23 pm

>I get that leftists blather on and on about the evils of the West, Europeans, colonialism and imperialism to a tiresome extent…

Wow. Thank you, Hazel. I’m impressed that you “get” this, and have evolved on the matter. Seriously, it is even-handed thinking like this that makes the world a better place.

>… but continually responding in a hypersensitive manner to the idea that white Europeans might have done some bad stuff…

Jesus Lord. I admit it; you got me. My bad. I congratulate on the trolling, and best of luck at your Junior Prom!

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55 Chip March 2, 2017 at 10:53 am

Nonsense is nonsense and deserves mockery.

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56 Turkey Vulture March 2, 2017 at 11:00 am

It is fine when used as an explanation by someone who is only interested in describing a situation. But I think it readily becomes an excuse, one used as cover for failing to make beneficial changes in the present. Then it should be ridiculed. Here I think it is more of an explanation by Alex than an excuse, so I don’t think it is in particular need of ridicule.

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57 dearieme March 2, 2017 at 10:39 am

“One of the unfortunate legacies of British colonial rule in India is a permanent civil service that” is scrupulously honest. Yes?

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58 Kevin March 2, 2017 at 10:48 am

Dat Commerce Clause doe

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59 anon March 2, 2017 at 11:09 am

Is India too big? Rather than eliminating internal tariffs, should it be 6 or 10 countries? Maybe something like a pre-colonial map?

http://www.victorianweb.org/history/empire/india/maps/7.jpg

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60 dearieme March 2, 2017 at 4:13 pm

Their empires were smaller in 1525.

And then in 1526: “The Mughal Empire or Mogul Empire, self-designated as Gurkani, was an empire in the Indian subcontinent, established and ruled by a Muslim Turkic dynasty of Chagatai Turco-Mongol origin from Central Asia.”

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61 Harun March 2, 2017 at 11:22 am

“a permanent civil service that tends to subvert any change that it deems against its interest”

Anyone have examples of a country where this does not occur?

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62 Epictetus March 2, 2017 at 12:01 pm

One of the unfortunate legacies of Alex Tabarrok is to blame the British for things right now when in fact the British left the scene well before he was born. A more fortunate version of his sentence is: “Two of the legacies of British colonial rule in India are India itself and its civil service.” Mr. Tabarrok’s unfortunate legacy can be blamed fairly and squarely on the British, who were silly enough to fight on both sides of the American Wars of Independence, which directly caused Hollywood to show how the USA won the Second World War without much Russian help, and how the British were so beastly in Indian’s Jangama Massacre, how the British are to blame for the horrors of the Belgian Congo, and how the British today fail to enforce women’s rights and to prevent paedophilia in First Nations reservations in the USA. It’s faintly surprising that no one has blamed Britain yet for Trump, Putin and the loudness of men’s snoring—where is your imagination ?

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63 ad March 2, 2017 at 2:55 pm

One of the unfortunate legacies of British colonial rule in India is a permanent civil service that tends to subvert any change that it deems against its interests

Doesn’t every country in the world have one of those? Are they all legacies of British colonial rule?

The law created a GST council of federal and state ministers and through this council the GST is rapidly becoming more complex and convoluted.

On the face of it your example of the problems caused by ” a permanent civil service that tends to subvert any change that it deems against its interests”, is actually an example of the problems caused by federalism. You could at least plausibly blame British imperialism for that.

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64 Troll me March 2, 2017 at 5:51 pm

“is actually an example of the problems caused by federalism”

Exactly. Federalism also has numerous benefits, including severely resitricted abilities of a national-level government to force local people’s to teach or learn BS history (etc.). And many other things … practically necessary to prevent revolution in states with multiple founding cultures.

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65 jon livesey March 2, 2017 at 4:50 pm

“One of the unfortunate legacies of British colonial rule in India is a permanent civil service that tends to subvert any change that it deems against its interests”

Funny how that doesn’t seem to hold back the UK itself. But where would we be without trite and superficial cliches pretending to be analysis.

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66 Ritwik March 4, 2017 at 4:58 pm

you’ve just made a case for why federalism in practice may not produce the utilitarian outcomes desired by our models.

A set of elected officials vs another.

What does it have to do with a permanent civil service?

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67 Ritwik March 4, 2017 at 5:13 pm

p.s. my angle is civil service vs elected officials. Not a defense of the Raj.

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68 ABali March 5, 2017 at 9:21 pm

1. There are very few federal economies where one rate of tax (i.e the GST) is applied uniformly. Political economy considerations require multiple rates (taxing gold at the same rate as pharmaceuticals or water is politically not feasible in India).
2. Yes, the current GST is not ideal – but the question to ask is at the margin will it result in a tax system that is more efficient than before?
3. Delaying GST reforms further to arrive at an ideal system increases opportunity costs (The next Union Government Elections are in 2019 and the current government will focus its efforts and political capital in 2018 to ensure it gets re-elected; in 2019 the re-elected government or a newly elected government will not be able to implement or pass such major economic reform within the first 2 years), the earliest it can happen would be 2021-22 (and its a big assumption that the government will still be able to arrive at an efficient/ideal GST).

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