January 3, 2006EconomyPublic Policy

The Great Leap Backward

Reservations have no merit (or, India’s deepening crisis of selection)

This is an archived blog post from The Acorn.

Not a single political party of any consequence has had the courage to caution the government against deepening India’s entitlement economy (via Secular Right). When courts ruled against reservations in private educational institutions deeming them unconstitutional, parliament amended the constitution. The next target — and perhaps the biggest — is the private sector. If the populists have their way, the government of India will soon decide who private companies can hire. At a time when it needs to liberalise its labour laws to make industry more competitive and create employment, the Indian political system is veering towards doing just the opposite. Government interference in business decisions of private companies is not only perverse, but is widely acknowledged to have been a failure. It is widely acknowledged to be a failure not just in some country half-way across the world, but in India. Prime Minister Manmohan Singh may go down in history as the man who took the Indian economy out of one dark dungeon, allowed it to experience a tantalising breath of freedom, only to plunge it into another, darker dungeon.

The case against reservations goes beyond just economics. It is fundamentally about the principles around which India organises its society. Equality of all citizens is among the most fundamental of these principles. The argument for affirmative action — of which job and college seat reservations are manifestations — is that social, cultural and historical wrongs have left some communities more unequal than others. Reservations, the argument goes, help create the equality of opportunities. It is undeniable that the reservation policy, especially in the early years of the Indian Republic, helped empower large segments of India’s population which, for various reasons, had been cut off from political, economic and social opportunity. So did land reforms. But it is also undeniable that this system of reservations is now largely perverted by ceaseless pork-barreling. The absurdity of this can be seen from the fact that the number of backward’ communities has skyrocketed, more communities each year clamour for the exalted status of being designated backward’ and even forward’ communities are seeking reservations to secure for themselves a piece of the pie. Far from creating equality of opportunity, when extended in such a pervasive manner, reservations have ended up creating the exact opposite.

One reader questioned why merit should be so important. He also mistook merit for performance in high school examinations. Merit is important because it is very often the only objective measure of a person’s potential to do a job. If the purpose is to have a winning cricket team, then it is far better (and far easier) to select a player based on his domestic record than on the basis of the community which he is born into. Of course, you don’t choose the cricketer based on his high-school grades, but on his domestic record — an objective measure of merit for the purpose concerned. What applies to cricket teams applies to management-, R&D- and sales teams too. Neither the Indian cricket team nor the Indian firm can succeed in hyper-competitive international contests if they choose anything other than merit to compose their teams.

But is it correct to interpret performance in say, high-school or entrance examinations as merit? In other words, is merit being measured correctly? As far as the private sector is concerned, it should be free to use whatever qualifications it sees fit to select employees. Where there is concern for public safety, like in the case of certain engineering professions or health, government does have a role in setting standards, but not in picking candidates. For the vast majority of private-sector jobs though, the government must yield to the simple truth that the employer not only knows how best to spend his money, but more importantly has the sole right to do so. (See GreatBong)

But should the government use exam scores as the sole metric of merit while selecting its own employees? Here there is a case for expanding the selection criteria to take into account various other factors like participation in social service and uniformed groups or achievements in sporting, artistic and other fields. Converting these into convenient, comparable metrics is not easy. Nevertheless, the selection criteria for public servants can be expanded to include various extra-curricular achievements that extend the scope of merit to something less academic in orientation. While this is a case for broadening the definition of merit, it is not quite the same of dispensing with merit and choosing entitlement instead.

India is facing a crisis of selection. It is clear that the culture of entitlement is pervasive in society and a vote-winner for the political class. But it is also a course that is certain to cause India, yet again, to lose the ticket to prosperity and development that every generation feels is within its grasp yet somehow slips out of its hand. In reality, it’s not slipping out at all. It’s being snatched out of their hands by a self-serving political class. Written constitutions are designed to help prevent such perversion. In the next few months, India’s will face one of the stiffest challenges yet.

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