The Psychology of subsidies

It was sometime in 1997 that I was driving into Delhi from Faridabad alongwith  Tom the Chairman of my company an American when we came across a man who had obviously been run over and very much dead. The crowd kept a respectful distance and while it was unclear when the accident had occurred the mood was one of morbid curiosity but little else. We like many others drove on with murmurs of sympathy. A few minutes of drive later we drove past a large hospital. Tom felt that with a hospital so close by he should have been seeing a ambulance already on the spot while I made my own attempts to try explaining the "situation" in India.

After some time as we continued driving Tom who had visited India countless times and  traveled extensively remarked to me - "Do you know that India is the richest country in the world". I was taken aback when he continued saying - "I have toured India so much including tourist attractions, wild life resorts, offices, industries and met so many people and I find that you folks have no value for anything including human life. You are willing to discuss price but value nothing. See the state of your heritage sites that are thousands of years old, the slums, the waste that I see in abundance and many more. Anyone who had a value of how precious each of these were would cherish and protect them. You want everything free and you never realise its value". While I may have argued the comments made me think.  Later experiences made me understand and better appreciate his comments.

Sometime in 2005 or 2006 the company I was working with decided to start a subsidised meal for the workers. The workers were also asking for it in a nice way. It was justifiably needed.  A project budget was made and approved for the required infrastructure etc. In the face of agreement from all I was the only one who objected. I had seen how in other company canteens whenever I had eaten the conversations of many who kept protesting against some shortcoming. In one canteen I was a embarrassed bystander to a VP getting gently rebuked by the CEO since the VP felt that ice cream should have been an option in the menu. I wasnt popular with my operations colleagues for my objections. I gave them a solution wherein whatever was the amount of subsidy the company wanted to give can be given as a cash input to the workers. They would then pay the full price of the meal and eat in the canteen. Reluctantly this was agreed and the canteen started. Within 2 months the contractor wanted  to leave. His complaint - very few purchased the meals. They all bought meals from home and used the canteen to eat and he spent money to clean up and wasted food in addition. The canteen quietly was closed and  converted into a dining area and since then nobody ever complained about wanting subsidised meals. 

Around the same time the company decided to start a car scheme for the Managers and budgets were being drawn up and every Manager wanted a Ford Ikon or a Maruti Esteem kind of sedan and the budgets were going out of control. I once again objected saying that whenever anyone quit the company the car would become a burden since the new manager would often refuse to accept a used car. After much heartburn with colleagues I suggested that each manager could purchase a car of his liking based on a monthly EMI budget allotted. The company would pay the EMI as long as the manager worked but whenever he/she left the car would go with them and the EMI's would become their responsibility. Except me, every other manager in the company settled for a  Maruti Alto and the company actually saved money since the budget allocated was for a better car.

In another company that I worked for there was a temporary slump in business and the management wanted to curtail many benefits temporarily but the workers demanded that they be allowed to stay at home and earn the salary since they would not get the benefits. They also wanted be allowed to work elsewhere if they could in the interim. While I am not privy to the intricate details of the case the MD gave a decision to the workers. They would report for work everyday but sit on the lawns from morning to evening and go home. The factory would not operate. The company did save money in the operations but the workers were not given both salaries,benefits and also stay at home. The concept of the value for the salary/ time (apart from the ethics) was driven home very effectively.

I can share many other experiences where the reaction, decisions, attitudes towards a item were vastly different from the stated demands depending upon whether the person involved paid for the item or it was free. If we take a look at our lives, the attention we give to how we maintain our OWN house as against how clean we keep a RENTED house is vastly different. We dont pile up food on our plates and then waste them at home like we do in weddings or such events. A scratch on our car gets high blood pressure attention but the dent in the office car is ignored. The garbage from our house must be thrown out but we have no qualms of throwing it in the street. We scream blue murder when the teenager at home sticks a poster on his/her room wall with glue  but dont think twice about drilling a hole in the road to put up a tent for a party. We have a neighbour  who washes his house, compound, garden often and the amount of water that is sprayed from a pipe and wasted  makes you cringe and go murder him. I can go on about dozens of such contradictory behaviour in ourselves.

We behave such because we get so many free/subsidised things that we have lost value or meaning to anything. We actually live in a delusion that it belongs to the government forgetting that it is our government, our country, our city and most importantly it is OUR MONEY.

Forget blaming the politicians for their inefficiencies or corruption. We make them that way since we always want quick results, free, no effort and rarely if ever appreciation. Soon the politician treats us the way we deserve to be.

The UPA govt started the best system in our history, namely the Aadhar and we should be bending over backwards to implement it and using it by removing subsidies and making people pay for it. The govt anyway would be giving this subsidy as cash to the people so it would not change the support system. But we dont. The cynical would point to the corruption involved but forget that we also secretly covet this free stuff. If we got money it would become our RESPONSIBILITY and we would have to be careful but if free we can squander it. Here is where the AAP in Delhi could have made a difference to how such issues are tackled. They could have given direct cash subsidy on power and water using Aadhar but made the people pay the deserved price for the services. This would make the people conserve water, power and also leave the government free to tackle the power companies to improve efficiencies etc. But instead once again we believe in subsidy/free stuff. 

With the election fever catching on the silly season begins and we will see every party and its uncle promising everything free. Except for cars and such items our governments have given out free stuff from food grains, cooked food, TV's Laptops, Cycles, Water, Power, loans etc.  With investments not happening, manufacturing sector not growing, jobs not getting created, our service industry like IT under threat of protectionism abroad we can ill afford to simply dole out freebies which are not valued. We have today created a Aadhar system at huge cost but still prefer freebies and dont use the system created. At this rate the next government will be left with a poisoned well and cleaning that would be a stupendous task and time consuming. Unless the Congress is striving to lose the election they would do well to control the damage quickly. They cannot be the party to drink from the poisoned well.  If the AAP wants to be a party that is different they must change the rules of the game and when they are attracting some top notch talent from the industry they must leverage them to be game changers. But they seem to be falling into the same old trap of other parties. As of now the BJP is the only party talking ONLY of governance and development. Whether they will hang on with courage of conviction or get trapped by the freebies announced by their opponents remains to be seen. 

But the writing on the wall is clear. Unless we clean up our economy and kickstart reforms 2.0 we are going to be in big trouble in the years ahead. And with a 65% population under the age of 40 we will have a different psychological problem in the populace instead of the psychology of subsidies.