Last week’s Supreme Court instructions to the Central and state governments on civil servants and last month’s CBI pursuit of Kumar Mangalam Birla and P.C. Parakh build on a recent tradition of India’s five other policy backseat drivers (CAG, CVC, the press, NAC and NGOs) of confusing the accounting of accountability (did you mindlessly follow checklists, rules and procedures) with the account of accountability (did you do the right thing). Accountability may be overdue, but it must be effective. The breathlessness of the Indian state today emulates Pandolfo Petrucci, the tyrant of Siena, who according to Machiavelli, “conducted his government day by day, and his affairs hour by hour, because the times are more powerful than our brains”.
But India’s complex problems need the ambition, gumption and imagination — both private and public — that have been hit by the simplistic accounting accountability of the last five years. The biggest job for the winner of the 2014 elections is catalysing policy and private entrepreneurship by restoring India’s confidence in its future. Even Keynes — patron saint of the dysfunctional ayatollahs at the National Advisory Council — recognised that the most important economic variable is expectations.
Parents and poets have long tried to understand the sources of ambition, gumption and imagination. Are they like shoe-size or height, something that is given and cannot be changed? Or are they like muscles that can be developed by working out? Research suggests that people take bigger bets when they have more confidence in the future because they accept longer payback periods. They also take bolder bets when they have the room to make mistakes — the old quip about entrepreneurship is that it’s the same outcome if you jump from the 10th or 50th floor of the building, but with the jump from the higher floor you have more time! Economist Albert Hirschman’s “hiding hand” was about the necessity of entrepreneurs operating under the useful delusion that what they are attempting is less risky than reality.
Entrepreneurship is about trying to “prove Hamlet wrong”, and success comes from failure. Hamlet — like India’s seven policy backseat drivers — took himself too seriously, thought he needed to be perfect and could not imagine learning from mistakes. But the best plans do not anticipate the future; they help shape it. Research suggests that entrepreneurs are worse than pessimists at knowing the future, but they tend to be