T C A Srinivasa-Raghavan: Tutorial for Jairam (if not Sonia)

OKONOMOS

A few days ago, this newspaper pointed out in an editorial ("Sonia's choice", June 21) that the Congress president, Sonia Gandhi, did not seem interested in imposing party discipline.

As a result, Congress chief ministers were following policies that did not match the party's election promises or were doing things that had not been promised.

In a recent paper*, Gene M Grossman of Princeton University and Elhanan Helpman of Harvard University have analysed the relationship between party discipline and political handouts.

Sonia should read it and ask her son Rahul also to do so. It could prove a vital input into their political education, especially since Mother Gandhi believes in tax-and-spend policies.

The central point made by the authors is simple. "At low levels of discipline, the parties promise lavish pork-barrel spending." Pork-barrel spending is American for the way in which politicians try to bribe voters. The bribe can take any form.

The authors consider a specific variant of it, one that approximates the Congress model of development: spend more in districts that vote for you and less on districts that don't.

"We study," say the authors, "how differences in 'party discipline' shape fiscal policy choices." They then go on to examine the determinants of national spending on local public goods by using campaign rhetoric, voting and legislative decision-making in a three-stage game.

And what do they find? "The rhetoric and reality of pork-barrel spending, and also the efficiency of the spending regime, bear a non-monotonic relationship to the degree of party discipline."

In plain English, this means that when discipline is low, parties promise lavish spending.

The starting point of the analysis in this paper is the not unreasonable assumption that often there is a divergence between the objectives of parties and the objectives of individual legislators, "whose interests may be more parochial."

So you can either have a situation in which members of the party are fully committed to a policy platform if elected or one in which campaign promises are wholly non-binding.

This latter is what seems to be the case with the Congress chief ministers.

"In between these extremes," say the authors, "the extent to which the political parties can tie the hands of the politicians elected to office will depend on institutional characteristics of the political regime, such as the role of the national party in financing regional campaigns, in allocating the perquisites of election, and in choosing candidates for higher office."

Party discipline, they say is an institutional variation. They then go on to "" what else "" develop a new model of "majoritarian elections and legislative policymaking".

It is a winner-takes-all model and, therefore, of considerable interest to India. The key element in the model is the fact that elected members face penalties if they deviate from party policy.

The further they deviate, the greater is the penalty. The authors have introduced a measure for estimating the cost to legislators of deviating from the party platform. This they call party discipline.

They then use the model to examine pork-barrel spending; that is, projects that are financed by broad-based taxation but provide benefits that are "geographically limited in scope."

The announcements by Indian Railway ministers, for instance, fall within the ambit of this. As do the setting up of public sector units in Amethi and Rae Bareilly.

Therefore, "When discipline is lax, the parties make extravagant promises and actual spending in districts represented in a majority delegation is socially excessive. In fact, the lavish spending in these districts may leave a typical voter's expected welfare below what it would be were national spending on local public goods to be constitutionally prohibited."

Given the limited space here I have not been able to present all the nuances of the paper. So I would urge Jairam Ramesh, at least, to read the paper in full.

He can then advise his Lady and Master about the importance of party discipline, not just in the feudal sense they understand it, but also in the larger sense that matters to the country and the Congress.

*Party Discipline and Pork-Barrel Politics, NBER Working Paper No. 11396, June 2005