While excellent newsletters on specific themes within public policy already exist, this thought letter is about frameworks, mental models, and key ideas that will hopefully help you think about any public policy problem in imaginative ways. Audio narration by Ad-Auris. If this post was forwarded to you and you liked it, consider subscribing. It’s free.
Global Policy Watch: Tu Cheez Badi Hai Musk, Musk (umm, sorry)Insights on global policy issues— RSJ One of the great problems of policy, or even philosophy, is who should own things that are or that behave like public utilities. For instance, who should own news broadcasting services? Suppose you prepare a case study explaining what’s news broadcasting, the perils that someone abuses such a service to spread fake news and propaganda, and the damage they do to society. Now hand over this case to a bunch of well-meaning people and ask them: how would they frame a policy on ownership of such a service? What do you think the answer will be? I don’t have any empirical evidence to back this, but I think in most scenarios, you will find a group of well-meaning people supporting some kind of ownership by the state or a distributed set of individuals. They might suggest a set of tightly regulated norms on what should be broadcast, and they could also throw in a stringent penalty regime for violations. It is unlikely that any group will come up with the answer that it should be owned by a megalomaniac rich man who believes in free speech, flips the bird to regulators on most occasions and has a penchant for poop emojis. A public utility cannot be left to such unstable people regardless of their genius, is what most would say. Twitter is the equivalent of a global public square where news stories are broken, and opinions and trends are generated. Should it be owned widely by the public with a governing board that regulates the platform, its content and its algorithm? Or should it be owned by the state, which can run it like a public utility without a profit motive? Or should Elon Musk own it? What do you think? Twitter Is DifferentBefore I venture to write about the options, it will be useful to lay out the unique character of Twitter as a platform. During the week, I reached out to Amit Varma (doesn’t need an introduction to readers here), who always has a clear-eyed view of things, to understand what he makes of the happenings at Twitter. His views helped me articulate my thoughts better. First, unlike broadcasting services of the past, Twitter is exceptionally quick because it is a hyperconnected network of people. Events unfold in real-time on it, and trends catch on fast. Mobilisation on Twitter is faster than the speed of response of any state. It plays an outsized role in shaping the discourse because speed is a feature in today’s age. Two, the incentive architecture of Twitter is designed to reward extreme positions. The ‘retweet’ or ‘quote’ button, the notion of having ‘followers’ and the constraint of the 280 characters all mean there’s more purchase for broad generalisations, provocative positions and performative behaviour to pander to your own tribe. Three, Twitter is a monopoly in a very unique sense. Granted, there are other platforms that take a share of our attention, but there’s only one platform that richly rewards us for our attention with the dopamine hit in the manner Twitter does. Social media platforms tend to be ‘winner takes all’ plays because, as a user, once you build a certain kind of network and reach that’s unique to that platform, there’s little incentive to start building it all over again for the same benefits in another. The switching costs are just too high. #OwningTwitterThink of these features of a broadcasting service together - hyperconnected and quick, rewarding fringe behaviour and a natural monopoly. How should we think about its ownership? Now look at the three options of its ownership - a) the state (or a group of states), b) a widely-held listed public company or c) a Musk-like figure. One way to think through this is to understand the natural incentives of these respective owners, how they will use the platform to achieve those and what will be the net societal outcomes of those actions. Take the state first. All good intentions aside, as we have demonstrated over and over again on these pages, the primary incentive of the state is to perpetuate itself. Or, the party that runs the state to continue being in power forever. While to many in India who are brought up to think of the state as the mai-baap, it seems like a fair arbiter of how a public utility should be managed, the evidence all around us should go against that intuition. A public utility like Twitter controlled by a state that’s benign and fair can be a tremendous aid for the welfare of the community. But in public policy, you must consider the ‘corner cases’. You must ask, what if a utility like Twitter is in the hands of the politician you dislike the most? Will they be fair and benign? And then think about ownership and governance of such a utility and its consequences. So, the argument that a global public square like Twitter should be owned by a state or a group of states and managed like a global public good appears pious and workable on paper but is fraught with the risk of a bad faith actor with sovereign power taking it over. That will mean only one kind of fringe taking over. Bad things will follow. Next, let’s consider the ownership by a publicly held company which is how Twitter used to be till Musk bought it out. The management of such a company is the shareholders' agent, and its incentives are aligned with what’s best for the shareholders. The management, therefore, works to maximise shareholder returns which get tracked every quarter based on the company's performance. Regardless of how visionary the management team is, they are toast if they do not deliver every quarter. There’s no avoiding short-termism here. What’s the incentive for any manager to fundamentally retool this company, take short-term hits for many quarters and live in the hope that the strategy will pay off in the long term? Nada. Shunya. Nobody has seen the long-term, and the shareholders have other places to invest than to wait for so long. Twitter has dug itself into a hole where outrage and fringe positions bring in engagement, and that engagement is monetised for advertisers. Even if you had an enlightened management team that knew the damage this ad-dependent business model was doing to society, it would find it impossible to junk the model and change the engines mid-air, so to speak. Because any change in course will need to be dramatic, meaning significant short-term pain. That would understandably test the time and patience of the shareholders. You would need a Steve Jobs-like reality-distortion capability to convince them otherwise. There aren’t many Steve Jobs around to run a public company as professional CEOs. The best that Twitter, in its public company avatar, could do is to be managed efficiently. That’s it. That efficiency on its current model however would mean it would only get better in coarsening our discourse and widening cultural chasms. I think this is what is called irony. Lastly, let’s consider the option of a Musk-like figure buying out Twitter and doing what he pleases with it. What happens here? While it was somewhat easier to appreciate the incentives that drive the state or the shareholders of a public company, we can only speculate on Musk’s incentives. There’s no academic research done (yet) on Musk’s behaviour and actions. So, we can only think in terms of scenarios here. Scenario 1 is what I call the ‘Matt Levine view of Musk’. Levine is a modern-day Plato. The most lucid interpreter of capital and economy in the world today. His newsletter is quite simply the best chronicle of our times. And it’s free. What a legend! He has built a theory of Musk’s purchase of Twitter in many delightful editions. In this theory, to Musk, Twitter is a video game he loves. Ordinary people, like you and me, play a game, get addicted to it and then, over a period of time, get bored with it. We start hating a feature, or a new upgrade isn’t to our liking, or we see too many people playing it. Whatever. We move on. But Musk is not any of us. He’s the world’s richest man. He is also the world’s most addicted user of Twitter. He loves to troll people there, responds with poop emojis to the tweets of others and originates many meme cycles. He’s the shahenshah of all Twitter super users. So he buys up the video game company. Now he can play around with features as he fancies so that he can continue to enjoy the game. He placed a bid for it that was high. Then as the tech stocks and the markets crashed, that bid looked worse. Like any rational actor, he tried to get a better deal by threatening to pull out of the deal. Eventually, he bought it because a) he always wanted to buy it or b) maybe, because legally, he couldn’t opt out of it. Whatever. It is his now. Is there a reason to believe this theory of Levine? The answer is yes. Musk is rich enough to throw $44 billion for his favourite toy. In any case, he’s not paying everything from his own pocket. Maybe about half of the $44 billion. Nothing in how Musk has used Twitter so far suggests he has any great vision for the platform. In fact, he enjoys and leverages all the toxic features of the platform. Musk will play with this for some more time, and during that time, he will keep it running with some mix of charisma and his unique gift to meme-ify things. He will then hand it over to a sucker and walk out with a tidy profit. Twitter will then collapse in a heap. Or maybe it will collapse under his watch itself. An expensive way to amuse himself? Sure. But does he care? Either way, he’d have had his fun. That was his only incentive. Scenario 2 is the alternative that I want you to consider. I don’t necessarily believe in it, but it has equal merit to exist as the Levine scenario. Think of it as the RSJ scenario. For a moment, consider that Musk is an incredibly rich man because he makes things that people pay a nice premium to own. In short, he’s not a Sam Bankman-Fried. His businesses that are live offer genuine products with real software running within. People die if he gets them wrong. He has often mentioned in his interviews (listen to him speaking to Lex Fridman or Seth Rogen) that his primary concern is the survival of the human race. Therefore his preoccupation with autonomous cars, clean energy and finding an alternative to Earth as a home for our species. He doesn’t think about them like a scientist. He isn’t interested in the theory beyond a point. He wants to build products that will use science to solve these problems. He’s an innovator. In this scenario, he views Twitter in its current form as a net negative for the race. He sees it going only from bad to worse. It is worth his time and money to intervene. To innovate. This is hard work. Remember, he doesn’t need to work for a single day in his life. He can donate a tiny fraction of his wealth to build museums and libraries and earn all the praise and fame for posterity. His problem is there won’t be any posterity. He isn’t interested in delaying the inevitable. He wants to build an alternative for the inevitable. He doesn’t want to tweak Twitter for it to be a net positive. He is certain it won’t help. The old Twitter has to be changed at its foundation. That’s why he is at the Twitter HQ working long hours (and occasionally tweeting). This is a different frame to look through. If you consider this scenario, Musk’s incentives are to build a platform for good that doesn’t have to cater to extreme positions for engagement and ad revenues. He has no short-term pressure to show better numbers, no shareholders to answer to, and no sword hanging over his head to show instant results. He is his own man. He will change Twitter for it to be a force of good at his own pace and time. $44 Billion is important even for as rich a man as he is. He could have put it anywhere to make more wealth. He’s sinking it into a platform he thinks can do enormous good for humanity if it is changed. That’s the only incentive that matters to him. Now consider how things will play out if you take the Levine and RSJ scenarios together. In both, Musk will behave based on his incentives. One of the two results is only possible then. Twitter will die in short order or turn itself around and be a force of good. In either case, we will be better off from where we are now with Twitter. Stacking It All UpSo, let me summarise this ownership and consequences thing here. a) The state(s) could own Twitter, and their incentive will mean they will weaponise it further to perpetuate themselves. This will be bad for everyone. It will be worse than where we are today. b) Or Twitter could continue being a widely-held public limited company with incentives that will dig a deeper hole for itself. It will mean ever-spiralling toxicity forever. Again a worse outcome. c) Or, Twitter could be owned by someone like Musk. Here, it will either die quickly or become a force for good. Either scenario will be an improvement on Twitter in its current form. Which ownership option from among the three would you choose? Applications for the re-awesomed Post-Graduate Programme in Public Policy are now open. Check details here.
Matsyanyaaya: Managing China the Aussie WayBig fish eating small fish = Foreign Policy in action— Pranay Kotasthane Anthony Albanese, the new Australian PM, had a tough couple of days this week. Asked about Taiwan’s candidature for the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) — a regional trade pact of 11 countries — he said, “The CPTPP is a relationship between nation-states which are recognised”. Since the statement came just three days after Albanese met Xi Jinping, it ruffled quite a few feathers. Did the statement mean Australia was trying to build bridges with China again? Was Australia changing its position concerning Taiwan as a result? In any case, the Australian government swung into action, clarifying that Canberra remains open to Taiwan joining the CPTPP. Albanese, too issued an explanation:
So, it’s pretty likely that the Australian PM misspoke. There doesn’t seem to be any change in the Australian position on Taiwan or China. However, this incident provides a window into the debate in Australia on its China policy. Australia, in recent years, has been the most vocal opponent of Chinese expansionism and authoritarianism. The surfacing of a case of Chinese interference in Australian domestic polity in 2017 was an inflexion point in Australia’s China policy. Since then, it has actively tried to counter China’s aggression unilaterally and balance China’s power multilaterally. It is also the most enthusiastic participant of Quad 2.0. There is a bipartisan consensus that Australia needs to partner with the US and other powers to counter China, even if it means significant economic setbacks. And yet, there are some in Australia who oppose this consensus. Hugh White is one of them. In a recent Quarterly Essay, White opposes Australia’s current China policy. He locates his opposition in realism and not idealism or liberalism. Some of his arguments echo the voices in India who are opposed to a closer collaboration with the West. For this reason, it’s worth studying it in some detail. Here’s my summary of the essay. BackgroundHugh White is a well-known Australian professor of strategic studies. He wrote Australia’s Defence White Paper 2000. A constant theme in his writings has been that Australia should not overly rely on the US. It should instead learn to co-exist with a powerful China by drawing a few red lines. Essentially, he makes what we know in India as the “strategic autonomy” argument. TL;DR Highlights from White’s Essay
What’s the Takeaway?White represents a view that’s politically out-of-fashion in Australia. Yet, it is an analysis founded on realism. But some of his underlying assumptions are contestable. For one, Biden’s current policies on China (like the semiconductor export controls) indicate that the US is willing to incur costs on its own companies and citizens to counter China. While it is true that the US cannot decouple from China in most fields, there is definitely a willingness to counter China in economic areas that the US considers core to its national security interests. This is a significant commitment that the Biden administration has made. It doesn’t seem like the US will give China a walkover in East Asia. Secondly, it is unclear how a shaky outreach to China will be better for Australia than one in which China’s powers are restrained because of a partnership with the US. If the US does back out from the region, it would indeed make sense for Australia and others to make peace with China — even if it is on the latter’s terms. But we are far away from that happening. Thirdly, the fact that White’s view is not acceptable to both political formations in Australia is proof of Xi Jinping’s failed foreign policies. China is the most important trade partner for perhaps every country in its neighbourhood, and yet it has managed to put itself into a situation where many of these trade partners have reached a domestic consensus on standing up to China politically. Fourthly, I agree with White that the US does need to demonstrate its commitment to the Quad and IPEF quickly. If the US cannot commit itself to a trade arrangement with China’s adversaries, its effectiveness as the paramount power in East Asia will decline. Countries will start cutting their own deals with China. And finally, India’s position in this game differs from Australia's. While it is tempting to draw lessons for India from White’s fear of depending on the US, that would be to miss a fundamental determinant of international relations: power. To the extent that the future prospects of a country of India’s size keep growing, we need not fear about the loss of “strategic autonomy”. India’s engagement with the US will be very different from the Australia-US partnership. And so, it doesn’t look like Australia is changing its position on China after all. But there are no finalities in international relations. This space is worth watching. Not(PolicyWTF): A Perfect TakeoffThis section looks at egregious public policies. Policies that make you go: WTF, Did that really happen?— Pranay Kotasthane This week marked a milestone for India’s space sector. Hyderabad-based Skyroot Aerospace successfully launched India’s first privately developed rocket into space. There’s a lot left to be accomplished, but today is a good day to reflect on a rather-interesting story of policy reform.  Aap Chronology Samajhiye…Until 2020, the space sector was effectively a government monopoly. Yes, a few private companies developed satellites or supplied materials and equipment to ISRO, but more ambitious projects were out-of-bounds for private companies. In this sector, liberalisation seemed particularly challenging because the government umpire and player — ISRO — was doing a far better job than other public sector organisations. So why reform something that’s not broken? Why invest political capital in liberalisation and not double ISRO’s budget instead? That would have been the starting position for politicians and bureaucrats. Many papers arguing for the liberalisation of the sector had been written earlier. As late as Jan 2020, there was no indication that a big reform was on the government agenda. My Takshashila colleagues had also put out a policy brief proposing a policy and regulatory structure to develop India's nascent private space sector. And then, the COVID-19 pandemic began. The horrendous lockdown was announced in March. The future looked scary. On 5th May, the border clashes in Ladakh began. On June 15th, the Galwan clash claimed the life of 20 Indian soldiers (and an unknown number of Chinese soldiers). The satellite imagery displayed in the public domain came from constellations of private companies in the West. And on June 24th, the union cabinet “approved” private sector participation in space activities. These connections are merely speculations, as we have no idea about the internal decision-making process of the government. Nevertheless, a few things are instructive. The government was searching for success in various domains after the botched lockdown. As for the space sector, the government could well have chosen a “big bang” reform to double the ISRO budget to improve India’s presence in the space domain. The PM would have announced it on Twitter, and people would have cheered. Crucially though, the government had other policy solutions to choose from when the crisis hit. And it is praiseworthy that the government chose the option to liberalise rather than expand ISRO’s mandate. By 2021, the government also had de-regulated geospatial information collection and dissemination. And by 2022, the first private-sector rocket had been launched. A lot more remains to be done in this sector. The role of ISRO and the new regulatory body needs clarification. But the key lesson for policy analysts is to be ready with well-articulated solutions before a crisis hits. While the crisis provided urgency, it could have also made the situation worse had the liberalisation option not been internalised by policy entrepreneurs in the government. Congratulations to SkyRoot. And thanks to the government for getting out of the way. HomeWorkReading and listening recommendations on public policy matters
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