The plight of North-East India was brought to mind by this recent editorial in Mint recommending that the "troubled frontier", i.e. the border with Bangladesh, be "fenced and sealed." This is a recipe that will cost the taxpayer hugely - and lead to the proliferation of border guards, guns and checkpoints. The North-East is underdeveloped because it is not properly linked to the rest of India. Today, Sikkim and Arunachal are hoping to open the border with China. Will autarky be good for the North-East?
Socialism, central planning, and "balanced regional development" have all failed the North-East. So the very idea as to what constitutes "development" must change. No longer must centrally funded "projects" constitute development. Rather, development must be seen as increased "consumption" on the part of the ordinary people. Ordinary people buying mobile phones should be seen as development - and not some PSU.
When we turn the discussion to market-led development, the focus immediately shifts from politicians, planners and bureaucrats to traders and entrepreneurs. In many cases, those who undertake such trading activities will necessarily be "outsiders." These outsiders should be seen as valuable and useful - and not as easy pickings. I have for long heard horrible stories of how Bania shopkeepers who venture into the North-East are treated - especially by all the "rebel" groups. So, to begin, let us understand how these Bania shopkeepers benefit a local population.
In the small market town 3 kms from the village where I live in south Goa - the only market town in a vast, rural (and forested) district - is a Bania shopkeeper. His little shop is always crowded with poor villagers who come from miles around to buy this or that, in very small quantities. And he never fails them. I always get my carton of cigarettes from him - and he stocks hundreds of other goods. We should pause to appreciate the tremendous amount of diligence that goes into running such a shop, upon which so many rely, and how he "improves their consumption." When shops and markets close, people suffer - especially in far-flung parts of the empire. We may also note that all the mathematics the Bania uses are the four operations of Arithmetic.
The land-locked North-East, the furthest-flung part of this empire, presents to The Market the appearance of an unexplored (and unsafe) "frontier." The real foot-soldiers of The Market in this frontier are the intrepid traders. Small traders. Outsiders. Travellers. The specific purpose they serve is that they improve consumption for the local people. Thus, they should be encouraged. Just as any "trade delegation" from abroad is to be welcomed.
The alternative, "closed society" view of one state-one people-one leader - what the Nazis called ein reich, ein volk, ein fuhrer - is seen far too much in local politics these days, all over the land. This view requires fences, border guards, checkpoints and "papers." Consumption does not improve. Taxes are misspent.
Since the editorial specifically recommends a border fence between Meghalaya and Bangladesh, allow me to add something about Shillong. The British built this city, which was then the capital of the entire North-East and is today the region's educational capital. I have never visited Shillong, but I recently read a great contemporary novel set in this city, and the picture it offers is of a town with many markets, trades and professions, churches, schools and colleges - and also a very mixed population. The protagonist is a Muslim girl from UP, a college teacher, with a Manipuri boyfriend (she even eats pork momos!). There are, however, some boors who go round harassing outsiders and extorting money from shopkeepers. One shopkeeper is even shot dead. (Brings to mind a thought: A gun is a consumer durable that serves to make the consumer more durable.)
Instead of a border - fenced and sealed - between Meghalaya and Bangladesh, I suggest a great big highway running from Shillong to the Bangladesh port of Chittagong, so that container traffic can enter the North-East directly from the nearest port. Chittagong is also close to Tripura and Mizoram. The investment in the highway could well come from an entrepreneur in The Market.
There are troubled parts of the North-East - the entire border with Burma is troubled - but there will perhaps always be troubled parts on this troubled planet. All we can do is promote the market ethic. And hope it spreads. But it bears repetition that small traders are the foot-soldiers of the market economy in such "frontiers." I borrow this particular word from Peter Bauer's The Development Frontier: Studies in Applied Economics, in which he writes about Africa - and the skills of the small traders there.
These "development frontiers" of the Third World - or should I say the "socialist" Third World - present a picture that is not very different from parts of Eastern Europe in the 15th and 16th centuries, when Poland-Lithuania was underdeveloped and underpopulated. The lords of all the vast lands were poor. What saved them were the great migrations of the time, which brought urban Jews from west to east. The Polish lords responded by settling them in their own towns and letting the urban market economy develop. This is how vodka came to eastern Europe. All these urban trades "improved consumption." Bangladeshis are great migrants. They are found all over India and are hard-working and honest. It was 7 AM one morning in London when I went out looking for cigarettes. Only one little cubbyhole was open - run by a Bangladeshi.
There is lots and lots of hope for the North-East. Scotland was extremely underdeveloped compared to England in Adam Smith's time. It was trade that made Scotland flourish - a trade that was encouraged and studied in Glasgow University. In those days this university produced more useful knowledge than Oxford and Cambridge combined. There was Adam Smith, of course. But also James Watt, inventor of the steam engine that powered the next century. And there were others as well, in Physics, and in Geology. The novel I read about Shillong paints a horrible picture of the State-run higher education system today.
Like the North-East, Switzerland, too, is land-locked and mountainous - and was once poor. At a souvenir shop in Interlaken I found figurines of Swiss women carrying bundles of firewood on their heads. The Swiss have succeeded because of peace, free trade and free enterprise, urbanisation and a top-class transportation system. Goods have to physically travel. Transport is the key, not border fences.
Recommended reading: My recent column in Mint, titled "Catallaxy: Key to an Open Society."
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