Etah, ASBOs and Skybet

"I started my management career in a backward village in Etah, Uttar Pradesh. I lived in the village, as one of the local people, trying to improve their lives.

Women in my village walked five miles each way, every day, to get water for their families. This was obviously a big effort; it left them physically drained. Couldn’t we improve these women’s lives by putting in a water pump, right here, in our village? Of course, easily done. My company bought and installed a new water pump in the village. But that didn’t work out. The women still had to do their daily hike for water because the water pump never worked. It got vandalized at night, either for components or by local boys with nothing better to do. My company repaired the pump, again and again. But it never worked.

The breakthrough came when the company stopped buying the pump, and said the villagers would have to buy a new pump themselves. Sure the company could top the pot up with cash if needed, but each family in the village would have to contribute towards buying the pump. There were no exemptions for poor families. The could make really small contributions of one or two rupees. But everyone had to contribute. It took months of conversation, cajoling and threats of being socially ostracized to get every family to contribute. But once they got there, once the villagers had their pump with their own hard earned money, the pump stayed in repair. People would protect their pump from thieves, vandals knew they would be ostracized. Nobody cares about a company’s pump."

This is not a parable. I heard this story as a historical account, from a friend who now teaches at Stanford. He started his career with Unilever India as a management trainee. This prestigious Unilever program places trainees in villages in Etah, a backward part of Uttar Pradesh, for six weeks.

This placement provides Unilever trainees - who mostly are privileged, ambitious, well-educated, upper-middle-class youngsters from India’s metros - with a lifetime supply of interesting stories. There have been insinuations that the sole purpose of the Etah placement is to equip management trainees with good stories. These insinuations are not true. Unilever has a dairy factory in Etah. The company is engaged in an Integrated Rural Development Program (IRDP) in the surrounding villages to improve the supply of milk to its factory. Management trainee placement in Etah is a part of this larger serious-minded program.

This story keeps coming back to my mind because its insight, call it the Etah Insight - that public enterprises work only if the populace are emotionally invested in the enterprise - feels bleeding obvious, but is so often ignored.

For instance, just last month, the Con - Lib government in the UK announced an emergency budget. They are raising the personal allowance by $1000; so 880,000 families will be taken out of the income tax net. This sounds both pro-poor and fiscally responsible, and has attracted almost no comment from the mainstream media. However, looked at through the lens of the Etah Insight, it could actually mean 880,000 more families have less of an emotional stake in their society’s success.

Taxes need not be about revenues. They could have a role to play even in households who receive more in benefits than they would ever pay in taxes. People who realize that benefits and government services are not free are more likely to use these services responsibly and respect the society which provides these benefits.

Taxes could be re-framed, like voting, as a part of a broader social contract. Benefits become a part of a contract rather than a pure entitlement. Taxes, despite being involuntary, could help foster a sense of ownership in the “broken society” that David Cameron’s Conservatives once cared so much about.

Stimulus spending, which is a bit like buying water pumps for villages, is in the news across the pond. The commentary is predictably sterile and partisan, with the left talking up spending and the right claiming that the $787 billion stimulus did not work. The Etah Insight suggests that the more creative conversation is in the middle and a few levels deeper; about precisely where stimulus spending would work, which depends mostly on whether the social norms to make stimulus work are in place. Will the stimulus pumps remain intact, or will they just get vandalized by the local yobs?

The Etah Insight also suggests that the pain of paying taxes matters. It is clearly easier to collect taxes like VAT and TDS, which are perceived as higher prices or lower incomes rather than as a price paid for governance. However, making it necessary to pay hard cash for government services could produce a more engaged, and ultimately more successful, citizenry.

The Etah insight is not on the public agenda, but the bookies are one constituency who seem to get the idea. Betting remained robustly recession proof through this World Cup. Why? Skybet’s advertising slogan hit the bunny on the nose: it matters more if there’s money on it.