Transcript

Rob’s intro [00:00:00]

Robert Wiblin: Hi listeners, this is the 80,000 Hours Podcast, where each week we have an unusually in-depth conversation about one of the world’s most pressing problems and how you can use your career to solve it. I’m Rob Wiblin, Director of Research at 80,000 Hours.

We’ve done a number of episodes on COVID-19, but something we’ve deliberately avoided offering opinions on is how the developing world has been performing in response, or what lower income countries actually ought to do.

That’s because both we and our guests just thought we didn’t know, and if we opened our mouths would run too high a risk of saying something completely wrong.

But Shruti Rajagopalan is someone who actually does have a good idea of what’s been going on in parts of the developing world and the effects their policy response has had. In particular she has been following the situation in India and writing about it since April, when she published ‘Pandemic Policy in Developing Countries: Recommendations for India’ with her colleague Alex Tabarrok.

After seeing her writing, Howie Lempel was excited to interview Shruti to learn about this incredibly important topic.

I suspect many of you will feel similarly in the dark about the impact COVID has been having on poorer countries, and so will be as curious to find out what’s in this episode as I was.

Howie and Shruti recorded this episode three weeks ago. Since then, looking at the website Our World In Data, the number of new COVID19 cases and deaths in India being recorded each day has continued to climb at a roughly linear rate. The number of new cases found each day has gone up 60%, while the number of deaths recorded each day has risen 25%.

One bright spot is that the fraction of tests that come back positive has actually declined a bit from 12% to 9% because the number of tests performed each day has roughly doubled.

By the way if you’re wondering how I keep abreast of the pandemic, I visit ourworldindata.org/coronavirus every couple of days. The team there has done an amazing job visualising the piles of data about COVID19 and deserves a lot of credit for that.

Finally before the interview I wanted to make sure you know that Shruti has just launched a podcast of her own called Ideas of India — which describes itself as a discussion of the academic ideas that can propel India forward. The first episode is now out and is an interview with Ajay Shah about his book In Service of the Republic: The Art and Science of Economic Policy, about when a market failure justifies state intervention.

So if you like this interview and have an interest in economic policy in the developing world, consider subscribing to that show, Ideas of India.

Alright, without further ado, here’s Howie Lempel interviewing Shruti Rajagopalan.

The interview begins [00:02:27]

Howie Lempel: Today I’m speaking with Shruti Rajagopalan. Shruti is a Senior Research Fellow at the Mercatus Center at George Mason University. She grew up in New Delhi, India, where her mother was a renowned classical musician, and her father was a banker. She studies Law and Economics, first acquiring a BA in economics and a law degree from the University of Delhi in India. She went on to attain a Master’s degree in law and economics, and finally a PhD in economics from George Mason University, which she chose because of its rich tradition in political economy. She then taught for six years at SUNY Purchase before she more recently returned to GMU. As a Fellow at the Mercatus Center, she works on Indian political economy, including public choice, constitutional economics, and some work on COVID that we’ll discuss today. In addition to all of her academic work, she directs India grantmaking from a fairly unique foundation called Emergent Ventures. After living in New York City for almost a decade, she now lives in Arlington, Virginia with her husband and her dog. Thanks for coming on the podcast, Shruti.

Shruti Rajagopalan: Thanks for having me. This is a pleasure. I’m a big fan of the show.

Howie Lempel: Appreciate it. So first we’re going to start with the question we always start with, what are you working on right now, and why do you think it’s very important work?

Shruti Rajagopalan: So I’m working on about three different projects. They seem disparate, but I see a connecting thread in all of them. One is I just started working on a book on property rights in India. It is mainly focused on eminent domain. And the big question I’m trying to answer is what are the reasons we have such weak protections for property and against government expropriation or nationalization in India. I’m trying to understand it from a point of view of evolution of the political economy of India. So I’m looking at colonial history, more modern history on why these constitutional protections were weakened. And it obviously has very important consequences for modern-day India. Since partial liberalization in 1991, India tried to embrace markets and it is not easy to have a fair or functional free market economy without a strong foundation of property rights.

Shruti Rajagopalan: So, that’s the reason behind the project. So I’ve just got started on this. I hope to have a book in due time. So, that’s one big project. The other one also, I just launched a new podcast. It is called the “Ideas of India”. My goal with this podcast is to bridge the gap between academic ideas and policy. In India the current discourse on news is a little bit disappointing. It really lacks depth. It’s not rooted in the most contemporary rigorous research or data, and the academic work that is actually rigorous and well researched is not so accessible to engaged citizens or even public intellectuals. It’s very specialized. So the goal of the podcast is to bridge the gap. And I have a cracking list of academics and experts who have written really great books and papers, and it’s available on Stitcher, Google, Spotify, all the usual outlets for free download.

Shruti Rajagopalan: And I believe by the time this podcast airs, there should be some episodes available. I think the first couple of them are with Professor Ajay Shah on state capacity and government and market failure and policymaking in India. The other one is on India’s constitutional founding moment with Professor Madhav Khosla. I’m hoping to start a different project with that podcast. And finally, the third big project is: I direct the India grants for Emergent Ventures which is the philanthropic venture started by Tyler Cowen at the Mercatus Center in George Mason University. I love this particular project. I’m very new to it. I’m learning a lot. It started with a special grant, which was devoted as a tranche of funding for Emergent Ventures, India. And the goal was to support moonshot ventures, which are either about India or emerging from India, working on Indian problems.

Shruti Rajagopalan: And this came about because even before the Indian Emergent Ventures launched, we got some great applications from Indians and from academics in America working on India. These were excellent problems. So this is not surprising. There’s some exceptional young talent in India that goes unnoticed because the spotting of talent is still weak. And the value of entrepreneurial ideas, particularly moonshot ideas, which are most likely to fail, but were they to work, they have this huge payoff. That is still an underrecognized or underappreciated idea in India. And, in one sense, EV India is our attempt at a moonshot, because even a small difference that one can make in India has an outsized effect because of just a large number of people that it can impact. So, that’s the third project. Aside from this, there’s always the bread and butter work of deadlines, projects, working on papers, policy briefs, contemporary columns, and things like that.

Shruti Rajagopalan: But these are sort of the big themes. They seem very different, but I think the unifying thread is to think about changing and improving the world on a few margins. The first is just a dedicated effort to improve economic growth, because I believe that is a key to unlock a lot of the other solutions to problems that we face today. The other, of course, is dedicated commitment to human liberty and freedom, which reflects in my constitutional work. And finally, one doesn’t have to wait for all the institutions to be conducive before we think about entrepreneurial action, right? You can support moonshots, even in an institutional environment that’s weak, hoping to push the envelope on a slightly different margin and improve things and make lives better. So it all seems a little bit disparate, but it somehow makes sense in my head.

Howie Lempel: Awesome. It sounds like great work.

What an economist can bring to the table for COVID-19 [00:07:54]

Howie Lempel: Yeah, so the topic that we wanted to start talking about is COVID and specifically how it’s both affected India and how India has responded to the pandemic. And so we’ve talked a lot about the pandemic on the podcast already, but have really focused on its effects on the developed world and sort of had a bias in that sense. So we really wanted to make sure that we broadened out and talked about the effects more broadly. So I guess to start, you wrote a few papers on COVID, and I guess you’re an economist, not an epidemiologist or a doctor, so I’m curious about how you started to do some work on it and what you think an economist can bring to the table.

Shruti Rajagopalan: So, you know the work of epidemiologists and the scientific community and the medical community is incredibly important. They have the capacity to inform us on the nature of the disease and how to attack that from a treatment point of view. And epidemiologists can provide us with good models, ideally, right? All sorts of models on how the virus may spread, what we can expect from the pandemic, how long it will go on and things like that. But when we are in the realm of public policy, that is, what kinds of actions public and private institutions can take to counter the effect of the pandemic or to cope with the pandemic, now we’re in a slightly different world. We’re in a world of trade offs, right? And this is where, I think, more generally economics has such an outsized influence on public policy because you’re always trying to be on the correct side of these trade offs.

Shruti Rajagopalan: But I think it’s also true for COVID. So epidemiologists may be able to tell us the rate of growth of the virus spreading through the community, right? But they are not in a position to compare what kinds of policies to take because that depends on, for instance, health care capacity, right? So in the beginning, there was this huge conversation about flattening the curve. Now flattening the curve obviously has two sides to it. One is how quickly people are getting sick and ending up in the hospital. But the other part of it is hospital capacity, right? Now, the first part of it, the epidemiologist can tell us. But the second part of it, which is what is our existing hospital capacity, how many resources we need to devote to it immediately to increase the capacity, and how many resources do we devote to imposing shelter in place or lockdown kind of policies to reduce the spread of the disease?

Shruti Rajagopalan: I don’t think that’s a medical decision. I think that’s squarely a public policy decision. So this is where I think, more generally, policymakers have a lot to say and I think economists have jumped into this conversation. The other area, of course, is that the pandemic is having a huge disruption on economic activity and overall economic growth. And that is squarely in the sandbox of economists. So I think these are two places where economists can contribute, ideally with a lot of epistemic humility. But, you know, that’s true, I think virtually for any discipline.

Howie Lempel: Yeah. That makes a lot of sense, I guess, because it just affects so many aspects of life, almost every discipline, I think, has something to contribute on this front.

Shruti Rajagopalan: Absolutely. I think psychologists have been doing some great work on how to just cope with the everyday aspects of the pandemic. In particular, I’ve had close friends who’ve lost family members not to COVID, but to other diseases like cancer during the COVID pandemic and they weren’t able to have funerals and couldn’t get… So I think there is, like you said, there are lots of other disciplines. There’s a lot of other specialized areas that are telling people to cope with social distancing, or loss, or how to deal with economic disruption and things like that. And I think the medical practice of how to treat COVID is one very important part in a much larger problem.

Howie Lempel: Yeah. I remember talking to some experts about the Ebola epidemic several years back and how important it was to have anthropologists get involved because a lot of the fix was changing burial practices and you really need to just understand the culture on the ground and how to communicate with people locally if you’re going to actually be able to get people to change practices in somewhere so sensitive.

Shruti Rajagopalan: Absolutely. And I think this is also on a global scale. I think we might get the best results if everyone chips in on the areas where they have expertise.

What India has done about the coronavirus [00:12:24]

Howie Lempel: So I guess diving into actually what’s going on in India, just start with telling us a bit about what India has done about coronavirus, sort of in the period from February up until now.

Shruti Rajagopalan: Yeah. So India was a little bit late in terms of the numbers increasing with coronavirus. It started with a student who returned to the state of Kerala from Wuhan. So the state of Kerala had the first known case. I think this was end of January, early February. But it was relatively slow on the uptake, right? So by early March you have people running out of space in hospitals in Italy and Spain. And South Korea is testing at sort of this war footing, but India was still relatively unaffected, especially in comparison to the scale of the population, there were just a handful of cases. But, the number of cases started increasing. And in early to mid March, there were also a couple of superspreader events. So one reason for increase in COVID transmission was just people returning from various parts of the world and not realizing that they had COVID and then getting sick and getting tested. But in the meanwhile, they had interacted with lots of members of the community.

Shruti Rajagopalan: The other was, there were a couple of superspreader events. One was religious congregation and that religious congregation happened in New Delhi, but it had people from all over Asia and the Middle East. And some of the members immediately after that, went back to Dharavi, the largest slum in Mumbai. And that was sort of the beginning of the uptick in cases in Dharavi. So this is sort of from my memory, how it all started in India. And just looking at global news, I think what happened in Italy and Spain was a big wake up call for everybody around the world, right? I mean, no one thinks of Italy as a country which is struggling with its healthcare system.

Shruti Rajagopalan: I mean, I’m sure they have problems, but it doesn’t seem like a fragile state. And when COVID hit, it seemed like everything was so overwhelmed and things just sort of came to a standstill. And I think it was frightening for a lot of people in leadership positions in a lot of countries and served as a wake up call. I have no doubt that there was something similar that went on in the Indian leadership. Now, since then, what has happened is, you asked earlier about how economists can contribute. And there was a big conversation, as I said, about flattening the curve. And I grew up in India and just anecdotally I knew that Indian health care capacity is incredibly weak, right? So I was talking to one of my coauthors and colleagues. His name is Abishek Choutagunta. He is a PhD student at the University of Hamburg.

Shruti Rajagopalan: And our intention was to write a very different paper. We wanted to talk about all sorts of policy actions that are available in the economy and what kinds of economic restrictions to impose and things like that. But our starting point was we need to know what the healthcare capacity is in reality, to understand how much one needs to flatten the curve and we couldn’t figure that out. So we started looking it up and there were no papers on healthcare capacity in India. And so we started digging through government reports. All we did in that paper, there’s actually nothing really innovative in that paper, it’s a simple counting exercise and economists know how to count a little bit better than some of the other disciplines because we try and aim for consistency. We always compare apples to apples.

Shruti Rajagopalan: So that’s sort of how that paper came about. And all we did with no additional modesty on my part is we just counted. We counted how much government spends on healthcare, how much private citizens spend on healthcare, how many hospitals we have, how many ventilators we have and so on and so forth. And at that point, it became very clear that healthcare capacity in India is 1), extremely low and 2), it is already operating at its max which makes it extremely fragile in the event of a pandemic. And that is why we figured that we need to pay a lot more attention to what to do if there is a lockdown, because it would be very hard to contain this without some kind of severe restriction on economic activity. And that’s sort of how I got started on COVID.

Shruti Rajagopalan: And then of course I wrote another paper with another colleague of mine at the Mercatus Center, Alex Tabarrok, who also coauthors Marginal Revolution with Tyler Cowen. And we wrote a paper specifically on some of the challenges that are there in developing countries which don’t exist in other countries, right? So the kind of density of population, for instance, in Mumbai is unlike anywhere else. Dharavi’s, I believe, density of population, but we don’t have exact estimates is 20 times that of New York City. So you know that it’s an incredibly crowded place. And now, in the event of a pandemic, where social distancing is very important, but Dharavi’s also an engine of economic growth. It’s a billion dollar industry, right? So how do you think about these kinds of questions in a world where you have constraints that are there in developing countries? So that’s kind of how I got started thinking about these problems.

Shruti Rajagopalan: And it was all about, mostly about India, because that’s sort of the local context that I knew best. But overall, even now, I feel India is underprepared from a capacity point of view because it’s very difficult to overnight improve healthcare capacity. Some things are easier than others. You can have popup quarantine centers, you can add additional hospital beds, but you can’t overnight get more doctors for instance, or nurses. So there are margins that one can attempt to change and there are certain margins, but it’s very difficult to change capacity. And I think India has a very long struggle ahead because of capacity issues.

Howie Lempel: That makes a lot of sense. It’s wild to me that the data on Indian healthcare capacity didn’t exist yet, and that for such a large country, that nobody had sort of collected this. Do you have, I don’t know, any guess why that would be the case and why this just hadn’t happened yet?

Shruti Rajagopalan: So it’s one of those things… It all existed, but it was there in plain sight. It was there in lots of different government reports. It just wasn’t there in one place put together, right? And that’s the really odd thing about a lot of data problems that we have more generally, both in India and in developing countries. There are different organizations that try and collect this information that put it out there. There are independent organizations and government organizations that do healthcare surveys. A lot of the times the data is actually good quality, but this general sense that there is one nodal agency which is trying to look at healthcare capacity across India and trying to give feedback and monitor that is incredibly weak. Not just in India, but in many other countries. I think we’re facing something similar in the United States, right? The way different states learn from one another is not that much better than in India.

Shruti Rajagopalan: So there is a certain element of a lack of coordination, especially when we talk about very large countries, which are federal in nature, which have lots of different executive agencies. I think this is one of those coordination failures. And the kinds of expert papers that are written on healthcare capacity, they are not doing the simple counting exercise. So there are very sophisticated papers that do exist and that have been written on India in the context of malaria or tuberculosis to compare with other sort of diseases which have a big outsized impact in India relative to other parts of the world. But they are not doing this simple, “How many ventilators did we have in 2019” kind of exercise? So I think that the answer is somewhere there. So it’s not like… There’s no conspiracy. There is no hardcore failure. It’s a lot of little failures that explain something like this falling through the cracks.

Howie Lempel: That makes a lot of sense. I worry that this type of work just gets under-rewarded, where in academia, if it’s like a counting exercise, or it’s putting together a data set, it’s just like fantastic public good, but you’re not doing some methodological innovation that people are going to be really impressed by. And grantmakers really want to see something that’s like having a measurable impact on some particular disease. And so it feels like the type of thing you can imagine just being undersupplied all over .

Shruti Rajagopalan: Absolutely. And it’s not just the kind of counting exercise we did. I think in general, survey articles, whether they collect data from different areas, or whether they put together literature on a specific problem but from a whole variety of sources, I think surveys are just underappreciated in the academy and it is not that sexy in policymaking and grant writing as you pointed out. But I think we put too much emphasis on individual papers, whereas individual papers I find typically not that useful, especially the empirical papers. I think it’s very important to focus on literatures and surveys of literature instead of one single result here or there. So you’re absolutely right. It’s underappreciated both within the academy, I think it’s underappreciated in policy circles, but on the other hand, we were rewarded quite well because a lot of state administrators and local governance administrators wrote emails to us.

Shruti Rajagopalan: We shared all our data with them. We immediately put it in a nice Excel file. We told them exactly what were the actual numbers we used, where we’re using an estimation technique, and we shared it pretty widely. And both Abishek and I got lots of emails. So I do think that there were some people who found it useful, mostly on the ground level. We’re talking about like district administration, hospital administration, those kinds of people. So I think that was a reward in itself. And I enjoyed writing the paper because we also just learned a lot about what was going on. So, for instance, I didn’t know that the Indian States spend $16 per capita on healthcare compared to the global average of $763 per capita, right? This is a global average and India is relatively poor country.

Shruti Rajagopalan: But even if you compare it to something like the BRICS, countries right? Brazil spends about $338. That’s 21 times what India spends. Russia spends $267 per capita. That’s about 16 times, right? Same with South Africa. It’s about 14 times. So India is a little bit more comparable to Sierra Leone and Nigeria, which are in the low teens in terms of healthcare spending per capita by the state. Now private healthcare spending in India is a lot more. So, for instance, the government spends about 1.17% of the GDP on healthcare, but Indians spent about 3.7% of the GDP on healthcare. So it’s not that the gaps aren’t getting filled, but these are just things that I wasn’t aware of personally, mainly because I don’t work in health and was suddenly incredibly pertinent because all these different countries are facing the same pandemic, right? And now they all need to provide a very similar response with vastly different capacities. So I thought thinking about healthcare capacity was incredibly important because flattening the curve doesn’t mean the same thing everywhere, both because the curve is different and the healthcare capacity is different.

Howie Lempel: Yeah. I was really surprised when I read that paper and saw the differences in spending between India and the other BRICS country. It sort of made me feel like the BRICS acronym just gave me this mindset where like “Lump all these countries together and expect them to be at a similar level of wealth mix and more in other ways”, and I think it’s just not really the case.

Shruti Rajagopalan: Not really the case because Brazil’s population is the size of Uttar Pradesh, which is the largest state in India. Brazil is 200 million people. That is one among 28 states in India though it’s the largest. So you’re absolutely right. Sometimes it’s a useful comparison because these are emerging economies who’ve had a certain kind of transition in their development process, but for more specific things, you’re absolutely right. It’s very, very hard to compare them. Even within India there’s so much variation between different states. So Uttar Pradesh, which is the size of Brazil and relatively poor state is vastly different from Kerala, which is a much smaller state with much higher state capacity, much better healthcare markers, much higher spending on healthcare, better infant mortality, and so on, right? And now we’re in the realm of comparing hundreds of millions of people. So it’s not a tiny comparison. Proportionately it’s a very large comparison. Even India is more like a subcontinent. It’s hard to compare. Just think of it as a blob, at least in my head, especially because I write a lot on India.

Why it took so long for India to start seeing a lot of cases [00:25:08]

Howie Lempel: That makes a lot of sense. So I guess to sort of set the stage, India sort of has the healthcare capacity and is already utilizing almost all of it. And then the outbreak hit India later than a lot of other places. What happened then? Do we know why it took so long for India to really start seeing a lot of cases? That was surprising to me.

Shruti Rajagopalan: So one of the things that happened was India imposed a very severe lockdown, probably the most severe in the world incredibly early. And it was a nationwide lockdown, right? So a lot of other countries and cities and towns, their reaction was that maybe there’s one municipality which is severely affected and we need to restrict movement or contain that as a zone. I don’t think until India had its lockdown, any country of that size had even attempted something like that. So I will say that though I overall think the lockdown made a lot of mistakes in terms of policy, and we can discuss that more, the fact that India imposed such a severe restriction that early in the game definitely had some impact on the growth rate, right? Now having said that because other systems were weak, right? Because overall healthcare capacity is weak. The lockdown was very poorly implemented. The government didn’t recognize the need to think about economic migrants, right? About 50 million of them, of which about 20 million actually tried to go back to their villages and they were out of work because of the severe lockdown.

Shruti Rajagopalan: So because of various other reasons, there was a lot of movement of people and there was a spreading of cases. So I would put it this way: India managed to restrict the growth of cases because of the lockdown. But given the severity of the lockdown we still saw an uptick of cases, which is a failure on the part of policymakers. So it’s a little bit of both. And now that the lockdown has been lifted, you can again see a steady uptick in the growth of cases. And that is worrying because, as I mentioned, because of healthcare capacity and second, when we’re talking about a pandemic, the number of bodies in an area really starts mattering.

Shruti Rajagopalan: And in India that number is incredibly large, both in terms of absolute numbers and in terms of density in a contained area. So for those reasons, now that we’re out of the lockdown and people are going back to economic activity as they must, and now we have news reports that migrant labor is actually coming back from rural areas to urban areas to start earning again, now we are seeing a very steady increase in cases. And it’s a little bit worrying because the government doesn’t have a clear policy on how to contain this aside from imposing restrictions like lockdowns, which is not a long-term policy.

Howie Lempel: Right.

How India is doing at the moment with COVID-19 [00:27:55]

Howie Lempel: And so, we’re seeing an increase in cases. Can you give some sense of how bad it’s gotten so far? Is this one of the countries that is seeing huge prevalence rates like the United States might be? Or is it sort of still in an earlier stage?

Shruti Rajagopalan: So both. A little bit of both. So let me lay out the numbers for you and that might give a slightly better picture. These numbers are roughly mid to late July, so take that in that context. I don’t know when listeners will listen to this. So India right now has about 1.2 million confirmed cases, or almost that number. It’s only topped by Brazil and the United States in terms of the number of cases, right? There are about 400,000 active cases in India right now, that is those who haven’t yet recovered or died. And we are adding in India about 40,000 new cases a day. That’s sort of where we are right now. And so far, there have been 30,000 COVID deaths, reported as COVID deaths. So that’s the story on India. Now, just as a point of comparison, it seems like 1.2 million cases is very large, but it’s about roughly 800 cases per million, right?

Shruti Rajagopalan: So India is actually lower in terms of cases per million, then it’s neighbors, Pakistan and Bangladesh, which are both at about, roughly 1200 cases per million. Brazil and the United States are somewhere at the 10,000 to 12,000 cases per million mark. So that’s the second thing I’d say. Now in comparison, the Southeast Asian countries have just done remarkably well. So Vietnam and Thailand, I sometimes just don’t believe the numbers. I think Vietnam has less than five cases per million or something like that. It’s unbelievable. And Thailand has about 40 to 50 cases per million. So this is, I just want to put this in context that there are absolute numbers, but we should think about case per million, because India also has very large number of people in absolute terms, right?

Shruti Rajagopalan: The second aspect of this is testing. Okay? So we can see that because India has 800 cases per million, that’s the prevalence of COVID. It is the known prevalence of COVID, right? So we only know as long as we test. So another useful way to think about all these different countries is how much are we testing? So India’s testing is relatively low, right? We’re at about, I think about 9000 to 10,000 tests per million. That’s the rough level at which we are. Now compare this again to Pakistan and Bangladesh, which had more known cases per million. They’re actually testing less per million. Both Pakistan and Bangladesh are about 6 to 7,000 per million mark in terms of testing. But Brazil is testing 23,000 per million. South Korea was testing, across the board, it tests about 28,000 per million. Even South Africa, which is usually clumped together with India and Brazil, is testing 41,000 per million.

Shruti Rajagopalan: And the US, unsurprising, is at 138,000 per million. The real surprise for me, and I don’t know how to think about this, is Russia. Russia is testing 175,000 per million. That’s really an incredible number. So these are just numbers I got from Our World in Data, but this is how I’m trying to think about it. I’m trying to think about how do we look at prevalence? And you need to think about it both in terms of how many people are there in a particular area, but also how many tests we have.

Shruti Rajagopalan: So I think the known prevalence in India is an understatement of the actual prevalence, because we’re not testing enough. Now there’s an additional issue here, which is who are you testing right? Now South Korea was testing everybody. In India, we are still only testing those with symptoms. So anyone who is asymptomatic or presymptomatic is not getting tested in India. And even those with COVID symptoms, if they’re really mild, people are not going, because they know that exposing themselves to a test center or a hospital is going to be a problem. So only people with severe symptoms or severe enough symptoms that they need medical help are getting tested. So these are just some things to keep in mind when one thinks about India and the scale of the problem in India.

Howie Lempel: Got it. That’s really helpful. On the testing front, how surprised should I be that India has done such little testing? In some sense, the fact that they took the lockdown so seriously would have made me expect that they sort of would have scaled up everything at a really fast rate and is it just much harder to scale up testing or what else caused that?

Shruti Rajagopalan: So, multiple reasons for that failure. So I, like you, was also very optimistic. That it is hard to increase capacity in certain areas but testing, we can quickly increase capacity on testing, especially in the private sector. So my sense was that we would close down, perhaps severe lockdown for about three weeks and the Indian government would try and organize a lot of testing kits and also have popup labs and mobile labs and things like that to test more broadly. None of that happened. And when I was trying to look into it and Alex and I wrote about this a little bit, there are just so many bottlenecks in the Indian political economy which make that incredibly hard. So I’ll just give you a couple of examples. Some of these have been resolved, but it’s indicative of a failure and why it took place.

Shruti Rajagopalan: So the Indian Council for Medical Research is the nodal agency that sort of guides the biomedical testing program and things like that in India. At the beginning of the pandemic, there were about 100 or 130 labs that had been approved by the ICMR, okay? Today we have a thousand labs or just a little over a thousand labs. So it is both true that India did scale up testing, and it is also true that it didn’t scale up testing fast enough. And one of the reasons was that a lot of labs were willing to test. In fact, we saw philanthropists, we saw other agencies, we even saw entrepreneurs who produce cars and petrochemicals who said, “I can repurpose one area of my factory into a testing lab. How do I do that?” But the approvals were very, very slow, right?

Shruti Rajagopalan: So that’s one major reason. And part of this is, that’s the job of the ICMR, right? It is a bureaucratic agency. It’s sort of like the FDA. They are supposed to slow things down. That is part of their job description. They are supposed to make sure that you don’t have fraudulent labs so they have very, very good procedures and protocols and things like that. So they’re not exactly designed for speed. So the failure is not that ICMR did things the way they did, it is that that’s the only nodal agency which is centralized to proceed. Maybe they should have decentralized at the state level, sometimes at the city level, on who approves testing labs and how we get them going.

Shruti Rajagopalan: So that’s one way to think about the scaling of testing. The other is, other kinds of bottlenecks. There were testing kits that people had imported to conduct tests that were stuck in customs because of import tariffs. Then the government issued a notification to eliminate import tariffs on all testing and PPE equipment until September. So in March, they sort of suspended these tariffs for six months and we wrote about that too. So these are the sorts of bottlenecks which caused the problem with testing. And even now, there aren’t enough tests that are available. Every major government is struggling with testing.

Howie Lempel: Yeah. It’s amazing how similar a bunch of these problems sound too, but I’ve been hearing about what’s going on in the United States and similarly, just having scaling up get caught up by the FDA. There are these anecdotes, but these news stories and articles you can read, about hospitals trying to import PPE and testing equipment and having the FBI intercept them. So it’s really wild how this story of government regulations are just really slowing things down seems to be pretty universal.

Shruti Rajagopalan: Yeah. And I mean, we’re really noticing it when it comes to COVID, but I’m sure it’s true for so many other kinds of medical equipment. I’m sure it’s true for educational equipment for other kinds of life saving devices. We just never saw the effects. So it wasn’t so visible and now with COVID, it’s incredibly visible, the harm that import tariffs can do, or the harm that a centralized nodal agency which is slow and bureaucratic can do. But these are problems, like you said, they’re there in every country, India just can’t afford them. So I think that’s the aspect where this failure in India is just that too many lives lost, and too many of them are relatively poor and marginalized people because of these failures. And that part of it makes it just unacceptable.

Howie Lempel: Yeah. So one thing that surprised me about this is, I guess, given some of your work that I’ve read on India’s relatively low healthcare capacity and then state capacity in general. It was sort of surprising to me that they’re actually able to have this kind of a regulatory regime. And sort of successfully, I guess, both that they’re able to successfully slow things down in this way and that they would have the ambition to have this much of a regulatory system. Is there any sort of explanation for this sort of combination?

Shruti Rajagopalan: Well, we’ve got to go really way back in history. Some of this is colonial hangover and some of this is socialist hangover. Both colonialism and the way the British government handle the Indian problem or the Indian colony was that they centralized all the power among a few people in Whitehall and said, “Okay, now you’re going to run this entire country”, right? So it was extremely centralized for about 200 years, even before the Indian government took over. So there is a certain aspect of India centripetalism, which goes way back in a way that no one in modern day India can be blamed for it. The second aspect is socialism. Socialism just requires a very high degree of centralization. As you may know, in 1950, India started implementing a particular version of socialism, which was Fabian socialism, but it had a lot of elements of Soviet socialism: price controls, quantity controls, a five year plan made by an agency called the Planning Commission, which told you what the agricultural output should be and how much investment should be made in industry and what should be the savings rate in India.

Shruti Rajagopalan: So all these things require very high degree of centralization. So India sort of mastered centralization over 200, 250 years in this sense, right? So the natural instinct in Indian governance is to centralize. It is not to federalize or to reduce the authority of the union government. So that’s just the nature of the problem. It’s sort of what everyone inherited. But people try and do, in some sense, in governance, what they know how to do. When there was a pandemic before we went to ICMR, and ICMR gave us the policies, and then it worked out. There were some debts, there were some errors, but it worked out. Now with COVID, what we’re realizing is just the scale of the problem is so large that centralization completely fails. And we’re not just realizing this in India, we’re realizing this in the United States, right?

Shruti Rajagopalan: Even Italian governance and policymakers have said that they might have centralized too much. They should have been contained a little bit more locally. So across the board, everyone believes that decentralization is the better way to handle COVID, both because centralization imposes too many costs on people in a way that’s not necessary, right? Like the Indian lockdown. Locked down all of rural India where there were hardly any cases, it was absolutely unnecessary. But also in terms of their capacity to execute. It becomes very difficult to execute at the block level, at the ward level. And all the success stories in India, which are, whether it’s containment of the pandemic in Dharavi or Mumbai, they are all stories of decentralization and really strong executive action, but at the lowest level of governance. So I think it’s a complicated answer. So, I’m sorry, I’m not giving you any good straight yes or no answers. They’re a little bit messy, but that’s how I would think about it.

Howie Lempel: It’s a messy situation. And I want to talk to you more later on about some of your work on both state capacity and on centralization. So that’s a preview, and showing us some of that work, I think, connects to some of the things going on with the pandemic.

Is the mortality rate surprisingly low in India? [00:40:32]

Howie Lempel: So I guess maybe stepping back to just what’s going on, on the ground right now; I guess the one puzzle that I saw people talking about a lot, and I don’t know if you’ve looked into this, is there’s some claims that the mortality rate is surprisingly low in India. And I was wondering if you have a sense of it? Is it actually the case that the mortality rate is surprisingly low? And if so, why that might be?

Shruti Rajagopalan: Yeah, so I mean, this is going to be a slightly longish explanation with a standard disclaimer that I’m not saying this as a medical professional, right? So I’m going to talk about this only from the point of view of data and policy.

Howie Lempel: Yeah.

Shruti Rajagopalan: So the first thing I would say is, I think it is an underestimate. Indian fatality rates, not just for COVID, but I think India has just never been good at counting deaths. Only 70% of the deaths in India are registered by the civil registering agencies. And this is not just deaths, but also not very good at counting births and issuing birth certificates. As you know, when the citizenship row was happening about 10 months ago, lots of people said “I don’t have a birth certificate”. That’s because we’re just not so good at issuing them. Cities are a little bit better at counting deaths because burial grounds, and funeral homes, and crematoriums need to get permission from the municipal government before they can do it.

Shruti Rajagopalan: But in rural areas, for instance, just a lot of deaths are not officially recorded. So the way we count deaths in India is not through the registry, but very often we count it later through the census, health surveys, various kinds of health surveys, verbal autopsies, things like that. Now, of the 70% of the deaths that are recorded in India, the cause of death is not perfectly recorded in more than 80% of the cases. The reason this is important is that we don’t know, I mean, and when I say cause of death, I don’t mean more specific medical cause of death. I mean, a lot of times we just don’t know if someone died in an accident or someone died in a gunshot wound or someone died by drowning. Those numbers are just not that good. You can see this most, I figured this out, I mean, there’s a couple of great people who are reporting on the ground on this. So one is Rukmini S, who’s a journalist and another is Priyanka Pulla. So I’ve learned a lot from their work and I would recommend your listeners also go and read them.

Shruti Rajagopalan: So for instance, in India, if you look at malaria or tuberculosis, which have fairly high fatality rates in India, now the estimates for malaria deaths are about 250 times the actual number of malaria that’s recorded, which are something like 190 or something like that. So in all of India, about only 190 people died of malaria, right? But the estimate’s based on verbal autopsies and health surveys and things like that tell you that that number is an underestimate by 250 times, right? TB estimates are 10 times the official number of TB deaths. So this is an overall problem in India. So I just want to put that out there before we have any discussion on COVID.

Shruti Rajagopalan: Now, coming to COVID deaths, there’s a couple of issues. So the first is the ICMR, which is the same nodal agency which is appointing and approving labs and things. They clarified that any death of a COVID positive person has to be categorized as a COVID death, right? So there has been a biomedical test and that’s a COVID death, even if there are comorbidities. So that’s very, very clear from them, right? Now second, if a person dies with a COVID related symptom, but was not tested for whatever reason, then it should be categorized as a COVID suspected or COVID probable death. This is all in keeping with WHO guidelines and things like that, so this is not that out of the ordinary. Now, in the first case, so when someone has been tested for COVID and they have a COVID related death, we have decent numbers for that.

Shruti Rajagopalan: Now, when someone dies of COVID, or suspected of COVID, but they weren’t tested, but all the symptoms point towards COVID, either because someone they knew had COVID in the same household, or they have all the symptoms that we’re talking about, those have just not been recorded well. In fact, no state has systematically reported the second category, which is COVID probable or COVID suspected, right? So that’s the second part of it. Now the third part of it is, even in the first case where there are lots of comorbidities, depending on the culture of the hospital and the local context, there’s some inflation and deflation that happens, right? So some doctors are very careful. They want absolute certainty before they mark it as a COVID death. And some are a little bit more comfortable to say, “Hey, ICMR guidelines allow us”. So there’s also an interpretation issue.

Shruti Rajagopalan: And this problem is not just true of India. It’s true across the world, right? Like the UK struggling with this right now, where you are. So this is sort of the setup, okay? In addition to this, there are a bunch of COVID audit committees which are supposed to categorize each death and do that, but that hasn’t worked out very well. The numbers right now are becoming too large. And even among the COVID audit channels, in this particular instance, you have very good reporting or at least better reporting on anyone who died of COVID with a positive test and virtually no numbers on someone who may have died of COVID with no test at all. So that’s what we put out there. Now, this is not a problem in India. This is a problem everywhere. Everywhere, depending on who got tested, we have an issue of categorizing COVID deaths, including the United States.

Shruti Rajagopalan: Normally what we do in these circumstances, especially in this kind of a pandemic is, you can solve it by counting excess mortality. Now, this is the idea that we compare say April of 2020 to April of 2019. We remove all the deaths which were not healthcare related, right? So, we remove gunshot wounds and drownings and things like that. And then we just compare, did more people die in April 2020 than in April 2019 in this particular city or this particular country during the pandemic? And that gives you a sense of how many people may have died because of something to do with COVID. Now the problem is, in India, actually, mortality rates declined during the pandemic. And this is because of the lockdown, right? So I’m going to give you the example of the city of Mumbai, because Mumbai actually has one of the best municipalities in India, and they’re pretty good at recording deaths and things like that.

Shruti Rajagopalan: So in Mumbai, the total number of deaths just plummeted because Mumbai has a lot of car accidents. It has almost daily train accidents. People dying because they’re traveling by the local train and they fall off those crowded trains, right? Those kinds of accidents just plummeted. So overall mortality in Mumbai declined. Now we can solve this using the same technique as excess mortality in other countries, which is you compare only healthcare related mortality in April 2020 with April 2019. But because we don’t precisely record cause of death, it’s very, very difficult to do that. So this goes back to my original point about we just don’t record deaths very well. So we’re not in a position to even calculate this using excess mortality. So this is a major issue, right? So now this is not to say that mortality rates aren’t lower in India. It’s just to say that we don’t know. We can’t just look at one number and say the case fatality rate is low and therefore India is doing really well.

Shruti Rajagopalan: So what’s happened is the debate in India is sort of polarized around this. The ones who are the believers are like, “Oh, Indians are of course a superior race, thanks to Ayurveda and yoga and our belief and our immunity” and there’s all this nonsense going on. The skeptics are all into conspiracy theories because they’re like, “Oh, this is like some of these other autocratic countries, they’re suppressing rates and they’re suppressing the number of deaths”. I think neither of it is happening. I think we’re just bad at recording deaths. So this is not to say that death rates aren’t low in India.

Shruti Rajagopalan: Now to give you some sense of why both those things might be true, India does have a much younger population than most of the other countries that we’re discussing. So in India, only 7% of the population is above 65 years of age. It’s closer to 20% in most developed countries. So youth is a very good predictor of having mild symptoms or asymptomatic COVID related issues. So that might be a big one. Another cultural factor, and someone in my family was telling me this, and first I said, “Okay, that sounds crazy”, but then I said, “Maybe there’s something to it”. So, this is a very typical Indian cultural critique of America. In America, a lot of the fatalities happen in nursing homes and elderly care homes. And one of my uncles said, “Americans just leave their family members to die. They send them to these nursing homes”. In India, you have intergenerational living, which makes things better. And I was thinking about it. And my original instinct was that, when you have three generations living in the same household, you’re putting the elderly at risk.

Shruti Rajagopalan: But on the other hand, maybe culturally, people are taking less risk because they want to protect their own grandparents or their own parents, right? Or their uncles and aunts. So it might go either way. So culturally, a lot of Asian countries have three generations living in the same dwelling and these countries seem to have done surprisingly well compared to the Western world where elderly people go to nursing homes or older age homes and things like that. So that might be a factor. So there might be cultural factors, there might be demographic factors, but these numbers are not to be taken literally. You cannot compare them with the UK where there’s incredibly good records of births and deaths and things like that.

Howie Lempel: That makes a lot of sense. I wonder on the nursing homes also, if folks in nursing homes are just very likely to make hospital trips? You just have a lot of older people who have just all sorts of medical problems and it’s just really easy to get a hospital acquired infection and so I wonder if people just bring it back?

Shruti Rajagopalan: Yeah. Maybe. I mean, that could be the reason for the excess mortality, maybe. I don’t know. But even more generally, I mean, we know from the cruise ship, where they tested almost everyone, we know that they had a much higher positive rate in the test conducted, because there were a lot more older people and there were fewer percentage of asymptomatic cases, right? So only half the number of the percentage of cases were asymptomatic, say compared to other places where they conducted similar studies. So the best one I have seen, and I’m not an expert on these studies, I must say, is the municipality of Vo’ in Padua. They kind of locked down pretty much the entire municipality. This was pretty early in COVID. And I believe they tested about 3700 people twice over a period of two weeks. And they found that 40 to 45% of the cases are asymptomatic, which is much higher than the number of asymptomatic cases on the cruise ship, which is also a case where they tested everyone.

Shruti Rajagopalan: So we know that older people are more likely to have symptoms and also more likely to have more severe symptoms and need medical care. So there is something to it, but I think there’s too much variation in the policies of individual nursing homes to be able to make a generalization. Some nursing homes just are very, very careful about who goes in and out and how many hospital visits are allowed and what’s the staff turnover and things. And others, not so much. So even in that, I would be a little bit wary of making a generalized, “Nursing homes have these policies”, though I’m sure they’re contributory factors.

Howie Lempel: That makes a lot of sense. And do you know, are there, I guess, I would expect the other source of evidence to be somebody trying to do just a really rigorous local sample somewhere and just try, in some locality, try really hard to test as many people as possible and get some sense of the overall prevalence and track all of the deaths to get some estimate. Do you know if anybody’s tried to do anything like that?

Shruti Rajagopalan: I heard there were a couple of studies in California. I don’t know if they’ve been published yet. I know that the one in Vo’ in Padua, that’s been published in Nature. So everyone can read that particular study. I think the cruise ship studies are now pretty well known. They were some of the earliest. But you’re absolutely right, this is exactly what we need to do. I know a couple of people are trying to get these things off the ground in India, but you need permissions, right? You need permissions from the government. You need to restrict that locality. You need to know everyone who’s going in and out. You need the support of the local bureaucracy, so to speak. So there are challenges in doing that kind of a study. I would say, even a condo building… I’ve lived in New York City in condo buildings that had like 3000 people, right? As many as the municipality and in Padua.

Shruti Rajagopalan: So I think even just a building, if you had to lock down a building because it was a containment zone, might be a good place to start, just to get a sense of what is going on. But cities have younger people. Relatively speaking, they have less intergenerational living. So there’s just so many things, so many variables in the mix that I think it’s going to take us a while to sift through this literature and get numbers. I think we just have to have a lot of patience and humility when it comes to these numbers. And also a lot of forgiveness. People are trying to generate the best numbers that they can in this moment and I don’t think the “Gotcha, this was wrong and it was proved wrong in the next study” helps. I just think we’re right in the middle of it. It’s going to take a long time before we sort it out.

Howie Lempel: Yep, that makes sense. And I’ve actually been pretty impressed by, I guess, the early studies of infection, fatality rates, I think mostly centered around little less than 1%. And it seems like that’s still in the range of what people think today. So it seems like actually, epidemiologists did a pretty good job on that front and that estimate’s holding up.

Shruti Rajagopalan: Yeah, no, I agree. And the infection fatality rate in both cases, where they tested everyone is much lower than the case fatality rate and all the reasons why, which is only those people who have very severe symptoms were tested first. So the case fatality rate was inflated. So that’s definitely a picture. But now this is where I don’t know what to think, because I have no medical or biomedical training, I believe there are different strains that might be going around. Many people think that countries like Vietnam, Laos, Cambodia have a weaker strain of the virus than say Italy did, or what the United States is facing now.

Shruti Rajagopalan: I don’t know how to figure that out or how to think about that. And we don’t have good research on it yet. So there might also be a question of what is it that’s affecting… So right now we know the strain that we know of, or we’ve collected data on, seems to have this less than 1% or hovering around 1% fatality rate, but how that plays out over the next 10 to 12 months until we get a vaccine, I just have no idea even how to think about it.

Why Southeast Asians countries have done so well so far [00:55:43]

Howie Lempel: Do you know if there are other theories for why things seem to have gone so well so far in countries like Vietnam and Southeast Asia?

Shruti Rajagopalan: Yeah. So I can tell you what I have read and how I’m trying to make sense of it. So one is a theory, and I feel I’m quite sympathetic to this, that countries that faced the first SARS pandemic or that faced the older pandemics from the late 1950s or 1960s, they are much better at dealing with the current pandemic. I think there’s some merit to this and I’ll tell you why. I think state capacity is something that needs to be built and learnt, and it’s not easy to mimic. It’s very difficult.

Shruti Rajagopalan: So in India, Kerala dealt really well with the problem. Kerala is one of the richer states. They have incredible literacy rates, low infant mortality rates, good state capacity, but they also had experience with the Nipah virus. And that, I think, really helped their response. It’s a very recent problem that they faced. So even in Africa, countries that have experienced Ebola or South Africa, which had the AIDS epidemic, these countries have just handled this in their own way. It’s not the American way. It’s not the Italian way. They have their own strategies for testing, social distancing and things like that, given their capacity constraints. But they’ve just had much better results than even some of the developed countries.

Shruti Rajagopalan: So I think there’s something about learning by doing which can’t be learned by not doing it. Can’t be learned by seeing or mimicking. I think it’s just something that a society and a governance system needs to experience. So I think that might be one reason.

Shruti Rajagopalan: The other was the cultural reason that I mentioned which was many people believe that Asian countries have three generations usually living in the same dwelling, which makes people appreciate the risks faced by certain age groups much more. They take far more care. They adjust their own risk levels accordingly. So I think there is some merit to that too. But in one sense, both Thailand which is an incredibly globalized economy, lots and lots of tourists coming in every week, every year. And Thailand doesn’t border with China, but close enough, but Vietnam does border with China. And you can see that even with that kind of close proximity to the origin of the pandemic, they seemed to have had a really good response.

Shruti Rajagopalan: The other thing is Asians are really good about wearing masks. We’ve seen that in both South Asian and East Asian countries, even in India. I live in the United States right now. We’re having a meltdown politically and in civil society over masks. And there are various reasons for it. But in India, there is no similar meltdown. People wear masks. People who couldn’t find masks… In India, anyway, culturally the clothing has an upper-body cloth. Most people just cover their face with that and things. So people have just been good about those sorts of things.

Shruti Rajagopalan: So in a sense, when it’s hard to socially distance because you may live in a slum or you live in a crowded place, or you live with too many people in a single dwelling, maybe people compensate by other measures. Maybe they wash their hands more. Maybe they are more compliant about mask-wearing and things like that. So there is definitely something going on culturally. I’m not able to put my finger on it because even culture vastly varies between these countries and even within India. So I think I would put it down to learning by doing both in terms of governance and within the families on how they might have reacted to the past pandemic.

Different attitudes to masks globally [00:59:25]

Howie Lempel: That makes a lot of sense. I wonder on the masks front. I don’t remember whether or not the prevalence of masks in Asia preceded SARS or how much of it came afterwards. So I’ve wondered if the comfort with masks in Asia is partly from the experience of having really serious respiratory outbreaks beforehand.

Shruti Rajagopalan: That’s a good question. I have absolutely no idea. That’s a really good question. Worth looking into. I do know that in Asia, especially like Beijing, Beijing’s pollution levels are legendary at this point. Same with New Delhi. I see people wearing masks in Beijing, in New Delhi, even without a pandemic. They just wear a mask. So I think the environment imposes enough stresses and maybe some of it is past pandemics and some of it is other stresses, just bad smells or bad pollution, but people don’t seem to associate masks with loss of liberty or something like what’s happening in some of the other places in the world. And in all these South Asian countries, I think it wasn’t politicized. Masks were just not politicized in a way that they were in the United States.

Shruti Rajagopalan: So there is also some of the current response to the problem. If your president doesn’t think you need to wear a mask like the Brazilian case or the American case, or in America, they actually went out of their way to say, “You don’t need to wear masks”. And now we understand that the reason for it was they were worried that not enough masks would be available for healthcare professionals.

Shruti Rajagopalan: Now this is not a misunderstanding of medicine. It’s a misunderstanding of economics. Masks can be relatively easily increased in supply should you have the right trade policies and the right incentives. It’s easy to scale up mask production. But now we realize that people were discouraged from wearing masks, worried about shortages. So some of it is just we don’t believe that masks do anything. Some of it is we think masks may help. We’re not absolutely sure, but we discouraged you for a different reason. But it got politicized in Brazil and America in a way that it just didn’t in Asia. So some of it is also just contemporary ‘in the moment’ politics.

Howie Lempel: Yeah. That seems like just a tragedy that something that feels like it should be just so technical and medical got so politicized in the US. I also wonder if one aspect of it is the conservative… Conservative in the sense of risk-averse nature of the medical regulatory agencies, where I remember seeing a lot of reporting claiming that if you don’t have an N95 mask, it won’t do anything at all. It just never made sense to me. It was like, “Well, I know how paper works. Clearly some of the air and some of my spit is going to be stopped by this barrier. I just don’t see how it’s not doing anything at all”. But I think my perception is it’s sort of like “Either this thing has to be the industry standard, or we’re going to say it does nothing”. That seems like a bad attitude.

Shruti Rajagopalan: No, I agree with you. And I think part of it is just how experts think about some of these things. They need absolutely clear-cut studies with 95% confidence intervals that this absolutely helps, or it doesn’t help. And the second is a communication failure. A failure to communicate on what margin they think it helps or at what point it fails. So I think we had a little bit of both probably, and it’s just unfortunate because I still don’t know what the exact research is out on how much masks help or don’t help, but they seem, so far from the different countries which have had good mask policies, it seems like they help. I wear a mask unless I’m working out in the park or going for a jog, a solitary run, or something like that. And it is a little uncomfortable, especially because we have a heatwave going on in Washington D.C. right now, but it’s not the end of the world? So there’s also some of that.

Shruti Rajagopalan: I think there’s also some of the research in terms of the Peltzman effect. This is how some people might… If you mandate masks, they might engage in more risk-taking behavior on other margins. This is like the seatbelt argument. If you mandate seatbelts and you mandate child seats and things like that, you’re going to have a situation where people take risks on other margins. So we also don’t know when it comes to masks so far how the Peltzman effect really plays out.

Shruti Rajagopalan: So some people are saying that the people in certain states in the United States, especially the governors, who are reluctant to impose a mandatory mask requirement are doing it because they want to keep the Peltzman effect at bay and they just want people naturally to take on the practice of wearing masks. I think there’s some merit in that, but overall, I would say just better communication. On the mask thing in America, the failure I think has been entirely on communication and partisan politics, not so much the science.

Howie Lempel: Yep. And to be sympathetic to the authorities, I think it actually was the case that for a period of time, there really just wasn’t enough PPE for healthcare workers. And that is just a very difficult situation. And I think you just need to find a way to communicate the tough message that “Yes, these things do seem like they have some benefit”. It’s also the case that right now they’re being reserved for the people who are at highest risk. And then it’s just a tough communications challenge.

Shruti Rajagopalan: Yeah. And this is where your original point of walk away from the binaries is really important. Put a T-shirt around your face when you walk into a store. Put a handkerchief around your face, and that might help. So you’re absolutely right in that thinking about this in a ‘yes or no’ fashion has not been very helpful.

Howie Lempel: And then going back to India. Do you have a sense of what mask use is like there? How prevalent are masks and do people have access to them at this point?

Shruti Rajagopalan: So it seems like mask use is pretty prevalent, especially when you see pictures of people out and about. Things like that. People seem to be wearing masks. Like I said, India culturally has typically an upper-body cloth that almost all the women wear and a lot of the men wear, so those who don’t have access to masks, like when we saw those horrifying images of migrant workers walking hundreds of kilometers, they had all covered their face. You could see that they were taking the precautions that they could take even in such a difficult situation. So I think people are covering their face.

Shruti Rajagopalan: Now, I don’t know if it’s with masks and with the correct masks and things like that. I learned now that India has also become a mask exporter to the world because now masks are becoming a bit of a fashion statement. People are getting tired of that medical blue thing. People want to have nicer masks. Things that are washable. Things that are colorful. So I believe India is also exporting masks now, which is very good to know. So I think the face-covering precaution in India is pretty good.

Shruti Rajagopalan: I think handwashing is difficult. Half of rural India doesn’t have piped water that comes to their home. Women need to carry water from a hand pump or something like that. Even places that do have piped water, you don’t get it all hours of the day. Places like the slum in Dharavi, you have 400 to 500 people using a single bathroom facility. Just handwashing. Something that simple, which was told to us by WHO and CDC as the number one thing we must all do, is still a huge challenge in India. So there are challenges on those margins.

Shruti Rajagopalan: Marketplaces are terribly crowded. So if you want to go and buy… After the lockdown was lifted, now suddenly all the booze stores open. There’s long lines outside booze stores. Lots of people trying to socially distance, wearing masks, but you have like 2000 people standing outside a single booze shop. So those kinds of things. Having very centralized marketplaces. This is land-use zoning. It’s just bad land use policy. But those things have been big challenges during COVID. But I think on mask use, India is pretty good.

Differences in policy approaches for developing countries [01:07:27]

Howie Lempel: Pulling back, I want to ask some more questions about policy and what policy was implemented exactly and your take on it. But maybe just as context for that, are there ways that developing countries ought to be thinking about policy differently from developed ones when they’re thinking about pandemic preparedness?

Shruti Rajagopalan: So going back to the head of our conversation, I think this pandemic is here for a while. So when you’re talking about flattening the curve, again, there are two parts. One is how you control the rate of growth and the other is your healthcare capacity. So whether you’re a developed country or a developing country this is just something to be mindful of.

Shruti Rajagopalan: The unfortunate reality is developing countries are just… They just tend to have weaker healthcare capacity. So as a consequence, they need to impose more restrictions on movement and economic activity. But they also can’t afford that. This is the developing country conundrum. So America can afford to say, “Hey, we have shelter in place for five months. And we’re going to impose these orders and for all the people who’ve lost their jobs, like restaurants and waiters and salons and places like that, we’re going to give you a stimulus package for small businesses”.

Shruti Rajagopalan: Now developing countries don’t have that option either. And the reason is one, they are fiscally constrained. They can’t just say “We are going to announce a three trillion stimulus package” like the United States. The other part of it is we don’t have good targeting and this is true across the board. Now, in the beginning, I said there are lots of differences between developing countries, but one area where a lot of these nations are similar is they have a huge informal sector. India has a huge informal sector, both… They say about 80 to 90% of the workers work in the informal sector, about 60 to 70% of the businesses are not registered or operate in the informal sector, sort of in the shadow of the formal economy.

Shruti Rajagopalan: It’s the same, in say, Kenya. It’s the same in Ethiopia. It’s the same in Brazil. The numbers might be slightly different in terms of the proportion of the informal sector, but all of them have a large informal sector. Now an informal sector means it’s hard to regulate, but it’s also hard to stimulate. It’s both. So if we open up the economy, it’s very difficult to regulate social distancing norms. If you have a good industry health and safety inspection system, then you can reopen factories and send your inspectors and say, “Okay, everyone standing eight feet apart, everyone’s covering their face. We’re having three different shifts that don’t intermingle and things like that”. It’s almost impossible to do that when most of your economy operates informally and you don’t even know who they are and how they operate. So that’s one part of it.

Shruti Rajagopalan: It’s also very difficult to stimulate. Even in the United States, which in terms of formalization of economy and registering of firms and records, it’s very good on those things. But even then it was so hard to give small businesses loans. Congress said that this is a problem that the banks need to resolve. The government just can’t do it. Even checking everyone’s true unemployment status or records before they give them the relief. It was really hard. So even in developed countries with excellent formalized setup and good state capacity and good record keeping, this is a tough task. And in developing countries, it’s just almost impossible. So in India, your typical fiscal and monetary stimulus, they just don’t work as well. So this is one major difference between developed and developing countries. I think we need to be very cognizant about the percentage of economic activity and the population in the informal sector.

Shruti Rajagopalan: The second part of it is a consequence of this is also people living in informal sectors like slums are technically not recognized. There are people who have decided to live in the center of the city, breaking all the regular rules of your housing and land-use rules because of very bad regulation in the rest of the city when it comes to improving the available quantity of housing or commercial use or land use and things like that. So one very large similarity across all these countries is they have very large slums. Now of course Dharavi in India is the largest slum. Other Indian cities have lots of slums. They tend to be smaller and a little bit more spread out. But it’s the same problem in Ethiopia. It’s the same problem in Kenya. It’s the same problem in Brazil.

Shruti Rajagopalan: Slums are a really big problem for any pandemic and particularly so for COVID. It’s very hard to create containment zones. So that’s another area where developing countries need to think about the problem a little bit different from developed countries.

Shruti Rajagopalan: Third is developing countries can’t take some of the recommendations and translate it easily. So in the US they said we have a shortage of hand sanitizer. Everyone just wash their hands and don’t empty out hand sanitizer from the stores because we need it for the healthcare professions. Fair enough. In India, I would say the opposite. We don’t have good delivery of piped water. So this is going to sound a little Marie Antoinette but if you don’t have piped water, use hand sanitizer. It’s a little bit of an upside-down world, but that’s what we need in India.

Howie Lempel: Yeah. I never would’ve thought of that problem.

Shruti Rajagopalan: So in India, we need to create common handwashing stations, which is something no developed country would do. They’d say “Oh, people are congregating. You should wash your hands at home”. But in India, you can’t wash your hands at home. So we do need handwashing stations at bus stops and train stations for instance. I think we should have distributed… Everywhere we go, we should really scale up capacity on producing hand sanitizer and distribute that very freely. I recently saw a tweet where there’s a company called CHIK in India which make shampoos and things like that. It’s a consumer goods company and they are making one rupee sachets. One rupee is about 1.3 cents or something like that US dollar cents. So it’s really cheap.

Shruti Rajagopalan: They’re these tiny sachets like a single-use hand sanitizer. And all the elites were up in arms that it’s single-use plastic. I’m sure there’ll be some Americans up in arms about how India is increasing it’s single-use plastic. But it’s the only way out when you’re faced with a pandemic and you don’t have good piped water delivery. So this is a long-winded way of saying that each developing country really needs to understand its own constraints. It’s very difficult to borrow or imitate from other countries what to do and what not to do. It just doesn’t work. What’s working in Pakistan is not working in India. What’s working in Bihar is not working in Kerala. So even locally there’s a lot of variation, and that’s the governance parcel to really keep in mind.

Howie Lempel: That makes a lot of sense. To what extent are there the resources in India to design a bespoke policy response? Is there both a research sector and an equivalent of the CDC and local public health agencies and just the capacity to do this type of massive policy design this quickly?

Shruti Rajagopalan: Yes and no. So all these agencies exist in India. So you have an equivalent for all the central nodal agencies on pretty much anything. Whether it is medical care or arbitration you have it in India. Now, the problem is that a lot of what they design is mimicked from other countries. And I’ve written about this a little bit with Alex Tabarrok. We wrote a paper called “Premature Imitation and India’s Flailing State” where we talk about how India mimics other countries. Indian elites borrow ideas from the developed world too soon in a way that Indian capacity cannot execute those ideas.

Shruti Rajagopalan: So single-use plastic in the middle of a global pandemic is a fantastic example of that. You want to get rid of single-use plastic straws. You want to get rid of single-use plastic sachets of hand sanitizer. That makes sense in the developed world. It just doesn’t make sense in the developing world where you don’t have water. So we need to think about that. So all these agencies exist. They are staffed with very smart people, very well-educated people. These people come from American universities and British universities, but there is a lot of mimicking of the policies in those countries.

Shruti Rajagopalan: Now to answer the second part of your question. I think at the same time we do have a lot of local contextual thinking. So Dharavi, which I mentioned, is the largest slum in Bombay. The way they contained the problem in Dharavi is an extremely local solution. It’s hard to mimic that anywhere except Dharavi. It’s hard to do that anywhere other than the municipal corporation in Bombay, which is the BMC. And that is a great example of a government agency which has been around for a long time that has actually learned from its local problems and capacities and implemented a solution that actually functions.

Howie Lempel: How did they do it?

Shruti Rajagopalan: Oh, how did they do it? There’s no straightforward answer to the question. I’ll give you a slightly longish answer. So I think it’s a few things. So the first is, the BMC is one of the older municipal corporations in India. It dates back to pre-colonial India or rather colonial India, pre-independence India. And they are very well resourced. So it’s one of the richer municipal corporations. They actually have money. They actually have manpower and infrastructure. So this is something to keep in mind. That’s not true for most municipal corporations in India. So Bombay is an outlier in that sense.

Shruti Rajagopalan: Now they did a few things. So the first is the government actually appointed really good people and sort of created a war room or a task force for COVID in Mumbai more generally, and to deal with Dharavi specifically. So I think Ms. Ashwini Bhide who is the Additional Municipal Commissioner in Mumbai, she is one of the best civil servants we have in India. She was responsible for getting the Mumbai Metro off the ground or underground, so she is really fantastic. So some of it is just, you pick the right person for the right job. You give them the money and the infrastructure and control over a situation and you let them execute the decisions.

Shruti Rajagopalan: Now, some of the Dharavi containment zone policies were actually quite clever. So they decided that they have a lot of manpower, and they’re going to deploy manpower for contact tracing. So they had about 2,000 to 2,500 city workers who literally went door to door. The reason this is important in Dharavi is we don’t have records. We don’t know who lives where. We don’t have address proof. We don’t have utility bills to figure out what’s going on in a particular area. So you really need to do this door to door kind of contact tracing surveys/interviews: “Did you meet so and so? What was the last time you were in that part of Dharavi” and so and so forth?

Shruti Rajagopalan: Now, if you allow me to brag a little bit about Emergent Ventures, two of our Emergent Ventures grantees have contributed to the success of Dharavi. So this is Akash Bhatia and Puru Botla. They are two fantastic MIT alums. They run something called Infinite Analytics in India. Their main job is analyzing consumer metadata for the private sector. But as soon as COVID hit, they said, “Oh, we can do all this large-scale mobility and individual mobility data analysis. We can think about contact tracing and how do we help the government”. So they repurposed their entire firm in a matter of a week with help from an Emerging Ventures grant to just dedicate themselves to COVID. So they’re doing amazing work.

Shruti Rajagopalan: Now I’ll give you one example of how they helped in Dharavi. So initially the containment zones were set up geographically. So this was just… Let’s say we have… Think of a Rubik’s cube or something like that. And you just divide that in eights or 16s, and you say each one is a containment zone. And this is because most people who are governing Dharavi don’t live in Dharavi. All these additional municipal cooperators and things like that, they don’t actually live there. They don’t know how people move there. So what Akash and Puru found using the meta mobility data analysis was that people were mingling between zones because they were living in one zone but the toilets they used were in another zone because in slums, not every dwelling has its own toilet. Like I said, there’s one toilet facility for about 500 people roughly. They were going to another zone to buy milk.

Shruti Rajagopalan: And the way they figured it out is by cell phone mobility data aggregated, not individual. So this is not any kind of surveillance or spying that Akash and Puru were doing on these people. And then they went back to the BMC and they worked with Ms. Bhide and other people and they said, “Look, I think you need to reorganize your containment zones”. And the BMC actually took their advice. They changed their containment zones by actually accommodating how people move within a day. Where do they go for their milk? Where do they go to the bathroom? And accordingly changed the containment zones and then closed them off. So that was one really–

Howie Lempel: That’s great.

Shruti Rajagopalan: Yeah, that was a great move. I’m so thrilled that Emerging Ventures grantees did it. I would have been thrilled if anyone did it, but now I’m just like a proud parent. I’m just bragging about them. But they did this amazing thing. And this affects thousands of people, potentially millions of people because people living in Dharavi serve all of Mumbai in terms of lots of services that they provide. So that was one.

Shruti Rajagopalan: The other was aggressive door-to-door contact tracing. Not just cell phone or app or something like that. And the third is they immediately extracted individuals and entire families and put them in quarantine facilities. So with Dharavi they realized what a black box it is and how hard it is to penetrate and understand what’s going on. They also understood that it’s very hard… If they don’t contain Dharavi, they can’t contain Mumbai because everyone’s domestic help, and security guard, and cleaner, and the person who provides the services, the person who sells them their leather bags, the person in many cases who comes and solves their IT problems. All these people live in Dharavi. So if you don’t contain Dharavi, you’ve contaminated all of Mumbai.

Shruti Rajagopalan: So there was both the right incentive and the right talent and the right infrastructure. And thanks to something like EV, also the right technology to solve this problem. Now I know from conversations with Akash and Puru that they have offered this to many other municipal corporations. Some of them are thinking about taking the help. Others not so much. But it is a question of different municipal corporations just don’t have the same quality of leadership. They don’t have the same money. They don’t have the same infrastructure. So there are those kinds of differences. So Dharavi is really, I think a case study on how to contain a pandemic given the constraints of a developing country. But it’s also very difficult to mimic lessons from Dharavi to any other municipal corporation.

Howie Lempel: That makes a lot of sense. What was the outcome eventually? Were cases introduced and to what extent were they able to really contain it, or at least so far?

Shruti Rajagopalan: So the rate of growth in Dharavi has really plummeted: that’s what’s going on. So it’s not that Dharavi has zero cases. It’s not a success on that margin. It’s that the rate of growth of cases was dramatically contained. It’s actually lower right now than the rest of Mumbai. It’s also lower right now than the rest of India. So, in that sense, it is a success.

Shruti Rajagopalan: This is not to say that it won’t flare up again as things are relaxed or it won’t come back. Those issues obviously exist anywhere. So Dharavi needs just this constant attention. But the victory in Dharavi was really one of how to do contact tracing through one of India’s greatest strengths, which is manpower. So you take down oral testimonies using manpower.

Shruti Rajagopalan: Now, I have to say, this obviously had some costs. That were a lot of Bombay municipal workers who were severely affected. Some have died because of COVID because they were part of this exercise, not just in Dharavi, but in other places.

Shruti Rajagopalan: So it’s not that this is costless. It’s a huge cost to society, but at the same time, it’s a huge benefit because Dharavi just has so many people. And we need to open up the Dharavi economy because a lot of poor people work in this billion dollar industry and you can’t keep it closed down forever. It’s trying to understand all these different problems.

Shruti Rajagopalan: Another thing was, the first lockdown was supposed to be 21 days. Then they extended it by another 19 days. So at the end of 40 days, there was a lot of movement that was going on in Dharavi. And people like Akash and Puru who study the meta mobility patterns, they figured that this is not actually people going around in Dharavi, they’re people leaving Dharavi to go back to rural areas. They were leaving the city.

Shruti Rajagopalan: That kind of information, given very quickly to people who are looking at data, we can say, “Oh, now we need a slightly different strategy for containing Dharavi. There are a lot of people who are leaving”. So we need to inform other states on how to contain. And we need to think about who is allowed back into these containment zones. So it was just like a great case study, just very hard to replicate.

Howie Lempel: Yeah. I guess I had expected that there would just be no way to contain COVID in a slum. So it’s just a big victory that they’re able to have a success there.

Shruti Rajagopalan: Absolutely. I really hope it continues. Dharavi is a very large slum, so I hope they managed to do this in smaller slums.

Shruti Rajagopalan: I hope the other outcome of this is to seriously take informal sectors seriously in India. We normally just walk past slums in India, the elites, the people who are governing, the policymakers. Some people hold their nose and they just go about it like this is ordinary business and it’s become part of our landscape. Only when there is such a serious problem and they’re a threat, not just to their own health, but also across the city that we suddenly take notice and say, “Oh, we’re worried about slums”.

Shruti Rajagopalan: I think we need to think about housing policy in cities, land use policy in cities very seriously. That we don’t have these kinds of slums emerge in the first place. That will make it easier to contain it in a pandemic should there be another one in the future; I hope not.

India’s strict lockdown [01:25:56]

Howie Lempel: That makes a lot of sense. I’d like to ask you some more questions about the lockdown more generally. You’ve mentioned that India was one of the strictest lockdowns in the world. So, I guess I’m curious about, to start off with, what exactly did that involve?

Howie Lempel: I guess I expected that even in the United States, it’d be almost impossible to implement, but particularly somewhere like India, how are you getting rural people to comply with this? Are they complying? And if so, how are they eating? What was the actual policy as it was designed and then as it was actually implemented.

Shruti Rajagopalan: Okay. So by around March 20th in India, the number of cases were small. There were only about 500 cases, but they were growing very, very quickly. I think the doubling rate at that time, if memory serves me well, was about doubling every three days, or doubling every three to four days. There was real cause for concern.

Shruti Rajagopalan: What Prime Minister Modi did was he did a one day curfew where he said, “Everyone stay at home on a Sunday” and he kind of did a test run. And then a few days after that, on March 24th, he just announced a three week long lockdown.

Shruti Rajagopalan: Now, there are a couple of things to keep in mind. The lockdown that was announced was that nobody can go anywhere and that one shouldn’t go anywhere, but they didn’t very clearly communicate: what were the activities that were allowed?

Shruti Rajagopalan: ‘Are healthcare professionals allowed to go everywhere’ wasn’t clarified in the original speech. ‘Can you go and buy milk and bread from your local grocer?’ That wasn’t clarified in the original speech. So there was once again a huge communication failure.

Shruti Rajagopalan: There was a communication success in the sense that it was very clear that Prime Minister Modi was taking the pandemic seriously. That he was actually listening to epidemiologists and medical experts because in India, sometimes things can go either way. There’s this whole thing about homeopathy and Ayurveda. Of course, there are also the real loonies who think drinking cow urine is going to cure you of cancer to COVID to everything. So sometimes even the leadership can go slightly off and not rely on good information.

Shruti Rajagopalan: The good thing about Prime Minister Modi’s lockdown and the communication of the lockdown was, one, he took it very seriously. He communicated very clearly that lots of people are dying across the world.That this spreads. That COVID is kind of like this clever virus which spreads even when you don’t know when the other person is sick.

Shruti Rajagopalan: He did it in a smart, colloquial way and he said that everyone needs to support this. Everyone must sacrifice. Everyone must stay at home. So on that front, it was great.

Shruti Rajagopalan: Now, there were certain aspects which were very horribly planned, or rather not planned at all. First, they didn’t announce any relief for people who lose their wages for 21 days because of a restrictive lockdown.

Shruti Rajagopalan: Now, for someone who’s earning daily wages, if you say that you can’t earn daily wages and you can’t go to work tomorrow, maybe they can survive a couple of days, maybe even a couple of weeks on their savings. But typically, people working on daily wages in India don’t have much social security or savings or infrastructure to rely on.

Shruti Rajagopalan: You saw that all the daily wage laborers, they suddenly hit the train stations, and the bus stations, and the trains and buses weren’t running. So, you saw massive… In New Delhi there were 20,000 people at the train station. There were 40,000 people at the bus stations just waiting. So you were trying to enforce social distancing, but in a week, you made the problem worse. That’s one kind of miscommunication.

Shruti Rajagopalan: The second kind of miscommunication was just that the police who are enforcing this at a local level didn’t know what they were supposed to do. So there were some places where they were very sensible and they organized the local markets and they allowed people to go and do their most basic jobs with social distancing.

Shruti Rajagopalan: There are places where doctors were beaten up by the police, severe head injuries because they said, “You shouldn’t be out right now. Prime Minister Modi has declared a lockdown”.

Shruti Rajagopalan: We got a bit of everything, mostly because of very bad communication. So that was what was going on at the time.

Shruti Rajagopalan: Then the next stage was that all the migrant workers… About 50 million, I’m told, in India who live in rural areas, their families are in rural areas. They go seasonally or for a bulk of the year to urban, large metropolitan areas. They work and they send the money home. It’s very difficult. All these people are in the informal sector. They work on daily or weekly wages. Very difficult to survive in such a circumstance. And, as I mentioned before, because they’re in the informal sector, you can’t give them unemployment or stimulus. It’s just not easy to target them.

Shruti Rajagopalan: So some policy needs to be announced and nothing was announced. And what you saw… I mean, I can’t tell you the horror of this… there were people literally walking with their kids and all their life’s belongings on their back and their head. They were walking hundreds of kilometers to reach home because there were no trains and there were no buses, and the government made no provision for them to go home and they couldn’t afford rent where they were living.

Shruti Rajagopalan: This is not a couple of hundred people. This is hundreds of thousands of people, potentially millions, if you think about it over a four month period.

Shruti Rajagopalan: There was some great journalistic work on the ground, people like Barkha Dutt. There were literally journalists walking alongside these people. They didn’t even have a moment to pause, to give an interview to a TV journalist because they just needed to get home.

Shruti Rajagopalan: So this was, I think, one of the worst failures of the lockdown. We haven’t seen this kind of internal migration since the partition in India. It was horrifying. People died walking on their way home. They died of road accidents. They died of dehydration, starvation.

Shruti Rajagopalan: There was one particularly horrific incident of some people who were resting near a train track or on a train track. One of the goods trains went over them because they thought no trains were running and they died. So there was some real horrors that I can’t imagine that we had a state policy response like this.

Shruti Rajagopalan: It was, at one level, callousness. The Indian elites who are governing just don’t see these people. They’re invisible to them.

Shruti Rajagopalan: On the other hand, it was also even once they were made visible, there was no real policy response because it’s very hard to target them.

Shruti Rajagopalan: There were some provisions saying “All people just show up at your local ration stores and you’re going to get free rice and pulses and some basic food provisions”. So there was some relief package announcements like that, but just nowhere in the proportion that was required. And once again, lots of paperwork, lots of bureaucracy and paperwork.

Shruti Rajagopalan: So I think the poorest in India bore the brunt of the lockdown in a way that the rich people didn’t. I think that’s a little bit true across the world. Even in the United States, it’s becoming very clear that people who are poorer, people from minority communities, they are working more on the front lines. They are the essential workers. They are the checkout counter people at grocery stores. They’re just more exposed. But I think in India, it just took this whole new version of horror imposed by bad state policy and bad communication of even reasonable state policy.

Shruti Rajagopalan: The odd thing was that the poor people were very sympathetic. They agreed. Even then they were willing to support the prime minister and his vision. There was no violence, nothing like that. They were willing to comply with the lockdown, but they were just like, “What are we supposed to do?” So that part of the lockdown was horrific. It was a huge mistake.

Shruti Rajagopalan: The other part of the lockdown which was a huge mistake was what you pointed out earlier in the conversation which is, one thought that if you have a three week lockdown, you would quickly scale up testing and healthcare capacity and have popup quarantine centers and hospitals.

Shruti Rajagopalan: China did this right. China literally built hospitals in a week that could treat 3000 patients and things like that. And one was hoping that’s the kind of response that comes from Prime Minister Modi’s government, but it just didn’t happen.

Shruti Rajagopalan: The problem was that they kept pushing the problem away. They kept kicking the can down the road. So the first lockdown was 21 days. Then it was extended until May 3rd, which was another 19. So you’re 40 days into the lockdown.

Shruti Rajagopalan: Then there was a phase three, which was a less restrictive version. It was another 14 days. Then a phase four of the lockdown, which was another 14 days. So India was in lockdown for a really long time, March 24th till 31st May. That’s a long–

Howie Lempel: A long time.

Shruti Rajagopalan: Yeah, that’s close to 70 days, right? It’s a really long lockdown. So this was the way it was handled which was bad policy. And, as one would expect, the moment you lifted the lockdown, all the migration happened. So we transported what was originally an urban problem, and we made it now a pan-India and a rural problem.

Shruti Rajagopalan: The people who are migrating are migrating from the poorest districts. So we’ve sent COVID back to the poorest districts in India, in rural India. So that’s one kind of a problem.

Shruti Rajagopalan: The other is, as soon as you lift the lockdown, the cases increase and you never really increased the capacity to a level where you didn’t have to flatten the curve with a severe lockdown. So now what you see is, anytime the cases spike in a particular city or a town, they impose the lockdown again. So it’s really ruled by lockdown. There is no other sensible response to this policy. That’s kind of the problem in India. This is the big picture of why the lockdown went wrong.

Howie Lempel: That’s really helpful. I guess on the aspect of increasing capacity during the lockdown, or making good use of that time, was the problem that there was just no way for India to scale up as quickly as needed, either because they didn’t have the resources or because there are just lags that are too long? Or were there things that could have been done to better take advantage of that time?

Shruti Rajagopalan: A little bit of both. I think things that could have been done were, I see it more as a central agency, with all the benefits of pretty much your union government backing you. They could have easily found some exemptions, tried to increase manpower, tried to approve more labs and things like that.

Shruti Rajagopalan: Now, when it comes to healthcare in terms of hospitals and things like that, that’s a state subject in India. Now states are very fiscally constrained in India. So this is not just about COVID, it’s an overall governance issue.

Shruti Rajagopalan: In India, the states, they don’t have much revenue raising authority or capacity. So there are very few areas where the states can legislate and raise their own revenues. The large ones are property and alcohol. All other taxes are usually centralized in India.

Shruti Rajagopalan: Now that the taxes are centralized in India, of the central pool of revenue, only about 40% are shared with the states. So there is a genuine fiscal constraint that the states face. Even the richer states have this problem. The poorer states obviously have a bigger problem. This is why they were so keen to open alcohol sales after the lockdown, because states were literally struggling for revenue sources. That’s one thing to keep in mind. It is hard.

Shruti Rajagopalan: You might say, “Okay, Bihar is expecting a lot of people to come back from Mumbai and New Delhi. It wants to increase the number of quarantine centers and the number of hospitals”. They did try to do that, in all fairness. They were good about quarantining people and contact tracing. But it is very difficult for that state, given its fiscal resources, to just suddenly do something like what China did, which is have a new super specialty hospital in two weeks or something like that. So that’s one kind of problem.

Shruti Rajagopalan: The other problem is, in India, we don’t have good local municipal governance. Again, there’s a long history to why we don’t have it. The more recent history is, the original constitutional scheme in 1950 just did not accommodate a layer of local governance. They left it to the states to legislate and create municipalities and things like that.

Shruti Rajagopalan: So India doesn’t have a functional municipal governance level which raises its own tax revenue which has the ability to spend it on public health and sanitation and those kinds of features.

Shruti Rajagopalan: This is also why you have big problems in India in terms of public health, like open defecation, very high infant mortality, terrible quality of water and so on and so forth. So this is the second kind of government constraint that you cannot change in three weeks. Three weeks or even three years is too little to change this kind of a constrained state capacity.

Shruti Rajagopalan: So because of these two reasons, the real action, which is on the ground, which is contact tracing, going door to door, making sure that you can set up a new hospital, fly in doctors, those things just weren’t possible.

Shruti Rajagopalan: But at the union government level a lot more could be done. I mean, you need to really think about all bottlenecks. Who is manufacturing your PPE equipment? Can we encourage them? Can we give them subsidies? Can we give them clearances and permission to operate 24 hours a day instead of imposing the industrial inspection system on them and saying you can only operate eight hours a day. There are so many other things that could have been done that weren’t done.

Lockdown for the average rural Indian [01:39:11]

Howie Lempel: I’m trying to get a sense of, for the average rural Indian, how were they affected by the lockdown? Was it just countrywide actually being in practice imposed, and just how are you sustaining yourself if you’re a poor person in a rural area and need to keep going during that period of time?

Shruti Rajagopalan: My understanding was that in rural areas, the imposition of the lockdown was not weaker in the sense of that the rules weren’t different, but the execution was different. People realize that there are little to no cases in a particular village or town and they let them go about in that village, but then they restricted mobility to cross village lines or cross township lines and things like that. So you’re absolutely right in that the execution of the lockdown was a little bit different.

Shruti Rajagopalan: Also, a lot of the manpower, which is your policing, was moved to the urban areas because that’s where they needed it more. So it was a weaker lockdown.

Shruti Rajagopalan: Now the way they sustained themselves, I don’t know if this is a blessing or a curse, but because we don’t have a single large market in India across everything… We have different states. We have checkpoints across states. We haven’t developed a good model of treating India as one market.

Shruti Rajagopalan: Until very recently, we used to have different taxation which means it was very hard for states, for goods to cross borders and things like that. So because of that, a lot of the supply chains for food are extremely local. So this is your elite version of farm-to-table dream come true, but this is a reality in India.

Shruti Rajagopalan: Your milkman probably doesn’t live that far from you. The people who are supplying your vegetables probably don’t live that far.

Shruti Rajagopalan: Now for cities, they need to be trucked in, and there were a lot of problems in cities initially. The first 10 days of the lockdown, there were shortages of milk and vegetables and things like that. But in rural areas, that was just simply not a problem.

Shruti Rajagopalan: So, if you’re a poor person in a rural area, life is anyway different, but I don’t think it was that much different because of the lockdown cutting supply chains. It was different because you have fewer employment opportunities.

Shruti Rajagopalan: Maybe you work at a handicraft industry that is supposed to be selling paintings or garments, and now there’s no demand for it because there was a severe lockdown. So, on those margins, rural areas were a lot more affected.

Howie Lempel: That makes sense. How is the country faring economically, more generally?

Shruti Rajagopalan: Poorly. Very, very poorly. There are two aspects to this. One aspect is India had a growth slowdown even before COVID. There has been a growth slowdown since 2017. It has been a significant slump since then.

Shruti Rajagopalan: One part of it was the demonetization policy, which was canceling about 85% of the currency in India overnight, causing this huge problem of currency shortage where people can’t transact with one another. It wasn’t that different from the lockdown. It was just a huge disaster. So that was one cause of a slowdown.

Shruti Rajagopalan: The other was the goods and services tax. India switched from an indirect taxation system, from different states imposing their own indirect taxes, to a unified goods and services tax. Now, of course, we didn’t do this the smart way. We did it the Indian way. There are five different tax slabs and 12 different classifications, and it just caused a huge disruption in the Indian economy.

Shruti Rajagopalan: So these are two clear points where, more recently, there has been a reason for the slowdown, but there has been a more general slowdown in the last decade.

Shruti Rajagopalan: India was sort of roaring in its growth rates from, say mid-1995 to 2011. This was all the gains from liberalization and embracing markets and India’s tech sector taking off and India becoming an exporting country and things like that.

Shruti Rajagopalan: But from, say about 2011, 2012, the growth… It’s not a recession. It’s a reduction in the rate of growth. So, India was growing much faster. It started growing less fast. Some people have termed this a growth recession. That’s the word that some economists use for a type of natural recession.

Shruti Rajagopalan: Post-pandemic is the first time India is expected to have a recession in a very, very long time. That is, it is actually expected to go into negative rates of growth for more than two quarters. That’s the expectation.

Shruti Rajagopalan: The IMF and all these people, everyone’s been revising India’s growth rate estimates down. It was about 5%. It came down to about 3%. Now it’s hovering around 1%, the estimate. And I think the longer the pandemic continues, the more likely that India will go into negative growth rates. So there is a very serious problem with the Indian economy.

Shruti Rajagopalan: Some people trace back the slowdown in growth, not just to some bad policies like demonetization and the GST execution, but more so to all factor markets. In India, there are so many bottlenecks in all your factor markets. There are so many bottlenecks when it comes to regulatory clearances, things like that.

Shruti Rajagopalan: Initially, it didn’t matter too much because Indian growth rates just really took off by integrating into global markets. But as India was growing, these structural bottlenecks really started to matter. So that has been the big explanation around this and COVID is not going to help. It’s only pushing India into lower and lower growth rates.

Public reaction to the lockdown in India [01:44:39]

Howie Lempel: I was wondering, in this context of a lockdown that seems like it was really sort of imperfectly implemented and then all of these economic risks, what has the public reaction to the lockdown been? Has it been popular or unpopular? Was it politicized in the way that it has been in the United States?

Shruti Rajagopalan: It was mostly unpopular and it was a little bit politicized. Now, I’ll tell you the puzzle that none of us can figure out. Prime Minister Modi, who was the face of the lockdown because he was the one who conceptualized it and announced it, is still incredibly popular in India. It seems like his approval ratings are like Teflon. They just stick. They don’t go down. So that’s sort of the conundrum.

Shruti Rajagopalan: People thought the lockdown was very bad. They were very upset about how the poor were treated. There’s also a lot of fatigue. After 70 days of a severe lockdown, there’s just so much fatigue that sets in.

Shruti Rajagopalan: It has been disproportionately hard on women who traditionally do a lot more of the household work. It has been disproportionately hard on the poor, naturally. I mean, everything is harder on the poor, but this particularly so. When they can’t get access to employment opportunities and they can’t get access to services. Their children don’t have internet access at home. Now suddenly their kids are not going to get educated. So many stresses like that. So there’s a huge discussion on it.

Shruti Rajagopalan: The lockdown was very unpopular from my understanding of it. A lot of people made it partisan and did blame Prime Minister Modi, but somehow his individual approval ratings don’t seem to be dropping. So there’s something weird going on there.

Shruti Rajagopalan: I’ve noticed that, especially the poor people in India, despite all the stresses imposed by the state being disproportionately borne by them, they seem to be very sympathetic to doing something as a community or sacrificing for the greater good. It’s kind of remarkable.

Shruti Rajagopalan: Even when the migrants were walking back and they were complaining about how the state and the people of India had forgotten about them, they still understood why all this was happening. They were sympathetic to sacrifices that need to be made, which to me is just really remarkable culturally, and I haven’t quite got a handle on that. Because a lot of the stuff that I read, it was obviously written by the elites and they are scathing in their criticism of the government. The people are less so, in terms of the scathing criticism, but the policy’s unpopular. No one wanted it.

Howie Lempel: Yeah. That is really amazing that people in such a bad position were able to be so sympathetic to the reason the policy existed. Feels hard to imagine in the United States.

Shruti Rajagopalan: It was the same during demonetization. I mean the poor people faced this huge crunch. They’re standing for hours and days, waiting to get money out of ATMs or out of banks. They’re not able to pay. People are dying because you couldn’t pay to get into a hospital. They’re dying because they couldn’t buy food. But the poor were still very supportive of a policy because they thought that Prime Minister Modi is trying to eliminate corruption and money that was ill-gotten and due to tax evasion.

Shruti Rajagopalan: Of course, that’s a misunderstanding of basic principles of economics, but they were still very supportive in terms of someone’s vision of the greater good for a corruption-free India or something like that. So it’s really remarkable how that has worked out, culturally.

Shruti Rajagopalan: If you notice, India doesn’t have violence and riots over these issues. I mean, the number of migrants waiting at bus stops were a really large number. We’re talking about thousands, sometimes tens of thousands at train stations. No violence, no vandalism. So actually, it’s the poorer people in India who have cooperated to make these policies even the minor successes that they have been.

Howie Lempel: Is there an opposition party that is making any attempts to sort of pin the Prime Minister with the responsibility for the lockdown and frame themselves as the anti-lockdown party?

Shruti Rajagopalan: Yes and no. India’s opposition is incredibly weak right now. The Indian National Congress, which is sort of like the Grand Old Party of India, it’s the party of Nehru and Indira Gandhi and things like that, that’s the party which is in opposition right now.

Shruti Rajagopalan: Rahul Gandhi is their leader, and there has been a lot of criticism from them on how the lockdown was handled badly, but this is a very elite sort of criticism. It’s not a widespread movement because the opposition overall is very weak.

Shruti Rajagopalan: The other thing that’s happened in India, and I think this has happened a little bit across the world, is legislatures have completely stopped functioning during the pandemic. The executive is functioning. The courts are somewhat functional through virtual and video conferencing and things like that, but the legislatures have just completely stopped doing business.

Shruti Rajagopalan: So the main opposition, which usually comes from the floor of the legislation, where parliamentarians are criticizing the government, that’s always been weak in India. It’s particularly weak given the very few seats and the poor leadership by Rahul Gandhi, but during the pandemic, it’s completely disappeared. So you have a little bit of opposition on TV news channels and Twitter, but it doesn’t amount to much.

Shruti Rajagopalan: Yeah. The state parties, the state governments, which are a different party than the BJP, which is Prime Minister Modi’s party, they have a little bit more opposition. So, for instance, Maharashtra is a non-BJP government state and they have had their own policies. They have opposed some of the lockdown policies much more, and they have instituted their own version of lockdown policies. So there is some of that happening in a federal sense, but not in a parliamentary sense.

Policies that should be implemented today [01:50:29]

Howie Lempel: I wanted to ask you about some of the policy recommendations that you made in your paper with Alex Tabarrok, and we’ve actually touched on a few of them at this point. So maybe instead, I’ll ask more broadly, are there policies today that still haven’t been implemented that you think it would be particularly useful at this point for the Indian government to pursue?

Shruti Rajagopalan: I still think that taking a serious look at regulatory bottlenecks to make sure that we can scale up PPE, we can scale up pharmaceutical medication, scale up production of masks, not just for India, but the globe, things like that. I still think India needs to solve them.

Shruti Rajagopalan: Some of the stuff that we pointed out in our papers, such as removing the import tariffs, that was low hanging fruit. They did it immediately. But a lot more work needs to be done in that area. So that I would stick by.

Shruti Rajagopalan: I would say our original idea about trying to repurpose buildings into quarantine centers as the numbers increase, or repurposing hotels, that industry has just completely died right now because tourism is dead. Using that for some of the quarantine facilities where the rich, if they can pay, they pay for their own quarantine facilities, but they’re comfortable. I think those kinds of policy recommendations still have a lot of play as the pandemic keeps going on.

Shruti Rajagopalan: I think our suggestion of providing hand sanitizers when you can’t easily deliver piped water, I think that is just so relevant, moreso today than ever before.

Shruti Rajagopalan: I think a couple of our recommendations on the relief package for the poor, I think that is still relevant. Even now, we are asking poorer people who don’t have good paperwork to go to their particular ration store designated in their jurisdiction and produce the correct card and then they get their supplies.

Shruti Rajagopalan: What we suggested was just take any ID. It’s fine. We’re trying to provide relief. We need to do it in the least bureaucratic way possible. I think these are ongoing problems, and I think those recommendations are still quite relevant and just have a lot of play.

Shruti Rajagopalan: I think our specific recommendation on “Change this tariff and improve that particular lab”, obviously things have changed in the last three months. So like I said, at the time, I think when we wrote the paper, ICMR had approved 130-odd labs and now it’s already a thousand. So some of those things have happened.

Shruti Rajagopalan: I don’t think we wrote about this in the paper, but the only policy that I might have changed my mind on since early April is the closure of schools. I think it’s an extremely costly policy to keep schools closed for as long as they’ve been already.

Shruti Rajagopalan: There’s a second issue in India. There’s tremendous inequality in India, both economic and social because of the caste system. Education is one way of reducing that inequality.

Shruti Rajagopalan: What we see during the pandemic across the world is that the pandemic has actually made access to education more unequal. So children whose parents have education, who can provide good internet, who can afford to give kids their own tablet or laptop or smartphone, those kids are much more likely to be enrolled in online schooling, be engaged in learning. That’s just not the case for a very large proportion of India.

Shruti Rajagopalan: So, I’m rethinking the aspect about school closures which I might have supported initially in the lockdown. I would really think about that.

Shruti Rajagopalan: We’ve recently given an Emergent Ventures grant to someone who’s trying to do voice-based education. This is to really reach the disenfranchised. So you record all your lessons on voice, and everyone has a cell phone in India, even if they don’t have a smartphone. A lot of people have a smartphone. So they take pictures of the homework on WhatsApp and they send it across.

Shruti Rajagopalan: This is Raman Bahl. We just gave him this grant and his policy is, there’s a local grocery store where you leave the lesson plans for the week for the whole village. They pick them up and the rest of it is done through voice.

Shruti Rajagopalan: I think there are some important ways by which we need to address this. One of the things Alex and I talked about in the paper was mobile phone penetration and how we really need to tap into that. India has excellent mobile phone penetration. So can you do telehealth, telemedicine, so that people need to congregate less at testing centers and hospitals and they can still get treated?

Shruti Rajagopalan: So we just need to think about those policies a little bit more, but one of the things I do worry about and keeps me up at night is schooling.

Howie Lempel: Yep, that makes a lot of sense. Yeah. What are the chances that remote schooling is a possibility? How likely do you think it is that you end up with some sort of remote schooling type of situation in much of India?

Shruti Rajagopalan: It’s very, very high variation across different states, across different communities. Of course, the elite have just gone online seamlessly. The Indian elite are having the same troubles as the American elite, which is both parents are working. How do we make sure the students are engaged? They don’t get much time outdoors to play with their friends, that kind of a thing.

Shruti Rajagopalan: When we’re talking about people in the middle class, they have managed to cope reasonably well. Even if every family doesn’t have a separate smartphone laptop or something like that for each child, they have managed to procure these devices at relatively low cost and they do manage to get internet smartphone access. The teachers have been exceptional. They’ve gone above and beyond, taking voice calls, tutoring in person, things like that. That’s going on.

Shruti Rajagopalan: Now, the big problem is the largest group of the poorest people. This is rural areas where schools are anyway not as well functioning. Plus parents may not have internet access, smartphones, even a regular phone. There are many cases where the entire family or the household has only one phone and it usually goes with the parent. The father will take the phone and use it for farming or whatever the day job is.

Shruti Rajagopalan: Those are the families which are at most risk, and this is about 40% of India’s schoolgoing kids. That’s the estimate. Now of course, these things are changing. I mean, it’s been three months into the pandemic. If it goes longer, hopefully there are corporate social responsibility initiatives where people are willing to give free laptops and smartphones to children from underprivileged backgrounds, things like that.

Shruti Rajagopalan: So these numbers will hopefully change. But the question you asked is true, depending on which group you’re talking about.

Shruti Rajagopalan: The most disenfranchised, which is struggling for piped water, electricity, internet, I mean, online schooling is just nowhere on the radar. And oddly enough, those are the students who need it the most, to work their way up in terms of social and economic mobility. So the inequality aspect, just very worrying.

Howie Lempel: Yeah, absolutely.

India’s overall reaction to COVID-19 [01:57:23]

Howie Lempel: So I want to make sure we get to some of your other research. So maybe wrapping up a bit on COVID, what’s your take on just overall how India’s reaction has been so far? And I don’t know, would you have expected it to go better than this, worse than this?

Shruti Rajagopalan: So I think globally, India’s reaction has not been that bad. And I’ll tell you in what sense I mean this. India has not had terrible leadership, or just unscientific thinking where they say, “Oh, the virus really doesn’t exist. Oh, it’s really not a threat. Look at me, I’m going to be totally fine”. It doesn’t have that kind of nonsense going on at the top levels of leadership. So in that sense, the Indian strategy has been successful.

Shruti Rajagopalan: The second sense it’s been successful is they took stock of their healthcare capacity very early, and they figured out that they need to impose restrictive measures. Now, having said that, once you figured out a policy that the government wants to impose or enforce, you actually have to enforce and execute that policy correctly. So if you decide that we need some stringent lockdowns, because we have very weak healthcare capacity, then you’ve got to do the lockdown properly in a way that there isn’t this adverse impact on lives and livelihood, and just people’s wellbeing.

Shruti Rajagopalan: On those margins, India has completely failed. So that’s the way I would set it up. If we think about where to go forward, I think India still has a lot of low hanging fruit, like the regulatory bottlenecks, how to get things moving, I think that it still hasn’t figured out. Some areas where I particularly worry is, about 200,000 people have not had access to vaccines, other vaccines during COVID, because of the lockdown. TB patients have not had access to their medication during lockdown. So I am also worried about other kinds of public health problems, because we didn’t think through the lockdown policy carefully. So same for education. So there are a lot of other things which I think are bubbling under the surface which might explode once we just have been in this situation long enough. On those margins it’s a failure.

Shruti Rajagopalan: Some states have done better than others. Maharashtra has done better. Kerala has done well. There are some states which are just doing very badly. Delhi’s numbers are a little bit alarming. So there is also a lot of variation within India. Andhra Pradesh and Telangana are literally neighboring states. Telangana was carved out of Andhra Pradesh, but it has way lower testing. And it doesn’t announce its numbers daily. It announces numbers monthly sometimes. So there’s also a lot of variation within governance in that sense.

Shruti Rajagopalan: So some governments have just done better than others. But I feel the people of India have done well. They’ve had some very high stresses imposed on them, and they have still tried to make sense of the pandemic and follow the rules, and do right by each other in society, and also what might be the best for themselves. So I think, in that sense, the Indian people have been very sensible through the lockdown.

Howie Lempel: Makes sense. What should we expect going forward? I know that cases are now rising as India opens up. Should we just expect another New York City or another Italy? Or are there reasons to think it’s going to go better than that?

Shruti Rajagopalan: You know, I’m not sure. So I think there are going to be some New York Cities within India, just because the numbers are so large, and some of the cities are so dense. And as the numbers increase, it’s harder and harder to get better policy execution. So if you didn’t manage to contain it in low numbers, it’s hard to imagine how you could do it in very large numbers. So there’s that problem that exists in India.

Shruti Rajagopalan: So there are definitely going to be a couple of New York Cities and Italies that are in India. It won’t be across the country, but it will be in certain concentrated areas, most likely metropolitan areas. So that is definitely a problem.

Shruti Rajagopalan: But going forward, I think there are a lot of other issues which we need to worry about. For instance, it looks like one day a vaccine will be available. We don’t know if it’s two months, six months, eight months, a year or two years. But the expectation is, for most people, sometime in 2021; people expect a vaccine to be launched. So we need to think about that today.

Shruti Rajagopalan: So the government of India needs to have a plan for scaling vaccine manufacturing. And India is one of the largest manufacturers of vaccines anyway, and pharmaceutical products in general. So how do we think about scaling and making sure that the vaccine is produced in time? Do we have a vaccine distribution blueprint in place today? How do you reach the very last mile very swiftly? So India has had some very successful vaccination drives, like the polio vaccine drive eliminating polio. It happened over a decade or more, but it did happen.

Shruti Rajagopalan: So we need to think about the next problem. And I don’t see any of that happening. No one is thinking about the problem a month from today, or six months from today. Everyone’s trying to just put out the fire today and do something and spin it into a media narrative and carry on. So that part of the Indian governance system really worries me.

Shruti Rajagopalan: By the way, that also worries me about America. I was joking with a colleague of mine that the rate at which America is going, we may have a vaccine tomorrow, but we won’t have enough needles. It’s just bottlenecks at each stage and no one is really… It feels like the leadership is asleep at the wheel. It feels like Bill Gates knows what he’s doing on the vaccine front. He knows you need to have multiple strategies. But has the leadership, even in developed countries, created a blueprint or multiple blueprints for different strategies on how to deliver the vaccine to the last mile, to the last person? And I just don’t see that happening. That, to me, is the biggest problem India’s facing today. It’s hard to produce more doctors in the next year, but it’s easy to produce more factories that produce vaccines in the next one year. And we should focus on that.

Constitutional economics [02:03:28]

Howie Lempel: Great. So I want to move on to some of your other work, especially on law in economics. And I guess, maybe starting with your work on constitutional economics, which actually wasn’t really a phrase that I have heard before. So what is constitutional economics? And what’s important about it?

Shruti Rajagopalan: So standard economics really focuses on the analysis of choices within a given set of rules. So what economics, as a tradition, did for a very long time, is it assumed that rules are exogenously given and fixed.

Shruti Rajagopalan: Now constitutional political economy broadens this research program by analyzing the choice of rules. So we’re not just thinking about how people behave, or the incentives that are set up by an exogenously given set of rules. And rational, self-interested people execute strategies within that. This is also, how do people come together and actually choose the rules of the game? And, in that sense, endogenizing the rules of the game is a very, very big and important part of constitutional economics.

Shruti Rajagopalan: So the main contribution, or at least the starting point of the contribution, was to distinguish the choice made by individuals in ordinary politics at one level, and in constitutional politics at another level. So it’s sort of moving the application of economic principles across all levels. We are not just economic agents when we are buying apples in the marketplace, right? Now we’re also thinking about applying the same principles to how political actors act given a set of rules, which is the school of public choice. Then you move it to the next level, and say, “Oh, this is not just rational actors acting under a given set of rules. They’re also choosing the rules themselves”. So this is a very powerful way to look at the world, and to look at political economy as a whole.

Shruti Rajagopalan: And endogenizing constitutional rules is important also in the sense that we’re not treating constitutional rule-making as something that happened once 250 years ago. You know, there was this constitutional moment that happened 800 years ago with the Magna Carta, or 250 years ago with the American Constitution. But you think about the back-and-forth between ordinary politics and constitutional politics, and that becomes a very powerful way to explain what is going on in political economics as a whole. So I think that’s the way I would describe constitutional economics.

Shruti Rajagopalan: Now why is it important? I think it’s important on a couple of different fronts. So the first is to treat individuals as rational and self-interested, even outside the realm of markets and in the realm of politics. Now this seems commonsensical, right? But it wasn’t part of mainstream analysis within political science until quite recently. Even today, it occupies a relatively small space in analyzing politics. So it’s called the positive political economy, or public choice theory. So it’s still a subfield. It’s not the way we think about politics. So in that sense, it’s an incredibly powerful tool.

Shruti Rajagopalan: When I talk to regular people, the emphasis is really placed on good intentions, as opposed to good incentives. And that is always startling to me as an economist. Now good intentions are hard to find, maintain, replicate, and especially hard to scale beyond a family or a small community. So when the focus is on intentions, then people in society get very disheartened or fatigued when they look at politics, because then it’s just disappointment after disappointment. But if you shift the focus to institutional arrangements, you create rules and constraints, irrespective of intentions, political actors are incentivized to align their interests with the social interests. Then that’s a very powerful way of thinking about the world and very powerful way of thinking about governance. So that’s the first important thing that constitutional political economy brings to the table.

Shruti Rajagopalan: The second is that we need to solve a host of problems through collective action. And a lot of this happens outside the decentralized cooperation in the marketplace. So it’s important to study how we exchange in the market. But it’s also very important to study how we make collective decisions where there isn’t a market exchange process. Where we need to cooperate with each other. So now, if you think about politics as exchange, but outside the market, then that gives you, once again, it’s a great institutional move to understand what’s going on in society. And far less attention is paid to the processes and institutions that lead to political outcomes, as opposed to market outcomes. This used to be dominant, you know what I mean?

Shruti Rajagopalan: In one sense, my interests are a direct line from the Scottish Enlightenment Project, where you think about political economy as a whole, you don’t think of just market behavior, non-market behavior, political behavior, constitutional behavior, sort of like a whole. So in that sense, constitutional political economy, I would say, is a direct inheritor of the Scottish Enlightenment Project, or what Professor Peter Boettke calls “mainline economics”. There’s a direct line we can draw from Adam Smith and David Hume, to James Buchanan, Gordon Tullock, or the more modern versions of that kind of a project.

Shruti Rajagopalan: So the foundational work in this area was done by James Buchanan, who won the Nobel Prize for constitutional political economy. One of the first few books written in the area was “The Calculus of Consent”. It came out in 1962. This is a collaboration between James Buchanan and Gordon Tullock. Both of them went on to write a lot in the area of public choice and constitutional political economy. I think Vincent Ostrom, his “Theory of a Compound Republic” is a masterpiece. Richard Wagner, who was one of my mentors at George Mason University when I was doing my doctoral work, one of his best works is the “Democracy in Deficit”. So these are some of the people, in the tradition, who’ve written some really great work. So I think it’s a very powerful way of looking at political economy as a whole.

Howie Lempel: Got it. That’s really helpful. And then, it seems like there’s some implied distinction here between constitutional law and law in general. And so the way that I’m imagining it, from what you said, is that public choice economics is focusing on how actors go about changing laws in general. And then constitutional political economy is saying, “Well, what are we doing about the rules that the public choice actors are acting within?” Does that sound accurate?

Shruti Rajagopalan: Yes, that’s exactly right. So there are two stages at which we conduct the analysis. One is choice of rules, which is a constitutional level. And then the second is choice within rules, which is the realm of ordinary politics. So you’re absolutely right in that. You’re also right that there is a little bit of difference between this kind of a school of thought, and standard law in economics, or new institution economics. There are also lots of overlaps. A lot of the people working in these areas write across these subfields. But I think the major difference is, both in new institution economics and in law in economics, you can be much more focused about specific rules of the game, as you do in public choice society.

Shruti Rajagopalan: The constitutional economics project is much broader, of course. You can look at the incentives posed by specific rules or why specific rules were chosen. But taking the analysis to the constitutional level, and endogenizing that level gives you a slightly different picture than just looking at one rule on contract enforcement or strict liability versus negligence, or something much more specific than that.

Shruti Rajagopalan: So I think there are some important differences. I think the constitutional political economy is a bigger project on collective action and social cooperation than the law in economics project is. Law in economics project need not have much to do with collective action and social cooperation. It can just be some kind of a social planner, who switches the rule from strict liability to negligence, or from negligence to contributory negligence, and then you go from there. So it’s a slightly different kind of analysis.

Shruti Rajagopalan: But you also have this as, in the legal tradition, ordinary law is analyzed differently than constitutional law, or administrative law is analyzed differently than constitutional law, if you’re just talking about the difference between public choice and constitutional economics. So I think, you see that even in the legal tradition. You see this very clear demarcation.

What makes a good constitution [02:11:47]

Howie Lempel: And it’s possible this is too high level of a question to ask, but what makes a good constitution from the perspective of constitutional economics? And how different is that from what a lawyer or a legal academic would say?

Shruti Rajagopalan: What makes for a good constitution is one that can be adopted and enforced by the people who are trying to use the constitution. So I’m a strong believer that there is no one set of rules that work really well across the board, across the planet. I think rules are extremely contextual. A rule that works in the United States may not work in India if it’s just imported. So there is no such thing as one good constitution. So a good constitution is one that works. A bad constitution is one that doesn’t work, quite simply put. So that’s how I would describe that.

Shruti Rajagopalan: Now constitutions need not just be the governing documents for entire countries. You can have state constitutions. I think companies have their own charter or rules of the game that can be thought of as constitutional law. Condo associations have very clear rules of the game, and a lot of variation. I think that is a kind of constitution. So the idea of a constitutional system is not just this written constitution that was handed and passed down from generations to generation. That’s just not how I think about constitutional law. I just think about it as people getting together to tell you what are the rules of the game. The one distinguishing feature of constitutional law over ordinary law is it also tells you how to amend the rules of the game.

Shruti Rajagopalan: Ordinary legislation doesn’t have an amendment clause. Only constitutions tell you how to change the constitution. So that’s one way to think about it. So it’s more about how people get together and cooperate on how to formulate rules that actually align individual incentives with the group incentive. So in that sense, constitutions are there everywhere, and there is no one single good constitution.

Shruti Rajagopalan: Having said that, there are some aspects that make certain constitutions work better than others. I think the words are a lot less important and the structures are a lot more important. So the architecture of constitutions, how they split up power, do they have separation of powers? How strong is the separation of powers between, say, the executive and the legislature, or the legislature and the judiciary? How strong is the vertical checks and balances on power, in terms of federalism? How strong is it? Do we have ordinary federalism, fiscal federalism, weak federalism? Are there two levels of government? Are there three levels of government? I think these are some very important aspects within constitution, the structural checks and balances. And depending on what is the goal to be accomplished, sometimes you want more checks which slow things down. Sometimes you want fewer checks to speed things up. So it really depends on what is going on, and what is the problem we’re trying to solve.

Shruti Rajagopalan: So if you notice, at the municipal level of governance, you have very weak separation of powers. It’s mostly executive-driven because things need to be done. You need to pick up the garbage. You need to pave the roads. You need to make sure the lights are switched on, police are patrolling and simple things like that.

Shruti Rajagopalan: At the highest level of governance, where you can really infringe on people’s constitutional liberty, you can expropriate property, you have a lot more checks and balances. So sometimes, we really want to slow things down at that level. Sometimes you really want to speed things up, like garbage pickup, with few other consequences.

Shruti Rajagopalan: So I would say I want to pay a lot more attention to architecture, constitutional structure, constitutional architecture: not so much the text. We’ve had so many constitutions have the same rights, and they sound the same when you read them out in English, but they’re not implemented, or they don’t have the same value in a de facto sense.

Howie Lempel: And so I guess, in the context of India, in particular, I know that you’ve written about some particular concerns you have with, or weaknesses of the Indian Constitution. So I’m interested in talking through those, and hearing why it seemed important to you to help investigate the Indian Constitution as part of your work on Indian political economy.

Shruti Rajagopalan: So a few reasons. I mean, my work on India is, aside from the Indian Constitution, there are two reasons for it. I grew up in India, and I speak multiple Indian languages. I have very strong connections to the country, though I work in the United States. I understand the local context which I think is incredibly important for the kind of work I’m doing, both policy and academic work. So there is a comparative advantage in me writing about India. And I would probably make huge mistakes if I wrote about another place where I did not understand the local context and culture and things like that. That’s one part of it.

Shruti Rajagopalan: The other part of it is, the moonshot element that we were talking about in the beginning when it comes to Emergent Ventures. But I think it’s there for pretty much anything in India. Even a small rule change in India has the ability to make an outsized impact on the wellbeing of just a very large number of people in the world. So it’s the ability, they all come under one constitutional umbrella. If you can get one thing right in India, the payoff is just enormous. And I would just like a country that I belong to, a culture that I belong to, to succeed like that.

Shruti Rajagopalan: So a lot of that comes from a personal, emotional, partially a professional comparative advantaged view. The thing I like about India as an academic, if I shed all my cultural and personal baggage, is places that are messy and entangled, the problems are just a little bit more delicious. They’re not that straightforward. You don’t have this glorious tradition of 800 years of constitutional law which is extremely stable, not prone to amendment. There’s a strong constitutional culture. When you have lots of amendments and lots of messiness, and lots of different interpretations, it just makes it delicious to look at a problem. It’s a different kind of challenge. It’s also harder to write about. So that’s the academic side of me. I think a lot more people will learn a lot from looking at the Indian Constitution.

Shruti Rajagopalan: So according to me, a lot of Indian political economy, not all of it, but a lot of it is actually constitutional political economy. A lot of the rent-seeking cronyism, failure of provision of public goods, failure of fiscal response, all of these things are visible at the level of ordinary politics. But the moment one reads the Constitution, or reads constitutional history and its interpretation, especially constitutional amendments, one realizes that all these problems that are visible in ordinary politics actually have a constitutional reason for them.

Shruti Rajagopalan: So let me give you an example. Now India has extremely small landholding sizes, and that makes Indian agriculture extremely unproductive and makes Indian farmers quite poor. So that’s one starting point. Now why are Indian landholding sizes so small? So then you can start tracing that, “Oh, we had ceilings on how much land can be held”. And this is because they wanted to break up the Indian feudal system in the 1940s and 1950s in post-colonial India. So the idea was that you’re going to take large feudal estates, and you’re going to break them up, and you’re going to do some kind of land reform, and you’re going to give it to the farmers. So people were landless farmers working on the feudal estate. So that was the original policy.

Shruti Rajagopalan: Now if you think about it, this is a certain kind of nationalization. You take one person’s land, you nationalize it for a particular policy, you break it up, and you give it back to the people. Why is it allowed? How was it allowed? How was it executed? Now when I go back from the point of agricultural productivity to how the Constitution allowed it, I realize that this whole thing happened without paying sufficient compensation to the feudalist states. So now that’s a problem that’s been going on.

Shruti Rajagopalan: Now what is the variant of that in modern India? In modern India, we have a lot of crony capitalism. There is this huge push that we need to create special economic zones, or we need to create large manufacturing units. So there are people in India, especially a lot of people working in economic policy, who say we need to take land from all these unproductive farmers. We need to take their land, and we need to consolidate it into large land parcels, and give it to the mining company, or the pharmaceutical company, or the car manufacturing company.

Shruti Rajagopalan: Now what’s ended up happening in modern day India is we are not giving them enough compensation: the poor farmers. And there seems to be something fundamentally and morally wrong about taking from poor farmers and giving it to rich capitalists. There’s that part of it, especially with the government coming in as a broker. Now you’re trying to understand how this can be done in any functional constitutional democracy. And what I find is land reforms done in 1950, and the kind of special economic zones being created today, they are mirror images of each other. Constitutionally, it’s the same story. You’re taking from Peter and giving to Paul without just compensation. You have weakened the constitutional constraints on political actors, such that they can expropriate land, and use it for a particular kind of policy.

Shruti Rajagopalan: The only difference is, in 1950s, what was considered public interest was to dismantle feudalist states. And in 2020, what is considered public interest is we need to move towards large manufacturing firms. That’s the only thing that has changed. But what is similar, is that you’re able to take land or property from one group and give it to another without balancing their interests and without paying just compensation.

Shruti Rajagopalan: Now at the end of the day, this is a constitutional problem. So today, there are people in India who are protesting the plight of farmers, and how the land is expropriated by the government. They are really, I mean, technically, they are protesting the local government or the local politicians. But actually, the core area of protest is a constitutional issue. Why did we not tie the hands of those who govern us better?

Howie Lempel: So you’ve definitely told some stories that sound just really tragic about people having their land appropriated. I guess, what’s the case for this being a really large policy problem? I can imagine someone saying, “It’s really hard to figure out the exact amount to compensate people, but we do need to get land together in order to have big enough plots to industrialize. This is a cost. It’s a shame. But this is not a huge policy issue”. What’s the response there?

Shruti Rajagopalan: Oh, so this is a delicious problem. I’ve been looking at it for a while, and especially for the book and things like that. So there are a host of policies by the government, over a period of 70 years, which have really depressed agricultural land values in India. For instance, after the way the British came in and controlled India, mainly through the feudal lords and the monarchs, there’s this huge pushback against anyone who threatens the wellbeing of farmers, so that one of the first set of policies that was implemented was that farmers should not be able to sell their land to non-farmers.

Shruti Rajagopalan: Now the intention behind the policy was that companies like the East India Company, which is always the cautionary tale, but even modern day normal firms, should not be able to take advantage of a bad harvest and make the farmer sell his land in a fire sale. That was the ostensible reason for it. So the kinds of policies they put in place was that farmer cannot sell to a non-farmer. You can’t sell, there’s only so many units of land that any farmer can own. So no farmer can become too big and scale up and become like a feudal lord. That was another kind of policy. You can’t change land use from farm use to other use. Anyone who buys farm land, the buyer needs to submit a proposal to change land use, and then make it industrial land or something. There’s a whole host of policies which were ostensibly to protect the farmer, but the consequence of these policies, over 70 years, is they’ve depressed the agricultural land market tremendously.

Shruti Rajagopalan: So India is one of those really bizarre places where farmers are dying to get out of agriculture. Developers are dying to buy agricultural land and turn it into manufacturing or urbanized condos and things like that. But they cannot meet on the price because there is a dual market, one market for agricultural land, one market for non-agricultural land. And the dual markets are caused by a regulatory problem.

Shruti Rajagopalan: So what you see in India is this crazy kind of cronyism. So what you see is rich developers have political connections, sometimes politicians or their families are involved. And they manage to buy the land from the farmers, because one of the politically-connected families has a farmer certificate, or has some farm land. So they end up buying the land, use their political connections to get a change of land use certificate, and then they sell it to the developer. And the difference between the price of the land, in some instances, is 40 times.

Shruti Rajagopalan: So the land is worth 40 times more with a change of land use certificate in hand, than without one. So naturally, if farmers can only sell to other farmers, and they can’t themselves get a change of land use certificate because they’re not politically connected, and so on and so forth, you’ve completely depressed the value of their largest asset. Why have you been able to do that as a country is because we have not constrained the power of our legislators to regulate property. I mean, legislators have no business telling farmers who they can and cannot sell their land to. But because the Indian Constitution allows them to do that, you get this other problem in the economy which snowballed over 70 years, it creates a dual issue of very, very small landholding sizes and an impossibility to convert it into a larger parcel of land.

Shruti Rajagopalan: Now people who don’t look at this problem constitutionally, and they only look at it in ordinary politics, they think of it in a very polarized way. So the left says, “The government is against poor farmers and poor people. They’ve sold out to crony capitalists”. The right says, “Hey, farmers are not that productive. We need to get large parcels of land assembled and make sure that rich developers can create employment opportunities and get them out of unproductive agriculture”. So they are looking at it in a partisan and a polarized sense.

Shruti Rajagopalan: The moment you shift the analysis to the constitutional level, all of this disappears. And what you really try and understand is, “What are the rules of the game that prevent people from buying and selling property from each other?” Why is it so high, in terms of transaction costs, for farmers and developers to assemble land parcels, either individually or as a group? Then you’re walking away from the immediate politics. You’re thinking about the larger institutional arrangements. And that’s, for me, the most interesting part of this kind of analysis.

Shruti Rajagopalan: And I can apply this… This is just physical capital, which is property. You can apply this to affirmative action and human capital issues. You can apply this to fiscal federalism. You can apply this to why we have open defecation in India because municipalities are not empowered to build sewage systems and toilets. So once you shift the level of analysis, and you walk away from the blame game of individual political actors or political groups, then I think that’s very powerful.

Howie Lempel: I have so many other questions I’d like to ask you about this, but just for the sake of time, I think I’m going to have to sacrifice and move on to another topic.

Emergent Ventures [02:27:34]

Howie Lempel: So I really want to get to ask you a little bit about Emergent Ventures because I think it’s just a really cool project. So you talked about it a bit earlier on, but do you want to give a bit of a description of what is Emergent Ventures and what about it distinguishes it from a typical foundation?

Shruti Rajagopalan: Yeah, so the idea of Emergent Ventures was to create a philanthropic fund or a project that will support other projects that may be too weird, too out there, too risky, very hard to measure the impact, or just very high chance of failing but should they succeed, they’d be great. Most major foundations are bureaucratic. By the nature of their setup, they like to pick more tried and tested things. Typically people who are better at grantwriting end up getting the grant or the money rather than the better idea. Now there are reasons why different philanthropic foundations work in the way that they do, but Emergent Ventures is an attempt to walk away from those problems.

Shruti Rajagopalan: Now this is really Tyler Cowen’s brainchild, and the way he set it up is minimal to zero bureaucracy. There are no layers and layers of approval. Tyler is the final approver of any Emergent Ventures application. I approve the India applications. Of course we all talk to each other. Tyler uses a couple of us as scouts. We’re in touch with him, ask each other for advice on how to deal with a particular kind of project, especially if we don’t have much familiarity in that particular area. But the idea is a pop-up philanthropy, which quickly hands out grants to projects that are not otherwise going to be funded, right? So it’s, in one sense, looking for those unlikely ideas which have gotten lost in the maze of standard bureaucracy when it comes to philanthropy, and the other part of it is also choosing people, right?

Shruti Rajagopalan: So I also like to support ventures where there might be very, very low likelihood of the idea succeeding, but it’s come out of a very interesting, smart, creative person, and empowering them through an Emergent Ventures grant is going to change the trajectory of their careers or their lives. And then the next idea is much more likely to get success and funding and commitment and collaboration from others. So that’s the big picture or vision of what we’re trying to do. I mostly try and follow Tyler’s vision in terms of what Emergent Ventures does, but I use my own instincts and my own sense or judgment of what I think works or what is a better project or not when I’m choosing on the India projects.

Howie Lempel: Yep. That makes a lot of sense. Do you have some sense of how big these grants tend to be?

Shruti Rajagopalan: They really vary. The nice thing about India is a very little money goes a long way.

Howie Lempel: Yeah.

Shruti Rajagopalan: So we’ve given grants as small as $500 to $1,000, which have helped people get things off the ground. $4,000 or $5,000 in India, you have people building robots and then trying to get it to the next stage and so on and so forth. So you have really small grants and then there are, of course, very large grants, we’re talking about hundreds of thousands of dollars in some cases, like half a million dollars.

Shruti Rajagopalan: So it really depends on the project and the person and what they are trying to execute. The India grants tend to be smaller, just it’s a special tranche that was given to Emergent Ventures and the asks are also typically much smaller. So the average size of India grants is much smaller than the average size of the American grants, but we try and keep away from any fixed template. We try and keep away from, of course there’s a budget constraint, but we try and keep away from… “We must only entertain grants smaller than this or bigger than that”. So it’s more just evaluating each grant on its own merit and trying to empower the best, most interesting ideas.

Howie Lempel: Do you know how applicants tend to find out about it?

Shruti Rajagopalan: I’ve heard that it’s usually through the internet and word of mouth. So really smart and entrepreneurial people are attracted to other really smart and entrepreneurial people. So that tends to do the job. Someone’s heard about a friend of theirs who got a grant and was encouraged to apply, but most of the heavy lifting is done by Marginal Revolution. It’s one of the most popular blogs in the world. And Tyler is very influential, both through the blog, through his writings for Bloomberg, or on Twitter. He’s just relentless in terms of how he engages with the world, just through ideas and entrepreneurial action. I’m free-riding on the infrastructure and the brand of Emergent Ventures and that makes it very, very easy on one side. So I don’t have to think of this as a typical startup. I came in with a lot of advantages. So it’s really, I mean, trying to do one’s best to think about what kinds of projects to support. That’s the real struggle for me.

Howie Lempel: Is there anything that stood out to you about what types of projects end up being most exciting to you?

Shruti Rajagopalan: That’s a great question. A few. This might be because I was a professor for such a long time and I’ve just had a lot of experience working with younger people and students, but the young talent in India is just sort of a marvel to me. Our youngest grantee in India, I believe, is Onkar Singh who is 14 years old, who’s about to start high school: it’s such a simple and elegant idea. So the state of Kashmir, due to India, has had one of the most severe lockdowns pre-COVID. It’s been going on now almost exactly for a year. And there was no internet in the initial parts of the lockdown, and then they only introduced 2G internet, they still don’t have high speed internet.

Shruti Rajagopalan: So as soon as the COVID crisis hit, Onkar tried to create a symptom checker that would work on Kashmir’s issues related to 2G problems. It was a very simple website that would load easily, that would give the information about your immediate local hospitals and centers, that will give you the best information on the symptoms regarding COVID in the local language, and so on. So it’s a very low tech, low-cost project, but it does a lot of good very quickly in the areas where people need the information the most, right? So we’ve had a couple of people developing COVID checkers, which have… This was even before the government of India got around to creating an app. So another one of our winners, Mohammed Suhail, he had a symptom checker across multiple languages before the government thought it is important to communicate this in multiple languages.

Shruti Rajagopalan: Then of course the symptom checker kind of got torpedoed by the fact that the government introduced one and made it mandatory, bu we just have very smart, very young, very creative people, and all these people are in their teens. When it comes to COVID, we’ve had people working with municipalities. So one is Nilay Kulkarni. They develop the contact tracing app for the Nashik municipality, which is a municipality in Maharashtra, and then they started working with Bombay and Pune as well. I already mentioned Akash and Puru, who were so instrumental in the technological and the data analysis that they could give to different municipalities in India, most notably the efforts in Dharavi. So we’ve had a lot of COVID specific projects that we empowered that did really, really well, so that makes me happy.

Shruti Rajagopalan: One of our, in terms of moonshots, is also academic projects. So there’s something called the SHRUG database, which is created by the Development Data Lab. This is Paul Novosad and Sam Asher. They’re professors at Dartmouth and Johns Hopkins, and they created a database on various socioeconomic indicators geocoded across about 500,000 villages in India. And they got a grant to make all this data clean, coated, and available to the public for free. So it’s this enormous public good, and we hope lots of research papers and policy papers come out of it. So it’s not a sexy cancer research kind of grant, but it’s a public good grant which hopefully enables and launches a thousand more papers and dissertations. So some of these kinds of ideas, which are low tech but do need resources and they do need support that ordinary philanthropic foundations are not likely to support, those are my favorite. And my really, even among them, my favorite ones are the youngest group of people.

Howie Lempel: Cool.

Shruti Rajagopalan: They’re just incredible. The teenagers that I support are my favorite people.

Howie Lempel: For these moonshot kind of projects, do you have a plan for how to evaluate if they were successful?

Shruti Rajagopalan: There are different margins of success. So I’ll walk you through a few things that I try to keep in mind. I think one margin of success is that someone tried. With moonshot ventures, anytime someone tries, it becomes easier for the next person to try and the next person after that and so on. So I think with moonshots we need to think about this as a larger project in the innovation chain than just one single thing that’s going to change the prospects of mankind. So the first is, did they try? Were they successful on any margin in getting some traction for their idea? Were they noticed? They get a little bit of scale and they go from there? So that’s one kind of success that I try and evaluate. Another kind of success is the project might’ve failed, but the individual got a lot out of it. The first entrepreneurial venture for the individual failed but now the next entrepreneurial venture is that much better. And then venture capitalists and private equity firms take notice and start investing in them. So that’s another kind of success.

Shruti Rajagopalan: A third kind of success is the project was well-executed, but whether it had an impact is going to be a very long run game and there’s no way to evaluate that. So this is stuff like the Data Development Lab’s project, right? It’s going to take us years and decades to know how many collaborations came out of it, how many better papers were written on India because of better data, there’s just no easy way… So in those cases I feel, “Oh, they completed it, they put it out there, that’s a success. That’s a huge success”. Now, the secondary and the tertiary success that comes out of it, I hope it does, but there’s no way of knowing for sure and one day we’ll find out.

Shruti Rajagopalan: So I think of it on multiple different margins. Like the example I gave you with Raman Bahl, I would love if he could individually scale up and give voice-based lessons to all the relatively poor students who have no access. But if his ability to do this project in India, in one village in Haryana, can inspire multiple other people to do similar projects in other states, I would consider that also a huge success. So it just varies. Luckily I have a very kind mentor and boss who doesn’t have any fixated ideas of what is a successful or unsuccessful project. And also, Tyler’s vision is very clear that if all your projects are succeeding, you didn’t take enough chances, right? So the idea of moonshot projects is also that you want a very high percentage of failure otherwise–

Howie Lempel: Yep.

Shruti Rajagopalan: … you didn’t take the risks that you were supposed to take.

Howie Lempel: Yeah.

Shruti Rajagopalan: Yeah, so it’s a mix of all of these different thoughts, so there’s no template for success, it’s more like learning by doing the way one does anything else. And just to get good ideas started, I think that would be my big one. If I just find a really small group of people who are otherwise ignored, and support their ideas which were otherwise likely to never get support, I think that’s a great start to thinking about Emergent Ventures, India.

Howie Lempel: Yeah. So looking through the grantees that you do have, do you have a sense of whether they have alternative funding sources available to them?

Shruti Rajagopalan: Some of them do, some of them don’t. Some of them don’t need alternative funding sources. If it’s a relatively small project, they needed particular kinds of technology, access to a platform, parts for a robot, we funded them and that was the end of that. With many of them, the ideas that we give them the initial, sort of like the startup ability, and if it works then they try and scale it up in a slightly different way. So it depends. So I’ll give you an example of a grant we recently supported, which I don’t know if they’ve started looking for alternate funding yet, I think they have and I hope they get it.

Shruti Rajagopalan: So this is VS Deepak, he’s an engineer from Bangalore: really, really smart young man. He’s worked on a whole host of how to use engineering and technology to solve problems. He’s worked on designing better and smarter traffic systems, traffic policing systems in Bangalore, things like that. Things that don’t sound like these out of the world ideas, but actually make a big change to how cities are run, how we actually navigate traffic and life. Now he’s created a new startup company called Tilt, and Tilt’s idea is e-bikes. So now you see e-bikes everywhere. You see city bikes in New York, you have a version of that pretty much in most of Western Europe and lots of big cities in the United States. But Indian cities are not so great for bikes, both because of weather and because of how the roads are designed. And most of the people who have the ability to subscribe to these bikes are not going to use them because they’re going to use cars, right?

Shruti Rajagopalan: There’s also a serious issue with property rights which is, are we going to treat the bike well? Are bikes going to get stolen? Situations like that. So his idea is much more specific. He wants to focus only on campuses and townships. So these are industrial townships, large city campuses, corporate parks. Especially in the world of COVID, normally they rely on shuttle buses or minivans and things like that. Now that obviously has both an aspect of carbon footprint. But during COVID, it’s particularly hard to socially distance when you all need to be packed into a shuttle to go from building to building, right? Or to go from classroom to classroom. So he’s creating this e-bike company that is only focused on townships and campuses, and I think that’s a great idea. It’s a beautiful local solution just for India.

Shruti Rajagopalan: We got him started on a grant, but he needs more resources. And some of them will come from the corporate parks themselves, from the college campuses. And he’s well on his way towards making that work. So they’ve already had, in the last year or so, over 5,000 users. So they’re hopefully going to become really big and they’re going to scale and I hope they make lots of money. So they’re a for-profit venture, so I hope all those things come true. But that is an example that I can give you where I believe… We supported them initially, but I think they need a lot more funding and they need some kind of a revenue model that makes this whole project feasible.

Howie Lempel: Yeah.

Shruti Rajagopalan: And it’s both great for the environment, it’s a great response to COVID. So, I think from that point of view it was a very creative idea, really smart, young people behind it. These people are…Half the team is in the teens and the founders are in their early twenties, these kinds of projects are really special.

Howie Lempel: Yeah. I mean, the other thing that I noticed is, especially for a lot of the high schoolers that you’re funding, I would guess that there aren’t that many other funders out there who would have been willing to take a bet on them. And so, that does seem like a really cool thing about the work that you’re doing is, let’s make a big difference for these people.

Shruti Rajagopalan: Yeah, and the high schoolers are just so smart. Sometimes when I’m looking at the grants, it’s actually not their project that’s the problem, it’s my lack of imagination or my own lack of education in the areas that they’re interested in. So a couple of them are interested in economics or public policy, that makes it much easier, but some of them are just working on things that I don’t even know if I fully grasp what they’re working on, technologically speaking.

Howie Lempel: Yeah.

Shruti Rajagopalan: So they’re amazing. You’re absolutely right, it’s very hard for them to get funding for these kinds of projects. On the upside, they also need very little money. For high schoolers, one of the things I’ve noticed when I speak to young people in India who apply for EV grants, the thing that they are most thrilled about, even if they don’t get the grant, is that someone took them seriously. And this is a problem, I think, just across the world. We don’t take the younger people who are not as well credentialed very seriously. I think that’s a general issue, but in India, that’s a very particular issue.

Shruti Rajagopalan: The higher up you are, the more gray hair you have, the more advanced degrees you have, the better you are. That’s just an assumption, culturally. So they are really my favorite people to fund. They are so creative. They need so little in terms of money and infrastructure, and it makes such a big difference to their mindset and how they approach a problem if someone just has faith in them and tells them, “Let your creativity loose. We don’t worry about wins and losses and profit margins”. And they’re just really–

Howie Lempel: Cool. That’s great.

Shruti Rajagopalan: So they’re very exciting to work with, they’re very exciting to stay in touch with. I am constantly at a loss on how I can help them just because I don’t think I’m as smart as them.

Howie Lempel: How has the work compared to what you expected of it? Any big surprises or lessons learned so far from…? How long have you been doing it for actually?

Shruti Rajagopalan: About I think since September/October last year.

Howie Lempel: Okay.

Shruti Rajagopalan: It’s been about eight/nine months. I think the big learning has just been… I mean, I knew this at an intellectual level, but it’s a little bit different to see it in action, just how many problems exist out there and how many different ways there are to approach a problem and think about it. That is just incredible to see. Normally I know there are lots of ways to solve a problem of mobility or pollution or COVID, but until someone puts it together in a grant that I have to read, that I read very carefully, and then I look up some other work done on it and other parallels, until then it really doesn’t register.

Shruti Rajagopalan: So this idea of just unleashing human creativity and imagination and entrepreneurship and having 20 different ways of solving the same problem and hoping that something comes out of that kind of entrepreneurship and social cooperation, to see that in action is a little bit different for me than reading about it in academic writing, like Israel Kirzner’s theory of entrepreneurship or something like that. You know what I mean? They’re the same thing, but it’s very different to see in action.

Shruti Rajagopalan: In terms of learning, I would just say I have become a little bit more patient with myself. Initially, any project that I read, I would worry about it for days. I would just sit on it for hours and days and lose sleep over it. Especially if you were going to reject a project. It just take so long, “Am I making the right decision or not?” would paralyze me a little bit. And I have just become a little bit more comfortable with making those decisions because that’s not my training, honestly. My training is not to pick winners and losers.

Howie Lempel: Right.

Shruti Rajagopalan: And I don’t think that’s what we’re doing with EV either, but one does need to select certain projects to give grants to, and I would lose a lot of sleep over it. And I think I’m getting, I don’t know if I’m getting better at picking, but I’m getting better at handling how to choose projects and just trusting my instincts a little bit more and things like that.

Howie Lempel: I worked on grantmaking years ago and saying, “No,” is just really hard. It’s a crappy feeling and it’s hard to feel… I at least found it really hard to feel confident in it ever.

Shruti Rajagopalan: I don’t feel confident in it. And the other part is, if we got a lot of terrible grants, it would be easy to say, “No,” but we get so many really great grants. A lot of times we don’t support really great ideas because we’re 100% percent sure they’re going to get funding from mainstream private sector, venture capital, things like that. Sometimes we don’t support them because they are really well tried and tested ideas that we know are going to work, but it’s a little bit outside of our mission, which is we want to support moonshot ideas. So you feel bad about rejecting those, but I try and communicate that it’s not about the project.

Howie Lempel: Right.

Shruti Rajagopalan: It’s just what we’re trying to do. But you’re right, it is very hard to say, “No,” to very smart and talented people. That’s something I do struggle with, but it’s a joy overall.

Careers [02:47:57]

Howie Lempel: Yeah. It seems like a great job. Well, so I’m wondering, if a student in India who, I don’t know, is an undergrad or at the end of high school, wants to eventually work on policy reform or maybe have a career similar to yours, how would you tell them to get started?

Shruti Rajagopalan: I would say, “Read broadly”. Economics, as a discipline, especially as you go higher and higher into the academy, it becomes very technical, you read only within the discipline. I think if you want to do public policy, if you want to do broader political economy kind of problems, one needs to read broadly. So that’s the number one requirement, be curious about the problems around you and read very broadly. The second thing I would say is pay a lot of attention to local context. And I have had more appreciation for this as I have grown older and as I have written more, because initially the tendency is to follow best practices.

Shruti Rajagopalan: For instance, you look at what are the best practices abroad, and you want to copy them, right? Or you want to look at the best academics. I mean, you want to read everything Milton Friedman has written and be genuinely inspired by it, and I was too, right? But I would not make the error, I hope, of applying what Friedman says one-on-one to what is happening in India without considering local context. I think local context is just incredibly important, and academia tends to reward people who walk away from it. And I think within the culture of public policy we need to reward people who are more rooted in local context.

Shruti Rajagopalan: And I think the third is epistemic humility. And this is not just for people who are starting out in public policy, actually they might have a lot of it. I think this is more for the rest of us who’ve been doing this for a while, and some people who’ve been doing it for a very long time. The idea that there is a single best answer out there, right? And we can both get the data to confirm it or to deny it and prove it, I don’t think we have anything like that for public policy. We don’t have any of these eureka moments you might have in natural sciences or hard sciences, in social sciences.

Shruti Rajagopalan: So I think we need to really carefully think about what it means when we read a study, what does an empirical paper mean? Whether it confirms our bias or it tells us something different about the world. So I think epistemic humility, combined with local knowledge and context, combined with just really broad reading, everything from literature to law, to history, to culture mythology, I think that really helps. That’s how I was raised, to think broadly about the world, to travel, to pay attention to the arts, to pay attention to literature, and that’s sort of how I have formed my view of the world.

Howie Lempel: That’s great. So you might also have, I don’t know, a couple of subjects that you’d recommend people study, or a couple of early career moves that you’d recommend that they make. So I’m interested if you have those or maybe it’s just the case that, the thing that seems much more important is reading broadly and being sensitive to local context. Like those kinds of skills are going to be more important than any of the more concrete “Here’s exactly what to do in your career” type of stuff.

Shruti Rajagopalan: Oh, I am an economic imperialist in that sense. I see economics in everything, I think it’s an incredible discipline. I think the way one sees the world, once they have been trained in economics, you can never unsee the world that way. You know what I mean? And the greatest strength of economics is that it makes you pay attention to things that are not visible, right? It makes you think about unintended consequences, or to borrow Frédéric Bastiat’s great phrase, “The seen and the unseen,” right? So it makes you think about the unintended consequences, the unseen effects. So economics is just a fantastic discipline, it’s got a great, very sensible sort of methodological core in terms of rational choice, and the ability to apply it to everything from constitutions to culture, to history, to religion, to crime. In that sense, I’m certainly one of those Chicago school type economic imperialists; I see it in everything.

Shruti Rajagopalan: So I think the economic way of thinking is very baffled. So any student who asked me, especially if they’re working in public policy, which has so much to do with trade offs, and costs and benefits, I would say, “An economics education is both thrilling, if it’s done the right way, and it is invaluable”. So economics in everything. You can read broadly, but get trained in economics. So that is one thing I would say. I think the other moves are… It’s very means and ends linked, right? I wanted to be an academic. I wanted to be a professional economist who teaches economics. In that sense, the minimum academic degree you need to do that is a PhD, right? And that’s the way to think about it. But there are many ways to do good in the world which have nothing to do with academic affiliation or getting a PhD or going to law school and things like that. So the effective altruism project is a great example of that. That’s something you guys do really well.

Shruti Rajagopalan: So I think people just need to decide what the end goal is and accordingly pick the means to achieve the goal. So for those who want to work in formal public policy, this might be the government, think tanks, all your multilateral organizations and agencies, like the World Bank and things like that. You definitely need advanced degrees in economics, social sciences, public policy, to achieve that goal, right? If one wants to be a lawyer and think about all the constitutional issues I’m talking about, it’s really helpful to have a law degree. It’s sort of, a little bit hard to talk the talk and think the think outside of the legal training. So I would say for those things it’s useful. So it really depends on what the end goal is, but if we’re asking about really bright young people who want to be informed, engaged citizens, read broadly, but also read economics, it just takes you a very long way in a way that I think no other discipline does.

Howie Lempel: Great. And then if there were listeners from the US or the UK who are really interested working with, or in India, and wanting to sort of get a start, is there any different advice that you would give to them?

Shruti Rajagopalan: Understand the local context, once again. It’s harder when you’re a foreigner, and sometimes I’m a foreigner in India because I don’t speak all the languages, right? I just speak two or three of them. So just really understanding: knowing the language helps. I know a lot of political scientists and economists who work in India and they all learned the language of the area where they were doing their field work or running their randomized control trial and things like that, so I think that’s very important. I think having a network helps if you’re doing academic work. You need to be able to go there, raise grant money, work with local people, co-author, publish. So try and formulate networks, go to a department where there are professors who are working on India.

Shruti Rajagopalan: For the non-academics I would say there are so many ways to support India, starting with Emergent Ventures. I might as well plug what we are doing here. But if someone just has an interest in India and understands the moonshot value of doing anything in India and how a little bit of money and few resources can really enable people to change the world in a big way for a large number of people, I would say support philanthropic efforts in India. And it need not be Emergent Ventures, it could be anything. But Emergent Ventures supports a very particular kind of ideas. So if anyone likes those, I would definitely recommend ourselves. And overall, the best way to learn about India, many people think is reading, but I think it’s traveling. So I hope one day in the post-COVID world, if people just want to learn more about India, just go there. Spend some time there, find some friends there, and then you go from there. It’s the way I learned about the United States, I think the reverse will be true in terms of learning about India.

Howie Lempel: Makes a lot of sense. Well, it was fantastic having you on, I think that that’s all we’ve got for you. Can you remind us your podcast name so listeners can go and find you?

Shruti Rajagopalan: Yes, thank you so much. This was such a pleasure, Howie, and I’m so glad we finally had this conversation.

Howie Lempel: Yeah, me too.

Shruti Rajagopalan: And I don’t think anyone has made me think as much as you have in the last few weeks in terms of thinking through all these issues about COVID and my own research and what I’m trying to achieve. Oh, the podcast is called The Ideas of India. It is produced by the Mercatus Center, and it’s available for free on all your major podcast platforms like Stitcher, Google. The first guest is Professor Ajay Shah, and I think that episode is out by the time you’re listening to this, maybe couple more depending on when the show is released, and I would love to get feedback on that.

Howie Lempel: Great. I am looking forward to listening to it.

Shruti Rajagopalan: Yes, and I hope we get a chance to talk more in the future. I would love to ask you a lot of questions because you were one of the first few people to think about pandemic risk and pandemic problems. In fact, when I was Googling this, your discussion with Rob was one of the first few things–

Howie Lempel: Oh yeah.

Shruti Rajagopalan: –That I found. And then I looked at the date and I said, “This is from a long time ago, this has nothing to do with COVID”. So I would love to pick your brain at another time when hopefully I get to ask the questions and listen and learn from you and you get to answer them.

Howie Lempel: Yeah. And now it’s somewhat out of date. It’s been some years since I was working on biosecurity and pandemics, but it was a really neat few years, where as a grantmaker I got to sort of just get to know the whole space really well. And yeah, I would be happy to chat about that sometime down the road.

Shruti Rajagopalan: Yeah, hopefully we get that opportunity, so I’d love to be in touch.

Howie Lempel: Yeah, me too. This was great, it was really great to meet you.

Shruti Rajagopalan: Likewise, thank you so much.

Rob’s outro [02:57:51]

Thanks to Howie and Shruti for that conversation, I learned a lot and I hope you did as well.

If you enjoyed it, remember Shruti’s has her own new show about government policy in India, called Ideas of India which you could subscribe to now.

The 80,000 Hours Podcast is produced by Keiran Harris.

Audio mastering by Ben Cordell.

Full transcripts are available on our site and made by Zakee Ulhaq.

Thanks for joining, talk to you again soon.