Decision Making as Output and Bounded Rationality

  The classical economics theories proceed on the assumption of rational agents. Rationality implies the economic agents undertake actions or exercise choices based on the cost-benefit analysis they undertake. The assumption further posits that there exists no information asymmetry and thus the agent is aware of all the costs and benefits associated with the choice he or she has exercised. The behavioral school contested the decision stating the decisions in practice are often irrational. Implied there is a continuous departure from rationality. Rationality in the views of the behavioral school is more an exception to the norm rather a rule. The past posts have discussed the limitations of this view by the behavioral school. Economics has often posited rationality in the context in which the choices are exercised rather than theoretical abstract view of rational action. Rational action in theory seems to be grounded in zero restraint situation yet in practice, there are numerous restra

Indo China Standoff and the World War I

 

The war clouds seem to be looming around Ladakh and Arunachal Pradesh. A two front war too cannot be ruled out implying the war might expand to Jammu and Kashmir and the Western states. It is not discounting the possibility of war around Himachal Pradesh, Uttarakhand and Sikkim. China seems to be belligerent and the recent setbacks seem to harden its stand. Any backing out would be setback for President Xi himself. It is unlikely they are going back to the 1993 agreement and the subsequent ones. Perhaps too them, it seems a sort of prestige to salvage their setbacks from Galwan till Pangong. India perhaps at this moment has little option but to confront the Chinese. The Indians are demonstrating patience is some indicator to the world that India does not want aggressive posture or solution to the problem but desire a genuine peace. Having demonstrated that, India seems reconciled to the war. With the Chinese virus raging around in the country, it would be a tough task to face the Chinese forces. Yet, the morale of the army is very high and in all probability will a give a bloody nose or two to China. The memories of Nathu La 1967 should be a reminder to China of what the Indian army can do to them. The ghosts of 1962 need to be exorcised for once and all times. There can never be an ideal situation and India must make use of this opportunity.

 

 The current events in Ladakh more are reflecting a game of chess before the actual combat. Each side is trying to jostle for positions so that they get the vantage point when the war actually arrives. India is moving in with supplies to stock it for the winter. India is expecting a long haul so that it has to get ready for the supplies to feed the armed forces for the whole of winter. India is rapidly expanding its infrastructure across the border regions to enable transport movement as and when necessary. Tanks are being up into the border and it should not be a surprise if one were to observe the tank battles at the highest battleground in the world. One doubts whether tanks have been used for combat at the battlefields higher than the ones in the plains and mountains of Ladakh and Tibet. It is a different matter for the Chinese since they have to push in supplies from long distances. Yet in the absence of a tactical victory or a face saver, it is almost impossible for the Chinese to go back to the pre-April positions. They too must be preparing for a winter haul. Therefore as such, in the current round, there is a lot psychological games being played around. Each negotiating at the military commanders level is a manifestation of not just a mind game but buying time till preparations are on.

 

China seems insecure in its dealings. At this stage, it would be apt to draw comparisons to the German state in the years leading upto the World War I. In the post Westaphalian Europe, the continental geopolitics was underpinned on the premise of balance of powers. Any disruption of the same by the Habsburgs of Austria or earlier Spain, or by France or by the newly emergent Germans was counter flanked by other central powers with the support of the flank powers like Britain and Russia. Britain and Russia through their unique geography had a special status in settling the continental power disputes. The balance of power was buttressed in the post Napoleonic era especially by the Austrian diplomat Metternich. Bismarck understood the dynamics and built Germany without so as to convey the disruption of the continental European balance of power. Yet post Bismarck, the dynamics in Germany changed. Kaiser William I was determined to alter the geography to his advantage. While the other European powers in their race for industrial revolution and markets for their industries, had embarked on massive colonization project which Germany felt was left behind. While Germany did acquire a few colonies in Africa, Pacific and concessions in China, it was nowhere compared to its European counterparts like the British, French, Portuguese or even the Spanish and the Dutch. Geography seemed to constrain Germany and it was this geographical disadvantage was sought to be changed by the Kaiser in alignment with Austrian and Turkish allies.

 

Xi Jinping seems to resemble Kaiser in many ways. China post Mao had adopted a low profile. They went in for industrialization and globalization in a step wise manner and did not anything that could attract adverse attention from the West in terms of access to markets. Their globalization approach stepped up post Tianmen. For Deng and other leaders, the globalization was a way to make the West overlook Chinese abuses and cracking down of dissent internally. During the Cold War, especially post 1970s onwards, China had aligned itself with US ostensibly in a fight against Soviet Union. The role of China as an anti-Soviet pole along with this huge market and labour pool producing goods at near zero price made West turn a blind eye and allow it a free ride to the economic apex. Under Xi, things however changed. The Chinese no longer are content playing a discreet role but want to step up their expansionism. In true Chinese fashion, they might have impacted by the virus they have released but want to convey to the world that they are perhaps the strongest at this stage. Therefore, they have been provoking Japan, Australia, ASEAN countries, Korea, India among others. ASEAN countries have their own multiple contradictions and are unlikely to stand up against China while continuing to make some symbolic noises. It is therefore left to India to stand up to China. Given the way German hostility to France and Britain that shaped up the World War I, the apparent hostility of China towards India will probably result in the emergent Asian war. Both India and China aspire to be superpowers and yet the battlefields of Asia aren’t big enough to accommodate both. At least that seems to be the perception. It is akin to the inability of Pandavas and Kauravas to coexist in the same power structure and apparatus.

 

Like the Kaiser, Xi Is determined to break the equilibrium that has existed for long in the Asian political system. The system is not of course merely Asian with Russia, US and Australia too being an integral part of the system. The Europeans are perhaps too soaked in woke to make of a material difference though Britain has interests in Hong Kong. The world is perhaps moving an Asiatic version of the European situation in the first decade and half of the twentieth century. It however remains to be seen whether the battles will continue to be localised as they are currently or will there be an expansion of the war theatre encompassing other countries. All that is needed is a tinder to light the forest.

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