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

China, India and Afzal Khan

 

The winter is seemingly setting in Ladakh yet there seems to be no end in sight for the standoff that has ensued since April this year. The Chinese forces are digging in and reinforcing. Ditto for the Indian forces. The mind games are truly on. Similarly, the Indian forces have taken control over series of peaks hitherto unoccupied and overlooking the Chinese positions. If it was believed China had occupied the strategic heights in the early part of the summer, as the winter sets in, it seems Indians have occupied strategic heights in some other sectors. While the game might moving towards a Prisoner’s Dilemma, yet no one wants to be the ‘Chicken’. It seems a game to the finish. It is unlikely that the game will have any other ending other than the fight to the finish in the long run. The current standoff are more an exercise of preparation for the final war. It is about buying time for the final preparations. The long negotiations are aimed at wearing down the enemy. Each side does not want to budge. The Chinese army is arguably short of winter experience relative to Indians who have experience in Siachen since 1984.

 

Alongside the military preparations, one is arguably witnessing a lot of mind games. China seems to be deliberately provoking Modi. It is no secret that each side needs a casus belli for the war. Without doubt, either side would want to proclaim the other as the aggressor. Yet, manufacturing a casus belli in a long standoff while not difficult is not easy either. There must be a provocation that sufficiently is higher than the normal rhetoric that often bursts into fights at the border. Indian psychological games must factor in the same. The latest in the Chinese provocations seems to be their reiteration that Ladakh is an illegally created Union Territory. Implied is China does not recognise Ladakh. They have not recognized Arunachal Pradesh, which they term South Tibet as part of India. They have provoked a number of times in their treatment of Arunachal residents when they have sought to visit China. China did not recognize Sikkim till 2003. Inspite of the recognition, they have sought to alter the border through creeping acquisition model in Sikkim over a period of time. The creeping acquisition model began in the 1950s itself when they constructed a road through Aksai Chin. It is the Indian denial that has allowed China to act with impunity.

 

Many newspapers published ads put by Government of Taiwan on their National Day which perhaps have infuriated more the Chinese. The setbacks and casualties China suffered in the clashes in Ladakh were a sort of reality check. They did not expect an Indian reaction very different from previous occasions. Hence it is plausible that they are seeking to provoke India further into either backing down or indulging in some action that would polarise the global opinion against India. They are betting on a Biden victory in the US to ease pressure on themselves. The Chinese provocations seem to be aided in no small measure by utterances of Nehru-Gandhi family, the self-styled crown prince in particular and set of Kashmiri politicians including the ex-CM Farooq Abdullah. This push and pull approach reminds of the Afzal Khan approach as the Adil Shah of Bijapur sought to rein in Shivaji. Shivaji was ensconced in Pratapgad in the Sahyadris. They had to drag him out and therefore they began a series of provocations. While the initial ones might have been minor, they tried to test Shivaji’s patience and more importantly his credibility. Shivaji’s greatest strength was his credibility and they wanted to attack. Hence Afzal Khan destroyed the Bhavani temple and the Vittal temple in Tuljapur and Pandharpur. To rub matters further, he slaughtered the cows religious to Hindu in front of the temple. Shivaji refused to get provoked and stayed silent. In fact, the whole idea of Afzal Khan was, if Shivaji stayed silent at these provocations, his hold on the people would considerably reduce. People would doubt his abilities to counter Afzal Khan and probably begin to desert him. They might consider him as coward and a leader not capable of defending their religious places. Shivaji played his own game, waited for his chance and drew Afzal Khan into his territory before killing him.

 

The exact modus operandi seems to be being built upon by the Chinese. There are provocations at different points on the border besides regular utterances in the media. They are psychologically designed to weaken the Indian resolve. This is sufficient fodder for the Indian opposition especially Rahul Gandhi to throw jibes at the Prime Minister. Narendra Modi’s biggest strength has been his integrity and credibility. The self-styled pretender to the throne has often said, his goal is to destroy this credibility no matter the means. He exactly seems to follow the Chinese prescription. To add is the section of the media which acts as a mouthpiece for China than to report facts. In Gobblesian terms, reinforcement would make people believe it to be the truth. There is of course a huge arms lobby too. The Kashmiri political class has been smarting since the abolition of Article 370 last year. Having failed to overthrow the Indian state through Pakistani support, they are now looking towards China. After all, China thinks Pakistan is the client state. Therefore it would be no surprise to find Kashmiri political class in the valley now seeking refuge in China. The whole objective would be to destroy the Modi credibility and trust among the Indian voters. Modi would come under serious pressure to do something on China. In the process, he might act hastily. The presumptive Biden rule in the US would perhaps be not hostile to China and instead might put pressure on the Indians. This would put India under strain and might buckle down. They want to do a 1962 which completely undid Nehru.

 

Modi facing the COVID-19 crisis unleashed by China is also suffering from the economic woes. At this stage, he knows a war might not be a feasible option. Yet with passage of time, he has to tackle China if he has to ensure peace in South Asia. The steps towards Quad are beginning in the direction. It would test of his credibility to see how long he can postpone the war and fight it on his terms. Modi ideally would want to draw China a la Shivaji drawing Afzal Khan into his sphere. He wants to hit China in the economic sphere but that would a very long battle. Public patience would wear thin. He has to manage the same. Whether Modi would do a Shivaji or would get provoked by China into something of haste is what time would tell. Until then the standoff continues.

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