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

The Message from Gujarat

 

Local body election results tend to favour the ruling party in the state and prima facie, the results from Gujarat seem to reinforce that. One witnessed something similar in Punjab where the ruling Congress swept the polls with the other parties performing very badly and nearly wiped out. In Gujarat too, the ruling BJP has ensured it swept the urban body elections across all six corporations. It did so in resounding manner. The opposition was left to clutch some straws for hope. It is more remarkable given the BJP is ruling these corporations for nearly three decades. In 2016, there were some setbacks, the party barely managed to hold on a few of these corporations though the urban voter by and large stood with it even in those tough times, the Patidar agitation at its peak.

 

The remarkable feature of the Gujarat polls is not merely in the BJP sweeping the stakes. It is the changes that seem to be occurring in the landscape of the political opposition in the state. this changing landscape is bound to have effects across the country. The first remarkable feature is the defeat of the Congress not just in terms of a loss but the magnitude of the loss. For instance in Surat it did not open its account and ended third in the vote share. In Rajkot for instance, it had experienced a narrow loss five years ago, but in the current election it had to be content merely by opening its account in the elected body. It experienced a near whitewash in the  other elected bodies too. It is not that Congress voters shifted to the BJP. The traditional Congress voters or for that matter, the anti-BJP voter no longer see Congress as an option. Gujarat was one of the states which had a bipolar polity with BJP and Congress as the two poles. The third force had barely little existence. The second signal that is coming out from these polls is the third polity is underway in Gujarat and it will be at the expense of the Congress. In Surat for instance, the anti-BJP vote shifted from the Congress to the AAP. AAP has made some impressive inroads into the city. It might not have secured any seat in Rajkot for instance, but the double digit vote share ensured AAP being the barrier in Congress performance in the body. It perhaps amplified the BJP victory in the city. Similarly, Assaduddin Owaisi has made inroads for his party MIM in Ahmedabad. After tasting success in Bihar, Ahmedabad now sees some significant movement in his experiments. His seats might be in single digits but he has emerged as the voice of the Muslim community in the city. This is again a bad news for the Congress. In fact, in Jamnagar for instance, anti-Congress votes seemed to have shifted to BSP which hitherto had very little presence in the state.

 

This no doubt sets the stage for the Assembly elections in late 2022. Given the significant urbanization of Gujarat, it would be a pointer to a possible emergence of third force maybe through a coalition of AAP, MIM, BTP(tribal party) or maybe even NCP or BSP into the stream. This is certainly not a good news for the Congress, though BJP would be happy in the immediate run. At the national level, its implications would be perhaps even worse for the Congress. It is the signal that matters in politics and at the moment, the Congress is not conveying those positive signals. Any adverse verdict in the upcoming assembly elections across five states and union territories would further worsen the Congress position.

 

The Congress is increasingly losing its pre-eminence as the leading opposition party. For long the Congress was the ruling party whereas there was no single opposition party that could sustain itself as the non-Congress pole. The BJP’s emergence changed the same leading to a national bi-polar contest between these two parties though the regional parties continue to remain strong across many geographies. Even among the BJP leadership, the belief was the national polity revolves around two poles, the Congress and the BJP. However, the thinking in the current leadership seems to be different. The Gujarat results indicate the Congress would no longer be the undisputed leader to the non-BJP parties. Both in 2004 and 2019, the Congress led the non-BJP forces in the battle against Vajpayee and later against Modi. The results in 2014 and 2019 indicated severe loss to the Congress not just in terms of seats but also in vote share. Congress barely commands a fifth of the national vote share while the BJP is increasingly moving towards capturing two in five votes at the national level.

 

The other opposition parties will no longer look to Congress to lead the anti-BJP polity. Sharad Pawar is already indicating the possibility of him occupying the position of UPA chairman. In other words, there is a sign to Rahul Gandhi, he would not be the Prime Ministerial candidate for the combined opposition which they were willing to concede even in 2019. There are signs that KCR of Telanagana and even Mamta throwing their hats in the ring. Surat might have given just that encouragement to Arvind Kejriwal to boost his national ambitions. In this context, multiple fronts are likely to emerge as opposed to the leadership of Congress. The discontent in the Congress is likely to intensify in the days to come. The G-23 might get a fresh lease of life to press their concerns. The inability of Rahul Gandhi to provide the leadership at this stage will perhaps prove costly and make it difficult for others to entrust their fate to him. The Muslim vote which used to go the Congress in many states especially where there were no regional players strong enough to challenge the BJP are now increasingly looking towards Owaisi. The rise of a national Muslim party or at least a coalition cannot be ruled out and it might seek to strive a hard bargain with the Congress as with the other parties. Thus the immediate outcome of the local polls is the shrinking of the Congress position in the non-BJP polity. The contestations within the non-BJP polity would intensify. This obviously would benefit the BJP. There might be ‘Modi vs who’ something being talked about. Yet, one has to await how in the long run the indian polity would transform as new forces seek to displace the Congress.

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