Uber, knickers and other interpreters of maladies

https://thewire.in/economy/indias-slowdown-uber-knickers-and-other-interpreters-of-maladies Recently, Union finance minister Nirmala Sitharaman – riled by incessant criticism of the state of the economy under her stewardship – sought to identify culprits responsible for the malaise. The multiple organ failure of the economy needed culprits more proximate than Nehru who has hitherto ably absorbed blame for failings past, present and future. So the millennials – those born between 1981 and 1996 – had to take one for the nation. The immediate irritant was the plight of the automotive sector, an anomaly in India’s otherwise low-tech manufacturing sector, that has been tanking for the last ten months with no recovery in sight. A sector that contributes 7% to the GDP and directly and indirectly employs over 34 million workers has seen its worst slump in two decades. The minister sagely pronounced that we should look no further than the millennials who selfishly choose ride aggregators such as Ola and Uber over the pleasure of car ownership. Her diagnosis was neither endorsed by the captains of the car industry nor substantiated by the prevailing poor performance of ride-hailing companies. Even as her homespun wisdom reverberated through the echo chambers of Twitter, the otherwise pliant media unhelpfully released figures of falling sales of men’s underwear. This further evidence of a free downward swing of the economy, while a bonanza for meme producers, has not hung well with the minister’s argument. How was she to know that in an age dominated by men who sermonise muscularly and goosestep in vintage khaki shorts, there might be shortcomings beneath? Alan Greenspan, the former chair of the US Federal Reserve had famously identified the fall in men’s underwear sales as a sure predictor and proof of economic recession. When men, who view their underwear as a necessity rather than a luxury, are willing to wear them threadbare, you know the economy is taking a kick below the belt. People skimp on necessities – basic food or essential clothes – only in periods of serious economic recession. What are the other rough and ready indicators of an economy going limp? Along with knickers, Greenspan identified dry-cleaning as another area where customers skimp during downturns. Haircuts too reportedly become infrequent, whilst cheaper fast-food replaces the cost and luxury of eating healthier or dining in upmarket restaurants. Conversely, in the world of women, where fashionable lingerie is a relatively affordable luxury, the freefall of the economy lifts their sales. A plausible theory is that people will spend money on things that allow them to feel good inexpensively when going out is unaffordable; lingerie might also complement the joy of staying at home. The Hemline Index, first developed by George Taylor in the 1920s, is another index that draws conclusions from the jarring response of women to a good economic crisis. Taylor, an economist from a family of textile mill-owners, observed that hemlines rose with economic growth and fell towards the ankles during the recession. In the booming 1920s, it was possibly because women could afford silk stockings that they could show off with shorter skirts. This index has survived obdurately as compiling data has evidently been delightful labour for the ‘dismal scientists’. It has also proven to be accurate. A study conducted by academics at the Erasmus School of Economics using monthly data on the hemline and chronology of the economic cycle from 1921-2009 found that this urban legend holds, although hemlines lag the economy by three years. Alas, the Hemline Index might not be of much relevance to India where hemlines have remained stubbornly close to the ground, and any upward movement is policed closely, mostly by men in khaki shorts. The lipstick index too, which predicts an increase in the sale of greasepaint during an economic downturn is not an entirely dependent indicator for the Indian economy’s arcane ways. What might be good indicators for India? Do the length of queues in front of chole-kulche roadside stalls in Delhi indicate a similar trend as the demand for fast-food in the West? Do astrologers fare better in periods of uncertainty? Do Indians speak less on their cheap mobile phone lines? More morbidly, are farmer suicides an indicator of a failing rural sector? Or are onions sales India’s most reliable indicators? As R.K. Laxman’s Common Man wryly observed after Vajpayee lost state elections despite testing nuclear weapons in 1998 – to Indians, the onion is more important than the (nuclear) mushroom. Do the sprinklings of chopped onions on pav-bhajis and uttapams thin when the going gets tough? What jugaad indicators might aid Ms Sitharaman in reading the state of the economy? The answer should be – none. Jugaad and earthy wisdom are no substitutes for the complex expertise required for the serious business of running an economy such as India’s. Right-wing populist leaders from India’s Narendra Modi, US’s Donald Trump, UK’s Boris Johnson to Turkey’s Recep Erdogan, and their cheerleaders posture that the common man has had enough of experts. The real cost of this exile of experts from public discourse and policymaking bereft of rigorous data analysis is not just the occasional loss of face for populist politicians, but the mission failure of the state and its key institutions. Be it in running the Reserve Bank or implementing tax reforms in India, managing trade relations for the US or negotiating Brexit for the UK, economists, lawyers and statisticians have essential and irreplaceable roles. Macho politics of this generation needs to choose between making peace with geeky experts who can offer advice, and continuing to get their knickers in a twist while trying to feign proficiency. Robin Koshy is a London-based economist. Views expressed here are personal.