A Strike in India: Part I

Today, I will discuss a general strike that took place in India on Thursday, September 29, 2005. American readers may find in this discussion of the Indian labor landscape yet another reason to consider themselves lucky to be American.

Here are the lead paragraphs of a Press Trust of India report on the strike:

Industrial and commercial activities as also air services were affected in large
parts of the country today as the day-long strike by Left trade unions crippled
work in the public sector banks and insurance companies and government
undertakings to protest the UPA government’s economic policies.

The impact of the strike was the maximum in the Left-ruled West Bengal where life
came to a standstill with public transport, including train services, remaining
paralysed.

If this were not enough, the unions promised more to come. The PTI report quotes Gurudas Dasgupta, a union leader, as saying, “If the government does not yield to our demands, there will be a larger strike and for a longer duration. … Let the government read the writing on the wall and change its policies.”

It is instructive to see in all this how the Left is leveraging India’s socialist past, during which crucial sectors such as banking, railways, and air transport were reserved for the public sector, as a weapon in today’s political skirmishes.

Public sector employees in India have never been accountable for their performance or for their ethical choices. And their salaries have always been politically determined variables immune to the laws of supply and demand. (For example, bureaucrats’ salaries are determined by something called the Finance Commission, which happens to be staffed by—guess what—ex-bureaucrats! The last Finance Commission set wages so high that most state governments had very little money left over for developmental expenditure after paying the salaries.)

How do they get away with this? Simply by going on strike—or threatening to go on strike—from time to time. Because the public sector dominates all crucial economic gateways, a strike by public sector employees can impose such heavy costs on India that no government dares to privatize the public sector or to hold the public sector employees accountable for poor performance and get-a-load-of-this levels of corruption. Dr. Frankenstein’s monster can now take care of itself.

To the catalog of reasons against the expansion of state power we can now add a new one: the Indian experience shows that it is not the leaders at the top but the employees at the bottom that make a powerful public sector a formidable roadblock for even a democratic society that seeks to undo its past mistakes.