If Muslims get richer, Hindus try to kiss them.

Implications of an Economic Theory of Conflict: Hindu-Muslim Violence in India

Anirban Mitra, Debraj Ray

NBER Working Paper No. 19090
Issued in May 2013
NBER Program(s):   DEV   POL 

We model inter-group conflict driven by economic changes within groups. We show that if group incomes are low, increasing group incomes raises violence against that group, and lowers violence generated by it. We then apply the model to data on Hindu-Muslim violence in India. Our main result is that an increase in per-capita Muslim expenditures generates a large and significant increase in future religious conflict. An increase in Hindu expenditures has negative or no effect. These findings speak to the origins of Hindu-Muslim violence in post-Independence India

.

The full paper is here.
On the assumptions of the authors,  assuming the Police are non-functional or that they side with the majority, then -if a riot breaks out- the majority will
1) kill more than the minority unless the minority has rational expectations and quickly runs away
2) loot more than the minority and thus, potentially, come out ahead.
Thus only Minorities which are stupid or which have very poor Leadership or which have a suicide wish will ever participate in riots. Instead, they will be prepared to pay a Protection Tax till such time as they can safely emigrate. Similarly, Majorities with rational expectations will launch periodic predatory assaults on the Minority if for no other purpose than to keep their numbers down.
Prima facie, this model predicts that minority share of population wlll fall as indeed has happened in Bangladesh and Pakistan and now Iraq and Egpt and so on.

Examining the empirical evidence, the authors find something strange.
In India, the majority community doesn't slaughter and dispossess the minority (unless the majority happens to be Christian, as in Nagaland, or Muslim, as in Kashmir). Instead, if its Income goes up, it gets less aggressive (provided it is Hindu). Not so the Minority (unless it is Hindu- in which case it runs away). If its Income goes up it is more prone to go on the rampage. But this means it will lose more and so its Income will fall back down after a riot. Still, once Income starts rising again, they just go on the rampage  again and the pattern continues till either they become the majority (assume poorer people have bigger families) or they become so de-skilled that their Incomes can never rise.

Obviously, the Identity categories 'Hindu' or 'Muslim' have no natural or inevitable connection with 'majority' and 'minority' and thus can't be used as explanans in a scenario like this, yet this is what the authors do. Their conclusion is that when Muslims get richer, Hindus attack them. This is entirely inconsistent with their assumptions and findings. What is warranted is the conclusion that you don't have to be a Bengali Hindu to be a shite Economist, but it sure seems to help.

Vyasa's Vighnaharta

Much has been written about the Gita but few mention the elephant in the room.

For Hindus- it is Ganesh.

The main obstacle Vyasa faced in composing the Mahabharata was finding a faultless scribe to take down his inspired verses. As 'destroyer of obstacles' our friendly elephant headed God volunteered to be Vyasa's amanuensis.

But Ganesha is also the 'creator of obstacles' and His presence lets us focus on the biggest obstacle that would arise in the composition of a work which shows that the Just King must learn Statistical Game Theory to overcome 'vishaada'- debilitating angst or Moral Uncertainty.

What is that obstacle? Well, in any didactic exercise or gedanken there is always the danger that either the speaker or the auditor, or both, will forget the wholly metaphorical nature of the underlying discourse and begin indulging in 'meta-metaphoricity'- i.e. taking a metaphor for a fact and constructing another metaphor, itself taken as fact, upon this illusory basis. In other words, there is a slippery slope to Alice in Wonderland type nonsense.

Interestingly, Ganesha warns Vyasa that he must not stop the flow of his dictation- in other words, Vyasa has to have a heuristic against facile nonsense- and Vyasa adds the stipulation that Ganesha should pause if he does not understand a couplet- thus always being able to buy time for himself by employing Vedic 'Slehsa' or metonymy.
Thus Vyasa, internalizing a Noether type symmetry conservation heuristic, remains on his guard against facile prolixity while Ganesha, who only pauses for what is deep- i.e. Vedic- is able to remove the obstacle he himself, as Vighnakarta, created so that as a matter of fact, not conjecture, the Mahabharata becomes a truly divine book dispelling all delusion, though only for stupid debased drunkards like me. Savants and people of good character can always study the Vedas which I am too stupid and evil to propound, while my aleatory exposure to the 'fifth Veda' enables me to have a good laugh at the silly things scholars say about it.

In particular, in Game Theory- the dramatic scenarios it invokes- the word 'rational' is used in a wholly metaphorical sense. The elephant in the room is Muth rationality- human beings are social animals and only that is rational which we would all agree - this is called Rawlisan 'overlapping consensus'- is the correct theory all can act upon for the best empirical outcome.

Game theoretic exercises show how 'rational' following a rule leads to irrational catastrophes and this has instrumental value provided we don't forget the motivation of the elephant in the room- viz. the fact that we only created an artificial obstacle so as to improve our insight into how to get rid of a real stumbling block.

In other words, Game theory studies rationality artificially constrained to be irrational so that the actual constraints on Muth Rationality- re. Information aggregation and decisional heuristics- are better understood and circumvented.

The Mahabharata, though showing that Policy Principals need to apply Statistics and Game Theory, also reveals that Moral Agents need something else entirely to escape Vishaada- i.e. existential angst.
The Bhagvad Gita- in which both the incarnation of the Divine and the representation of the human-too-human are merely Agents, not Principals- comes to the conclusion that human life is ontologically dyshoric- even Presentism must turn into Theistic Occassionalism such that this world is devalued- it is rejected as heimat- and ontlological dysphoria is itself celebrated as 'Vishaada Yoga' and becomes foundational to Raja Yoga and Karma Yoga and Bhakti Yoga- i.e. all the good stuff.

Viktor Orban may be a cat even if no cat is Viktor Orban.

Does 'No cat is Viktor Orban' necessarily imply 'Viktor Orban is not a cat'? No because Viktor Orban may have the property of being a cat only when it is established that no cat does.

What happens when we add the stipulation that there is at least one cat? Can we now deduce from 'No cat is Viktor Orban' that 'Viktor Orban is not a cat.'? No because Viktor Orban may have the property of being promoted to cat status iff only one cat is confirmed in that property. Similarly the existence of n cats who are not Viktor Orban may itself vest the property of being a cat in him.

The truth about Jivanmuktas

My Seetha was an eight year old Iyengar whose fierce affection

Taught my Iyer alterity its grotesque reflection

Fear is that Demeter mills the World on Belief's lathe

Till, Dis, thy LSEusis graduates Faith

Muth Rational Migration Theory.

When my mother asked if we were hungry, sister would reply 'So hungry, my Capital is Budapest!' which earned her a biscuit. I would get angry and weep bitter tears till my wife intervened and threatened my Mum with prison under India's draconian anti-dowry legislation. Then I too got a biscuit.

What prompts this digression down Memory lane, is the spectacle of Hungry Border Guards beating refugees from Syria because they don't all happen to look like Amal Clooney-

As Ghalib said-

I will swing for you, mate, the way you translate my ghazals all Auto-tuney

Tho' Heaven's Houris, too, could wait were my lawyer Amal Clooney

As so often happens on this blog, mention of Ghalib means I've been drinking and thus the great ethical dilemma of the day will, very quickly, be shown to decompose into a simple case of ignoring Muth Rationality. 

In this case, Merkel's  policy of dithering till Public Perception of a crisis for Liberal values snowballed meant that the 'Ordo'- i.e. rule based- part of Ordoliberalism- became a nullity.

Essentially, Merkel's salience meant Media led, ad captum vulgi, Crises were the 'discovery' process for Social Choice. This was fine if Europe actually had more capacity for Liberal policies than could be acknowledged by the 'Ordo' rule-set because of some cognitive bias or Ambiguity aversion.

However, Merkel's flip flop- saying 'come one, come all' one day and then suspending Schengen a couple of days later- means that Viktor Orban (who is actually my neighbor's cat which ran away back in the Nineties) has suddenly gained salience as the Arrowvian dictator or mimetic leader.

One outcome is that backward induction can now show the Muth Rational solution- viz. Country X, which will take migrant y, even in violation of its rule-set, should arrange the current safety and wait listed transport of that migrant immediately. Otherwise the present value of the cost of treatment for trauma, which will fall upon the final host, will outweigh the current cost of arranging safe warehousing and wait listed transport.

Of course, this way,  avoidable death and suffering to migrants, and profits accruing to people smugglers, would not arise. That's a good thing. The argument could be made that People's Preferences would not change unless these avoidable deaths actually occur- i.e.  bead babies washing up on the beach, or a dad with a bloody face clutching his baby running from the Hungarians- but this is not a moral argument. In any case, Human beings are very good at simulating horrible outcomes so as to awake feelings of pity and terror. A well made film- even a poem by a school kid- would change our preferences without even the depiction of death or suffering. The suggestion of vulnerability is enough.

The concept of Muth Rationality arose more than 50 years ago in response to the War time bureaucratization of Liberal Democracy with more and more decisions being delegated to clerks following rules mechanically. People like Arrow showed that Social Choice can't function democratically if rules are mechanically applied. John Muth explained why economic processes aren't hopelessly hysteresis entangled but quickly return to ergodicity from any perturbation no matter what traits or 'adaptive expectations' type heuristics are attributed to, or indeed affirmed, by people.

The idea is simplicity itself- people will expect the result of the correct economic theory. This expectation will create its own reality iff no current obligatory passage point seeks to capture a rent.

In this case Merkel wanted to capture a reputational rent as St.Angela without running the risk or expending the effort necessary to prepare Germany for the outcome she wanted. But this rent vanished very quickly. Orban became the obligatory passage point.  Expectations are already adjusting. Orban will probably get no more, and no less that the number of migrants his people really want. Suddenly he has salience as the mimetic leader- at least on this issue.

Avoidable suffering was caused by the mixed signal Europe was sending out. Now it will build capacity to receive migrants in a rational manner. More will be saved than under the old 'wait and see' approach because 'ambiguity aversion' means rational agents jump the gun in a collectively irrational way.

There won't be a 'cobweb' type increasing or decreasing oscillation around the Muth rational solution- provided Merkel learns her lesson.

Hindu Ethics vs Ethical Hinduism.

Hindu Ethics refers to the Norms observed by Hindus. Ethical Hinduism is the critical hermeneutics of Hindu Ethics.
To grasp the distinction, I will permit you a small glimpse of my personal life.

It so happened that a young friend invited me for his son's upanayanam (sacred thread) ceremony. I accepted graciously and mentioned what time he should pick me up. A couple of days later, I was having a drink or two and got to thinking.
My friend was certainly observing Hindu Ethics but was he really practicing Ethical Hinduism? Anyway, I sent him a Skype message to the following effect-
'Chiranjivi Sanjay,
You are a wealthy young man and carry on the philanthropic tradition of your ancestors. No doubt, you will provide us a splendid meal and have given a big donation to the Temple so the Swami is bound to deliver a marvelous sermon. Your son, too, is now sure to follow in your footsteps. It seems you have discharged your debt to the Manes while also benefiting numerous worthwhile charities.
I have no hesitation in saying that you are doing your duty as laid down by Hindu Ethics.  However, it seems to me, something is lacking. Your earning power is such that whatever sum you give away, you will earn more very quickly. Your nature, and that of your family, is so happily constituted that you get more pleasure from contemplating the benefit gained by the recipients of your charity than any you could have purchased for yourself. Where, then, is the sacrifice on your part?

'It is not enough to observe Hindu Ethics. You must practice Ethical Hinduism- which is founded upon sacrifice. Cut off your arms, roast them properly and then set off to feed some hungry cannibals or animals. After that, by all means, proceed with your son's upanayanam.'

I didn't get any answer. Next day I woke up late with a headache. The auspicious muhurath for the upanayanam had already passed. I asked my house-bound neighbor whether my friend had come to ring my bell. He was supposed to pick me up in his car. My neighbor said no one had rung my bell for months except the bailiffs. Anyway, I rang my friend and left some messages but got no answer.
A few days later I saw my friend's wife in the Ambala Sweet Shop. She saw me too but I was able to cut off her escape.
'What, I say, is wrong with your husband? I instructed him to kindly cut off his arms, roast them and find some hungry cannibals or animals to feed them to. Ethical Hinduism demands no less. Seems he is ignoring me completely! Didn't even come to pick me up for your son's upanayanam! Won't even answer when I ring! What sort of behavior is this? How he can still call himself Hindu?'
'Uncleji,' his wife replied, 'he cut off arms just as you advised. That is why he was unable to drive to your house or to pick up phone when you ring. I offered to do it for him, but he said only he can discharge his own duty- by learning to use his legs and prehensile toes- and must incur sin till he is able to do so. Let me give you his new private phone number. Leave as many messages on it as you like. Be sure he will answer you once he has properly trained his legs and toes.'

I must tell you, I felt greatly relieved to hear this. But along with relief, I also felt some remorse. I should not have recklessly accused my young friend of being an acharabrashta and Hindu by name alone.

This remorse was unwarranted. I just bumped into the fellow today. He explained that due to global liquidity trap arising from the Singerian sub-prime catastrophe relating to the currency of deontic Utilitarianism, there is contango in the alms market creating a Parrando's Game type Arbitrage strategy for Effective Altruism applicable to arms chopped off to feed hungry cannibals or animals. Thus his current arms actually belong to his younger self and can't discharge obligations undertaken after they had themselves been given up.
Since, as readers of this blog know, I am an expert on Financial Matters, I was easily able to understand how contango arises in this context.
Yet another reason that, as Varoufakis says, we Ethical Hindus must unite to slay the Global Minatour of Capitalist Humbuggery.
Meanwhile, kindly cut off your arms, roast them nicely and feed them to hungry cannibals or animals.

Muth Rationality and the Pirate's Game

Rationality has to do with making optimal choices by means of a effectively computable calculus. There are other ways to make optimal choices- e.g. 'expert cognition' which is apophatic- and situations where some wholly intuitionistic or oracular process can be shown to yield a better result than the any effectively computable method.

What happens when you set up a gedanken where you specifically prohibit the rational choice, yet demand that a rational methods be applied?
The answer is- you get nonsense. Take the following example-

The Pirate's Game. (from Wikipedia)

There are 5 rational pirates, A, B, C, D and E. They find 100 gold coins. They must decide how to distribute them.

The pirates have a strict order of seniority: A is superior to B, who is superior to C, who is superior to D, who is superior to E.

The pirate world's rules of distribution are thus: that the most senior pirate should propose a distribution of coins. The pirates, including the proposer, then vote on whether to accept this distribution. In case of a tie vote the proposer has the casting vote. If the distribution is accepted, the coins are disbursed and the game ends. If not, the proposer is thrown overboard from the pirate ship and dies, and the next most senior pirate makes a new proposal to begin the system again.^[1]

Pirates base their decisions on three factors. First of all, each pirate wants to survive. Second, given survival, each pirate wants to maximize the number of gold coins each receives. Third, each pirate would prefer to throw another overboard, if all other results would otherwise be equal.^[2] The pirates do not trust each other, and will neither make nor honor any promises between pirates apart from a proposed distribution plan that gives a whole number of gold coins to each pirate.

The result

It might be expected intuitively that Pirate A will have to allocate little if any to A for fear of being voted off so that there are fewer pirates to share between. However, this is quite far from the theoretical result.

This is apparent if we work backwards: if all except D and E have been thrown overboard, D proposes 100 for D and 0 for E. D has the casting vote, and so this is the allocation.

If there are three left (C, D and E) C knows that D will offer E 0 in the next round; therefore, C has to offer E 1 coin in this round to win E's vote, and get C's allocation through. Therefore, when only three are left the allocation is C:99, D:0, E:1.

If B, C, D and E remain, B considers being thrown overboard when deciding. To avoid being thrown overboard, B can simply offer 1 to D. Because B has the casting vote, the support only by D is sufficient. Thus B proposes B:99, C:0, D:1, E:0. One might consider proposing B:99, C:0, D:0, E:1, as E knows it won't be possible to get more coins, if any, if E throws B overboard. But, as each pirate is eager to throw each other overboard, E would prefer to kill B, to get the same amount of gold from C.

Assuming A knows all these things, A can count on C and E's support for the following allocation, which is the final solution:

• A: 98 coins
• B: 0 coins
• C: 1 coin
• D: 0 coins
• E: 1 coin^[2]

Also, A:98, B:0, C:0, D:1, E:1 or other variants are not good enough, as D would rather throw A overboard to get the same amount of gold from B.

Is this solution 'Muth rational'? Does it conform to the prediction of the correct economic theory- viz that the booty will be divided according to fighting ability- i.e. Expected Value of their marginal contribution to any possible victorious coalition?

Clearly not.

This is a contrived paradox demonstrating something everyone already knows.

Induction is useless unless it also applies to the base case.

Here, voting on dividing the booty is irrational- pirates will always gang up to rob and kill any one with a gold coin- so no one is safe if they own gold. Thus Pirate A should offer 0,0,0,0,0 - unless Pirate A's seniority arises by reason of his superior ability to objectively and truthfully estimate each player's marginal product and this is common knowledge. However, in that case, the other rules stipulated are redundant. 

The fact that the Pirates are rankable at all means they must have a Expected Marginal Product based on their contribution to a victorious coalition. This may not be exactly known but it is something the Pirates can thoroughly discuss and, after a few iterations, you have a robust solution because it can incorporate newcomers & deal with deaths or defections.

Not so with the 'official' solution given above. A's proposal is voted down and he is thrown overboard because his solution concept is not robust at all. 

Consider the following scenario-  E is paralyzed completely. Should he vote for the 98/0/1/0/1 solution? No. Because he will be thrown overboard immediately for the sake of his gold.  Suppose D lacks arms and legs but can still roll around biting ankles and causing a minor nuisance . Should he vote for the proposed solution? No. Whoever gets the gold coin won't be him and anyway pirates like throwing each other overboard and there's little resistance he can put up. Suppose C has one leg and thus can deliver one potentially disabling kick but after which he just rolls around uselessly because he has no teeth. Should he vote for the conventional solution? No. He'll be killed for his gold. He votes with D and E and gets the pleasure of seeing A killed. Suppose B has one leg and one arm and can hop around waving a sword but will eventually be bested by A who has all his limbs- though there is a small chance that if D bites A's leg at just the right time and he trips over E, then B can deliver the killing blow.He votes yes, just in case C, D and E defect because only A is strong enough to actually throw anyone off the boat and they like contemplating that spectacle.

Of course, one can change the rules and say 'pirates can only throw people overboard after a vote of this type and are forbidden to steal from each other'. But this is equivalent of saying rationality means people can guess what I want them to do, just from the way I set up a voting game,  without my having to explicitly tell them because I have infinite power over them.' This is silly. Rationality means sometimes rebelling against a tyrant because there is no rule that says you have to follow his rules.

The Pirates' game is not wholly silly. It may have reference to poorly designed computer systems or stupid Indian politicians. But it isn't part of Economics which is about robust ergodic systems based on Muth Rational Expectations- i.e. ordinary people making situational, not trait based, hysteresis led decisions.

One other point, the question of dividing the booty would never be mooted unless it was common knowledge that no hegemonic coalition of a Barbarik type obtained.