#125 Sab Khatre Mein Hain

Like Benjamin Franklin once said - "We must, indeed, all hang together or, most assuredly, we shall all hang separately."

While excellent newsletters on specific themes within public policy already exist, this thought letter is about frameworks, mental models, and key ideas that will hopefully help you think about any public policy problem in imaginative ways.

Audio narration by Ad-Auris.  


PolicyWTF: April Is The Cruellest Month

This section looks at egregious public policies. Policies that make you go: WTF, Did that really happen?

- RSJ

It is difficult for us to write this edition with clarity. India is living through a dystopian nightmare that’s operating on two different timelines. In one, there’s whir of the virus raging across it leaving behind a trail of cremation pyres and plumes of smoke. Time fleets past on the X axis of many graphs that have reduced ordinary Indians into mere statistics on an exponential curve. On a different timeline is our policy response. Lumbering, reactive and unable or unwilling to anticipate the future. Here time is space. Infinite and uncalibrated. Where it can wait for inauguration ceremonies of hospitals, for department of legal metrology to waive approvals for import of Oxygen concentrators and for election commissions to clamp down on celebrations after election results.

Ordinary Indians are going about their lives between these differently paced worlds.

Public Policy Saves Lives

We are often asked about the point of discussing public policy. How does it make a jot of difference? The answer is all around us today, unfortunately. The virus might be an act of nature. But what about our response, or the lack of it? The basis for organising ourselves into a community or surrendering a few of our liberties to the state was to safeguard ourselves from the worst instincts - of human and of nature. Not caring about this fundamental role of the state and the society is not an option. We are here because of public policy failure at all levels of governance. But there’s also the collective failure of not concerning ourselves with policy while choosing or when holding the elected to account. Of letting primeval passions of identity and ideology guiding our choices.

We wrote in the last edition (“Flailing Again”) about the three public policy measures that would have been apparent in mid March 2020. Implementing them might have helped avoid our current plight. We arrived at them based on the ‘knowns’ at that time without the benefit of hindsight we have today. We argued this was all that was needed to be done. Yet we bungled on them. We received a mail from Prof Ajay Shah in response to that edition. He pointed us to a working paper he had authored (dated March 11, 2020) where he used the available data and ‘knowns’ to arrive at a comprehensive set of policy measures. He was politely telling us you might be doing this as a thought experiment now but I wrote about it last year. It is a remarkably prescient paper and as you read it a year later you cannot help but wonder why couldn’t we do what’s suggested in it. The sad answer is no one has time for public policy. Of course, we can debate endlessly the death of a film star during peak pandemic. A questioning media, an accountable government and an informed citizenry should have been discussing papers like these and forcing their implementation over the last 12 months. It would have saved lives regardless of the nasty surprise that the second wave sprang upon us.

Maybe this experience will mark a change. But I’m not holding my breath.

Anyway, given the ‘knowns’ now, what should be done?

On Vaccines

Admit we missed the bus in buying them in advance from multiple makers and get on with sourcing them now. We had written about India and the global race for vaccines (May 6, 2020). I don’t want to bore with ‘I told you so’. This is what we had written (in summary):

A low-income country with a large population like India has significant risks even if a universal vaccine is developed quickly elsewhere in the world. India can ill-afford the huge economic costs and time for the vaccine to reach its shores. There are a few strategic options that it must exercise at this moment to make the best of a bad situation. These include

  • Funding domestic vaccine research

  • Advance contracts with global vaccine makers

  • Offering manufacturing capacity

  • Don’t piss off China: It is very likely China will be the first to produce a successful universal vaccine.

  • Vaccines as strategic stockpile

We will reiterate these points today. Pay vaccine makers (not just one company) to build huge additional capacity in short time and get them cranking out vaccines for India. Vaccine prices will be higher if you need to produce huge numbers in a crunched time. Nobody can make the numbers we need without advance purchase agreements. These are basic economics. This is no time for nickel and diming. Just pay them for capacity now.

What the government pays to procure vaccines and what the ordinary citizens pay for vaccines are two different things. Don’t confuse the two and don’t let vaccine pricing become another policy front to engage in pointless debates. Make vaccines free for the citizens at all government hospitals and vaccine centres. Those who can afford to pay can vaccinate themselves at private hospitals based on market price. Since the government will have bought in bulk, it will be controlling the supply anyway.

Healthcare Infrastructure

We need to do a realistic assessment of potential cases over the next six months at pincode level. We then need to make sure the healthcare infrastructure including hospital beds, medicines, oxygen supply, ventilators, vaccines and medical & paramedical staff are available as quickly as possible. This has to be done on priority. Build makeshift beds, import ventilators, set up Oxygen plants in each district, manufacture medicines and train as many people on basic healthcare skills - just get going on it. We will have a shortage of nursing and healthcare professionals in the next few months given the current spike. This is no time to be embarrassed about asking for help from others or about importing supplies. People are dying on the streets of the capital. We should be beyond embarrassment at this time.

Information System

We need genuine and real-time data to mobilise resources and save lives. It is also needed to prevent future outbreaks and deaths. Build a pincode level dashboard of pandemic readiness. Track the quantities of key materials used, the current inventory and the supply needed based on daily and weekly moving averages of the cases. Make this transparent to people. Don’t stop this till every Indian who is eligible is vaccinated. We need to stop making people anxious for accessing basic life-saving infrastructure.

Focus

We need to get our act together really quickly. This is a humanitarian crisis. The government has to focus its time and attention to get this under control. Other things can wait.

Here’s a list of Don’ts for the Union government that will help with the focus.

  1. Don’t fudge data on number of deaths or cases. It won’t help the pandemic go away. Nor will it help with relief measures. We also need more genome tests done in India to know the nature of virus. Right now this number is pitifully low.

  2. Don’t blame people for the second wave. They let their guard down but so did you. Also, don’t call them stupid. They elected you.

  3. Don’t deny there’s a problem. Accept it and communicate how it will be solved soon. People forgive mistakes easily.

  4. Don’t blame the opposition run states for their pandemic response. The virus will singe everyone equally by the time it is finished.

  5. Don’t tell everyone now Health is a state subject after trying to manage it centrally from the start of the pandemic.

  6. Don’t file criminal cases against those looking for help in social media. Life is tough already.

  7. Don’t waste time celebrating waiver of import restrictions on relief materials or flagging off trains carrying Oxygen on social media. Things shouldn’t have reached here in the first place.

  8. Don’t draft petty responses to global media outlets writing about the second wave in India. Get over the notion the western world is conspiring against us. They have better things to do. You surely have better things to do.

  9. Don’t spend efforts on managing the narrative. The WhatsApp messages filled with conspiracy theories to divert attention can wait. You can do them three months later. You are good at it. Back yourselves.

  10. Don’t advertise unproven Ayush or other remedies to ‘cure’ Corona. People need genuine health advice today.

  11. Don’t blame the system. You are the system.


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🔔🔔 Closing bells. If you’re interested in learning the nuances of public policy, consider joining the monsoon cohort of The Takshashila Institution’s Graduate Certificate in Public Policy. Details here.


Matsyanyaaya: Siliconpolitik

Big fish eating small fish = Foreign Policy in action

— Pranay Kotasthane

The geopolitical focus on semiconductors is likely to continue for a few years to come. Just this week, Taiwan banned recruitment platforms from listing any China-based job openings in the semiconductor sector. This development is in line with the current trend of governments — China, the US, and EU included — trying to nationalise the highly-globalised semiconductor supply chain. Are such attempts at nationalisation likely to succeed?

I don’t think so.

In a paper for the Institute of South Asian Studies at NUS Singapore, I make the case that multilateral cooperation is a necessity and not a choice for securing semiconductor supply chains. I then show how the Quad countries have enough complimentary strengths in this sector to act as a nucleus around which a more reliable, secure, and advanced semiconductor supply chain could be built (a point we’ve made before here). Finally, I list out principles and policy recommendations that the Quad governments could take in order to convert their latent strengths into market dominance. They are:

Principle 1: Think security and ecosystem, not indigenisation and manufacturing

The Quad members’ primary goal regarding semiconductors should be to build enough redundancy in the supply chain such that it is not dominated or threatened by the China. The secondary goal should be to have enough expertise in all parts of the supply chain to outpace China in semiconductor technology and even constrain its access to such technologies in case of worsening ties. To achieve these two goals, the Quad members need to think beyond national self-sufficiency in semiconductor manufacturing and instead invest in building a robust joint semiconductor ecosystem. The motivation should be to create a resilient, collaborative semiconductor ecosystem that encompasses all upstream and downstream stages of this complex supply chain. Two specific recommendations arise from this principle.

  • Form a Quad consortium aimed at building a diversified semiconductor manufacturing base.

    The US’s industrial policies are focused on attracting investment for leading-edge semiconductor manufacturing (5-nanometres and below). Even if the US is successful in this endeavour, this node will not remain leading-edge when it starts production. Moreover, the demand for some of the older manufacturing nodes (28-nanometres and above) will not disappear anytime soon. Future applications such as 5G radios and electric vehicles will continue to require manufacturing at these nodes. Instead of duplicating efforts and competing with each other to gain access to reliable production at all these nodes, the Quad members can form a consortium that pools resources to build fabrication capabilities across these four countries. Not only will this approach be cost-efficient, but geographic diversification will make the supply chain more resilient. From a strategic angle, fabs constructed as part of this consortium could give preferential access to fabless companies within the Quad grouping.

  • Cooperate on developing new standards such as RISC-V and GaN manufacturing

    Like in other industries, global standards are setting the tone for competition in the semiconductor sector. If a standard becomes internationally dominant, companies using these standards gain a disproportional competitive edge, as the Chinese efforts in the 5G standards-setting process have demonstrated.

    For example, RISC-V is an open-standard instruction set architecture that holds a lot of promise. Currently, Intel’s x86 and ARM are two dominant instruction set architectures; their licenses are costly, deterring academia and small companies from using them. RISC-V, by contrast, is more customisable, free, and open-source. It is ideal for powering several Internet of Things devices. However, this open standard requires significant investment in research and encouragement for global adoption. This is where Quad centres of excellence for RISC-V could be of immense help. Similarly, collaboration on industry-wide security standards and semiconductor composites such as Gallium Nitride (GaN) can help companies based in the Quad to maintain a long-term competitive advantage throughout the supply chain. Proactively building these common standards will also build trust in each other’s companies and business environments.

Principle 2: Coalesce “bubbles of trust” carefully

The “bubbles of trust” metaphor serves as a helpful principle for the Quad semiconductor partnership. Even the combined might of the Quad cannot achieve complete dominance over the entire semiconductor ecosystem, and neither should it try to do so. Instead, the Quad engagement on semiconductors should become a platform that, over time, brings onboard other siliconpolitik powers such as Taiwan, Vietnam, South Korea, Israel, Singapore and the European Union (EU). The Quad semiconductor partnership’s explicit position should be to become a starting point for forming larger “bubbles of trust” instead of aiming to be an exclusive industrial bloc.

  • Following the above principle, a specific recommendation emerges. Given that the Quad collectively lacks leading-edge semiconductor manufacturing capabilities, it can form a larger bubble of semiconductor manufacturing involving Taiwan and South Korea. Similarly, on semiconductor R&D and semiconductor design standards, a larger bubble with the EU and Taiwan as partners could be beneficial. The idea should be to start small within the Quad and then collaborate with other partners on specific issues.

Principle 3: Governments should do what companies can’t or won’t

Semiconductor companies are better judges of efficiency rather than governments. In pursuit of efficiency, semiconductor companies figured their comparative advantages and then utilised relatively free global trade flows to optimise costs. In turn, consumers across the globe benefitted. In recent times, governments are trying to reverse this trend by subsidising local semiconductor manufacturing and resorting to export controls. A better approach instead would be for governments to do what companies won’t or can’t. Specifically, governments should:

  • Encourage strategic R&D cooperation between companies within the Quad

    R&D cooperation between semiconductor companies could be of the following types: licensing agreements, cross-licensing agreements, technology exchange, visitation and research participation, and joint development. In each of these areas, governments have a role in easing the process. For example, faster visa processing and lower employment barriers for semiconductor professionals in the Quad member countries could facilitate higher technology exchange and joint development levels. Similarly, removing technology transfer restrictions in the Quad’ bubble’ could make licensing and cross-licensing agreements easier. Easing capital flows in this sector could again foster more joint development projects.

    The Intellectual Property system, particularly patent protection, has been a critical enabler in accelerating R&D in this domain. A robust patent system has allowed for extensive cross-licensing without fear of being sued for patent infringement. Governments can play a significant role in strengthening this system within the Quad. For example, a Quad-wide patent prosecution highway can accelerate patent prosecution, prevent IP theft, reduce examination workload, and improve patent quality. Such a lubricating mechanism can smoothen R&D exchanges within the grouping.

  • Allow preferential access for EDA tools to Quad companies

    EDA (Electronic Design Automation) software license costs are one reason why India’s world-class semiconductor services sector is not able to transition into creating its own products. By creating a joint funding mechanism, the Quad members can enable preferential access to EDA tools at lower costs, leading to a diversification of fabless design beyond the US.

  • Increase trust in each other’s legal enforcement mechanisms

    Although geopolitical imperatives can motivate governments to align with each other, they aren’t enough to convince semiconductor firms and investors. A precondition to enable alliances between private players from different countries is to cultivate trust in each other’s legal systems, specifically in contract enforcement and regulatory practices. Quad governments can play an important role here. For instance, export control regimes and trade secrets protection of the four countries vary widely. Harmonising these systems will prepare the ground for semiconductor companies to enter into mutually beneficial partnerships.

If you have any feedback on the paper, please send in a reply. With siliconpolitik, as the song goes, “we’ve only just begun”.


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HomeWork

Reading and listening recommendations on public policy matters

  1. [Video] An insightful address by Dr. Devi Shetty on the likely shortage of healthcare professionals that might hit us soon. We need to plan for this.

  2. [Podcast] The latest Puliyabaazi is about a unified, technology-friendly Indic script, Bharati. Many Indian languages share a common phonetic structure that can form the basis of a common script. This article by Navin Kabra discusses the phonetic structure of the Nagari script in a way that was never taught in school.