People act, individually and collectively within institutional constraints. These institutions are created by and embody rules that have developed historically partly through some social evolutionary process, and partly through some correctly or incorrectly conceived and constructed processes.
In some cases, the broadest set of rules—the supreme law of the land —are written down and used as the superstructure within which all other rules are framed. The classic example of this is the United States constitution which went into effect in 1789. Another example is the “Government of India Act 1935,” which the British created to rule colonial India, and which forms the core of the Indian constitution which was formulated later.
The prosperity of a nation depends ultimately on the aggregate behavior of the people constituting it. People’s behavior, in turn, is determined by the rules and regulations that constrain and motivate behavior. Thus, the constitution as the set of meta-rules—rules on how to make rules—has an unavoidable impact on everything that takes place in a nation. The constitution truly defines the character of the collective called a nation.
Consider, for example, the rule which prohibits the government from discriminating among citizens based on religion, as is the case in the United States. This rule makes it pointless for religious groups to seek differential benefits from the government. In the absence of such a rule, the Indian government has the ability to discriminate against some religious groups while favoring others.
Religious discrimination is embedded in Indian law, and this originated in the British era. For example, consider the case in Tamil Nadu. The Tamil Nadu “Hindu Religious and Charitable Endowments Act XXII” of 1951 was based on an Act passed in 1925. The Hindu Religions and Charitable Endowment Act of 1951 allows state governments to appoint governing boards to Hindu temples, thus gaining control over the operations of temples. Donations to temples that are freely given by devotees are collected by the government, and only a fraction is returned to the temples. The rest is used by it for purposes that are not transparent. That act controls 36,500 temples, over 1700 endowments, and 200 trusts today. By contrast, non-Hindu religious establishments enjoy full autonomy from government interference, and even get part of their funding from what the government takes from Hindu temples.
The importance of education cannot be overstated. The “Right to Education Act” of 2009 destroys educational objectives under the pretext of doing good. It sets standards that are unrealistic and makes schooling unaffordable for the poor who desperately need schooling. Under that Act, over 4,000 schools were shut down by the governments of various states, around 8,000 closure notices were served to schools, and around 12,000 were served closure threats. These were schools that the poor attended where they could afford the few hundred rupees in tuition. Hundreds of thousands of children were denied what little education they could have had, because of this government interference.
Suppose the constitution were to change so that the government was prohibited from entering the education sector, then, the government would not be able to prevent for-profit institutions from running schools and colleges. That would expand competition, reduce prices, increase supply, and improve quality. It would also eliminate the massive corruption that is currently present. It would have an impact at the familial level: parents and children would not be so desperately stressed.
One could argue that a policy change to allow the private sector into education does not need a constitutional change. Unfortunately, unless the constitution mandates it, that kind of policy change is unlikely to happen because those in government have an incentive to prevent private sector entry because of the bribes they currently receive. Only a constitutional change will bring about policy change.
Prosperity has evaded India even after 1947. It can be argued that this is because India is not really free, since it is still governed by a constitution that is primarily a set of rules designed by a colonial power to rule over its subjects. What citizens are allowed to do is constrained by government policies, and these policies have to be consistent with the constitution. If the constitution were to change, the ultimate rules of the game would change, the policies (the derived rules) will change, and thus the action on the ground (the play of the game) and the outcome will change.
A change in the constitution is a necessary precondition for altering the rules of the game, and therefore the game itself and its outcome. The link between the constitution and what happens on the ground every day is robust and observable.
Atanu Dey, Ph.D., is an economist. His blog “Atanu Dey on India’s Development” is at deeshaa.org. Connect on twitter @atanudey.