The electoral bonds disclosures tell us who bought how much and who received how much. But they don’t tell us who gave how much to whom.

It’s possible that the same buyer gave to many parties depending on business needs. That’s simple hedging.

The more important question is what has been achieved by this episode. The Supreme Court has said it is the right of the voter to know who has funded which political party. That hasn’t happened, at least not so far.

On the other hand it has succeeded in reverting to political funding as a cash only exercise and in making the government renege on the promise of anonymity of donors. The moral dimensions of eBay will be discussed for a long time.

It’s hard to say, therefore, if we are better off now. It doesn’t look as though we are. Indeed, reverting to cash only means we are worse off.

And the reason for this mixed outcome is the failure of the Court to apply the reasonable principle enunciated by a 19th century Italian engineer turned economist called Vilfredo Pareto. The Pareto principle says that a change, or a move, from situation A to situation B is an improvement if and only if it leaves at least one person better off and no one worse off. Because of the ‘if and only if’ condition, it is a very hard condition to fulfil and never used.

That’s why economists have developed less strict versions of it. But while these have found theoretical acceptance, in practice they are rarely used because it’s nearly impossible to assign values to welfare gains and losses.

Pareto v Supreme Court

This is the precise problem now with the Supreme Court order. We now have the perverse outcome which economics anticipated 175 years ago. In lay terms it meant that the best can be the enemy of the good and societies should choose sensibly.

But it looks as if now, for a few weeks at least, the country can bask in the dim glow of vicarious and vacuous morality. This has happened time and again in India — the Bofors gun whose induction was delayed, the A320 aircraft grounding, spectrum sales and coal block allocations, to name just a few.

In each case, good decisions have been sabotaged by unbending moralists on the one hand and unscrupulous politicians on the other. The moralists get carried away because the politicians blow wind into their sails. It’s the perfect lose-lose outcome.

These mistakes are eventually corrected but not before the country has paid a huge price. The least the Supreme Court could have done to avoid this cost was to make its order about anonymity prospective.

Alongside this it could have directed the government to tweak the electoral bonds scheme by imposing a lower profit line for donation limits. That way we would have come closer to the requirements laid down by Pareto.

It is now written in stone that voters have a right to know who is funding the political parties. That cannot be faulted. But surely it must also be asked if this will actually happen in a better way now. It would be a huge surprise if it did.

Corner solution problem

Economics has also developed a concept called corner solutions. It’s about the way things are bought or consumed — in combinations or just the one thing. It’s like drinking only soda or only whiskey.

This is exactly the problem with many judicial pronouncements on public policy. They often have no combinations of welfare. It’s always either this or that.

Thus, either the PMLA is all okay or none of it is okay. The Supreme Court said it was okay. But with the electoral bonds it says it’s not okay.

Both are non-combinatorial solutions. You either put the baby in dirty bath water or throw out both. Is this binary approach good for society, or country, or whatever group one talks about.

Corner solutions exist in mathematics also and judiciaries the world over unwittingly use that method. This consists of laying down hard boundaries of, or for, what is permissible.

These are simple yes/no solutions that don’t allow for any middle ground. They are needed but not always. The normal rules of moral conduct end up hindering.

Thus, where the electoral bonds are concerned, the optimal solution would have been to let them continue without the anonymity promise. They would have either died a natural death or become transparent.

I can only conclude this article by recalling what the late Mrinal Dutta-Chaudhary, professor at the Delhi School of Economics, pointed out. Reform, he said, is an art and an essential part of governance. But seeking ideal solutions is not only futile, it also leaves everyone worse off.

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