#18 - Bharatvaarta - India's Response to Covid-19 | Balaji Srinivasan and Sri Thiruvadanthai

Namaste, everyone. I'm Roshan Kariyappa, and welcome to another episode of the Bharatvartha podcast. We're living in exceptional times. We've been in a lockdown for over two months here in India. You've heard the government announce a stimulus package for businesses last week, and there's been, as per last estimates, about 120,000 confirmed cases and over 3,000 deaths due to the coronavirus. There's also been a lot of talk on what has happened and how we are reacting to it as a nation, as a people, and how our governments are fed. In fact, we've done three episodes before on the impact of COVID 19 and the government's response. Today we'll be doing a fourth that examines this response in further detail from a global lens and really understand the impact of all of this going forward. So on the podcast Today, I have two very special guests with me, both based in the U.S. one on the east coast and the other on the West Coast. Perhaps to give a more balanced view of things, we have Srinivas Stiruvadantai, who is managing director and director of Research at the Levy Forecasting Center. Aside from economics, which is his main expertise, Sri also has an interest in banking, technology, and psychology. He's also been an active voice on social, economic, and political matters concerning India. Welcome to the podcast, Sree. Great to have you.

Thank you, Roshan.

Joining us in this conversation, we also have Balaji Srinivasan, who is an investor and entrepreneur. He founded a genomics company called Council, which sold for about $375 million a couple of years back. He's also been an active voice on Covid and was one of the first few people to pick up on how serious the whole thing was. Thank you so much for joining us, Balaji. Pleasure to have you as well.

Thanks for having me.

All right, so before we get started on India specifically, I just wanted to ask the both of you if you could name a single event or anecdote that got you to take Covid very seriously. Balaji, aside from the high R0 numbers of the virus, you've said it was seeing how China behaved quite contrary to its usual mercantilist ways. Any particular incident that you recall?

Yeah, I mean, you know, certainly the lockdown of Wuhan was important because that showed the level of expense and energy that China was putting into this, how seriously they were taking it, and seeing not just that, but also the reports from people on the ground. Those were really the main events for me. And then I started Digging into literature.

Right, right.

Anshree, when did you realize that, you know, we were in the middle of a life changing event?

Well, you know, I didn't, I can't say it more evolved but as Balaji said, you know, more when they were locking down, I was thinking, you know, I remember SARS and it didn't seem an H1N1 and there were clearly no lockdowns of this nature. That itself told me that we were dealing with a different kind of an animal here. But you know, still, you know, my, my whole thing evolved. I can't say that there was a be Jeevis moment for me where I thought this was going to be very, this was going to be very serious. I had, I kept evolving my thinking as a skeptic. Right, right.

And you know, continuing on that note, Sri and then maybe Balaji, you could comment on this as well. Just to set the context for the rest of our discussion. If we were to measure along four key areas. Right. Let's say response time to the crisis, ability to test and isolate, set up supporting healthcare infrastructure and then, you know, provide economic and social relief. On balance, how would you say India has fared in its response to Covid? Balaji, your thoughts?

Yeah. Can you repeat those four again? It was response to crisis relief or.

The other two, response time to the crisis. Second would be ability to test and isolate, maybe set up supporting healthcare infrastructure and then provide economic and social relief. I mean, feel free to add in a fifth element or parameter if you think that's necessary.

Yeah. So my overall take is that India has punched above its weight here. It's done better than I expected it to do. I actually kind of think it is. Maybe. I'm not sure if this is a left handed compliment or what have you, but it's among the best of the western countries, but it's among the worst in Asia. And so what I mean by that is relative to the us, uk, France, Germany, Italy, I think India does quite well in terms of large scaled western aligned countries relative to Taiwan, Singapore, South Korea and so on. It does not do well. With that said relative to where I thought it was going to land up. The things that have impressed me as an NRI about India are first, that Narendra Modi has taken it very seriously from the beginning. He never called it just the flu. He has been dignified on Twitter about this, this, this whole episode. He is, you know, talked about wearing masks and has basically been on message about it. Other things India did, I think relatively early they thought were Good. They shut down travel. They actually made it hard even for, for Indian citizens to come back.

That's great.

They have. You know, one of the most interesting things about India is with the recent things like other and UPI and now Aurogya Sethu, which I may be mispronouncing.

That, but.

With the recent sort of national software projects like this, there's bugs in them. I'm sure you can point to flaws. Still, it's actually execution beyond where frankly the US or UK or the leading NATO countries have have been able to do. There is no aerogia SETU equivalent in the US the closest equivalent for a large country is something like WeChat in China where they have like a COVID 19 thing built into WeChat and whatnot with yellow, green and red coats. So from like a software and technology standpoint, I think India has actually done surprisingly well. I think so. So messaging, they've done well. Also the thing where their example of messaging, every phone call in India had that 30 second clip, right, which I post on SoundCloud and you know, just stuff like that where they were taking it seriously from the beginning. They did the travel ban, they did the, you know, public health announcements. Modi, you know, got the significance of it across. They did a rogue setu. A lot of those things, a lot of blocking and tackling. Feels like the country has actually taken it seriously and taken it seriously in a consistent fashion. Now it's still in many ways a developing country. There's pockets of wealth and not wealth and so on. On balance though, I think my prediction as to where it's going to land up, and I wouldn't say I have extremely high confidence, but where I think it's going to land up is that by the end of India will be considered more of a peer to the us, uk, Italy, Spain, Germany and you're going to see probably like a new security alliance with these relatively weaker NATO countries and India versus potentially China and its allies. And I think that's kind of what's likely to happen towards the end of this whole thing.

Yeah, I think we're going to have very different definitions of developing and developed world. Post this for sure and be able to do it at the scale at which India operates, 1.4 billion people. One of the things that you've mentioned, Balaji before is that you would prefer a more decentralized response. And while our law and order has been decentralized, it's at the state level. Our testing strategy or things like lockdown design and so on have been quite centralized.

Yeah, so let me talk about that for a second. I think I being actually clear on this, which is that I think the best outcome is a competent centralized state like a Singapore or a South Korea because some services are just easier to perform centrally, to execute, to deliver. Then a distant second is a decentralized response where individuals, communities, companies take it upon themselves to, you know, fix Corona or prevent it. And then even farther down is an incompetent or even malicious state. But let's say an incompetent state is, is worse than the decentralized response because for example, they can prevent people from rolling out new lab tests in the U.S. you know, the FDA has tried to prevent people from doing this. They have given wrong instructions to people like don't wear masks. You know, the CDC and Surgeon General said this kind of thing in the US So the best is a competent centralized state, a backup plan is a decentralized response, and the worst is an incompetent centralized state. One other asterisk on that Typically, you know, in a, in a well functioning society, it's not just the competent centralized state, but it's also a decentralized response. That is to say it's a state and society. It's you know, the government going and doing a bunch of things, but then you as an individual taking personal responsibility and your company, you know, filtering for this and so on. So they're not mutually exclusive. I would say that, you know, for things like a contagious virus, a lot of the, you know, libertarian ish paradigm breaks down because you have, you know, live and let live, you have a very large stake in what your neighbor is doing health wise, what they're doing, behavior wise. Because you know, like if they go and get a tattoo or something, it doesn't really affect you. But if they go and bring back COVID 19, it could affect you. And so a lot of these kinds of things sort of break down in this sort of exceptional situation, which we may be in for quite a while, unfortunately.

Yeah, absolutely. I think a fair mix of, as you mentioned, central and state measures sri on balance, how do we rank along those four parameters or some new parameters.

That you can think of? Let me start off with where, where Banaji talked. He said the state society response. I mean, I think that's really the key issue here, that you need a very good state capacity. Covid really is testing us against all these dimensions, state capacity as well as the social capacity, the society's capacity to be empathetic and to See the larger interest of society. Because, see, if you take the mask itself, for instance, it is not so much by wearing the mask, you are preventing the infection coming to you. There is a self interest in that, and we will all do that. But actually the mask is more important for not spreading the infection from you to other people. So there is altruism in that. So, you know, there is. Clearly, that's why these stations have done so much better. Partly because there is, of course, much greater social cohesion, but also there is a great state capacity at the central level, which they have built over decades. So the combination of that is why the East Asians have done so much better compared with anybody else. India ranks middling simply because it doesn't have the same level of state capacity. I mean, obviously it's a poorer country as well. Much poorer country. But I've been quite struck by how much discipline average people have generally shown. When I talk to people, I always, on the average, we have shown tremendous amount of discipline. So coming back to your four points, the response from the government, I mean, to be honest, I felt when they first took this response in March 14, and I tweeted about it, that it was very draconian. And I have been wrong, I would say, because they turned out to be right and they have taken the PFC right from the beginning. There is no doubt about that. Not March 14, March 24, sorry. And even before that, they had already shut down international travel and things like that. So in terms of the ability to test and isolate, obviously India has not been that great, although they've ramped it up. And the main problem, and that comes from the fact that we don't have adequate healthcare facilities, especially the testing part of it, isolation. They were doing a decent job earlier, although they started getting overwhelmed to some extent on that. Again, look, India is such a large country, even 1.1 billion people show restraint and 200 million don't show restraint. It endangers everybody. And with such population density and difficulty of maintaining social distance, all you need is a few bad actors or few, let's say, careless actors. I don't want to impute intent. Then you can get into trouble, right? I mean, that's, you know, for us to say Tamil Nadu was doing reasonably well. And suddenly this, this, this vegetable market in Coimbatore, and, you know, since then, it has been an uphill task to try and control it. And in terms of healthcare support, you know, again, you know, we don't have adequate infrastructure, whether it's per capita, doctor per Capita hospital beds, we just don't have that level of. And that's just a reflection of the fact that you're a poor country still, relatively speaking. Sure, we can make more investment in those facilities and going in the future. We should. And this should be a wake up call. Where India has been the weakest, I would say is the economic response. And that unfortunately is possibly causing the second round of problems in terms of the migrant workers. You know, I mean. Sorry, you were going to say something.

No, no, go ahead. I was just agreeing with you.

Yeah. So the economic response, I mean, you look at the us, the scale of the fiscal support in the US and the alacrity and the speed at which they rolled these things out, or even the Federal Reserve, all of these were done so quickly in relation to the physical efforts of controlling Covid, which they were far more tardy and the dichotomy between those two things and the contrast to juxtapose against India where they were much more, showed much greater alacrity in taking the physical measures to control Covid, whereas they have been very cautious, tardy and even slow in rolling out one measure after the other, and I would say inadequate. Now India doesn't have the same resources and the fiscal capacity. I don't want to ever include that India can do what the US does. That said, it still has done much, much, much less than what it could have done.

Well, so hold on one second. So, you know, I don't think that the US's spending was good at all in the sense of the $2 trillion bill, for example. It seems like a very small percentage of that was allocated towards vaccines, masks, drugs, devices like ventilators, stuff like that. I think there were some for hospitals, but a lot of it was sort of treating the problem as if it was a political or economic problem fundamentally rather than a biological or physical problem. I think also it is true that, you know, digital measures are easier to roll out because, you know, that moves at the speed of the Internet, which is, which can move faster than the virus and physical measures are harder. But you know, I actually think that what the US did in terms of printing trillions of dollars in a few weeks is not something that other countries want to emulate. And it's actually, you know, like good that India hasn't done something quite as extreme as that.

Okay, let me say two things. One is, has the economic measure been towards health care as much in the us? No, clearly not. That is not the US priorities. I mean, at the end of the day, the US Is as Calvin Coolidge famously said, the business of America is business. And you can see the dichotomy and the dust of concern about the response to the economic fallout, containing the economic fallout. So most of the US fiscal response and the Fed's response has been to contain the damage on the business sector, on financial markets, rather than in trying to spur greater health care spending or support the health care infrastructure. But I argue priorities.

Here's why I argued that's wrong. Even if you are focused on economic growth, you want to put out the viral fire first. So you know, essentially what the Fed has done and what that $2 trillion bill was like, it's like, oh, we need to fix this person who's bleeding. Let's get a bunch of mops to mop up the blood on the floor as opposed to bandaging the wound and you know, putting antibiotic or whatever on it. If you allocated all of the monies to fixing the virus and stopping it from disrupting society, you'd actually have a better economic outcome in the medium to long run. And I think that's the short sighted thing. It was treating things symptomatically, only going and giving payroll support or what have you, which look in emergency you might have to do some of that, but the lion's share, the prioritization should have been unblocking, you know, testing, for example, unblocking entrepreneurs, for example, making, making it easy for people to build masks, not just to import them, but to raise the prices on them so that, to allow for, for prices to evolve such that if people wanted to pay $10 or $20 for a mask, they could. And then every factory in America would have been making these things. I think they, they completely messed that up because A, they didn't treat it, they didn't treat the root, they treat the symptoms and B, they didn't actually unleash the economy to allow it to reallocate, to go and defeat the virus.

Yeah, I think those are fair points. I don't have a disagreement. You know, I mean, that obviously goes to the deeper political economy. Point, point here is what are the restrictions on why we don't do these things? And you know, letting for example, prices to some extent dictate production. You know, again there would be, oh, that's unfair gouging. You know, it's just the politics of the thing. Whereas it's much easier to roll out similar that everybody seemingly benefit from. But, but I do agree, yes, I don't have a disagreement on that.

Right. And actually though, just to talk about that point for a second. The issue is that if you do things that are popular but that aren't like, aren't good in the long run versus doing the things that are good but unpopular. Take that example. The people's general objection to price gouging is, oh, in a time of vulnerability, somebody's exploiting me. And you know, one can argue that point in let's say a hurricane or a one day event. You know, oh, why is this store jacking up the prices on me? I'm usually a good customer. Now they're trying to exploit me. This is a long run relationship. I might pay today, but I don't like it tomorrow. That may be legitimate in terms of a one day event, but this is actually something which is like an economic reallocation. You know, the way I've talked about it on Twitter is it's not a V shaped recovery or a W shaped recovery with bounces back and up and down, but rather a Y shaped recovery where the economy was on one branch and now it's going to be taking another branch. Many aspects of what I call the physical leisure economy in the US at least bars, concerts, restaurants, events, things of this nature that involve large crowds, also public transit, things like that now have very high costs in operating in an environment with uncontrolled COVID 19. The reason being they now have, for example, pandemic insurance. They have liability. If you're a restaurant, you need to space out your tables so that you have less revenue since you can only have like 1/3 or 1/2 the number of patrons. Every table needs to be cleaned. You need to buy masks and hand sanitizer for all of your employees. And on and on the list goes in terms of the tax that COVID 19 uncontrolled COVID 19 imposes on society. And so the thing is that the economy needs to reallocate to be able to deal with that. And so the far thinking, you know, politician would take the short term pain of saying, okay, I'm going to let prices rise on masks, on tests, on hand sanitizer and all this stuff such that, for example, alcohol manufacturers could turn around and start cranking out hand sanitizer, factories could turn around and start making masks. Because if you can make windfall profits off of this, then you can actually put people back to work and help put out the viral fire. Because it's not a one day thing, it's not even a one month thing, it's like probably not even a one year thing. This is a multi year thing. So farsighted leadership would actually allow prices to evolve. The way I put it is control the virus, not the prices, allow the economy to reallocate. And short sighted leadership I would argue is just again treating it symptomatically. Doing things that are popular but that don't actually solve the root problem and frankly will be unpopular in the medium to long run because it didn't solve the root.

Oh, very eloquently put. I mean I can't disagree. I mean I think part of the problem arises from the fact of the US political dysfunction which really tends to the archaic nature of the US political system. We are often proud of it here. We say oh, check expenses and all that stuff. But reality is, and Huntington wrote about this long back, is that the US political system is actually a pre modern one. All the modern western states, European states in particular from I'm comparing to the European because US is fundamentally settled by Europeans. And you know, so if you think about it that way, they all have a very different state capacity and state structure compared to the US and you know, so I mean it's a complex problem and Covid really reflects that. The dysfunction of the US political system. I can't disagree with you at all.

Yeah, and so actually it's interesting, you know, I agree with much of what you said. I would let me offer an asterisk or, or let's say addendum whatever to the other half. It. So part I definitely agree with you on is that the US political system is dysfunctional. The part that I'd offer an addendum or quibble or what have you is that I don't necessarily think that other western systems, like political systems are a model. I wouldn't say France is better, Germany may have some better aspects in terms of their trade schools and so on, but I actually think the real model for the west is going to be the West Coast. Because if you think about like the, you know, what the. And these are not exactly geographic entities. I'm using this as a metonym. Right. But what the east coast of the United States has exported over the last 20, 25 years has been financial crises and invasions and bombings and drone strikes. And that's kind of what the rest of the world has sort of experienced from the east coast of America. Whereas the west coast of America has given Google and the iPhone and all of these Internet technologies, startup culture and the concept that anybody anywhere in the world, they're not going to be president of the United States of America unless they were born in the U.S. and even then, it's actually relatively difficult to do. Very difficult to do. But anybody anywhere can set up a tech company and become, you know, a tech millionaire or billionaire. You know, one way of putting that is there's only 45 US presidents, but there's, you know, being hundreds, thousands of billionaires, depending on how you count. And so it's actually a more achievable goal, a more realistic goal for many people. You know, a kid in India can become a tech billionaire, not going to be president of the United States. And the thing about this also is that these tech companies have functional organizations. One way of thinking about it is, you know, somebody who's the CEO of, you know, something like Google or Facebook has built something up from absolutely nothing to a gigantic multinational entity with billions of people depending on it. Whereas, for example, someone who's, you know, the mayor of New York or the president has inherited an organization, and they didn't just inherit it from the predecessor. They've inherited, you know, 30, 40 generations hence. So the mayor of New York, for example, would not be capable of assembling the NYPD from scratch, you know, of training them of figuring out what their uniform is going to be, what their doctrine is going to be, their rules of engagement. He has inherited that, and he's inherited that to such a level that he doesn't understand how it started in the first place. I think that's a very deep point that folks, you know, who are true leaders have built something up from scratch as opposed to inherited it. That is, say, founding as opposed to election as kind of the mantle of legitimacy for a leader. Why are you a leader? Because you're one of the founders. And the US Used to have this with, for example, the Founding Fathers. Right. And then people, you know, would argue about whether this or that was emulating those founders, and eventually it got so dilute that anything could be said to emulate the founders. So go ahead.

No, you can see that. I mean, the response in the west coast has been so much better compared with where I live here in New York and New Jersey. I mean, even though both tend to be in the middle America, both tend to be clubbed together as, you know, the bicoastal liberal. But, you know, I think there is a big difference between the west and east coast in terms of attitude. And I think there is a lot of the old world Tammany hall, which continues to hobble the response. I mean, clearly you can see that. I mean, there is no doubt about that.

That's right. And I think you know, this is something which is interesting model for the medium to long term future is. I think what's interesting is India has had a tradition of the IITs and smart folks, individuals doing things. It's got like a guru culture and whatnot. And I think that actually will serve it well in a softer age where one person can have a lot of leverage. As I said, I think some of the biggest successes India has had in recent years have been things like other or UPI or even with its issues. I think on balance, and I think that the reform of the Western political structure has to be, I think coming from a Z axis. I don't think you can reform it within the structure. For example, Bitcoin, which I think a lot about, obviously is one of the most important political reforms ever. And it's a reform of the Federal Reserve, it's a reform of the banking system, it's a reform, it's a reform of the political system, it's a reform of frankly debt, culture, a lot of things. But it came from a Z axis, it came from the Internet, it came from cryptography, it came from something that wasn't within the existing XY plane of what is considered to be politically feasible. And I think something similar is going to happen. Where over the next 10 years have you guys played around with Oculus Quest.

Not Oculus VR, you mean?

Yeah, you should get an Oculus Quest if you have not gotten an Oculus Quest. It's the most important device since the iPhone. And the reason I say that I was at Andreessen Horowitz when we did the Oculus investment a few months before it got acquired by Facebook back in 2013, 2014. And it's developed a lot over the last six, seven years. It's a long term investment for sure. But essentially it's crossed a chasm where virtual reality and I'll connect the things in a second. Virtual reality is now quite immersive. You can tilt your head around, you can walk around in 3D. It'll actually move. It really feels like you're transported into another place. The headsets have gotten lighter. It's kind of crossed that chasm. And it's like the iPhone one, you can see where the iPhone X is going to be. Eventually VR will probably get to a glasses form factor or something like that. Okay, what's my point? The point is that right now on the Internet, on social media, when you have, you know, 2 million followers or 2,000 people who like a tweet or what have you, people just see A number on screen. And they know it's kind of a big number or a small number. But it's a very different thing to perceive the same thing. Except in VR, if you have 200,000 followers or, you know, 5 million followers, or 2,000 people fave a tweet, that's like seeing in VR a gigantic audience of people clapping. And crucially, all those people can see other people. One way of thinking about it is people don't actually really understand how big the Internet has gotten because they don't see it in their peripheral vision. They don't see hundreds of millions of people on social networks milling around. They just. It's still experienced as a very solitary activity with you tapping on a phone or a laptop or what have you. Point being, here's why, here's why I put these together. People are going to be able to start virtual countries with their own governance systems, with smart contracts and so on and so forth as the legal systems. And you're going to attract people there and you're going to have commerce there. And yes, it's going to be digital commerce. Physical commerce will have to be obviously more difficult. But I think you're going to start to see folks building up societies online that potentially have renderings of the physical world and then materializing them offline. And this is how you kind of address the problem of elites that have inherited a system that couldn't build it. The next step is to actually build, I think, virtual societies with their own hierarchies and legal systems and have that be a model for the offline environment. Could be. And many of these will fail, by the way. Many of these will be worse than the current system, just like many startups are worse than the current status quo. But some of them will actually be very well organized with strong cultures. And then I think they'll materialize into the physical world. So I think that's going to be the west coast method for reforming these political systems. Okay, go ahead. I know that was quite a download.

Fascinating.

I'm not a visionary that you are. I will keep it more mundane level. Let me just say one thing. I think coming back to how technology actually enhances state capacity and how some of the old world systems act as kind of inhibitors. So in India too, if you see the whole software boom, part of the reason why India was the software boom was able to take place is that it was outside the radar of the general regulatory state that existed. And that's why it was able to move to some extent. It's not that the general regulatory state is a terrible thing. I mean, it's okay. I mean, I don't want to like everybody blame it too much. I mean, it's done okay job for something. But it was set up for a particular thing, for a particular purpose, for being an administrative state that, that tries to tackle emergencies and law and order. That was the British model and that's all the British cared about. And it did an okay job. But beyond that, it's obviously not capable of developing a country, what is called a developmental state, nor is it capable of meeting the needs of this modern society. And so what has happened is that's why you see this, Aadhaar has been able to bypass and circumvent some of the problems in state capacity that India had. And the fact that Aadhaar is taking place along with a mobile revolution which enabled us to bypass not having the state capacity to build landlines. When I was growing up, it used to take 10 years to get a landline in India. That's how my father request for a landline. It took 10 years to get it in the 1970s or whatever it was. And then the mobile revolution circumvented that. Okay, that's a problem, but it's no longer a problem. And the same with Aadhaar is now circumventing a lot of the lack of state capacity. For instance, not having a proper identity. Like we have a Social Security card in the us India doesn't have anything like that. So how do you do credit check for somebody? How do you ensure that this is actually the person? Aadhar actually helps you with that. So that's why Aadhar has now spawned on the fintech revolution. It's enabled JIO to build up very, very rapidly, which otherwise would not have been possible. And now with Rogsa again you can see how we are able to build state capacity which is not really dependent on the existing state infrastructure. And yes, I mean in that sense the power of technology, you can see it much more in a place like India, even more than in the US and in fact actually Indians are much more embracing of it. I feel like lot of older Americans are much more resistant to this than India.

I think.

Sorry, go ahead. Yeah, so one thing I've thought a lot about is over the last 500 something years, the rest of the world has had to, you know, like, like they've had to implement reforms at various times. For example, Japan with the Meiji Restoration when European colonialists came and they were technologically, you know, ahead China with Deng Xiaoping in 1978, Eastern Europe and you know, like Russia to some extent after the Cold War ended, India in 1991 with Manmohan Singh. You know, like leaders outside the west have had the, you know, sort of humiliation followed by recognition that they need to turn around society and have actually executed on that. At the, at the political level, the west has actually not been behind in the way that I think it's currently behind in 500 something years. And so there isn't really a recognition that that's happened at the political level. However, again at the level of the tech CEO for example. And people don't understand how big a deal this was. But in the 90s, when Bill Gates saw the Internet coming and turned around Microsoft to go and ship Internet Explorer, that was a massive shift for them from the desktop to the Internet. It was a massive, massive shift. Similarly, Zuckerberg In 2012, 2013, going and taking Facebook from a desktop only company to a mobile company. Enormous platform shift that, you know, it seems trivial today, but it's a, it was a huge change in all of their thinking. The entire app had to be relayed out. They had to get figure out what things people would click on. Mobile versus desktop. It was a massive, massive undertaking against an existential threat. And you know, third example, Netflix going and having, going from mailing DVDs built by other people to people versus streaming first party content is an enormous business and technological and operational shift. So I think one of the big issues is that the Western political system, because it's like this inherited kind of thing, people don't remember what it was to get on top in the first place. They don't remember a time when the west was behind. They don't understand, they don't have a language for that, whereas folks in other countries do. I think India has a recollection of poverty, it has a recollection of scarcity that's been within everybody's memory. So thinking about how, oh, things could get worse, it's not like a crazy thing, it's not a paranoid thing to say. Whereas it's thought of as such or dubbed as such often in the west because things have been so good for so long. I think that's a big part of, you know, the issue here is kind of whether you call it exceptionalism or arrogance or complacency or what have you. I think that's why the west has not really done that well on this.

Yeah, I think, I think that's a fair point because they have not had this kind of you know, memory of a catastrophe is not that far away in. In India or both places in the world. And here we clearly, you know, I mean, I remember Hurricane Sandy when it was, when it hit here, and we didn't have power for 11 days or something like that. I mean, around me, people didn't have it for nine, seven days. Depends on the patient. People were quite incapable of dealing with it. And the response was actually pretty shoddy overall. That's why it dragged on. I mean, it was pretty shoddy for a developed country. You would think that they would be able to do it much faster, but they were not. I mean, they were like dear cotton headlights to some extent. And, you know, I mean, clearly they didn't have the capacity to deal with that because it was out of the left field for that.

Yeah, you know, it's interesting, like, I like your phrase a memory of catastrophe, because, you know, extending that to Covid, you can think of that as a civilizational vaccination. You know, you. You had something bad happen in the past, and now you've got some antibodies to this thing and you can recognize it, pattern match it, and respond to it so that, you know, bad things don't happen again. I think also, you know, with Hurricane Sandy, you know, Nassim Talebi has this concept, famous concept of the Black swan, you know, But I think what's interesting is this concept of a black signet, you know, signet being a baby swan. And in retrospect, for example, before 9, 11, you could see the World Trade center bombing of 1993, the attacks on the USS Cole, there were black signets before the Black Swan. In retrospect, you could make the dots line up. There were warnings in the same way with the U.S. the fact that anthrax or Ebola or Katrina or Hurricane Sandy, both biomedical disasters and physical disasters, the response was actually quite poor. Those are black signets. Those were warnings that actually the rot had gotten deeper than people think. But it took a gigantic blow like this to make people realize, wow, okay. It's systemic. It's not just, you know, one city or one state. It is the entire political system. It's a media system. It's really the whole.

Right, right. No, no, absolutely. I mean, that is. Yes, and you're right. I mean, that's actually a good point. We have had many of these and our responses have been very inadequate, but we somehow have not learned from them. Katrina was a complete disaster. That was Sandy. And kind of. We never really learned from them. To put the. We just went about Business again, back to where we were. As if this were like one off events and not advanced warning signals in some way. Yeah, it's a sad thing. What can you say? I mean, yeah, I mean, I think India's done actually in order. India has done creditably well. It could have done better. And certainly, I mean, one of the things, I mean, this is what in the US we call Monday morning quarterbacking. One of the things that they could have done, I feel right now, in hindsight, I did not know this at the time. They could have done these trains with the migrants in the beginning and whatever quarantine they might have had to do at their respective places, destinations, they could have done that. So then it would have been easier to bring them back now. Now those people are scarred and they're going to be worried and not very reluctant to come back to their places of work. So. Which might make the economic restart a little bit tougher. But, you know, there is no way I could have. I visualized it at that point and you know, maybe some other people did, but you know, that's, that's the one thing I can think of right now that they could have done potentially a little bit better. But overall they have not done a terrible job. I mean, you know, it reflects the limits on the financial resources, physical resources, as well as an incredibly dense country where social distancing is hard. And what are the limits of what you can achieve? You know, I think we need to be realistic about that just to pick.

Up on sri's point as well.

Right.

Even our institutions, you know, compared to the who, even the FDA that, you know, Balaji has dealt with earlier and have been found lacking in response.

Right.

Our institutions like the Indian Council for Medical Research or the National Institute of Virology and so on, have been really proactive, whether in sharing data or ramping up tests. I think there are upwards of 100k tests at this point of time and on communication and so on.

Right, yeah, yeah. As I said, you know, the Indian doctors have done, you know, enormous, enormously difficult job given the challenges, because we don't have. The number of doctors per person in India is incredibly low and the number of hospital beds, nurses, everything, it's just, I mean, it's a Herculean task.

Balaji, I want to ask you about these institutions as well, because, I mean, you've famously dealt with the fda, right, and you've criticized them as sort of being inhibitors of innovation and not acting soon enough in the face of this crisis as well. We spoke about digital Societies and innovation on that front. Is this also an opportunity for us to kind of relook the way these organizations are structured and run? Because at this point of time, I think they're structured to prevent harm rather than foster innovation or cure.

Yeah, and I think it's important when talking about something like this to talk about it in terms of like thesis, antithesis, synthesis. So thesis, you know, the, like people want safe devices and drugs and whatnot. Like people actually do want that antithesis. This regulatory system is actually more slowing things down and actually making people less safe because it's, it's giving too many false, false negatives. It's, it's saying hey, I'm rejecting this even though it's good. And I think the synthesis is to say, okay, it's not that we need no regulatory system. We need a better regulatory system. We need, we need to, you know, yes, like remove or give options to the existing one, but we can't just tear it down and have no replacement. And I think that the short answer for how to achieve that sort of like, you know, for example, you may think the Federal Reserve is abusing its power, but to simply remove the US dollar, you couldn't do that. Instead you introduced Bitcoin, which is a very creative way of coming at the problem from Z axis, where you introduce an alternative and allow it to build up over, you know, years and frankly decades. And it's gaining steam and gaining power. But it's not like an overnight replacement of the thing that's at the center of the existing financial system, you know, namely the dollar and the Federal Reserve. In the same way, for something like the FDA or any other major regulatory institution, the key is to think about how to build an alternative to it, to focus your political capital, your thinking not on abolish, but on alternative. And how would that work? For example in the US on the fda you would have, for example, there's alternate pathways outside the fda. Doctors for example, can do off label prescription laboratories can get regulated at the state level rather than the federal level with something like clia. Pharmacists can do so called compounding pharmacy things where they're basically prescribing combination pharmaceuticals without direct FDA approval and you know, of the combined drug. And so there's pathways outside the FDA already. But one of the most powerful is the so called right to try pathway where in some cases at the state level people can prescribe a drug for emergency use by just notifying the fda, not actually getting their approval to do it. And I think that this could be systematized where you could have, you know, states, these new interstate compacts that are arising in the US Very undercovered but very important interstate compacts meaning sub national entities. California, Oregon, Washington, Colorado, Nevada are part of like for example the Western States Compact. Minnesota and other states are part of the Midwestern compact. And these compacts could have regulation within their borders. For example, the Mayo Clinic could be working with the state of Minnesota and it's other states to go and review drugs and devices. Or in the Western States Compact you could have Stanford and Berkeley, ucsf, UW and whatnot, working with California and Washington in order to review drugs and devices. Because actually the academics at these institutions are qualified to do that, to do diligence, to do peer review of other people's technical work. And in fact the FDA currently goes and subcontracts out with these folks through this mechanism of expert panels. And so I think that's a model where you don't abolish the fda. It still exists, but you set up more formal alternatives with the right to try at the state level.

Right, sure.

So I want to talk a little bit about trade as such. We did an earlier podcast as well on the end of globalization as we know it. And we also do a follow up on some of the labor reforms that have been announced. Sri it seems like some of the states have stepped forward to kind of make it easier for industries to set up and also hire people. Broader question is, you know, what can India do to kind of convert this crisis into an opportunity?

Yeah, I mean look, if you look at India's development through the since independence, a lot of it. As the economist Shankar, I mean the journalist Shankar Iyer wrote his book what Accidental India. So a lot of these things happened by accident because they were not by design. These things happened because people took. Some things happened. There was a crisis that forced you to take certain actions and that resulted in unexpected, you know, the downstream benefits over long period of time. Right. So like the 1991 for example, which everybody remembers, but there were many other things that you can go back and look in the past, right? So for instance, the 1966 when Lyndon Johnson forced India on a ship to Mao, that forced us on the, on the green revolution effectively. Right. So because we wanted to be free of such leverage and control by foreigners. So this reform Covid is also an opportunity to get outside some of these stultifying labor laws that we have. I don't think it is a panacea because I don't think labor law alone was the real inhibitor of investment in India. But it certainly helps because one of the things that the labor laws do is do is they prevent businesses from reaching their optimal scale and capacity. That's number one because of all the small scale and limits on everything. So certainly they are good. And more important is you need to clear out a lot of inspector inspections and lot of approvals that you need to start a business. And then you have to pay off so many people. And I think they have also done that. As far as I know, Madhya Pradesh government has taken some of those steps. It's not just about the labor, but overall ease, getting an approval and starting a business. And I think that's very critical to take a role of being a businessman ultimately as a facilitator rather than as somebody who's, you know, who's gouging off society. That I think is a step in that direction. I think it's a good thing. I mean, insofar as trade is concerned, I think supply chains will move, but we have to be very careful and realistic for many of these things. Manufacturing capabilities for many things just do not exist in India. So the ecosystem, building out these ecosystem will take years. It's not something that can be done overnight. And China has been doing this for 20, 25 years. They have the whole ecosystem out there and it's not as easy to do it. So people will tell you about Vietnam and Bangladesh, but they're doing fairly low end stuff which every developing country starts with, which is. And they are doing some electronic stuff. But you know, Bangladesh is mostly textile. And yes, we should probably doing that too. But you know, let's remember much of that advantage in textile comes from the fact that you are exploiting your labor in entirely brutal conditions, which wouldn't fly in India, regardless of the labor law. If you want to do that in India, it just would not. There is so much free press and there is so much vigilance on civil society. That kind of thing would not be possible in India. So we have to be realistic about what we are going to be able to get and how long it will take. I think these are. All the ingredients are there and we are laying the foundations and I am optimistic. But we also should be aware of what can be done. And just saying, oh, Bangladesh is doing this and Vietnam is doing this. I think we should be careful about that. Sure, yeah.

Balaji, I want to be mindful of your time. I know you have to leave. I wanted to ask you a question around remote work and virtualization that you Mentioned earlier as well. Do you see more software and R and D work coming out of coming to India? Because technically, let's say if you can move out of San Francisco, you could also move out of the U.S. right?

Yes. I mean, the remote only or remote first will be, will certainly be good for India, but it'll be good for every place that has, you know, it'll be good for poor rural areas in the US It'll be good for any place that has talent where, you know, it's, it's not in the big blue cities of the US It'll probably be least good for the big blue cities of the US It'll be best for pretty much everywhere else. So. And I think the reason for that is, you know, if you've got an Internet connection, you can now parachute in income, rule of law, like a virtual community, and you can just kind of go and get a job there and anything that's information work you can do there. And you might say, well, okay, that's only design or programming or legal work or maybe medicine via telemedicine and say, well, yeah, except we're also getting teleoperation now. You know, remote control of drones is just the beginning. There's teleoperated sidewalk robots for delivery. There's teleoperated machines for supervising factories. I think we're going to see many, many more, you know, aspects of the professional world being put into remote capable such that you can operate them over an Internet connection. And then what that means is then you can operate them not just from down the street, but from anywhere in the world. So I do think that's kind of the direction of the 2020s. Sure.

So, you know, we're nearing the end of the podcast and a question that I want to ask the both of you is, you know, how do you see the exit playing out of here?

Right.

You know, some understanding on what the timelines would be and so on. Balaji, we can start with you.

Sure. Yeah. So very briefly, I think I thought there's a good summary of this that I tweeted a while back. But, you know, a vaccine, a drug or quote, herd immunity, are three ways to get out of this. And the thing is that they're not. None of them are actually guaranteed. For example, with herd immunity, we have to know that immunity is long lasting to COVID 19 and it doesn't, you know, dissipate. Or a mutant version of COVID 19 doesn't come back every year or two years. The flu is known to be hypermutable. In certain ways. And so that's why you do need a flu booster shot each year. We don't really know. COVID 19 is new, so we don't know how mutable it's actually going to turn out to be, whether new strains will arise. So herd immunity is not a guarantee. A vaccine isn't a guarantee either. We've got, you know, I believe vaccines for animal coronaviruses, but not, not for humans yet on their hand, it's also something that the entire world is working on. So you know, you should, you should think, okay, well, probably someone will figure it out, but it's not 100%. And then a drug also, you'd have to have that drug or treatment more generally take morbidity down and mortality down quite a lot for it to be feasible. So the timeline, any of those I think is uncertain. And so there's one scenario where we get one of those things quickly. Another scenario is where we get one of those things slowly. And a third scenario is we get one of these things never or not for a very long time. And it just becomes an endemic disease that humans have to live with. Like polio was for a long time, like, you know, other conditions were. And I think that's likely. Actually, I don't rate it at 99%, but I don't rate it at 1% either. And in which case we have to figure out how to like just modify society to deal with that. It may mean less folks living in cities, it may mean more rural activity, it may mean much more energy on biomedicine. And I think that's the most optimistic route, which is we might have to pull the biomedical technologies of 2050 or 2100 into the present to solve COVID 19. It's a possibility. So that's kind of how I think about how this ends. And I think that the technological solution is probably the best. Of course, that's my disposition. But I think we'll get knock on benefits from that if we pull future biomedical technology into the present day in the same way that for example, During World War I or World War II, technology advanced 50 years and five years, you know, depending on how you count. I think if we do that here against this, in this World War virus, we will, we will have something which benefits us on the other side. You know, our biomedicine is improved.

Yeah, no, in many ways I think Covid has acted as a forcing function for a lot of these trends that are already in play. And you know, hopefully we get better healthcare, better everything, right out of this, not just healthcare, I mean better education. We're seeing edtechs do really well in India for example.

Right.

So yeah, Sri, how do you see this panning out from an economic perspective?

So you know, I think here is what's going to happen if we do not get a cure relatively quickly. I think people will go back to as Balaji said, I agree with him. You know, in the days before vaccines existed, it didn't seem. It's not like people shut down their lives. Right. I mean they just went about their lives. They just lived with the fact that there is greater chance of contracting a disease or dying. Like measles vaccine was in late 60s in the US and India didn't come until the 70s or 80s. So people, it's not like people shut down their lives. And so I think people will go back, but it will also restructure the way we do things to the extent it is possible. In India it's harder because of the density of population. But here certainly I think there will be de urbanization thanks to Covid. But so the impact I feel like one is the hollowing out of cities certainly will start to happen. And the other thing that I feel like a lot of the work that can be done remotely. I think this is a great opportunity for India and it's another leg in the BPO KPO process. For example, you were talking about working from home. My classmate Sridhar Vembu, who is the founder of Zoho, he set up in a remote place in South India, so much lower. Right. I mean you can do this stuff so much more easily now. And as you said, Covid has been a catalyst or certainly in the cases where already the trends were there, it accelerated them. But for where the trends were not there but the ingredients were in place. It's been a major accelerator, a major catalyst for making that shift. So I think it will be hugely disruptive. But as with all disruptions, you're going to have tremendous investment opportunities juxtaposed against tremendous decline in existing ways of doing business. For instance, commercial real estate, commercial property, office space and things like that. But against tremendous boom in so many ways we re engineer our life and our businesses. So yeah, I'm optimistic about that. Right.

So if you were to envision like sort of a new normal coming out of this. Right. What is your one wish for India in that sense?

One wish for India is that hopefully this actually gets rid of the congestion that we have in cities. So people don't actually live in a place like Mumbai. Or Chennai or wherever it is, you know, it's horrible. If I can live in my village and work remotely and enjoy the civil surroundings, why not? Yeah.

We had Sridha Vembu on a previous podcast of ours, and he was talking out of Tenkasi in Tamil Nadu. And, you know, we could, we could hear birds chirping in the background as well.

Yeah.

So this is a fantastic note to end the podcast on. Thank you so much, Sri. Thank you, Balaji, for your time. Fascinating conversation. And, you know, there were so many things to unpack here, and hopefully we can do a follow up very soon in the future. So thanks everyone for tuning in. This podcast will be live on all popular platforms. Do listen, subscribe and share with your friends and family. Until next time, stay safe and Jai Hind.