What are the economic costs of lynchings?

In the popular imagination of Kashmir’s struggle for azadi, the Kashmiris are funded by Pakistan. Stone pelters are paid Rs 1,000 and they see this as an employment opportunity, it is commonly believed. Kashmiris, however, will say that even if the Indian government lays golden roads in the state, the struggle would not stop. Their desire is independence, not better financial security. It is telling that in the Indian mind, the only reason to protest would be for better economic prospects.

Perhaps Yashwant Sinha sensed this. In July, Sinha made a statement condemning lynching in the name of cow protection. But the argument was peculiar. “I am relating it to economic activities and I am saying that it has an adverse impact on the economic activities[1].” He said that lynching would serve as a disincentive for foreign investment.

Sinha was not appealing to people’s humanity or morality, but to their economic interest. “As far as lynching per se is concerned, you know unfortunately in our society, such lynching has been going on. It is not always communal,” he said. With one sweeping statement, he accepts that lynchings are a part of the society we live in and that there is nothing to be outraged about it, but for the economic consequences.

In the past few months, the “Not In My Name” protests, PM Narendra Modi’s (hollow) call to stop lynching and several other appeals to morality have curbed neither the climate of hatred nor the trend of lynching.

Do we then need to make an economic argument against lynching?

This is not the first time that an economic argument has been touted against what is a humanitarian, ethical or moral question.

In Victorian Britain, when education reforms were being introduced in 1870 by William Forster, a similar argument was made. The Bill to establish the foundations of mass elementary education stated that industrial prosperity would depend on elementary education. Faced with opposition from the upper classes, who felt an educated working class would ‘think’ and possibly revolt, Forster was left to appeal to the economic sense of the upper class. By providing skilled labour, education would benefit the capitalists and the industrialists, Forster argued.[2]

In 1776, economist Adam Smith made a similar case against slavery, stating that slave labour was inefficient and costly to national economies[3]. To tackle modern slavery such as forced and bonded labour, organisations have been putting forth economic arguments to show slavery is not profitable.

In the late 19th and early 20th century, America also saw large number of lynchings. They were carried out by white Americans, who primarily targeted black Americans, but also immigrants of all races. In 1919, Alabama put 18 lynchers on trial. A mob had lynched three blacks, two of whom were accused of killing a police officer and a third man who had been in jail for a minor offence. The state prosecutor, after presenting eye witnesses who identified the lynchers, added that killing of innocent blacks harmed the business climate of the state. The jury, however, would still find them guilty.[4]

A report titled “Lynching in America” by the Equal Justice Initiative states that in the 1920s, lynchings were disfavoured because of the “bad press” they generated[5]. “Southern legislatures shifted to capital punishment so that legal and ostensibly unbiased court proceedings could serve the same purpose as vigilante violence: satisfying the lust for revenge.”

Does Yashwant Sinha’s claim that foreign investments would be affected by the trend of lynching hold up when the numbers are inspected?

The gau-rakshak terror attacks started gaining momentum in late 2015, most noticeably with the killing of Mohammed Akhlaq in Dadri. A report by IndiaSpend says that in the first six months of this year, English language media reported 20 gau-rakshak terror attacks. This is over 75% of all incidents that were reported in the entire year of 2016, which saw the highest number of attacks since 2010[6].

To check whether Sinha’s statements are true, we need to trace Foreign Direct Investment (FDI) in India from September 2015. The data published by the Department of Industrial Policy and Promotion (DIPP) on the inflow of FDI can help us gauge the trends[7]. The inflows are fairly fluctuating, as can be observed from the graph below. Data is only available until March 2017, but we can already see that after peaking at Rs 41,353 crore in November 2016, there has been a steep decline in foreign funds. February 2017 saw the lowest FDI at Rs 8,118 crore. There was a rebound in March, doubling to Rs 16,126 crore.

This simple graph, of course, does not prove any causation. Experts say that the rapid inflows were due to relaxation of FDI regulations, which allowed investors to flock to the Indian market. After the initial gold rush blew over, markets are stabilizing.

But in recent months, media outlets across the globe, including BBC, The Washington Post, The New York Times, Al Jazeera and The New Republic and many more have reported on lynching, terming it an epidemic. The Modi government has always tried to project a “business friendly” approach to foreign investors. One can imagine that such damning press coverage by international media will only make investors reluctant.

Earlier this year, a spate of attacks on African nationals in the country was condemned strongly by African envoys in Delhi[8]. Many expressed a fear that Indian business and economic opportunities in Africa would be damaged due to these xenophobic and racial attacks.

In an opinion piece published by The Hindustan Times, it was noted, “Just as the murder of Srinivas Kuchibotla has seen a decline in the number of Indian students applying for US universities, we can anticipate a dip in the number of African students willing to study in India. Medical tourism may also take a hit. Around 20,000 Nigerians visited India in 2015 for medical reasons.”[9]

It leaves a bad taste in the mouth to say this, but for economic sense, the lynchings need to stop!


[1] https://www.thequint.com/india/2017/07/06/lynching-vigilante-killings-india-economy-yashwant-sinha

[2] http://hansard.millbanksystems.com/commons/1870/feb/17/leave-first-reading

[3] http://digitalcommons.conncoll.edu/cgi/viewcontent.cgi?article=1026&context=econfacpub

[4] African Americans Confront Lynching: Strategies of Resistance from the Civil War to the Civil Rights Era (Pg 71, 72)

[5] https://lynchinginamerica.eji.org/report/

[6] http://www.indiaspend.com/cover-story/86-dead-in-cow-related-violence-since-2010-are-muslim-97-attacks-after-2014-2014

[7] http://dipp.nic.in/publications/fdi-statistics/archives

[8] http://timesofindia.indiatimes.com/india/african-envoys-say-attacks-xenophobic-and-racial-india-rejects-charge/articleshow/57999401.cms

[9] http://www.hindustantimes.com/opinion/attack-on-africans-envoys-show-the-mirror-to-what-india-has-become/story-mlfljqM83lCBmzY0TBOd4I.html


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Amrit Written by:

Freelance journalist and student of communication research.

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