Cockroaches 1, Modi 0: India’s remarkable protests

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1:05The Economist

1:12Hello and welcome to The Intelligence from The Economist. I'm Jason Palmer.

1:21Today on the show, why so-called macro trading is hard both for man and machine, and the mystery street artist taking over cities.

1:36But first...

1:48Government ministers come and go all the time, all over the world. But in India, the resignation of Dharmendra Pradhan, the education minister, over the weekend was seismic. It was driven by growing youth protests, and the youth were ecstatic.

2:09A mild-mannered movement that started as a jokey meme has become very, very serious for India's leader. We've had 12 years of Prime Minister Narendra Modi's rule, And in those 12 years, we have never before seen a cabinet minister resign due to public pressure. Kira Huyu is our Asia correspondent and has been reporting from the protests in Delhi. I had not been expecting this resignation. Frankly, I don't think that all of the cockroaches were expecting the resignation. And now it goes far beyond that. This, I think, is the beginning of a new culture of dissent and accountability in India. now at the mention of cockroaches they have been talked about on the show before but let's do a little reminder who are they so back in may india's chief justice seemed to compare india's jobless youth to cockroaches a tweet appeared on the social media platform x that just said what if all cockroaches came together and that was a tweet by a guy called abhijit dipke who at the time was a student in Boston.

3:12And that single tweet basically morphed into a satirical online meme that then became this huge youth movement that seems to have struck a nerve. So you went from mostly quite amusing Instagram content. Last time I checked a couple of minutes ago, they currently have 27 million followers. Lots of AI images of fist raising cockroaches set to Hindi rap. But underneath all of this, there's actually a much more serious message. Go on. So there is this all India exam called NEET, which you have to do if you want to get into medical school in India. And there was a leak which really upended the dreams of more than 2 million exam takers.

3:53And so there's a lot of corruption. That leak has since then been linked to more than 20 suicides among students trying to take that test. And so now you have this perfect storm where India has this insanely competitive exam culture. It's very hard to get into some of the few good quality colleges. And then if you do get into those colleges, despite all these scams, there's very few jobs at the end of that line. And now you have India's chief justice telling you you're a cockroach. So that's how the movement got so much force behind it. But how have we got to this quite exciting stage now with the resignation and so on?

4:26So earlier this month, on the 18th of July, you had plainclothes cops arrive at the protest site in Delhi, throw white sheets over this veteran activist called Sonam Bangchuk and then ferry his frail body against his will to a government hospital.

4:48And from there, he continued to record videos in support of the protests. Sonamji, as he is known, was on day 21 of his hunger strike in support of this idea that the minister needed to resign. And if you talk to the protesters, they talk about this as a kidnapping.

5:08Tens of thousands, maybe hundreds of thousands staged Delhi's biggest protest in more than half a decade. I described these protests as originally very peaceful, very patriotic. Students were clutching copies of the constitution. There was someone who was dressed up as Gandhi holding a sign that said world peace. All of this was because the BJP, Narendra Modi's party, has a habit of branding all of its critics as anti-national. And so the protesters really went out of their way to show that if anything, they are here to do their patriotic duty to defend the future of the country. Now, unfortunately, less than three hours after I first saw Gandhi holding a sign saying world peace, riot police without name tags started beating up protesters with sticks and firing tear gas at them.

6:01Police were later found to have used pellet guns, and that's a weapon that previously had only been used in conflict-ridden Kashmir. All across central Delhi, the internet was actually illegally shut down, so it was quite hard for me to move around or contact anyone. You also had 17 metro stations closed down. As the authorities tried to stop anyone from coming, they couldn't really do that. The crowds kept coming anyway. So as you moved around when you could, what were people telling you? They were saying that the resignation is key. They're not going to go before the education minister goes.

6:35But you very quickly got a sense that this protest had become about much more than just that one single resignation. I'm going to record you. Is that OK? Yeah, but my voice is not. I understand. How many days have you been fasting? Today is my ninth day. Ninth day. I spoke to 28-year-old hunger striker Yash Mishra. Education is like water. It is the most important commodity. And the government of India, Mr Modi, is failing and he has no way, no policy which he can use to actually get things back on track. Most of India is young, about 65 % are under 35 and many of those feel doomed. 25 % are not in college or jobs or training.

7:21There are all these exam leaks. We've had about 150 known cases in the last decade alone. and India seems to not really be investing in what it calls its demographic dividend, aka its young people. India says it wants to spend about 6 % of its GDP on public education, but that current figure is closer to 4%. But it was something else actually that Yash said that I found most interesting. How are you feeling? I am feeling very good. Energetic. Energetic? What gives you energy? The fear that we have induced in the government. Tell me more about the fear. The conversation with Yash kept coming back to these bigger themes.

8:02And similarly, when I spoke to a lot of my friends, most of whom were at these protests, not long anymore, mid-30s, they weren't just talking about paper leaks. They were talking about a broken system. We've had more than a decade now under the BJP of a shrinking space for dissent. India used to be this very loud and boisterous democracy. People have gotten quite scared now of publicly criticizing Narendra Modi. and all of a sudden you get a sense that the younger generation, it's not just that they aren't scared anymore. Even more fatally, they are cracking jokes about Narendra Modi. And how has the BJP, or more to the point, how has Narendra Modi responded to all of this?

8:40Modi first tried ignoring the protest. Then he tried announcing a bunch of policy changes that had not been on the cockroaches list of demands. And then he seemed to be panicking. So we were treated to this really unusual late night video from a usually very stage managed, very image-conscious Prime Minister. He was holding the camera himself, really uncomfortably close to his own nostrils, and he apologised in a very candid way, acknowledging the student's pain. But it seems to have been too late. Gen Z responded with mock online tutorials, guiding their Prime Minister on more appropriate lighting and camera and script for viral videos.

9:22And so I think Morty got a sense that there was no way of winning these students back unless he caved to their demands. Which he has now done, which you say is extraordinarily unusual. Where does this go from here? What his image is that of a strongman leader who doesn't bow to the public, he doesn't accept traditional notions of democratic accountability. He hasn't in all this time taken a single press conference in which the press could hold him to account. So it seems that something could be pretty fundamentally shifting. It might be that going forward, performance and public support actually matter for staying a minister.

9:57It might mean that the stronghold of the traditional media, which has mostly stopped criticizing Maudie, is breaking because Gen Z will just come with their own cameras and phones and film it all for the world to see. The cockroaches have gone home. I hope they all have a long, warm shower and a meal. We don't really know what's going to happen with the movement where that new culture of dissent is going to go but from the conversations I have had in true Gen Z style with a lot of these protesters on Instagram they are saying look we've had this really historic win in quite a short period of time there's no way that we're not going to be back on Parliament Street the next time that the government thinks that can take us for granted.

10:39Now the reality check on all of this is the BJB is actually just fresh off a string of state election victories in May. It is politically strong across the country. And frankly, the country's opposition is not very impressive, or particularly united. But I think Indians wake up this week to a country that feels bolder and louder and younger. Kira, thanks very much for joining us. Thank you for having me.

11:12Thank you.

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12:31This is a copy of the Financial Times. Now, obviously, the headlines tell me news that's already happened. But imagine if instead they were telling me tomorrow's news. And I'm a trader. I buy and sell stocks and bonds. Rosie, how do you think I'm going to do?

12:51Rosie Blau:Well, Josh Roberts, you're our capital markets correspondent, so I assume you'd rake it in. Well, you might think so, but a couple of researchers have actually done an experiment that is very like this. They invited 120 people to look at tomorrow's newspapers every day for 15 trading days and then place bets on stocks and bonds. And the surprise is even with that crystal ball, they actually did pretty badly.

13:21Rosie Blau:Okay, so Idiot's Guide to Markets here, by which I mean me. Obviously, markets move on financial information, how businesses have done, all sorts of things like that, but also on global trends, on political information, on data releases, that kind of thing. And yet you're saying that even if people knew what was going to happen, they'd still do badly on the stock market? Yeah, some of the biggest events that move markets, as you said, they're data releases, Things like jobs reports, where is unemployment, how many jobs have been added to the economy, how is inflation doing, are central banks going to move interest rates up or down.

14:00These are the sorts of events that the participants in the experiment were shown in tomorrow's news. If you know that the economy has added a lot of jobs, you might think the economy is growing quite quickly. That will cheer shareholders, share prices are going to go up. You might place a bet in advance that shares are going to go up. Similarly, if you think the Federal Reserve is going to raise interest rates, you might think that bonds are going to do badly because bonds prices tend to fall when interest rates go up. However, even with that information, which you might think was the key that would unlock markets for you, yes, the participants didn't do particularly well in placing their trades.

14:34Rosie Blau:So how does this study work, Josh? Did they just give everyone a crystal ball and tell them to get on with it? So, yeah, obviously we don't actually have access to tomorrow's headlines. This was a team of researchers at Elm Wealth, which is an investment firm. And what they did was they picked 15 front pages of the Wall Street Journal between 2008 and 2022. And they recruited some participants and they showed each participant for each of 15 trading days tomorrow's headline. Then what you get to do is buy or sell stocks. You can buy or sell bonds. and they gave each participant leverage to do this with.

15:15So you could multiply your bet by up to 50 times. This is the sort of bet that hedge funds actually get to place in real life. At the end of the trading day, based on the actual market moves from that historical trading day, your trade gets closed out and we do that 50 times. Now, each participant was given$50 to start with and you might think that they made loads and loads of money, but actually only about half of them ended up with more money than they started One in six went completely bust. They lost everything. And the average return was very small. The average person ended up finishing with about$51.

15:50So despite the crystal ball, they didn't do great.

15:54Rosie Blau:So what does all that mean? Why are we so bad? One of the things is that even with tomorrow's news, it's surprisingly hard to guess the direction markets are going to move in. Markets don't just move based on the news that's happened. They move based on what people are already expecting. Say tomorrow there's a great jobs announcement, but everybody was already expecting that. Well, the news has already been priced into shares today, so I might see tomorrow's news think our stocks are going to go up. But, you know, the economy added 100 ,000 jobs. People expected it was going to add 150 ,000 jobs.

16:30People are actually quite disappointed. So it's quite hard to work out the direction. And our participants here were not great at guessing directions. They got them right only about 51 % of the time. So that tells you something of why they did badly. Even worse than this, though, is how they sized their bets. This turns out to be one of the hardest things to do in trading and investment. You want to be able to work out how confident you are in the move you're taking. And you want to be able to size your bet appropriately, right? If you just think markets might go up tomorrow, you probably either wouldn't bet or you might bet a very small amount.

17:07If you feel really confident this is definitely going to be an upward move, you should be able to take account of that and bet more. But what they found in this experiment is that people are very bad at doing that. They didn't size their bets according to how confident they were. And even when there was news they were shown that made it really, really likely that they had got their bet right, they didn't increase the size of their bets. Conversely, people took far too much risk and multiplied bets far too many times when they weren't very sure. And that's what led to people going bust.

17:35Rosie Blau:So we're bad at predicting what might happen. And we're bad at predicting how likely it is that that might happen. There's another surprising element of this experiment, which is they then repeated it with artificial intelligence models. And even the artificial intelligence models did badly. They were a little bit better than humans at guessing the direction of markets. They got that about 60 % of the time, but they were pretty much as bad at sizing their bets correctly. Even the machines who are supposed to be our future overlords took way too much risk, didn't really calibrate their bets according to how confident they were.

18:14And some of them lost money as well.

18:16Rosie Blau:Personally, I find that quite comforting. The machines aren't brilliant at this. Is anyone any good at this? Well, we might take some comfort from the fact that the professionals actually are quite good at this. Macro traders who bet on the things that we've been talking about, you know, direction of stocks and bonds based on economic and political trends. The researchers at Elm Wealth recruited five expert macro traders and gave them the same test. As you might expect, they did rather well. All five of them finished with profits. On average, they over doubled their money. And actually, the crucial distinction between them, the AI models, and the lay participants, let's call them, was not that they were loads better at predicting directions, although they were a bit better at predicting directions.

18:58It was they changed their investment sizing massively according to their confidence. On some days, they chose not to bet at all. On days, they felt very confident. They chose to massively ramp up the leverage of their bet, and it worked out very well for them. So we can take some comfort from the fact that the people who do this day in, day out in Wall Street in the City of London actually are quite good at it.

19:17Rosie Blau:Where does this leave the existential question, particularly working at The Economist? Are the markets rational? Are the rest of us irrational? I think markets can be both rational and completely wrong. And what I mean by that is it may well be that markets aren't brilliant at predicting how much a company is going to earn in the future, how much the economy is going to grow in the future. But if I'm a participant in markets, I might not actually care about whether the prediction is accurate. I might just care about making money. So if I know that the market might incorrectly predict the future, but I think it's going to move in a certain direction, nevertheless, it makes sense for me to bet on that direction, even though it might lead to a price in the market that predicts the future incorrectly.

20:03I think the biggest lesson from this study, though, is that a lot of investors spend loads of time thinking about what they should be buying. Which stock should I buy? Should I buy this government bond or that government bond? Should I lend to massive company developing AI? We devote a lot of thought to those things. But almost if not more important is the question of how much? How confident am I that the particular investment I'm making is going to pay off? And can I quantify that? And how should I size my bet in order to take advantage of my confidence. This is actually possibly the most important question in investment.

20:42And it's one that I think we give too little thought to.