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Wednesday, July 24, 2013

Bhagwati versus Sen: What's going on? 07-25


Bhagwati versus Sen: What's going on?

7 things you should know in the Bhagwati vs Sen slugfes
Amartya Sen & Jagdish Bhagwati

Yet, minor disagreements between them have amplified into a shouting match — well, a one-way shouting match, with Bhagwati repeatedly attacking Sen in public and in print, and Sen expounding on his point through interviews and op-eds, largely without mentioning Bhagwati or his views.

In a way, this isn’t surprising: Bhagwati has long disapproved of Sen. Also, both have competing, co-authored books in the market. In his latest broadside against Sen, Bhagwati managed to mention his book frequently, insisting in it, he had proved how Sen was anti-growth, a point many reviewers surprisingly failed to mention.

But that doesn’t entirely explain why the dispute has really taken off. One reason, of course, is Sen has spoken about food security, released a book on Bihar and expressed a preference that NarendraModi not become prime minister. This immediately meant the luminous intellectuals of the internet, and those in the respectable media that followed their lead, immediately assumed he somehow represented the Congress.

Meanwhile, Bhagwati’s co-author, Arvind Panagariya, had praised Gujarat’s growth in several pieces. That immediately made Bhagwati Modi’s best friend and any further difference between the two could be conveniently slotted into the pre-prepared Modi-versus-Congress mould apparently compulsory for news stories today.

If there’s anything worth taking away from what has become an increasingly unseemly and uninformative spectacle, it is the sobering realisation that academics continue to be divided over the simple mechanisms of how growth can be achieved — purely through deregulation, as Bhagwati would argue, or with a simultaneous push to education and health, as Sen wants.

Here’s the basic checklist on who said what, whether it was true, and the real differences and similarities between Sen and Bhagwati:

Do Bhagwati and Sen have similar stature as academics?

Sen won a Nobel Prize for his work on social choice and welfare but Bhagwati is a path-breaking trade theorist. Sen’s PhD students have included Kaushik Basu; Bhagwati’s, Paul Krugman.

In fact, Bhagwati is far more an economist’s economist than Sen, who at Harvard, for example, had an office at the philosophy department, not in the economics department. Sen is unique in that he is also one of the most respected living academic philosophers and a close associate and fellow teacher of both the left-of-centre John Rawls, the leading philosopher of the 20th century, and libertarian icon Robert Nozick.

Is Sen close to the Congress and Bhagwati to the BJP?

Actually, Sen was awarded the Bharat Ratna by an NDA government in 1999, though some sections of the Bharatiya Janata Party want it taken away now because he has said he doesn’t think Narendra Modi should be PM; a belief in Modi’s spotless virtue is not known to be a necessary qualification for the award.

Bhagwati, meanwhile, has fellowships named for him at Columbia University, paid for by the Indian taxpayer — set up in 2010, at the direction of the UPA government (it is unusual for such to be named after a member of the university’s faculty). Both Bhagwati and associate Arvind Panagariya—who holds the, yes, Jagdish Bhagwati Chair in Indian Political Economy at Columbia—have frequently talked about their long interaction and friendship with Prime Minister Manmohan Singh.

So, in a word, no! The desire to impose a politically partisan lens on an academic disagreement shows how shallow and debased is the understanding of economics in the Indian public sphere, as well as how devoid of thought-provoking content is the actual political debate between the Congress and the BJP.

Is it really Sen versus Bhagwati?

No. It’s Bhagwati versus Sen. Sen has almost completely avoided commenting on Bhagwati’s views, although Bhagwati has become increasingly personal and petty in his attacks on Sen.

Sen broke his Bhagwati-as-Voldemort rule in a recent letter to The Economist. The liberal British magazine had run a review of Sen and Jean Dreze’s new book; the reviewer happened to mention Bhagwati in passing, without specifying that he, Bhagwati, was right and Sen was wrong. This was a red rag to Bhagwati, who wrote Sen only paid “lip service” to growth. This was too much for Sen, who wrote, explaining he did his PhD on how to stimulate growth, and the first collection of his essays, published in 1970, was titled Economic Growth. In fact, Sen is perhaps the greatest living scholar of the original philosopher of the free market, Adam Smith.

Sen must regret his moment of weakness, because Bhagwati then wrote an article for Mint that basically returned, even more harshly, to his complaints about Sen. Bhagwati’s books are littered with disparaging remarks about Sen; indeed, reading between the lines of his last book reveals even more such remarks, some of these from resentments that date back to the early 60s, when both were young professional economists in New Delhi.

Is Sen anti-reform? Is Bhagwati anti-public funding of schools?

No, and no. Sen has often and publicly argued in favour of greater liberalisation, ending red tape, labour law reform, and cutting fuel, power and fertiliser subsidies. It may be convenient for both his friends and enemies to paint him as some kind of socialist but he isn’t. Meanwhile, Bhagwati has also argued for a second track of reform in social sector areas, though he would prefer public money be spent on, say, school vouchers that let poor parents pay for private schools.

Has either of them soured on the India growth story and blamed the UPA?

No. Both are unfazed by the fall in India’s growth rate. Sen argues it has fallen as much as its competitors; Bhagwati has blamed tight monetary policy and the freeze-up in clearances following outrage over scams, adding many government proposals could reverse the slide. Both of these are, pretty much, what the government also claims.

So, what’s the real difference between Sen and Bhagwati’s policy prescriptions?

Merely a difference in emphasis! Sen would like more public funding (as distinct from public provision) of basic goods; Bhagwati argues this is secondary to focusing on growth.

Why? Sen says growth depends on creating a dynamic workforce capable of learning on the job, which needs health and education. Bhagwati believes laissez-faire growth will raise incomes sufficiently for the workforce to be able to invest in their own health and education. Of course, both these mechanisms can be true. In fact, both probably are true, which means the differences are even smaller than is claimed — just a question of which can work faster and more effectively. One path can hardly be abandoned for the other; both mechanisms will need government attention. Nor is either major political party likely to act on only one mechanism, at the cost of the other.

So, why all the fuss?

As I said: duelling books; people who don’t bother to read the duelling books but instead read headlines written by journalists who haven’t bothered to read the duelling books, or only partially understood these, and the eternal quest in the Indian media to make absolutely everything relate to Narendra Modi versus Rahul Gandhi.

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Please read this also,


The debate between two eminent Indian economists, Jagdish Bhagwati and Amartya Sen, has thrown up lively discussions as well as acerbic jibes. It has also taken political tones, with sharp reactions from various parties. Jagdish Bhagwati, professor of economics and law at Columbia University, tells Nayanima Basu he is not anti-redistribution, adding the crucial issue is where the money would come from. If this issue isn’t tackled, the poor would only be harmed, he says. Edited excerpts:

Critics say your debate with Sen is polarising an issue that shouldn’t be polarised. The debate, they say, is based on outdated notions of growth. Growth could be investment in capital, as well as investment in human resources.

Since when did investment mean it had to be in physical capital? Also, there are some instances in which we can eat our cake and have it, too. Thus, you can spend money on education as consumption, while it also serves as investment. But again, we must not overdo this.

A member of Parliament (MP) had once said, “Are we going to eat GDP?” You emphasise growth. What about redistribution?

The MP sounds so idiotic that maybe he should be fed on a GDP diet! If he cared to understand the arguments at hand, he would know there was no way significant redistribution could have been undertaken with results when there were too few rich and too many poor. We would just have been redistributing poverty, as it were. So, we had to grow first and then spend money on health, education, etc, for the poor. This is what policy economists call the ‘sequencing problem’. If Mr. Sen contends otherwise, he has no serious argumentation and evidence to support his assertions, even in his latest book with Dreze.
So, the issue is not that I am for growth per se and Sen is for ‘redistribution’. That is just a self-serving canard by the likes of Mr. Sen. I am for redistribution (spending revenue for the poor), but unlike Mr. Sen, I do not pretend somehow money would materialise by our wishing for it, as in some of our mythological tales! There lies irresponsibility, not wisdom. And, since it will harm the poor, instead of helping them, as I have argued with and without professor Panagariya, this is an immoral position, rather than the “progressive” position Mr. Sen would have his uncritical readers believe it to be.

Can’t both, GDP and redistribution, go hand in hand, instead of giving precedence to one?

That is the sort of wishy-washy thinking that obfuscates the issue. Of course, a limited amount of redistribution can be financed even without growth; but how far could we have gone with it in the 60s and 70s? At the end, there is no alternative to growth, which will raise the revenues earned, at any given rates, to make it feasible to finance the social expenditures our planners and politicians such as Pandit Nehru always wanted.

Sen also claimed countries such as Singapore educated people first; this led to growth later. That shows how ignorant he is. If you educate people and there are no economic policies that provide increased jobs, the education wouldn't suffice for growth and prosperity.

Singapore had inherited high literacy, but that helped only because outward orientation in trade led to huge exports, which enabled equipment with embodied technology to be imported. This equipment’s productivity was exceptionally good because of the high literacy, though it would have been high enough even without literacy. Literacy alone could not have led to results unless it fed into outward orientation.

China didn’t have the same level of literacy. But again, the phenomenal growth rate was due, not to literacy (which was good but not exceptional), but to privatisation of the collective farms and to the exceptional export performance of the Guangdong province.

The whole debate between you and Sen has taken political tones, with many accusing you of batting for Narendra Modi. Sen is obviously bashing Modi.

It is nonsense to say I am batting for Modi, when I have often said I wouldn’t vote for Modi or Rahul Gandhi, assuming they are the eventual candidates of the Bharatiya Janata Party and the United Progressive Alliance (respectively) in the forthcoming elections, unless I see their platforms and unless they are forced by public opinion and the media to hold US-style debates. If Sen is bashing Modi purely on the basis of his prejudices, that is his privilege. But it also betrays lack of integrity and judgement. I have no doubt the UPA leaders, all of whom I know well, will be astonished by Sen’s declarations.

You said Sen paid only lip service to growth. But his PhD was on stimulating growth.

Who did not build or talk about growth models even then? But can Mr. Sen really maintain he was talking explicitly about growth as an instrument for reducing poverty? Or that he was on the right side with gusto in the discussions on growth-enhancing policies such as trade openness, DFI (direct foreign investment), reduction in the massive proliferation of public enterprises and elimination of innumerable senseless interventions. One model does not a policy make.

The debate also saw personal remarks, which surprised many, as these came from eminent economists.

It is silly to fuss about personal remarks. You cannot discuss policy differences without citing your opponent’s writings. That is not getting personal. It is your safeguard against people who would otherwise claim you are creating a straw man.

If the exchange becomes animated, it is good; it will wake people up! If you want to see a debate descend into personal invective, I recommend you see how British intellectuals dish it out to each other, often hitting below the belt. Nothing we have had in the debate between me and Mr. Sen qualifies us as being in that tradition.

What do you think of the coming World Trade Organization ministerial in Bali, which aims to push for a deal on trade facilitation, while India wants the deal on food security to go through first?

What is wrong with letting trade facilitation go through? That is good for everyone, including India.