The Sen-Bhagwati Debate

Sen Versus Bhagwati

Once when I asked an economist how the government should cure the fiscal deficit, he said, “The government should cut the spending—anywhere and everywhere. The government is not capable of running the schools and colleges. The government is not capable of running the hospitals. The government is not capable of running the police and the court system. The government is not capable of doing anything—except perhaps running the NHAI roads.”

And then he asked, laughing, “Do you disagree with that?”

I said, “No. I do not disagree. That is obvious. Everywhere I see idiots. It is the first time I am talking to an honest guy.”

He said, “Thanks. But, you can’t quote me on that.”

Is there anything controversial in what he said? This is the most obvious statement one can make. He said it because unlike these people who can’t make heads or tails out of what they read, he was no fool. But, it is hard to get away with such statements, especially in a poor country.

Deep inside, everyone knows that this is true. This is why people avoid government services like plague. In a sane world, only the inmates of a lunatic asylum would deny such obvious truths. But, here on earth almost everyone does. Inner nobility is rare—almost non-existent. Call me prejudiced. But, this is true. Much of what we call literature and art is some form of therapy for these people.

Long ago, perhaps the village goon turned up in front of your cave to grab his share when you were back home after hunting. Today, it is largely passive aggression. Denying the obvious is a form of passive aggression. Passive aggression has consequences. One consequence is of course that it has kept much of the world poor for much of history. That is passive aggression for you. Intellectuals like Sen are masters at passive aggression. Most intellectuals are. To understand the Sen-Bhagwati debate, you first have to understand this.

Growth versus Development?

I have been saying for years that much of what the Indian media publishes is totally worthless. Here is an illustration with a concrete example. Take a look at Lola Nayar’s article, “Their Common Threads” in the Outlook Magazine. It is published under the “Business” section of the Magazine. What has a debate of two economists on policy issues got to do with “Business”? This of course means that the writer will fail in more substantive ways. This is common in national magazines and newspapers—partly because they do not know better, and partly because there is no one to call them on their behavior. Now, read the blurb:

Growths vs. development, Bhagwati vs. Sen. Both are right, say experts.

Growth and development are not two different things. No decent economist would pit one against the other. Does Amartya Sen think that growth is not essential for development? No. Does Amartya Sen think that the Indian economy has not grown tremendously in the recent past? No. Does Amartya Sen think that the economic growth in the last two decades has not resulted in better living conditions for the poor? No.  

Journalists do not know that economists of Sen’s caliber do not make such egregious mistakes. It is hard for an academic to make such outright errors and earn the respect of his peers. High profile economists rarely disagree on such broad fundamental issues. They are not idiots. They can be deluded, but they are not superficial or abysmally read.

Now, Are both right? Amartya Sen thinks that there should be a shift in the policy priorities because the progress in the living standards of the poor is happening at a very slow pace. Bhagwati thinks that though the Indian poor still have a pretty raw deal, the progress in their living standards has been enormous. Sen thinks that no society has achieved growth without social spending—that is, without an educated and healthy workforce. Bhagwati thinks that you can’t put the cart before the horse—Redistribution can’t precede growth. These are specific disagreements—substantive disagreements.

These are just naive ways of looking at the issue. Government “Investment” in education and health care does not lead to growth. It only hampers growth. Free-market reforms and growth are not a pre-requisite for redistribution. Redistribution is not a pre-requisite for growth and development. What if a realistic path to growth is by cutting down “spending” and government involvement in the economy? This is far more realistic than say, “free-market reforms” in education and health care.

The Government Teaches Children

Awww. The baby responds.

Some developmentalists once kept six-month-old babies in a crib in a way that they look up at a mobile that hangs above the crib. A ribbon was tied to their ankle. When babies kick that foot, the mobile would jiggle. The babies were happy about it, and started kicking their foot deliberately to control the mobile’s movement. But, when the researchers slightly changed the appearance of the mobile, or when they kept the mobile in a different room, the babies’ soon stopped kicking their foot. The babies did not respond. They stared at the mobile cluelessly.

Why? Children are not designed in a way that they transfer what they learned in one context to another. Even six-month-old babies know that what they learned in one context usually do not work in another. Much of what we call education is about tying a ribbon to the ankle of babies, and watching them kick the foot to make the mobile jiggle, hoping that they will use it in radically different contexts. It won’t work. Period.

This is not an isolated experiment. There is a body of literature that has been looking into this for the last 112 years. The evidence is consistent. It can’t be denied anymore:

There is no evidence that people transfer what they learned in school and college to a different context in any meaningful way. Educational institutions have failed in equipping students to do this, because it simply can’t be done. The failure was more pronounced in the case of less talented children, often from low income families.

This matters because what people do at workplace is a lot different from what they learned in school. It is impossible to do much about it because no one can predict the career trajectory of a child.

To cut it short, people are simply wasting their time. Schooling does not work. It works less for poor children. Children who do well in school often do well in life not because they transfer what they learned in school to workplace. It is because their genetic makeup does not change when they move from school to workplace. If people are wasting a quarter of their life, money and energy on something that is fundamentally unworkable, there is only one solution: Cut it. You can call this crazy, but this common sense.

Malnutritioned Children

“Do you think that Kerala actually has more malnourished children than Senegal? On every vital statistic on health and development, Kerala is miles ahead. Except for rates of malnutrition. There are two possibilities: a genetic difference or that it takes generations of feeding to eliminate differences. They admit that current populations, no matter what nutrition you give, you will not get to the WHO standard.  I don’t understand Jean Dreze. In the scholarly literature, he had written a long paper in 2008 completely recognizing this problem. But, there was no mention of this in his piece on the subject in Outlook magazine. Not even an acknowledgement that there are some questions here!”-Arvind Panagariya

Why did Jean Dreze acknowledge the problem in an academic paper, but did not even mention it in a popular Magazine? Academics won’t let you get away with such nonsense.  But, Magazine editors and readers are not experts. Their tolerance level for unpleasant truths is shockingly low. So, it is more prudent to lie.

Left liberals have a very simplistic view of the world: All problems are caused by poverty and can be solved by more and more government spending.

Consider a similar situation. In the US, the problem of low birth weight among black children had persisted for decades even after decades of federal spending to address the problem. But, this was not very common among the black poor in Jamaica even though their income levels were lower than that of the blacks in the US. The left liberals wanted more and more Federal spending to address the malnutrition problem. But, the cause was not poverty or malnutrition as many left liberals wanted to believe. As Murray Rothbard once pointed out:

“The cause of premature births, in fact, is not nutritional but behavioral, that is the behavior of the pregnant mother. In particular tobacco smoking, ingestion of cocaine and crack, previous abortions, and infections of the genital tract and of the membranes surrounding the fetus, which often are the consequence of sexual promiscuity. And there we have it.”

Or another: Decades ago, leftists used to claim that despite all its flaws, Soviet Communism is better than US capitalism because the infant mortality rate is much higher in the US. Again, as Murray Rothbard observed:

“First, on the Soviet Union, I learned from Soviet economist Dr. Yuri Maltsev that the Soviets had achieved low infant mortality rates by a simple but effective device, one that is considerably easier than medical advances, nutritional improvement, or behavioral reform for pregnant women. Namely: by holding up the statistical reporting of a death until the mortality is beyond “infant” status. No one, apparently, pays much attention to the death rate of post-infants.”

The genetic component is not a possibility or even a strong possibility, as Panagariya thinks. Geneticists are convinced that it is almost the whole story, at least in western capitalistic democracies where the basic needs of children are met. From Selfish Reasons To Have More Kids of Bryan Caplan:

“Long life runs in families. But there are two explanations for family resemblance in health, just as there are two explanations for family resemblance in anything: upbringing is one, heredity is the other. When medical researchers use twin studies to weigh the importance of these competing explanations, nurture turns out to be far less important than parents think. Parents don’t affect life expectancy. Parents have little or no effect on overall health. Parents don’t affect height, weight, or teeth. Parents might have a small effect on smoking, drinking, and drug problems.”

These are not matters of opinion. Researchers have been looking into it for over four decades, and the evidence is consistent: The genetic component is far more significant than anything.

The Government Saves Lives

The heroic doctor.

Will more government investment in health lead to a healthier workforce? Are the health indicators in the US better because the spending on medical care is higher than in India? That is rubbish.

Robin Hanson puts it well:

“Our main problem in health policy is a huge overemphasis on medicine. The U.S. spends one sixth of national income on medicine, more than on all manufacturing. But health policy experts know that we see at best only weak aggregate relations between health and medicine, in contrast to apparently strong aggregate relations between health and many other factors, such as exercise, diet, sleep, smoking, pollution, climate, and social status. Cutting half of medical spending would seem to cost little in health, and yet would free up vast resources for other health and utility gains. To their shame, health experts have not said this loudly and clearly enough. Non-health-policy experts are probably shocked to hear my claims. Most students in my eight years of teaching health economics have simply not believed me, even after a semester of reviewing the evidence.  But, it has long been nearly a consensus among those who have reviewed the relevant studies that differences in aggregate medical spending show little relation to differences in health, compared to other factors like exercise or diet.”

The lure of the Mommy State

If it is so obviously wrong, why do people find the bleeding-heart liberal view so convincing? People bring politics into everything. They love to believe that the intellectuals who push their “sentimental” agenda to cure the world of its woes are nice, wonderful people. Golden-hearted socialists. People who have their “hearts” in the right place. For no reason, they would like to believe that Amartya Sen is right, and that Bhagwati is just a creep that annoys him. It is not because they have read their books and have found Sen’s economics sounder than that of Bhagwati’s. That is hard. That would be true initiative. But, when it feels so good, the intellectually lazy do not want to be woken up from their sloth and slumber. Intellectuals know that.

The truth is that normal people resent the rich. They resent foreigners. They resent people that are different. They resent people that are talented. They resent artists. They resent anyone that they do not identify with. The cry for a “bigger government” is about that. It is not about poverty. It is not even about money. It is about envy and resentment. People will never tell you this because it is embarrassing. If you tell them this, they will ask with a shudder on their face: “Oh, really?” But, actions speak louder than words.

Post Script: The tragedy is that in India, Sen and his ilk do not have competent opponents.

1) Read this kiddish article of Bhagwati in the Mint. How can a 79 year old economist write so incoherently?

2) People want to believe that Arundhati Roy’s writings are hysterical rants while Amartya Sen is an objective thinker who judges facts on its own merits, but read this interview:

N. Ram: Why have you chosen not to respond to Guha? Do you, as many others seem to, dismiss it as just a bad case of envy?

Arundhati Roy: No, no, not at all. That would be too convenient, too easy. One could end up saying that about everybody who was critical. No, I think that would be unfair. I’d say it’s far more complex and interesting than that.

Now, Observe how Sen responded to Bhagwati’s criticism:

“Can I not talk about Bhagwati, please? I don’t like talking about Bhagwati. He loves talking about me; I do not like talking about him.”

You never know. The point is that people are not very smart. They are not competent enough to judge intellectuals or their ideologies. Or even their character.

3) The wonderful thing about western libertarian writers is that you can’t expect them to begin a book on the growth debate with nonsense like this 😛 :

“On December 02, 2010 Professor Jagdish Bhagwati delivered a Lecture to a joint session of the Lok Sabha and the Rajya Sabha (the Lower House and the Upper House of the Indian Parliament) with the Prime Minister of India Manmohan Singh, the Lok Sabha Speaker Meira Kumar, the Vice President of India and Chairman of the Rajya Sabha Mohammad Hamid Ansari on the dais and dignitaries including Sonia Gandhi (Chairperson of the United Progressive Alliance the ruling coalition in India), L K Advani (former Deputy Prime Minister of India and a senior leader of the main opposition: Bhartiya Janata Party), and many other Members of the Parliament such as Karan Singh, Shashi Tharoor and N K Singh in attendance. The Lecture, that is available now in a revised augmented version on the Lok Sabha web site (www.loksabha.in) alongside the shorter oral version, was entitled Indian Reforms: Yesterday and Today (the 3rd Professor Hiren Mukherjee Memorial Annual Parliamentary Lecture).”

Egad, What a status oriented society!”

4) An Uncertain Glory” by Amartya Sen and Jean Dreze is a readable work. “India’s Tryst With Destiny” by Bhagwati and Panagariya is a badly written work. It is unreadable. Is this not relevant?

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