Prof Jagdish Bhagwati on Pankaj Mishra & fiction as non-fiction

Thanks to Sanjay for alerting me to this sharp and insightful speech by Prof Jagdish Bhagwati, titled, “This is how economic reforms have transformed India“, from which these excerpts (emphasis added):

…the naysayers, among them the socialists in the currently ruling Congress Party, have rejected the ‘miracle’ produced by the reforms by asserting darkly that the growth ‘lacks a human face’, that it is not ‘inclusive’, that the gains have accrued to the rich while the poor have been immiserized, that inequality has increased, and that India stands condemned before the world.

Perhaps the most articulate critics are the ‘progressive’ novelists of India, chief among them Pankaj Mishra whom the op-ed page editors of The New York Times regularly and almost exclusively invite to write about the Indian economy, a privilege they do not seem to extend symmetrically to American novelists to give us their profound thoughts on the US economy!

Mishra’s latest Times op-ed on October 2, 2010, writes of the ‘alarmingly deep and growing inequalities of income and resources in India’, ‘the waves of suicides of tens of thousands of overburdened farmers over the last two decades’, ‘a full-blown insurgency . . . in central India’ to defend tribals against depredations by multinationals, ‘the pitiless exploitations of the new business-minded India’, and much else that is allegedly wrong with India!

While economic analysis can often produce a yawning indifference, and Mishra’s narrative is by contrast eloquent and captivating, the latter is really fiction masquerading as non-fiction.

Prof Jagdish Bhagwati Rediff

Wait, there is more…

But are the opponents of the reforms right to complain that the reformers have been focused on growth to the neglect of the underprivileged; and that the latter have been bypassed or immiserized?

It has become fashionable to say that this must be so because the Human Development Index, produced by the UNDP, puts India at the bottom, at 135th rank, in 1994. But this is a nonsensical index which reduces, without scientifically plausible weights, several non-commensurate elements like literacy and health measures to a single number.

It is a fine example of how bad science gains traction because of endless repetition by the media: it must be dismissed as rubbish.

There is no substitute for hard, scientific answers to the questions concerning what has happened, during the period of reforms and enhanced growth, to the poor and the underprivileged: and these answers, as I will presently sketch, are more benign.

After a considerable debate, it is now generally accepted that the enhanced growth over nearly 25 years year was associated with lifting nearly 200 million of the extreme poor above the poverty line. By contrast, consistent with commonsense, the preceding quarter century with abysmal growth rate witnessed no perceptible, beneficial impact on poverty.

Then again, at a narrower level, the political scientist Devesh Kapur and associates have studied the fortune of the Dalits (untouchables) in India’s most populous state, Uttar Pradesh, between 1990 and 2008, to find that 61 per cent of those surveyed in the east and 38 per cent in the west said that their food and clothing situation was ’much better’.

Most striking is the finding of the political scientists Al Stepan and Yogendra Yadav, drawing on polling data produced by the Center for the Study of Developing Societies in Delhi, that for every disadvantaged group including women, the response to the question ’Has your financial situation improved, worsened, or has remained the same’ posed in 1996 and again in 2004, shows that every group has overwhelmingly remained the same or improved: those who claim to have worsened are invariably less than 25 per cent of the respondents.

As for the relative economic outcomes of the disadvantaged groups, the economist Amartya Lahiri and associates have studied India’s ’scheduled castes’ and ’scheduled tribes’, two particularly disadvantaged categories, and conclude that the last twenty years of major reforms ’have seen a sharp improvement in [their] relative economic fortunes’.

Then again, using household expenditure data for 1988 and 2004, the Johns Hopkins economists Pravin Krishna and Guru Sethupathy conclude that inequality, using a well-known measure invented by the Dutch econometrician Henri Theil, while showing initial rise, had fallen by 2004 back to the 1988 levels: a straight rise in inequality cannot be asserted.

I should also add that many reforms help the poor more than the rich because the rich can cope with the results of inefficient policies better than the poor.

If the public sector generation and distribution of electricity is inefficient, and the electricity goes off in the middle of the night in Delhi’s summer, the rich turn on their private generators and their air-conditioners continue working.

But the poor man on his charpoy swelters as his small Usha fan is not working. Those who object to letting in Coke and Pepsi forget that the common man derives his caffeine from these drinks while the well-off critics get theirs from the Espresso and Cappuccino coffee in the cafes.

Prof Bhagwati then talks about the political implications of this:

The most interesting political implication of the success in finally denting poverty significantly, though nowhere enough, is that poverty is now seen by India’s poor and underprivileged to be removable.

India is witness finally to what I have called the Revolution of Perceived Possibilities. Aroused economic aspirations for betterment have led to political demands for the politicians to deliver yet more.

This suggests, as my Columbia University colleague Arvind Panagariya and I have hypothesized, that voters will look to vote for the politicians who can deliver growth, so that we would expect growth before the vote to be correlated with vote now.

In an important paper, Poonam Gupta and Panagariya have recently tested for this hypothesis and indeed found that it works. So, this implies that politicians should be looking to augment reforms, not reverse them as misguided anti- reform critics urge.

So, politicians would do well to strengthen the conventional reforms, which I call Stage 1 reforms, by extending them to the unfinished reform agenda of the early 1990s. In particular, further liberalization of trade in all sectors, substantial freeing up of the retail sector and virtually all labour market reforms are still pending. Such intensification and broadening of Stage 1 reforms can only add to the good that these reforms do for the poor and the underprivileged.

But these conventional reforms have also generated revenues which can finally be spent on targeted health and education so as to additionally improve the well-being of the poor: these are what I call Stage 2 reforms.

When ’progressive’ critics argue that Stage 2 reforms must replace Stage 1 reforms, because they appear superficially to be more pro-poor, they forget that Stage 2 reforms have been made possible only because Stage 1 reforms have been undertaken.

Image Courtesy: Rediff Archive

B Shantanu

Political Activist, Blogger, Advisor to start-ups, Seed investor. One time VC and ex-Diplomat. Failed mushroom farmer; ex Radio Jockey. Currently involved in Reclaiming India - One Step at a Time.

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7 Responses

  1. Wonderful plain speaking by India’s greatest economist of the 20th century. Note that the HDI which Prof. Bhagwati rightly calls “a nonsensical index which reduces, without scientifically plausible weights” was devised by Amartya Sen.

    The World Bank thereafter went on a wild goose chase for the past 20 years using this absurd index.

    A Nobel prize for Prof. Bhagwati would help address the significant gap in good thinking at India’s policy level.

    Pankaj Mishra is an outstanding writer (I admire his book “An End to Suffering”) but a poor policy thinker. He must learn economics 101.

    Regards
    Sanjeev

  2. Suhas says:

    Pankaj Mishra tries to be jack of all and master on none. Remember his reporting of Chittisinghpura_Massacre in his book. It was all wrong.

    http://www.sikhiwiki.org/index.php/Chittisinghpura_Massacre

    To be an economist, you have to have stuff not just commerce and literary degrees.

  3. froginthewell says:

    Before starting off, I should say that (i) I am anti-“progressive”, and believe that the reforms are the only way out of poverty; (ii) I am not a fan of the Hindu-baiter “progressive” Pankaj Mishra, and should admit that any piece bashing him does give me some kind of kick.

    That said, the second excerpt quoted above leaves much to be desired. Here goes my objections :

    (i) Surveying people, asking them “Has your food and clothing situation improved” etc., assuming these are done honestly, might give some indicator of economic improvement, but since when did such methods become the “hard, scientific answers” to such questions? And why should we believe that these surveys are done honestly? Further, when 61%/38% people claim improvement, what about the rest?

    (ii) He talks of “bad science” gaining “traction because of endless repetition by the media”, implying that gain of traction should not be confused with scientific correctness. No complaint with that per se -but then soon enough he goes against that very principle by asserting “it is now generally accepted that…”!!

    (iii) Let us assume Sanjeev was right above in saying that the HDI was invented by Amartya Sen. That shows that we cannot take even a highly respected economist for granted. Fair enough (see how even Paul Krugman can be totally wrong, though also use this to temper your opinion). But then how are we to take just the words of Arvind Panagariya and Poonam Gupta (in the case of Pravin Krishna and Guru Sethupathy he at least quotes the measure they use)?

    (iv) The “preceding quarter century with abysmal growth rate witnessed no perceptible, beneficial impact on poverty”? That contradicts the data in this post, also written by a libertarian (Ravikiran Rao), who concludes that the reforms are still beneficial, though not as transformative as was the green revolution. This does seem, however to show that the condition of the poor can improve without the “Stage 1” kind of reform. Especially, consider that in spite of the green revolution agricultural productivity in India is still below par, so may be there is still more scope for improvement along those lines (this is not to oppose “Stage 1” though : as I said, I am not against the reforms).

    One worrying question all this poses is, how arrogant and hypocritical academics generally are. Somehow they consider their own arguments (while writing to the public, though may be not in peer reviewed journals) immune to criticism about scientific standards that they expect from others.

  4. Sid says:

    The time frame is too small to take full stock of the reform and determine pros & cons. At the beginning years of capitalism, if one looks at the crony capitalist nature of the earlier ventures (the east India company etc) nobody would say that it was a good thing. But in the long term we have to agree that it achieved better results than it’s rival systems.

    Looking at Pankaj Misra and then Prof. Bhagwati’s response, I am slightly depressed that nobody looked at the most obvious problem: we are too eager to get an approval from West. Why? Consider this:
    1. While discussing what came to be known as Barkha-gate, sinophile N Ram commented that if it happened to organizations like Times or NYTimes, jorunalists would have been sacked. Nobody asked him the reasons for considering NYTimes as the highest standard in journalism.
    2. A nationalist blogger, while commenting about Diggy Raja or clown prince’s comment on Hindu terror, vented that in the West they would have been grilled by media for this comment.
    3. Now, Prof. Bhagwati discusses Misra’s article in NYT. Mr. Chetan Bhagat writes even more worthless commentaries on Economics in the pages of TOI or HT, did anyone try to respond to him?
    4. Mr. Sablok (comment #1) thinks that Prof. Bhagwati is a brilliant mind and to prove that he is a brilliant mind, he must get a Nobel prize. Knowing about our Professor, one can conclude that he is not very dear to the Euro-socialists clan that dominate the Nobel prize committee (and can make absurd decisions to award a US president who has done nothing to get the award then). Why? Did Mr. Sablok has doubt about his own evaluation of our dear professor?
    5. There is already a group of people who are hell bent on defining and classifying Indian politics through the looking glass defined by western paradigm. According to them, every one in India has to be left or right (or far-left or far-right). Why?
    Why do we keep looking at the West for everything? We are supposed to be independent thinkers, right? I often read the writings of lefty-libs for amusement. One recurring theme is that how west tries to run a covert empire in the world. If this is our attitude, then West does not need a covert empire, we are doing a better job than them in maintaining their dominance.
    I have stopped reading Pankaj Misra in NYT or at times Swapan Dasgupta in WSJ. There are few conditions based on which a western media would run a the column of a brown man:
    1. A mandatory tribute to the caste system to convince the reader that they accept West’s view of Hinduism.
    2. A few reference to mind-numbing poverty (which apparently is not a theme in ghettos in Washington DC or homeless sleeping at 7 degree F in streets of Seattle).
    3. A not-so-frequent reference to dust and humid weather when applicable (you see, brown men are not supposed to have places like Ooty/Simla/Gangtok).
    4. A subtle reference to the poor job those monstrous Hindus are doing in maintaining peace with meek minorities. After 9/11, the trend has taken a straight dive, but appears sometimes in publications whose job is to get donation for minorities in other nations.
    5. A tribute to the civilizing mission Gora Sahibs have done
    6. And sometimes a reference to those exotic Gods – favorites are destructive Shiva (black with lingam) or that elephant-based fat God (color is not interesting) or the cloth-less black Goddess.
    But I digress.This is probably not on the topic.

  5. Manas says:

    Pankaj Mishra is the quintessential sepoy. He still hasn’t apologized for his mendacious polemics (as has been conclusively and publicly proven) against the Indian nation and its army regarding the Chittisinghpura Massacre. He and his anarchist ilk dream of a balkanization of their purported imperialist Indian nation. Amartya Sen incidentally shares a slightly mellowed down version of the same ideological moorings. Whats really ironical is that these radical leftists don’t have any qualms about enjoying the fruits of their much despised free market economies characterized primarily by globalization, creation of wealth, development and capitalism. Not very surprisingly, the illegitimate father of these insidious hypocrites Karl Marx himself had invested in the “oh-so-capitalist” stock market. To quote Sir Walter Scott, “Oh what a tangled web we weave, When first we practise to deceive!”

  6. Prakash says:

    So Pepsi and Coke are poor man’s drinks! Brilliant.

  7. Sid says:

    Read Hartosh Singh Bals’ excellent expose on royal intellectuals and our sepoys:
    http://openthemagazine.com/article/art-culture/the-literary-raj

    Then when royal Dalrymple found this to be racist, his defense:
    http://www.openthemagazine.com/article/art-culture/does-dalrymple-know-what-racism-really-is

    Hats off!! After Richard Crasta I found one other with some spine. Who knows may be there is a decolonization that may appear through the efforts of these men.