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The Nobel laureate is globally known for his work on welfare economics. He is professor of economics and philosophy at Harvard University and was Master of Trinity College, Cambridge, from 1998 to 2004 — the first Indian academic to head an Oxbridge college
Amartya Sen’s views: 2013
‘I have never been against liberalization. Ask Manmohan’
Praveen Dass (interviewer)| TNN
The Times of India 2013/07/28
Amartya Sen is angry, and clearly getting impatient. Having urged Indian policymakers over decades to do more to combat poverty, hunger and illiteracy, the economist is now taking direct aim at what he feels is our continuing apathy as a nation towards the underprivileged. But in his own way — less the firebrand rhetorician and more the gentle but firm academic don that he is. Sen, who is in the country to launch his new book ‘An Uncertain Glory: India And Its Contradictions’ (co-authored with Jean Drèze), sat down for a chat with Sunday Times to discuss India’s growth story and the spate of controversies that he’s been embroiled in. Excerpts:
Q: Are we obsessed with growth? Do we now tend to regard it as the only true measure of national self-worth?
A: Despite great successes in many areas over the last two decades the fact is that India is in a dreadful state in many ways. Inequality is the primary aspect of it. About economic growth, I think there are two things about it. First, the way the Indian dialogue has developed, there seems to be a basic lack of involvement about how growth happens. No country in the world with such a fast sustained rate of economic growth has done so little towards having an educated and healthy labour force. The way the debate has come, it’s now just, “we now have growth so we have to make it inclusive”. Now these aren’t two distinct things. If growth happens it depends on how it is happening. If it happens because you have an educated and healthy labour force then a lot of people are better placed to earn more income. So I think this demand for inclusive growth is in some ways actually an admission of defeat — not thinking adequately and clearly about what growth is about and how it happens.
There is also the point that even if you did succeed in having huge economic growth that would not be enough because you have to see what you do with its fruits. You could even end up not doing, for example, what has been done by Brazilians, Mexicans, Thais, and of course, much more famously, by Singapore, Taiwan, Korea and China — which is for the state to begin with education and healthcare right away without waiting for you to become rich, and then on top of that, strengthen these investments further by later ploughing in the resources that rapid growth generates. Now this is not so new an idea. Adam Smith actually discusses it back in 1776 in T h e We a l t h o f N at i o n s — essentially the importance of growth to human capability; to make a real difference to not only the life you lead but to your ability to be a productive part of society.
‘The Asian way’
Q: You also suggest that there’s an ‘Asian way’ (and an old one at that too) which we appear to be overlooking.
A: Yes, I think it’s quite remarkable that the clearest articulation of this Smithian position in the practical policy context comes in Japan; the importance of education particularly, which was pushed by Takayoshi, one of the leaders of the Meiji Restoration (in the 1860s), who appears to have been unaware of Smith though. What they were basically saying is that we (Japanese) are no different from Europeans or Americans but the reason we achieve less is because we are comparatively less educated. The last century saw all those Asian countries, including China, pursue growth by first addressing and taking up these responsibilities with regard to human capability.
Sadly, the country that’s comprehensively missed this is us, especially in universal education. I have been writing about this for a long time now, since the late 1950s. And after I got the Nobel, when these essays were republished, at a party for me in Kolkata, Jyoti Basu, then West Bengal chief minister, told me that my ideas hadn’t evolved, that I was still saying almost exactly the same thing as I was saying in the ’50s. So I said, “Look, the only thing I plead in my defence is that the problems haven’t changed. If you had solved them I’d have stopped saying these things too!”
Sen’s evolving views, or the lack thereof
Q: On your evolving views, or the lack thereof, some serious charges have been flung at you in the recent past. Your friend Jagdish Bhagwati has been leading the charge.
A: I’ve known Jagdish for many years, and even in this latest article in which he attacks me this week he begins by saying, ‘my good friend…’ So I do give him the benefit of the doubt and I would like to have him as a friend, so I’m not saying anything about him. However, to say that I’ve been in fact against globalization and liberalization, or supported the License Raj, is just not true. Manmohan (Singh) can bring that out because I had several discussions with him over that in the early 1990s. When he raised the question of reforms I argued that I do support them but my point was that yes, restrict the counterproductive activities of the state but also look to replace it by constructive activities in education and healthcare, like we saw in other Asian countries. In the event, he couldn’t do it.
Q: And why do you think that turned out to be the case?
A: Three reasons probably. One, he probably thought he couldn’t carry it through politically. Or he intended to carry through with it in a second stage, to do it later. And three is that it’s possible that he didn’t get clearance from Narasimha Rao. I don’t know. But when Manmohan became PM in 2004, he said in his first two speeches that in addition to reforms we’re going to expand schooling and invest in healthcare. There’s been some movement on education. But we must also take into account the political realities of the last few years. I mean Manmohan is not a politician, and he’s surrounded by coalition partners in government and I’ve often wondered, since he’s such an old and close friend, how I would have behaved if I was surrounded by people whose support is essential to my survival in office. So, on one side everyone’s criticizing you for not doing enough and you’ve become an object of vilification. And on the other you try to carry on. And I must say, now that I’ve become such a big object of vilification (with my comments about Narendra Modi) in just one week, for Manmohan to have gone eight years with so much more must have been rather trying indeed.
The Right to Food Bill
Q: Like the Right to Food Bill, which has been linked to you…
A: Yes, that is a paternity suit I’m contesting. I’m not the father of that Bill. It’s not the best way to go about things and we could do better, but it represents some movement on a vital issue. Jean and I have written about the Bill and its implementation.
Q: Yet subsidies are a hard habit to break for the state?
A: There are those who say that if you cut down NREGA and food security you could spend more on say, health. Then why don’t we also ask the question about cutting down the subsidization implicit in electricity, which absorbs 2% of GDP? Why don’t you talk about cutting down fertilizer, diesel and cooking gas subsidies too? And putting duties on the import of gold? Now these are alternatives. If the media questions them we’d get more relevant debate. I’ve been a great supporter of the Indian press. It’s very active, very lively, but appears to be more dominated by issues that only concern the privileged classes. See, I don’t begrudge the privileged classes their comforts. I’ve benefited from being part of it myself. But we do need to look beyond and act.
The need for impatience
Q:You’re clearly arguing for a certain impatience. This new book even ends with a chapter on the need for it.
A: I think the need for impatience is an important one now, to address the contradictions in India today. There’s a need for impatience for the government, the opposition, for the political system, for parliament, for the media and for all of us Indian citizens, especially the underprivileged to demand more.
Q: That sounds like a call to arms. Amartya Sen as seditionist perhaps, after a fashion? In the national cause.
A: (Laughs) It’s very difficult to judge how the book or my statements come through to others. But yes, as an Indian citizen I am worried that we’re not doing enough on many things in public discourse, we’re not raising the right viewpoints on issues. This also came up in some of the TV interviews I’ve been doing over the last few days and the issue kept being brought up about why I made that statement about Narendra Modi. Well, I felt that as a member of the majority community in India it is my duty, not merely my right, to speak up about the concerns of the minority. Despite the fact that there are many things that Modi has done as CM which are interesting and important — and I’ve talked about them even though when held up as a model I don’t think it makes for a very good one — there’s still that scare, that sense of fear. I have to exercise my duty as part of the majority and bring up my concerns.
The cultivation of democracy
Q: About what Modi represents? Especially in our carefully constructed liberal democratic tradition?
A: Look, I am not apologizing for the statement on Modi. In that context, yes, democracy, like liberty, must be defended. I do believe that eternal vigilance is the price you pay for liberty, just as eternal vigilance is also the price you pay for equity. The cultivation of democracy depends on that. We must learn from what comes from all kinds of different directions. Argument and reasoning is essential to the liberal tradition. And I say this as someone who’s seen my fair share of the Stalinist haughtiness of the Left and the Mussolinite ways of the Right.
Inequality in India
Q: There’s something tragically unique about aspects of inequality in India? Some irony too
A: If you compare India with other BRIC and emerging economies the differences are glaring. Take China, it may have more inequality, but you don’t have a situation where children don’t have a school to go to, where people don’t have decent healthcare or a toilet near their homes, or greatly undernourished rural children. China doesn’t have that. We do. Brazil has universal healthcare; Jean and I in fact used it as an example earlier to illustrate how public action combated hunger. Mexico has good universal healthcare, as does Thailand. Russia of course benefited from the huge Communist commitment to education and the fair degree of universal healthcare that still remains.
So I think we are unique in that respect, unfortunately. It’s very sad. This is India and its contradictions.
The Bhagwati- Panagariya Critique of Amartya Sen
What Amartya Sen Doesn’t See
Growth-oriented reforms provide the true starting point for a poor country
By Arvind Panagariya
The Times of India 2013/07/27
Bhagwati versus Sen
The ongoing ‘Bhagwati versus Sen’ debate has generated more heat than light, necessitating correction. As an equal co-author of India’s Tryst with Destiny, which defines the Bhagwati position, my [Arvind Panagariya’s] stake in the debate is second to none.
Two extreme characterisations of the positions of the two sides have emerged. The first has it that the differences between them are minimal with each side expressing the same ideas in a different language. The second depicts Bhagwati as advocating solely growth and Sen solely social spending. Both characterisations are plain wrong.
Agreement with Sen
Begin with the point on which the two sides agree. We have no disagreement with Sen on the objective. He would like to see poverty, illiteracy, ill health and other deprivations eliminated. We wholeheartedly accept this goal. Indeed, as India’s first prime minister Jawaharlal Nehru wrote in The Discovery of India, the 1938 planning committee of the Cogress had adopted this very goal for development planning and the latter indeed guided our policies in the entire post-Independence era.
Disagreement with Sen
But agreement ends here. Sen thinks that the starting point for achieving the desired goal must be an immediate massive attack on illiteracy and ill health. This would not only directly contribute to better education and health, it would also bring about faster growth by producing a healthier and more literate workforce. Higher growth would in turn yield larger revenues, allowing further attack on illiteracy and ill health. A virtuous cycle will thus emerge.
In this story, growth automatically follows improved literacy and health. This is perhaps why Sen sees little need for policies directly aimed at accelerating growth, what we call Track-I reforms in our book. In the past, Sen has never written calling for an end to the licence-permit raj, liberalisation of foreign trade and investment or generous entry to private players in banking, telecommunications and civil aviation. Indeed, he has been outright disdainful of anyone writing or reporting on foreign investment liberalisation.
Therefore, if in 1991 India embraced many of the Track-I reforms, writings by Sen played no role in it. Growth literature to which Sen contributed was wholly esoteric. The intellectual origins of the reforms are to be found instead in the writings of Bhagwati, both solely and jointly with Padma Desai and T N Srinivasan.
1947: India has low tax base and low income
Our view on development policy is almost the opposite of Sen. India began with an extremely low tax base as well as low income at Independence. This meant that the available revenues were small. Providing for public investment in industry, agriculture, infrastructure, defence and administration left meagre revenues for investment in education and health. Therefore, the option was to either settle for slow progress all around or pursue growth-friendly Track-I policies that would allow rapid expansion of incomes and revenues.
Our tragedy was that, unlike South Korea and Taiwan, which foresaw the importance of Track-I reforms as early as the late 1950s and early 1960s, we went in the opposite direction and progressively slid into a command and control system. The result was slow growth as well as slow progress in education and health.
But when we eventually accepted the lesson of history beginning in 1991, the results were spectacular: growth accelerated and social spending rose as well. Our view, therefore, is that Track-I reforms provide the true starting point for any poor country. On the one hand, rapid growth directly empowers the citizens through increased incomes that they can use to buy high-quality education and health in the marketplace. On the other hand, it gives the government ever-rising revenues to further enhance public expenditures on health and education.
How the government should deliver nutrition, education and health
Our differences with Sen also extend to how the government should deliver nutrition, education and health to the citizenry, a subject we discuss under the rubric of Track-II reforms in our book. Sen firmly believes that the state must directly deliver food, employment, education and health through its elaborate bureaucratic machinery. So he passionately advocates the food security Bill and employment guarantee scheme and rejects cash transfers, vehemently opposes education vouchers in favour of government-run schools and slams the door on private health services.
Under Track-II reforms, we advocate an approach that empowers beneficiaries instead of public providers. We argue that revenues must be redistributed to the beneficiaries through cash, school vouchers and health insurance, allowing them to decide whether they want to buy food, education and health from private or public providers.
Let me conclude with two questions for Sen. First, if he believes that India suffers from the worst illiteracy and ill health and also that high literacy and good health are the sine qua non of sustained rapid growth, what is his explanation for the 7.2% per annum growth that India has sustained for two decades ending in 2011-12? Or, since he is even more critical of education and health achievements of Gujarat, how does he explain its 8.4% annual growth over the same two decades?
Second, if the presumption of the sufficiency of education and health for rapid growth is flawed but Sen sincerely believes in the importance of the latter, will he support the pending Track-I reforms such as granting firms the normal hiring and firing rights, exit of the government from manufacturing and freer entry to private providers in higher education?
The writer is professor of Indian political economy at Columbia University.
Can command and control really liberate the poor?