Everyone is saying the same - let us stop taking sides

Development economics is full of debates - some scholarly, some rhetoric and some with high intense passion and emotions. Academics are also part of these debates, advocating for what they believe is correct, with their followers passionately supporting these ideas, sometimes going to the extremes and polarizing the debate. Prof Maitresh Ghatak eloquently captured the nuances of these debate in his recent article, Suit-boot of Jhola. Prof Ghatak argues (one of the points) that human capital and growth are not supposed to be debated as zero-sum games, both are important. I completely agree with this and this post brings up the same point from a different perspective. I argue that all the famous personalities quoted in the debates are saying the same and are misinterpreted in debates. Let us see some examples. 

Jeffery Sachs runs Millennium Village project. He is strong supporter of external aid as an intervention and has been successful in convincing people to donate huge money. Most of his advocacy is about aid. His opponents criticize him for putting aid as primary agenda. If one hears him normally, one would think that Sachs is all about aid, dismissing other factors. But in certain in-depth interviews, he does say that, urbanization, growth, trade are the only long term solution to generating incomes, but till then before millions die, we have a duty to save them. Hence aid is crucial at this point of time. This argument of Prof Sachs is not well-known. He is seen as the 'aid-only' advocate.

William Easterly is said to be the ideological opponent of Jeff Sachs. Easterly's arguments are that decades of aid has fetched nothing. Growth, institutions matter. It would appear as if Easterly is dismissing everything other than growth and institutions. But Easterly too,  in his writings does say that aid is necessary but should be done properly with accountability. He mentions 
four prerequisites of a successful aid programme: Customer Feedback, Incentives, Accountability, Outcomes. Contrary to the popular perception that Prof Easterly is against aid, he does seem to say that aid can be done but should be done in a particular way to make it most effective.

Richardo Haussman has come up with economic complexity, the famous Atlas of Economic Complexity project. It essentially says that countries with greater economic complexity grow more. Economic complexity in simplistic terms means, greater diversity of skill sets of people. He puts economic complexity at the forefront in most of his arguments. His recent article argues that education as strategy to growth is misplaced. Prof. Haussman is perceived to be dismissing the importance of education and is seen to be an advocate of doing something else. The fact being, he is trying to say that education is necessary but we should do much beyond it.

The famous case of Prof. Amartya Sen. For his emphasis on human capital, he is perceived to be and made out to be an anti-growth advocate. The truth being, Prof. Sen also said on many occasions that growth, business and private enterprise are important. Even in his recent ND TV interview, Prof. Sen says that Adam Smith had great influence on his way of thinking and he does believe that growth is essential.

We see a pattern in all these cases. In crude terms, let us consider that income or well being is dependent on the factors as below.

Income = external aid + human capital + growth + trade + urbanization + migration + anti poverty programmes + interactions between these factors + yet to be known factors + others.

All economists, I mean all, if you probe them properly, agree that all the above mentioned factors are useful. The difference of opinion comes in the importance they attach to these factors. We must note that the importance attached is also a function of time. If a problem being proclaimed as important today is solved, some other becomes important tomorrow.

I hypothesize that the difference in importance attached to a particular factor is due to one or more of the following reasons.
  1. Sensitivity of a person to a factor: Seeing people not receiving education troubles some people. This touches their emotional nodes. Different people are struck by different factors.
  2. Neglected or undermined factor: If someone feels that a particular factor is being neglected and not receiving attention it is supposed to receive, they tend to bring this into limelight by strongly advocating for it.
  3. Discoverer of a new phenomenon or factor: If someone uncovers a relation or a new factor, it is common for them to speak about it in most of their public talks and writings.

From among the list of various possible factors, everyone is trying to emphasize those that they feel are important and necessary by building narratives around it. However, this doesn't mean that these people don't acknowledge the necessity of other factors.

In a scenario of limited resources and bandwidth in debates, everyone is trying to get space for their own factors. We must recognize this and stop taking sides. Let us stop portraying necessary conditions as sufficient conditions. It is not x vs. y, it is x and y.

No comments:

Post a Comment