Good Economics for Hard Times by Esther Duflo and Abhijit Banerjee

 

Professors Banerjee and Duflo published Good Economics for Hard Times in 2019, the same year they won the Economics Nobel.

The title sets the tone of the book. The authors begin by identifying some of the principal features of the ‘hard times’ facing the present-day world. These include growing economic inequality -- of both income and wealth -- increasing social polarization by race/ethnicity/religion leading to fractured societies, growing angst amongst the deprived and declining trust in state structures. To deal with these hard times the need of the hour is good economics free of ideology, preconceived notions and assumptions divorced from reality.

The authors have focused their attention on eight areas of concern for the modern world. They examine the issue of migration and its consequences, both real and imaginary (viz. politically created), look at the pains of free trade and the failure of theory based on unrealistic assumptions about the real world. They question the economists’ assumption of given and immutable human preferences and ask if the days of growth are over and what are growth’s determinants anyway? Global warming, technology, employment and inequality, the legitimacy of the state and the merits of cash disbursals and the importance, for welfare policy, of a regard for individual dignity are also examined in detail.

Banerjee and Duflo are serious iconoclasts, writing clearly and arguing cogently using a wealth of data from a wide range of studies by many researchers, to effectively question inadequate theoretical conclusions, false ‘facts’ and ‘common sense’ perceptions that do not make sense at all.

The proportion of international migrants in the world’s population has not changed between 1960 and 2017 and low skilled migrants have not caused a drop in employment or in wages anywhere! The poorest do not migrate overmuch; societies just like economies are ‘sticky’ for many reasons and large -scale migration stems largely from desperation created by sustained violence. And, on the other hand, Sergey Brin was born in Russia and Steve Jobs biological father was from Syria!

Trade theory claims, amongst other things, that free trade raises national income for all participants but assumes that resources are homogeneous and shift smoothly and seamlessly between occupations and geographical regions. This assumption is false. Labour is far from homogeneous  and both labour and capital are ‘sticky’ too. As a result, even if total national income increases from trade, there are losers and winners and the former need state assistance if overall welfare is a matter of concern. If the angst of the losers and its consequences for an otherwise well- to- do society like the US are to be mitigated, effective state intervention is a must.

It must be emphasized here that a blog post can only give, at best, a brief glimpse of some interesting things in a book of more than three hundred densely packed pages. The authors dive deep into each selected issue  and examine multiple dimensions in detail in every case. And to get at that, the book has to be read as it deserves to be, slowly and carefully.

Economists take peoples’ preferences as both given and immutable and proceed on their analysis therefrom. In a fascinating chapter, the authors examine the whole issue of human preferences and individual and herd behaviour based on them, in the modern context of the Internet, social media and the ‘echo chambers’ created by these tech developments. A case study of Princeton students demonstrates, in very disturbing fashion, how deeply embedded racial stereotyping can be; how much self-doubt it can engender and the extent to which it can influence behaviour and performance.

Climate change, likely consequences and possible remedies, are discussed in detail. One important fact to remember is that 10% of the world’s population contributes 50% of CO2 emissions and 50% of the least polluting population contributes 10%.The authors also emphasize that the impact of global warming will be hardest on the poorest populations of the world and that, to avoid disaster, there may be no option other than a change in energy consumption habits along with rapid evolution of green technology.

Inequality of income and wealth -- causes, consequences and possible redressals -- are taken up for extensive discussion. The fact that free markets cannot handle all problems leads to the need for state intervention and an examination of the efficacy of the modern state. Those of us familiar with the ‘extractive’ and corrupt state may be jolted by the argument that if the markets cannot do something ,the state must intervene, even if the cost is higher than it should ideally be. It is also good to remember that corruption is as much a part of the private, market environment as it is endemic in the state structure.

A chapter on ‘Cash and Care’ highlights the need for universal unconditional cash transfers, along with more targeted efforts to deal with want, not just in the third world, but even in the USA. The implications of such a policy are analyzed, the problems -- financing and implementation -- discussed and the necessity of incorporating considerations of human dignity in notions of welfare, emphasized.

In conclusion, Professors Duflo and Banerjee reiterate the need for abandoning inadequate assumptions while formulating development policy. Bad ideas --distorted by ‘ideology, ignorance and inertia’-- can do enormous harm. Eternal vigilance appears to be the price of good policy and in the authors’ words ‘Without... vigilance, conversations about multifaceted problems turn into slogans and caricatures and policy analysis gets replaced by quack remedies.’

The book is not an easy read but a very rewarding one. It is educative, it makes one question, it makes one think.

Happy reading.

Masters of Thriller Writing -James Lee Burke

 

 

Very few thriller writers get nominated for the Pulitzer or even win more than one Edgar Award. James Lee Burke has done both.

One reviewer said that Burke “blurs the boundary between so-called ‘serious’ literature and detective fiction” and another that his “prose ...has a pronounced streak of poetry in it”. High praise, and all of it well deserved.

But just in case you get the impression of a soft, gentle, poetic sort of detective fiction, stop and correct the impression. Burke’s books have darkness, violence and despair along with love and compassion and great, absolutely riveting, good-versus-bad, storytelling.

Dave Robicheaux aka Streak is big, tough, and no longer young. He was a Marine in Vietnam and a detective with the New Orleans Police Department before we meet him in Iberia Parish of southern Louisiana’s Gulf Coast, working as a Deputy in the Sheriff’s Department. Dave’s past is dark -- alcoholism, the brutal murder of his first wife and a deep wellspring of violence that is hard to control. Despite the past, or perhaps because of it, Dave battles crime single mindedly and in his characteristically gripping, and often gut wrenching, fashion.

Damaged heroes, who are nonetheless convincing and attractive, are hard to create, but Burke succeeds brilliantly with Dave Robicheaux. In Streak, he has created a protagonist that can be ranked right up there, or almost, with Raymond Chandler’s Philip Marlow, who of course, is far more understated.

Detective fiction, especially such as feature policemen as principal protagonists, tend to be long on procedure and short on nature and ambience. But here again Burke is different, and powerfully so. His portrayal of the Gulf Coast -- the sea, the swamp, the vegetation, the wildlife -- is remarkably evocative and in no way takes away from the action.

Burke has published over forty books of which more than twenty feature Dave Robicheaux. He has other protagonists, and their adventures, some in Montana, others in Texas, also make for great reading. However, if you are just starting on Burke -- lucky you -- begin with the Robicheaux series and you will be hooked, forever and a day.

Happy reading.

Basic Income: A Transformative Policy for India by Sarath Davala ,Renana Jhabvala, Somya Kapoor Mehta and Guy Standing

 

 

In recent times, the issue of ‘ basic income’ has acquired a political hue with various political parties adopting different avatars of this long discussed policy measure .This politicization of policy has ,as always, led to a considerable muddying of the waters of reasoned debate with ideological debris.

In this context the book by Davala et al is a refreshingly clear and extremely educative work of scholarship based on hard data from field research.

The authors begin by carefully defining their terms and the task at hand .Their objective is to assess the impact on clearly specified parameters, of a modest basic income disbursed monthly in cash without conditions, to all individuals in selected villages.

In Indore district of Madhya Pradesh eight villages all roughly similar in size and socio- economic structure, roughly equidistant from an urban centre and in close proximity to a primary school were selected at random for a trial as were twelve villages to serve as ‘control’ villages for purposes of comparison. Similarly, one tribal village was selected for trial and one control village for comparison. The NGO SEWA was active in all the villages and was part of the project which was funded by UNICEF. For a year and a half  every individual ,adult and child, in the trial villages got a certain sum of money  unconditionally.(Rs 200 per adult and Rs 100 per child between June2011 and May 2012 and Rs 300 per adult and Rs 150 per child between June 2012 and November 2012).No income was disbursed in the control villages . A base line survey was conducted before commencement of the pilot, an interim survey half way thru and a final evaluation survey after the pilot ended. The impact assessment of Basic Income was based on the huge amount of data these surveys generated.

It is important to emphasize that in addition to the pathbreaking results of the project, the book serves to educate in numerous other ways.

The authors analyze the functioning of two important policy measures adopted in India for poverty alleviation-the Public Distribution System for free/concessional distribution of essential commodities , primarily foodgrain , and the public works program to offer work to those wanting it in the rural areas. The PDS is expensive to run, plagued by leakages and corruption and often does not guarantee adequate availability of the products it purports to supply. Public works, even if adequately funded, do not help those unable to perform hard unskilled labour-the most vulnerable amongst the poor- and often do not create useful assets .They do not contribute to skill creation either.

The authors also emphasize the problems in any kind of conditionality or targeting in social welfare schemes. The problems of cost of implementation, inaccuracy due to exclusion and inclusion errors and corruption in field operations are rampant. By comparison, unconditional cash transfers appear to offer a better option as regards both efficiency and equity.

Having examined the pros and cons of various approaches to poverty alleviation the authors proceed to assess the impact of basic income on various symptoms that poverty exhibits in the villages studied, as compared to the control villages. Here too, before we reach the impact assessment, those of us not familiar with the realities of rural poverty in India, stand to learn some very disturbing stuff. Rural indebtedness, despite the plethora of financial institutions created over the years, and resulting from it ‘tied labour’, is a reality ten years into the 21^st century. An indebted labourer may , on the strength of a loan, remain a naukar of a big landowner for long periods of time-often a lifetime!

The authors examine the impact of basic income on personal welfare, income and productivity and importantly, on freedom-the emancipatory effect of such income.

The principal welfare parameters are indebtedness, living conditions (toilets/energy use/water sources) nutrition and health. To pick up just indebtedness, Basic Income made a significant difference very quickly with debt showing a decline in both tribal and non- tribal villages. Households became more resilient in the face of external shocks- often the basic cause of indebtedness. The cynical view , that ‘private bads’ like alcohol consumption would increase were categorically disproved by the results and shown to be based on prejudice, not ground realities. Every welfare parameter showed improvement with Basic Income and the authors contend that the ‘emancipatory value’ of Basic Income was far more than just it’s monetary value.

Productivity and thereby income also showed improvement with Basic Income which permitted small investments that enhanced local income earning abilities and even impacted migration . Since women got the same income as men there was significant positive impact on women’s voice and a sense of identity and citizenship. A movement towards gender equity was thus an important consequence of Basic Income.

There is no claim that a small , universal , unconditional cash transfer is a magic wand to eliminate poverty. It is however emphasized that it can be an important tool especially if we face up to the fact that there are serious limitations to the tools currently in use-PDS, MGNREGA and very importantly the huge subsidies currently in vogue that are acknowledged to be largely regressive.

The one argument that I personally found overwhelming was that a small cash transfer can serve as a “minor correction for brute ill luck”. Endemic, visible poverty has perhaps desensitized us to a great extent and the absence of want has made us so complacent and we forget -as the authors remind us- that the basis of wealth is more often inheritance than personal effort and ability. Equality is perhaps impossible in the human condition and equality of opportunity is a dream that can be aspired to ( ‘getting to Denmark’, as Francis Fukayama put it) but how can we deny a small recompense for the visible and  implacable brutalities of fate.

The book is long, simply written and the regressions are confined to the appendix. It is not a light read but a rewarding one.

Happy reading.

Masters of thriller writing: Donald E Westlake aka Richard Stark (1933-2008)

 

 Many years ago, on the pavement near Flora Fountain, Mumbai, I discovered a bunch of slim and rather battered looking thrillers in paperback. A quick reading of the back covers promised entertainment and their poor condition ensured they were cheap. A win-win all around, I thought, and I was right.

My love affair with the Parker series by Richard Stark started that evening.

Parker, tall, strong, silent and immensely tough, is amongst the most impressive, and dare one say, attractive anti-heroes in the noir space. He is a robber by profession, and not one of your milk-and-water burglars either! Parker specializes in armed robbery. Large scores, banks, armored cars and suchlike, planned in detail and executed slickly with a team of fellow professionals is what Parker does best. But there are always flies in the ointment that make life interesting beyond the heist. Some wannabe tough guy feels he can cross Parker and make off with the entire swag and violence ensues.

 This of course, is just one variation on the theme of violence and betrayal that permeates Parker’s dark underworld and makes these books un-put-downable. But significantly, Parker does not hurt anyone who does not deserve it; and there is a lady love, the only one with whom Parker is a trifle gentle.

Westlake-Stark won several Edgar Awards, published more than a hundred books, of which more than twenty are as Stark featuring Parker. Stark ended the Parker series years ago and then after a hiatus of twenty odd years, revived it -- much to the joy of fans like me.

I picked up a few new editions at very reasonable prices back in the days when there were many bookshops one could browse in. The good news is that the Parker books have been reprinted. Some are reasonably priced and some not. The publishing trade is incomprehensible in this regard.

For thriller aficionados, especially of the tough, noir genre, Parker is irresistible.

Try your luck in the bookshops and if you see a reasonably priced Parker, pick it up. You won’t regret it.

Happy reading.