Tag: economists

Economists Do It In Tribes

… or at least, economists employed by the governments. So says Amol Agrawal in a searing piece that is at once a lament as well as an indictment.

Why is the nature of discourse today so painfully zero-sum? Why do we have a take-no-prisoner approach to discussions, where disagreement is necessarily proof of the fact that the other person isn’t just wrong, but their motives are suspect? There are plenty of hypotheses for why this is so for all of us at large, but Amol shines a spotlight on my tribe, and my tribe is supposed to internalize for themselves and teach the rest of the world that the world is a non-zero sum game.

Except it isn’t. Not any more, and certainly not in the case of economists talking about the economy in India:

The current government economists discredit any critique of economic policy. Each time any analysis/report comes up critiquing the economic policy, the economists rush in to disagree and discard the criticism. The purpose of these articles is not to engage but rebut/attack the institution/writer of the critiques. Shoot both the message and the messenger seems to be the mantra.

It is also highly fashionable to draw comparisons with earlier eras and say how bad things were back then. They forget it has been ten years of the current government and people are asking questions on the current economic policy. They also forget how they themselves critiqued economic policy and built their own careers. One is also amazed how the media whose job is to critique economic policy, allow so many one-sided articles.

https://mostlyeconomics.wordpress.com/2024/04/11/economists-working-with-the-government-what-has-changed/

Disagreements are not just “fine”, they are the point. When you and I look at a slice of the world and come away with different conclusions, it is because we bring a different perspective, a different methodology, a different set of facts to emphasize and analyze,and a different ideology.

All of these things are true, not just the last one.

For all of us to sweep away the different conclusions, perspectives, methodologies and sets of facts under the carpet, and pin the differences on ideology alone is a tragedy with far reaching consequences.

There are people who will oppose the current government on ideological grounds alone (alone, in this case, is used in this sense: indicating that something is confined to the specified subject or recipient). And likewise, there are people who will defend the current government on ideological grounds alone. That is just the world we live in, and these messages will get amplified and shared more than they should.

But for all of us to behave in only this manner is a society that no longer talks to each other. It is a society that is divided along deeply tribal lines, and with every passing day, those lines get deeper and more permanent.

The hardliners on both sides – on one side are those who critique the government and and on the other those who defend it – will say that the other side started it first, and they had no choice to respond. They will also say that the other side is worthy of this kind of behavior and ostracization, because the other side is evil, and needs to be destroyed for our version of this country to flourish.

Bullshit.

Allow me to labor the point:

When you and I look at a slice of the world and come away with different conclusions, it is because we bring a different perspective, a different methodology, a different set of facts to emphasize and analyze and a different ideology.

We would do well to not ignore all of these points. Hanging the weight of the world on just the one word, regardless of which side does it (or did it first), does nobody any good.

No government in independent India’s history has been uniformly bad. Nor has any government been uniformly good. You and I will (and should!) have opinions about which government was the best, which was the worst, and which lay somewhere in the middle. You and I will try to convince the other of why we say what we do. And you and I will reach some sort of an agreement, or at least an appreciation of why the other person thinks what they do. Disagreements are food for thought, not excuses to launch personal attacks.

That this needs to be said is a matter of shame for everybody, but especially for social scientists, and doubly so for economists. (Yes, I hold my tribe to a higher standard).

Economics is about three things:

  1. What does the world look like?
  2. Why does the world look the way it does?
  3. What can we do to make the world a better place?

“Better” is tricky because better is subjective.

“We” is all of us, those who defend and those who critique the government.

So if I say (and I do) that the census not having been conducted is a problematic thing, I say it because I think it is a problematic thing. The truth value of that statement isn’t only a function of the fact that I am saying it, or that I am saying it in a publication that you don’t like, or what my political affiliations or economic ideology are.

I use the census thing as an example. Replace “census not having been conducted” with “improvements in our airports”, and replace “is a problematic thing” with “is a wonderful thing” for the same take, but from the other side.

If your Pavlovian response to the census thing is whataboutery, or if your Pavlovian response to the airports thing is whataboutery, then you have a problem. Sure, bring up the fact that the pandemic was a factor. And likewise, sure, bring up the fact that oligopolies are a problem. But don’t decide that the statement is wrong as a function who is saying it – decide the truth value on the basis of the statement, not the person behind the statement.

And one final point, to circle back to Amol’s post.

Criticizing the government is not just fine, it’s not just OK, it’s what economists will do. We will do it because we want the world to be a better place.

Economic policy should not be limited to criticizing the previous governments and praising the current government. The policy should lay a framework to improve the economic conditions of the people. It should not just agree to the government decisions but caution the government against missteps. That is how we saw things and admired all the economists who have served the governments all these years.

https://mostlyeconomics.wordpress.com/2024/04/11/economists-working-with-the-government-what-has-changed/

Kudos to Amol for saying what he did, and I look forward to reading more from him about what the government, and its economists, can do better. The fact that he (and I, and so many others) critique their work isn’t proof that the work of the government or its economists is bad. Nor is it proof that we are evil. It is our attempt to help make the world a better place.

Now, please tell me why you think I’m wrong, and let’s have a debate about it.

Very underrated thing to do in 2024!

On Economists and Plumbers

Whenever an undergraduate student asks me for advice about what to do after graduation, I always recommend two things. A gap year, if possible. And some work experience, especially if the next degree they plan to acquire is an MBA.

The gap year because I think our society needs to learn how to learn outside of college. That is a whole other blogpost, and I’ll get to it this Friday.

The work experience before embarking on an MBA? Because you need to learn what folks in HR do (and don’t do) before you learn about HR in an MBA course. Because you need to experience the agony of a performance appraisal before learning about management in an MBA course. Because you need to fight for budgets for your team before learning about finance. Because you need to know what a deliverable is in the real world before earning the right to moan about assignments in college. Doing an MBA without having worked is a little like learning how to ride a bicycle without ever having seen one, and without actually riding one while learning how to ride it. If that makes no sense to you, great. That’s what that metaphor was supposed to do.

And Gulzar Natarajan says much the same thing, with two crucial differences. He admonishes, rather than advises. And the folks he admonishes happen to have won the Nobel Prize in Economics, so the audience is ever so slightly different:

I think India is a good example of [a country] where they literally had not thought through their own plumbing. If you think of what happened to the urban migrants, India’s welfare system is actually completely designed on the assumption that people live in their stable families which live in one place for year after year. In your village, you’re entitled to apply for the public distribution, which is essentially nearly free food . . . and in rural areas there is the rural employment guarantee system. Both of those are designed for rural citizens who live in their own village. You’re not entitled to go to any village and say: ‘I want my employment guarantee.’ There might be as many as 50m of these low-income migrants who temporarily live in cities. They can’t connect to the welfare system. That’s why there were pictures in the first lockdown of people walking 1,000 kilometres . . . there was no way for them to survive. They just had to go home. That is pure plumbing failure.

https://www.ft.com/content/f998d48a-dd8a-43de-81e5-d530dd9df004

That’s the Banerjee/Duflo quote, taken from Gulzar Natarajan’s blogpost, as is the link itself (I’m not rich enough to subscribe to the FT!).

This is his response:

This is pure rhetoric. It’s the classic hatchet job – form your hypothesis (a system where migrant workers can access food and other welfare benefits), set up a straw man (the public distribution system, PDS, or any welfare benefit), demonstrate how the straw man fails the hypothesis test (the example of covid induced migration), and blame the system (the government “did not think through their own plumbing” on its programs). Before passing such sweeping judgement on something like the PDS or NREGS, it’s useful to understand its original purpose and its trajectory of evolution. It’s also classic hindsight-based judgement.

http://gulzar05.blogspot.com/2021/06/more-on-why-economists-make-bad-plumbers.html

As always, read the rest of the blogpost. Anything written by Gulzar Natarajan is self-recommending. And while you’re at it, read this post (and all of the posts that he links to!)

But the larger lesson you should take away from his blogpost – if you ask me – is this: designing something is very different from implementing it. If you want to be a good designer, you must have worked in implementation for a bit.

Whether it is MBA after having gained work experience or economists working on policy design – or anything else, for that matter, it is worth keeping this in mind: first the trenches, and then the command centre.

And lastly, while on the theme, here’s a book recommendation for you: Skin in the Game, by Nicholas Nassim Taleb.

And this post too, please:

Hammurabi’s Code is among the oldest translatable writings. It consists of 282 laws, most concerning punishment. Each law takes into account the perpetrator’s status. The code also includes the earliest known construction laws, designed to align the incentives of builder and occupant to ensure that builders created safe homes:

  1. If a builder builds a house for a man and does not make its construction firm, and the house which he has built collapses and causes the death of the owner of the house, that builder shall be put to death.
  2. If it causes the death of the son of the owner of the house, they shall put to death a son of that builder.
  3. If it causes the death of a slave of the owner of the house, he shall give to the owner of the house a slave of equal value.
  4. If it destroys property, he shall restore whatever it destroyed, and because he did not make the house which he builds firm and it collapsed, he shall rebuild the house which collapsed at his own expense.
  5. If a builder builds a house for a man and does not make its construction meet the requirements and a wall falls in, that builder shall strengthen the wall at his own expense.