The glaring errors of growth analysis
| Only, in Professor Friedman's case, it is a full-frontal thing. |
| Despite its precise title, the book is a big ramble. It makes a simple, but controversial, point: as people become richer, they become nicer to each other. Economic growth thus leads to civilised behaviour. |
| In fairness, though, and to get a flavour, it is best to quote: |
| "The root of the problem is that our conventional thinking about economic growth fails to reflect the breadth of what growth, or its absence, means for a society... we think of economic growth in terms of material considerations versus moral ones... We weigh material positives against moral negatives...The value of a rising standard of living lies not just in the concrete improvements it brings to how individuals live, but in how it shapes the social, political, and ultimately the moral character of a people." |
| Elsewhere: "To the extent that economic growth brings not only higher private incomes but also greater openness, tolerance and democracy""benefits we value but that the market does not price""and to the extent that these unpriced benefits outweigh any unpriced harm that might ensue, market forces alone will systematically provide too little growth." |
| So "[c]alling for government to stand aside while the market determines our economic growth ignores the vital role of public policy: the right rate of economic growth is greater than the purely market-determined rate, and the role of government policy is to foster it." |
| And so on and so forth till we get to the point: "Economic growth not only relies on moral impetus, it also has positive moral consequences." |
| These days, following the dictum that one should not judge a book by its cover, I first look at the index and the bibliography. The idea is to see how insular the writer is. Friedman turns out to be a typical American: the world of intellect beyond the US almost does not exist. |
| Thus, it seemed to me then that if Friedman is talking about morality, I should see how many references there were to Gandhiji, to whom every action, big and small, had a moral dimension. There were none. How a Harvard professor can write about the morality of social and individual action without even once referring to Gandhiji beats me. |
| Professor Friedman also talks about moral duty. So I thought let me see if he has referred to the Bhagwad Gita. Again the same answer: no. |
| Well, I thought, both Gandhiji and the Gita are very far removed from a Harvard professor's universe. So let me see if he at least refers to a couple of Harvard colleagues whose contributions to economics and moral philosophy are beyond dispute: John Rawls and Robert Nozick. The former wrote about justice and the latter about equity. Both concepts are central to morality and economic growth. |
| Friedman doesn't seem to have heard of them. |
| This was getting to be fun and so I looked for another Harvard don, Amartya Sen, whose work on economics and moral philosophy has won him the "Nobel" in economics. Finally I got lucky. There were three references. |
| What about India, then, whose economic policy, if not always its execution, in intent at least has been bathed from the very start in a deluge of moral treacle? This time I hit the jackpot""or so I thought: India is mentioned around 30 times. |
| This intrigued me. No Gandhi, no Rawls, no Nozick""and Sen just thrice""but India 30 times? What had the old girl gone and done? |
| I needn't have worried. They were the usual statistical mentions, literacy, malnutrition, PPP, CO2 emissions and so on. But I also found two glaring errors and one off-the-cuff opinion. |
| The first error is where Friedman, in an apparent reference to the Emergency, says civil liberties and political freedoms were hugely abridged in the early 1990s. The second error is when he says India has not had a famine since 1947, forgetting the one in 1965-66. |
| He also says India's laws have kept poverty higher than it would have been, forgetting that our labour laws are precisely about the subject matter of his book: morality. |
| If this had been a Ph D thesis, Friedman would have been the first to ask for a rewrite. |
| THE MORAL CONSEQUENCES OF ECONOMIC GROWTH |
| Benjamin M Friedman Knopf Price: Rs 1,300; Pages: 570 |