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One cannot discuss policy differences without citing opponents' writings: Jagdish Bhagwati

Q&A with Professor of Economics and Law at Columbia University

Nayanima Basu  |  New Delhi 

Jagdish Bhagwati
Jagdish Bhagwati

A debate between two eminent Indian economists -- Jagdish Bhagwati and Amartya Sen -- has thrown up lively discussions as well as acerbic jibes. The debate on whether emphasis should be given to growth or redistribution has also taken political tones with sharp reactions from interested parties. Professor of Economics and Law at Columbia University Jagdish Bhagwati tells Nayanima Basu that he is not anti-redistribution, but the crucial issue is where the money will come from. If this issue is not tackled, the poor will be harmed in the name of helping them. Edited interview:

Critics say the debate between you and Sen is polarizing a issue which should not be polarized. The debate, they say, is based on outdated notions of growth. Growth could be investment in capital as well as investment in human resources. Your take please?

Since when did investment mean that it had to be in physical capital? Also, there are some instances where we can eat our cake and have it. Thus, you can spend money on education as consumption while it also serves as investment. But again, we must not overdo this.

A member of Parliament had once said-- Are we going to eat GDP? You emphasize growth. What about redistribution?

The MP sounds so idiotic that maybe he should be fed on a GDP diet! If he cared to understand the arguments at hand, he would know that there was no way that significant redistribution could have been undertaken with results when there were too few rich and too many poor. We would just have been redistributing poverty, as it were. So, we had to grow first and then spend money on health, education etc. for the poor. This is what policy economists call the “sequencing problem”. If Sen contends otherwise, he has no serious argumentation and evidence to support his assertions, even in his latest book with Dreze.

So, the issue is not that I am for growth per se and Sen is for “redistribution”. That is just a self-serving canard by the likes of Sen. I am for “redistribution” (i.e. spending revenue for the poor) but, unlike Sen I do not pretend that somehow money will materialize, like in some of our mythological tales, from just our wishing for them! That way lies irresponsibility, not wisdom. And since it will harm the poor, instead of helping them, as I have argued with and without Professor Panagariya, this is an immoral position rather than the “progressive” position that Sen would have his uncritical readers believe to be.

Can't both -- GDP and redistribution--go hand in hand, instead of giving precedence to one or the other?

That is the sort of wishy-washy thinking that obfuscates the issue. Of course, a limited amount of “redistribution” can be financed even without growth; but how far could we have gone with it in the 1960s and 1970s? In the end, there is no alternative to growth which will raise the revenues earned, at any given rates, to make it feasible to finance the social expenditures which our planners and politicians like Pandit Nehru always wanted.

Sen also claims that countries like Singapore educated people first and this led to growth later. That shows how ignorant he is. If you educate people and there are no economic policies that provide increased jobs, the education will not suffice for growth and prosperity.

Singapore had inherited high literacy but that helped only because outward orientation in trade led to huge exports which enabled equipment with embodied technology to be imported. This equipment’s productivity was exceptionally good because of the high literacy, though it would have been high enough even without literacy. Literacy alone could not have led to results unless it fed into outward orientation.

China did not have the same level of literacy but again the phenomenal growth rate was due, not to literacy which was good but not exceptional, but to privatization of the collective farms and then to the exceptional export performance from the Guangdong provinces.

The whole debate between you and Professor Amartya Sen has taken political tones with many accusing you of batting for Narendra Modi. Sen is obviously bashing Modi.

It is nonsense to say that I am batting for Modi when I have said often that I would not vote for Modi or Rahul Gandhi, assuming they are the eventual candidates of the UPA and BJP in the forthcoming elections, unless I see their platforms and unless they are forced by public opinion and the press to hold US-style debates. If Sen is bashing Modi, purely on the basis of his prejudices, that is his privilege but it also betrays lack of integrity and judgment. I have no doubt that the UPA leaders, all of whom I know well, will be astonished by Sen’s declarations.

You have said Sen pays only lip service to growth. But, his PhD was on stimulating growth.

Who did not build or talk about growth models even then? But can Sen really maintain that he was talking explicitly about growth as an instrument for reducing poverty? Or that he was on the right side with gusto in the discussions on growth-enhancing policies like trade openness, DFI, reduction in the massive proliferation of public enterprises, and
elimination of innumerable senseless interventions. One model does not a policy make.

The debate has also seen personal remarks, which surprised many as these came from eminent economists.

It is silly to fuss about “personal remarks”. You cannot discuss policy differences without citing your opponents’ writings. That is not getting personal. It is your safeguard against people who will claim otherwise that you are creating a straw man.

If the exchange becomes animated, that is good: it will wake people up! If you want to see a debate descend into personal invective, I recommend that you see how the British intellectuals dish it out to each other, often hitting below the belt. Nothing we have had in the debate between me and Sen qualifies us as being in that tradition.

What is your take on the upcoming WTO ministerial in Bali, which aims to push for a deal on trade facilitation whereas India wants the deal on food security to go through first?

What is wrong with letting trade facilitation go through? This is good for everyone, including India.

First Published: Fri, July 26 2013. 09:56 IST