Economics, Development & Policy Takeaways, 2017

It has been an extraordinary year in academic realm, especially in public policy and economics. This is the year when economics got realistic, if one regards the annual Nobel Prize in Economics as a defining moment in economics research. Richard Thaler won it for for showing how the human traits of ‘limited rationality, social preferences, and lack of self-control’ systemically affect individual decisions as well as market outcomes. This has been a clear break from the past. When have economists bothered about psychology before?

Besides being my areas of interest and training, public policy and economics, in my reading went through a rather significant transition led by eroding away of the traditional orthodoxy. The heterodox economics movement has now acquired the necessary critical mass which makes me hopeful about the discipline’s future.  May be, the Nobel prize recognition to behavioural economics also helps the cause.  The kind of change required was articulated well by Jean Tirole trying to push for economics for common good – ‘we urgently need economists to engage with the many challenges facing society, helping to identify our key objectives and tools needed to meet them.’ It is further affirming when the most influential thinkers contribute to a book titled Economic Ideas You Should Forget, edited by Bruno Frey and David Iselin. Some of the ideas to forget about, included in this book are “capitalism”, “rational expectations” and the efficiency-equity tradeoff”.

As for public policy, traditional policy thinking has been about what ought to be done, imagined in isolation from political factors like incentives for politicians. Thinking about policies that help institutions align social and private interests has only begun, as I figure. However, I’d still wish there was more concern shown to issues of work in digital era and workers’ welfare in these times of cheap goods and services. The year’s readings to the least makes me sure of pursing labour welfare research in the future. At the moment it looks somewhat ignored, in contrast to its consequences for development outcomes in an economy.

In terms of reading preference this year, it was India focused. I picked up Sumantra Ghoshal’s World Class in India and began looking at the case studies on Indian corporations again. This is a fine collection of innovative, risk taking and forward thinking Indian corporations detailing their paths to growth and transformation. I am particularly struck by Dr Parvinder Singh’s remark on the theme of building a world class company in India – ‘Ranbaxy cannot change India. Instead what it can do is create a pocket of excellence. Ranbaxy must be an island within India.’ As a philosophy for change, this is simple and compelling.

In development, I was led to Bad Samaritans: The guilty secrets of rich nations and the threat to global prosperity by Ha-Joon Chang. Earlier this year, I also read his Kicking Away the Ladder: Development strategy in historical perspective. Both these books are a seminal read in thinking about development from a mix of economic and historical perspective. The intersection of these perspectives makes Chang’s works insightful. Bad Samaritans alerts the reader to ‘the historical double standards involved in recommending free trade and free market to developing countries’. Whereas, the developed countries grew by practicing exactly the opposite. What follows is a careful, evidence-based and tempered argument for the same. I have learnt the art of constructing a clear and forceful argument from Chang’s writings.

In July, 2017, I graduated from MPP course. The quantum of reading in public policy almost dipped after that, except occasional academic papers. I intend to now begin a policy-thinker series which gives me an opportunity to discuss interesting ideas as well as develop a set of policy thinkers who are shaping the discipline. In all of these readings, I am struck by how few Indians I come across. May be, it says much about my exposure. While we do have scores of economists, those in public policy research seem few. I hope to discover them in the year ahead.

Overall, the year’s readings leaves me feeling positive about these disciplines’ focus and concern. I didn’t feel this way last year or before that. In fact, the state of disciplines made me reconsider if I ever want to pursue a Ph.D. But this year is different. I am considering research again, over abandoning it for business and work.

Among others, I was fascinated by Dror’s critical examination of public policy making which reviews the state of discipline in the early 1980s, and goes on to propose a shift (away from the idea of ‘muddling through’ of Lindblom) towards theoretical frameworks. Perhaps, there is a characteristic policy approach in the developing world and countries of the tropics, as opposed to others. It could be seen as ‘policy-making in the tropics’. I hope to build this idea further, in the months ahead. For one, policy-making in tropics is intricately linked to an institutional working culture which is somewhere between formalism and non-procedural, incidence-based functioning.

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