LIRNEasia seeks to foster evidence-based reform. The evidence, in the countries we work in, points to most of the needed actions having to do with reforming the state, by getting it to pull back from its current role of stifling decentralized innovation. This has caused many on the unthinking “left” plying their trade in the non-profit sector to look at us with suspicion, if not outright hostility.
But they do not see that a great deal of what we do is about regulation in various forms. If there were active standard bearers of conventional right-wing thinking in our region, I am sure they would be throwing rocks at us too. There has been too little of this, partly because, as Pratap Bhanu Mehta points out in his perceptive column, the actual right has failed to take off in S Asia. What is considered right wing is cultural nationalism, not economic liberalism.
Both political tendencies are more at home with abstractions than with diagnosing the actual complexities of economic life. Their respective progenitors, Adam Smith and Karl Marx, were acute at historical diagnosis; even when mistaken, they were instructive. Their self-proclaimed disciples merely want simple formulas. In a strange way, both have fetishised the market: the left in constructing an abstract enemy called neo-liberalism; the right in not understanding how so many sectors of the economy cannot operate on conventional market principles. Land, education, health, finance, infrastructure, insurance, knowledge-based industries and energy require very complex forms of regulation.
Environmental concerns can no longer be ignored. As Keynes suggested, abstract economic calculation made “the whole conduct of life… into a sort of parody of an accountant’s nightmare… We destroy the beauty of the countryside because the unappropriated splendours of nature have no economic value. We are capable of shutting off the sun and the stars because they do not pay a dividend.” They may not pay dividends but the negative externalities their demise might impose can no longer be ignored. These are now the mainstays of the economy, both in terms of their relative size and their importance for future growth. Economists can be reviled for their abstraction and compromised economic advice. But the bulk of serious work, from Joseph Stiglitz’s early technical work to Jean Tirole’s contributions on regulation, is driving home one simple point: we have to think more carefully about conditions under which markets are effective.
– See more at: http://indianexpress.com/article/opinion/columns/two-deluded/#sthash.GMIudT6w.dpuf
Anyway, here’s hoping more columns like this will help advance public discourse from the present stagnant condition, faintly reminiscent of the days of Beatrice and Sidney Webb with a little bit of cultural correctness flavoring thrown in.