Teachings of Prof Ambirajan: academic economics

Some excerpts from his article published in The Hindu in 2000.

• “…groups such as large farmers, Government servants, trade unions, employers associations, college and university teachers and so on with their day-to-day worries too find the `academic economist' bearing bad tidings or suggesting bitter medicines to be an ignoramus not understanding the real world.
• There is always a need for someone to examine the welfare of the whole as opposed to the exclusive interests of the constituent parts. The science of economics emerged to do this task systematically using both empirical information and rigorous logic. This does not mean that economists can be totally objective like a soulless weighing machine as they too are human, capable of harbouring bias, subject to ignorance and prone to misjudgment. While not being infallible, their location in the social matrix puts them in a unique position.
• As Prof. Jagdish Bhagwati once said: ``Politicians must play to their constituencies. Bureaucrats cannot forget the politicians. Think- tanks must seek funds to survive. All must mind their manners, trim their sails, and bend to the wind. Only professors have tenure, protecting them from the retribution that the indulgence of independence may bring. Indeed, that alone makes it an obligation, not just a luxury, for the academic scholars to break ranks, to cut through the fog of obfuscations that attends the politics of policy- making ... to propose policies and advance agendas that reflection and analysis lead one to believe to be good and beneficial, even when they appear outlandish now and will bring one neglect, at best, and opprobrium, at worst''.
• If they take advantage of the freedom and training, their advice can provide valuable insights to the policy-maker. Different economists may see different things in the same phenomena but that is no reason to discount the economists' approach to view things holistically. In any case there are some aspects of economic thinking that are absolutely correct and no amount of verbal or numerical legerdemain can counter their inexorable logic.
• Economics is all about scarcity, efficiency and welfare which it demonstrates by relating causes to consequences. It yields conditional propositions of the type: ``If A, then B''. This is embedded in certain ruthless truths of economics. Let us see three of them. First, there is no such thing as a free lunch. The cost is borne either by yourself or by someone else. Second, there is no escaping from trade-offs. You have to choose between different desired alternatives. And third, no amount of rearrangement of your resources can increase welfare or growth without increasing the efficiency of their utilisation. No politician, however powerful he is, can get over these fundamental truths.
• ..reason is that the impact of fundamental economic laws usually manifest themselves only incrementally. The existing institutional structure often masks the consequences, and this homeostatic process lulls the victims into thinking that no harm will come their way until disaster strikes with all its malignance. Again, in the short run, such policies - though violative of economic logic - may bring all round substantial benefit. Once hooked, it becomes impossible to give up as the system becomes dependent on such policies even though they have outlived their utility.”