Friday, December 23, 2011

Prof Amartya Sen: conflicts in liberalisation

On December 16th of this month, I had a great opportunity to listen to Prof Amartya Sen. This is the first time I got to see him closely and observe his actions in telling something about economics, politics and his friends like Dr Manmohan Singh. The session was chaired by Business Standard Chairman Mr T N Ninan.

The reader of this blog know that I came to know the fact that Prof Sen won 1998 Nobel Prize in Economics Science through my Tamil Language teacher.

Any way, Prof Sen delivered a lecture at Hotel Le Meridien, New Delhi and it was a part of 2011 Delhi Economics Conclave. Prof Sen's lecture was not on any specific topic. He briefly touched broadly on: (i) global financial crisis, (ii) the Euro crisis, (iii) implications on Indian economy and (iv) poor performance of social development indicators in India.

Prof Sen's understanding on 2008 financial crisis might be exceptional but given the ideological lean what he informed the hundred of industry member was not new at least in my view. So basically, he summarized by stating simply that the 2008 crisis erupted due to over confidence of banks (on lending, risks, etc), lack of rational confidence and inability of regulator. He also said that Adam Smith never used the word "capitalism" in his all works. According to Prof Sen Adam Smith only used the word "market" to analyse the players in the society.

On Bush and Obama: Prof Sen explained that Bush era saw the unrestrained capitalism, crisis of government and bailout to banks.

On Euro: Prof Sen said Euro is not worth having because there is no fiscal union in the political economy of EU. He also pointed out that the central problem of Euro crisis is epistemology and the crisis of government efficacy resulting from the fundamental like freedom and actions of key decision makers. He further went on to argue that the people who are reading the crisis in wrong side. He also talked about the 1943 EU movement of unity in Euro.

On Indian economy: Prof Sen's views are not new but some of his views expressed during this lecture is worth reading from the print media:

  • "We [India] need to maintain economic growth as growth generates public revenue and with public revenue we need to do things such as health care, immunisation, education...The government has to do a lot more,"
  • "I spent an hour with Manmohan Singh yesterday but I did not have any illusion that if I could convince him that everything will go fine, not because he is not a good Prime Minister, as I think he is, because that's not the way Indian democracy works".
  • "In a democracy, you have to carry the party, the coalition and the political system, including the opposition with you."
  • "I do not think that there is any conflict in liberalisation.... Each time you have to see if it is doing good for the people or not," 
  • "What we need is economic reforms, but reforms are not just about doing enough to addressed issues which are of great importance to those relatively prosper...Reforms are right but the formula that works for the only 20 per cent people of the country is not right,"
I must record here that Prof Sen rejected the way in which the Team Anna is trying to do with fighting corruption in India. I consider fasting for corruption is age old wrong doing. And I agree with him when he said that:
  • "What I had, in fact, said was that the judgement and penalty for corruption cannot be a matter for street justice, and must come through the democratic procedures that we cherish in India, including the courts and Parliament," he said in a communication.
  • "we do not not have to tie accused people to trees to deliver summary justice to meet the demand of most Indians to extend the process of democratic accountability in a more full-blooded way to corruption."

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