Prof Deepak Lal passed away at 80

                                        Prof Deepak Lal: 1940-2020

Extremely sad to hear that Prof Deepak Lal has passed away on 30.04.2020. He was 80. One of the greatest classical liberals of twentieth century, I had privilege of meeting him in Delhi several years ago.

He had planned to visit India couple of months ago but due to hit of coronovirus, he was stuck at London.

When the climate mania was in debate Prof Deepak Lal wrote several articles (in Business Standards) with historical data on the belief o the myths of one-side understanding of climate change. It was very insightful articles but many would disagree and they cannot ignore it.

• the “technocratic public economics approach to public policy” as he put it, “is ahistorical, suffers from amnesia concerning the history of economic thought, is ideological insofar as it sets up egalitarianism as a self‐​evident objective of public policy, is institutionally impoverished and, most seriously, makes assumptions about the character of most governments which—to put it mildly—are not universally valid!”

His web page at UCLA has kept almost all of his works here.

The following are Obituaries on Prof Deepak Lal's life and work:

Classicism and liberalism were two values that defined the man by TCA Srinivasa Raghavan

For a conservative, Deepak Lal saw deep strengths in India's civil society by Suman Bery

Profound philosopher in all travails & joys of life and living by Mani Shankar Aiyer

Cato Institute's obituary

• His book, The Poverty of “Development Economics,” published by the Institute of Economic Affairs in 1983 and subsequently revised and expanded, is still one of the best critiques available of the thinking that dominated, and to some degree still informs, development economics.

A friend of mine had reviewed one Prof Lal's book in Livemint is here.

Some links

Some interesting readings:

Dinesh has very interesting post on "Rahul ‘Neelkanth’ Gandhi"

Nitin on two and twenty three years later

Shruti on an economist who read economics without much romance!!

Deepak Lal on Buchanan- “Would citizens voluntarily agree to allow the government to exercise power quite unreservedly, or would they rather seek to impose constraints on the behavior of governments?”

Some links

"...they wrote in Indian languages and have perhaps paid a price for this by being forgotten by the exclusively English-speaking elite of today"

"I hope this is enough to show that Buchanan’s work, apart from its theoretical innovations, remains powerfully relevant for the most important problem of economic policy: how can Leviathan’s fiscal privileges inherent in a government’s power to take, and give to whom it chooses, be limited? It is a question that continues to haunt the Indian polity, and for which reading Buchanan remains essential."

Growing restrictions on personal liberty and increase in state power

Prof.Deepak Lal writes:

• In dealing with the undeniable state-sponsored Pakistani terrorism in India, a similar policy is relevant. The only long-term solution is to change the Pakistan army’s calculus that it can succeed in destroying India (or its economy) through its jihadi agents. As this tiger it has unleashed, increasingly turns( as it has) against its sponsors, and the growing distance between its citizens in a stagnant and those in the booming Indian economy becomes apparent to its people (as is happening), the ‘rent seeking’ soldiers might at last realise that it is in their interests to complete the deal, which Musharaff nearly completed with Dr Manmohan Singh. Meanwhile, intelligence remains vital in apprehending and forestalling ISI-sponsored terrorists. But this is not done through heavy handed suppression of civil liberties. When,with information from Western intelligence agencies, about the co-ordinates of suspicious boats moving to Bombay, along with mobile numbers of some terrorists, Indian intelligence failed to forestall the 26/11 attacks, it is absurd to believe that they can forestall future terrorist plots by preventing my 70-year-old American wife from coming back to India, a month after she had left our New Delhi home.

MPS Asia Regional Meeting-Two

Let me give you some sort of mixed picture from what I have noted from the various talks given by economists and experts in the MPS meeting on the opening dinner (Feb 10th, 2011).

Dr.Parth J Shah gave introduction with few facts about the CCS’s success stories such as its campaign (BAMBOO IS NOT A TREE!) against bamboo as a tree instead a grass, school choice campaign (education voucher or 25 percent reimbursement by Government) etc. He also mentioned that this is the second meeting organized in India.

He also mentioned that the amendments in the Shop and Establishment Act by the Government of Haryana paved a major window of opportunity to open call centres in India. Haryana was the first State in India to reform the above Act.

Professor Deepak Lal, who was immediate past President of MPS, gave Welcome Address. What was interesting from his address was that unfortunately the MPS society is divided when it comes to the debate of foreign polices!! He also said that this Society is not addressing the issues raised in the context of foreign polices.

The present President of MPS is Professor Kenneth Robert Minogu and he gave President Address. Few points from his address: (i) one point we should not be too taken by media that India, the global power, it is dangerous to think this and the State, (ii) he talked about the Prof F A Hayek’s works on the false government aims , promotion of welfare with debts, and (iii) the universal orders or spontaneous orders.

The MPS Asia Regional Meeting’s Inaugural Address (Full Paper in PDF) was given by Shri. Arun Shouri. Some major points from my noting: (i) India’s economic growth story is taking place despite of the government and not because of government has claimed to be, (ii) the former prime minister of India who initiated the economic reform in 1990s was the “honest crook”!!!, (iii) please do not go by your vision, please do not go with their past record, (iv) the Hayek’s notion of liberalism, (v) all political parties in India run by people who believe in nothing, (vi) the Indian family values for care each other which is actually the driving force for growing economy, (vii) morality is public life, (viii) the welfare polices are being promoted, despite of its weakness, with the blessings of people like Amartya Sen, (ix) natural order of society, virtual foundation of society, (x) a dog with a bone is his mouth cannot park.

Raj Cherubal had asked the important question which people like us ponder: what would the answer of Professor F A Hayek if he is alive in the mid’s of today’s crisis in India and abroad?

Mr Shouri answered rightly that the development and growth is taking place in a particular society not because of government but despite of it. But one can easily argue that Mr.Shouri is biased.

Previous posts: 1  

Evolution of migration, not birds alone but human too

Economist Bibek Debroy told some basic facts about his grand parents, parents and sons story of migration, beside his own in the EFN Asia Conference. I learned a great amount of knowledge from his brief talk. I also asked some basic questions and he firmly answered. The extended story has now been published in an article last week in the Indian Express. It is interesting to read. In fact, I always wondered what would be my own story after reading Prof.Deepak Lal’s own story.   

Super power dance-America, China, India

Professor Deepak Lal writes: 

• A rough measure of this relative power is provided by data on relative GDP. From the most recent set of comparable PPP data compiled by the late Angus Maddison, it seems that the US remains way ahead of all possible competitors at the moment, and despite prognostications of its economic decline (as I have argued in earlier columns), it would be foolish to write off the US. The US is and is likely to remain the sole superpower for the foreseeable future. 

• It should be noted the possession of nuclear weapons is a necessary but not sufficient condition for being a superpower or great power, nor is membership of the Security Council either necessary or sufficient: as witness the role of Pakistan, or North Korea for the former, and the UK and France for the latter. China and India are already regional great powers. They are both trying to expand their global influence. But, until they can provide a credible challenge to US naval power, they are unlikely to be able to compete.

• In a brilliant book, Walter Russell Mead (God and Gold, Knopf, 2007) has argued that world politics in the last 400 years can best be explained by the maritime system first created by the Dutch in the 17th century, and then adopted by the British and subsequently the US to create their imperia. In each version, sea power was used to build up “global systems of trade and might”. The open, dynamic and capitalist society this created “generated innovations in finance, technology, marketing, and communication”. The wealth generated provided the basis for military power. “The basic formula of an open society, world trade, and world power was the power secret… and the major driving force in the history of the 400 years”.

Laws are to seek rents

Professor Deepak Lal writes:

• ..........one continuing major source of “monopoly rents”. This is the colonial labour laws creating “monopoly rents” for the small aristocracy of organised labour. By limiting entry and exit, and artificially raising the price of India’s most abundant resource, they have damaged labour-intensive industrialisation in India. This situation will be made worse by the minimum wage and other purported labour rights being implemented in the unorganised sector. Much worse, the proposal to introduce minimum wages in the rural employment guarantee scheme will remove the main reason for the efficiency of this poverty-redressing policy: self-targeting. Though the immorality of rent-seeking associated with pure “economic” and “composite quasi” rents may be reprehensible, it is less damaging to growth than the continuing “monopoly rents” generated in the labour market.

There is war of debate is going on about the stimulus packages with respect to many issues like unemployment etc. It’s quite interesting to read and ponder how the "so called experts reacts".

I am posting the full debate below for record (dont' forget to read the Prof Lal's comments):

Neo-liberal economists find new battlefront

Michael Janda reported this story on Thursday, October 21, 2010 12:44:02

ELEANOR HALL: While many have criticised the scale of Britain's spending cuts one of the world's most powerful economic groups has praised the move to slash public debt, urging other nations to follow the UK's lead.

The Mont Pelerin Society held its biennial global meeting in Sydney and launched a stinging attack on the stimulus policies used to fight the global financial crisis.

The society's president professor Deepak Lal spoke to business reporter Michael Janda.

MICHAEL JANDA: Unbeknownst to most Australians one of the world's most powerful economic groups has recently visited our shores.

The Mont Pelerin Society was started just after World War II by Nobel Prize winner Friedrich von Hayek in an effort to fight back against communism, socialism and the Keynesian welfare state.

DEEPAK LAL: The society is literally there to promote the ideals of liberty - economic and political. The society has had, I can't remember - eight, nine Nobel Prize winners.

MICHAEL JANDA: That's the society's president professor Deepak Lal, a development economist from the University of California in Los Angeles.

And while its fight against communism largely ended in the early 1990s the society sees new battlefronts. One is the looming competition for economic supremacy between a free-market India and a state-controlled China.

DEEPAK LAL: China for 1500 years has been a tightly controlled bureaucratic authoritarian state. India for 2,000 years has been a completely anarchic society. Governments have never succeeded in doing anything.

And so as a result in India you've got civil society which actually manages to do all the things governments can't do. And that's its great strength.

In China if something happens to the state there will be another big band because the legitimacy that Chinese Communist Party which is the current dynasty, if that is eroded you could have chaos.

MICHAEL JANDA: Professor Lal says Australia should be careful not to over-commit to China.

DEEPAK LAL: If you're taking bets on the long-run, 20, 30 years, then clearly India is a better bet in my view, yeah.

MICHAEL JANDA: Another is the fight to quickly roll back the stimulus that most developed nations pumped into their economies during the financial crisis. And Professor Lal says the society is having some success.

DEEPAK LAL: The trouble is many other Western countries over the years have built up huge entitlement economies - welfare states in which you know they create politically determined income streams for all sorts of people.

And these then lead to a debt crisis. And this means that just trying to use the old Keynesian method, spending more, in fact makes this problem worse. And Britain for instance has bitten the bullet. It now decides, it's decided quite rightly the only way to deal with this is to reduce public debt levels.

MICHAEL JANDA: The society has a history of success, influencing the economic policies of conservative leaders such as Ronald Reagan and Margaret Thatcher in the 1980s.

A look at the guests at last week's conference shows the influence it has in Australia with former prime minister John Howard one of the key note speakers.

A key function of the society is attacking government intervention in financial markets and the economists who advocate it such as Nobel Prize winner Joseph Stiglitz.

DEEPAK LAL: Joe Stiglitz is a very smart theorist but he's got no sense as far as public policy is concerned. They've had all this stimulus and what has happened? Unemployment is still very high, no sign of it coming down. So they're going to try this next thing, print money.

MICHAEL JANDA: Professor Frank Stilwell who teaches political economy at Sydney University says the power of the Mont Pelerin Society to influence government policy shouldn't be underestimated.

FRANK STILWELL: Kevin Rudd at the time of the global financial crisis announced here the end of neoliberalism. But frankly a couple of years on it doesn't look like that. The neoliberals are resurgent.

And the meeting of the Mont Pelerin Society is I think part of that process whereby the right wing economists get themselves reorganised for a new assault on this Keynesian response to the crisis.

MICHAEL JANDA: And he's banded together with some other left-wing Australian economists to mount an irreverent challenge to free market economics through the Monty Pelican Society.

FRANK STILWELL: The name is of course ironic. But it's a serious attempt to provide a counter to these neoliberal views, stressing the need for governments to take responsibility for a more secure and a more equitable society.

MICHAEL JANDA: I'm guessing it's not quite as well funded and doesn't hold its meetings at the Hilton Hotel?

FRANK STILWELL: (Laughs) Absolutely no funding at all. And the small meetings are held periodically in a public place.

ELEANOR HALL: That's Sydney University professor Frank Stilwell ending that report by Michael Janda.

Back to counting the errors of World Financial Crisis

Prof. Deepak Lal on “..impotence of monetary policy, is a paper tiger.”

• ..the 2008 Crash is best seen as a Hayekian recession caused by “easy money” with the Fisherian consequences of a “balance-sheet recession”. How can the central bank avoid the deflationary Fisherian consequences of a financial crisis when — after the Hayekian boom — deleveraging is required by most agents in the economy?

papers

The Constitutionalization Of Money By James M. Buchanan

The Great Crash Of 2008: Causes And Consequences by Deepak Lal

Caste them out-II

THE ABUSE OF HISTORY I : Denying Caste By Deepak Lal

Caste them out-I

Prof Deepak Lal wrote in the Business Standard in 2009:

• Second, the caste system, which saved the mass of Indians being inducted into the deadly disputes of its changing rulers, in return for a customary share of the village output to the current overlord. Democratic practices introduced by the British fit these ancient habits like a glove.

• …the data from a rural household survey by NCAER finds that, at the ward level, the “parochial (caste) politics (of Panchayati Raj) appears to simultaneously increase both the competence and commitment of elected leaders, as indicated by the characteristics of the elected representatives and their enhanced delivery of local public goods in response to constituents’ preferences”.

Also read his other article Caste, gene and history wars

Caste them out

Whenever I heard the word CASTE I always remembered one book by Prof Deepak Lal which is “The Hindu Equilibrium India c.1500 B.C. - 2000 A.D.”

Abstract: India is an emerging giant. This book explains its long economic stagnation and recent rise by examining its social, political, and historical evolution with a long-term perspective. It explains how its distinct social system based on caste arose and why it still is of importance in its political and social arrangements, despite India's recent move from the plan to market.

By the way the Indian Lok Sabha Speaker Meira Kumar said:

“I have always worked towards a casteless society. The aim of the founding fathers of the Constitution has been to establish a casteless society. Anything which leads to that, would take us further in that direction is welcome,”

Climate-politics-I

Prof Deepak Lal on man made global warming

"Dr Pachauri, a railway engineer with a PhD in economics, as being “arrogant”

De-link Caste and Colonial system

Today’s Deepak Lal’s article throws many lights on “Caste, gene and history wars”. Of course, the political and left fanatic will ignore, then that is not our problem. A friend of mine recently mentioned that the “left people are not interested in fundamental issues”. Unfortunately, it also true in non left! Actually the kind of education system we have is too not enough to allow the student to question the ‘fundamental issue’.

Some excerpts:

• In the late 1960s, whilst visiting the Padmanabhaswamy temple in Trivandrum, the usual pandas accosted me. One came up to me and enquired about my origins: my jati and gotra. He then rattled off the names of about ten generations of my ancestors. He then asked for the names of the spouses and children of myself and my cousins. He did not ask for any money and was only interested in updating his records. Unless he had imagined my ancestors (and I could check the veracity of at least the last four), this would put my caste-based ancestry into the 15th century!

• A recent novel study (Reich et al: “Reconstructing Indian population history”, Nature, 24 September 2009) by American and Indian geneticists does just that. Though their sample is small — but diversified by language, region and caste — their conclusion on caste seems secure. They conclude: “Six Indo-European and Dravidian-speaking groups have evidence of founder events dating to more than 50 generations ago, including the Vysya at more than 100 generations ago. Strong endogamy (average gene flow less than 1 in 30 per generation) must have applied since then to prevent the genetic signatures of founder events from being erased by gene flow. Some Indian historians have argued that ‘caste’ in modern India is an ‘invention’ of colonialism …However, our results indicate that many current distinctions among groups are ancient and that strong endogamy must have shaped marriage patterns in India for thousands of years (ps.489=90)”. So much for the post-modern turn in Indian history!

Prof Lal’s 2002 articles are here 1 and 2

Teachings of Deepak Lal

There is a great piece in today’s BS by Deepak Lal. Some excerpts:

• ………..why a country with a firmly-established democracy and many world-class institutions and firms, and which is an emerging superpower growing rapidly, should in many dimensions of human well-being have a worse record than many sub-Saharan African countries.
• India, for millennia, has been par excellence an anarchical society held together by its unique cosmology. Hindu civilisation was born in the vast Indo-Gangetic plain, which no single political authority could hope to conquer for any substantial period of time.
• ………the decentralised and apolitical social and economic system, which emerged as a Hayekian “spontaneous order”, local public goods were provided by the semi-autarkic village communities. Thus, the decentralised civil society which developed did not need a state for its functioning.
• India’s ancient civil society has had greater independence from the state.
• For, in this ancient anarchical society, statist solutions will always fail, as these go against its historical grain. The only wise course is to intervene, if needed, by utilising the decentralised social channels which have maintained social order for millennia.
• the state needs to redirect its substantial expenditures away from its own agencies towards a system of vouchers for deserving individuals and households to use these private markets. The vouchers are best administered by local panchayats at the ward level. For, “Panchayati Raj” remains the only channel to get the improvement in human development indices, as it goes with the grain of India’s anarchical society.

Peter Bauer and the Economics of Prosperity

There is a new book on development economics giant Peter Bauer

Thatcher’s children, Macaulay’s children in India

Deepak Lal has a good piece on emerging new India. Some excerpts:

• “…..the 2005 Pew Global Attitudes Survey in urban India, which found that 71 per cent of Indians have a favourable view of the US, which in the 17 countries polled is only matched by Americans with a more favourable view of their country. Moreover, the popularity of the US has increased in India (as compared with other countries) with Indians being “significantly more positive about the United States now than they were in the summer of 2002, when 54 per cent gave the US favourable marks”. Indians also have a strongly positive impression of the American people — 71 per cent in 2005 as compared with 58 per cent in 2002 (2005 Pew Global Attitudes Survey, www.pewglobal.org).
• The first one, led by Nehru (for whom English became their first language), sought the reconciliation through the purportedly middle way provided by Fabian socialism. The other (Gandhian wing for whom English was an instrumental second language) saw Westernisation as a grave threat to Indian traditions, and wanted no truck with it. They adopted the attitude of the clam. They eschewed modernisation to preserve the ancient Hindu equilibrium.
• One of the major outcomes of the 1991 economic liberalisation was that, these children of the Westernised castes now increasingly find it easier to make a living in India. But they, by and large, still retain the attitudes to the US of their parents.
• It is the changing attitudes of the Gandhian wing of Macaulay’s children which is crucial in charting the changing course of the Indian view of America. Till recently they were against globalisation and the modernisation it implied, seeing it as a threat to their Hindu culture as embodied in the BJP’s slogan of Hindutva. But as many of their progeny came to prosper in the new liberalised economy (particularly in the new IT and outsourcing industries), without any changes in their mores, this Gandhian wing of Macaulay’s children came to realise that there was a third way out of the old dilemma posed by the Western onslaught on their civilisation. A route pioneered by the Japanese in the late 19th century: to modernise but not Westernise. The same BJP which was burning former GATT Director General Arthur Dunkel’s effigy in Parliament Square in the late 1980s, by 2004 was fighting an election on a platform of the benefits to “India Shining” from globalisation.
• Thus the cosmological beliefs of the fully fledged English-speaking Nehruvian wing of Macaulay’s children mirror those of their Western cousins. For the Gandhian wing English has remained purely instrumental. So their cosmological beliefs continue to be based on ancient Hindu mores. With economic liberalisation, both wings of Macaulay’s children have embraced the material beliefs associated with the processes of globalisation. This makes their former atavistic attitudes to America, decrying its materialism, redundant. As in the UK, with Thatcher’s children, Macaulay’s children in India no longer disdain American materialism and its pursuit of money. The growing embourgeoisement, with its accompanying erosion of aristocratic manners, has led to a more positive attitude towards America in both countries.
• ….the anti-American and anti-globalisation rhetoric of the parties of the Left is going to become electorally unsustainable. Thebhadralok are going to find themselves overthrown by the sons of the soil from the mofussil towns whose material values are at odds with the various forms of socialism espoused by the Left, and whose social mores are still traditional. This means that the young, self-confident refurbished Gandhian wing of Macaulay’s children should be able to see India through to modernisation without Westernisation”.

How to word a moment where the change remains change?

T C A on Economics and Climate Change:

• “There’s this to be said about economists: they go where the money is. When poverty studies had the funding, they went there; now that climate change has it, they are herding there. Their studies on poverty made no difference to poverty, except their own; their studies on climate change will make no difference to the climate, either.
• I have asked scores of economists, including three Nobel Laureates, about this problem. Not one had an answer because, in fact, there is no answer. And it should be noted: this has nothing to do with the idea of a social rate of time discount.
• It should be evident from this that it is impossible to work out anything that is even remotely sensible. And the reason for that is that economics is not the right intellectual tool to apply to the perceived problem of climate change. The answer lies in changing the energy base of the world. That needs science and technology, not economics.”