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India's Moral Churning -- Excerpts from August 16 Tata Lecture, Delhi

Kaushik Basu's picture

Revised excerpts from the 16th JRD Tata lecture, delivered in New Delhi, 19 August 2013.

This is a difficult time for the Indian economy. Growth has slowed, with industry shrinking over the last two successive months, wholesale price inflation has risen to 5.8%, and the rupee has been losing value sharply. There is reason to be upset about this and to demand more from policy makers. Yet, as I argue in this lecture, this is not India's biggest problem. The nation's biggest challenge at this critical juncture is a moral and an ethical one. This, for India, is a moment of moral churning. Skullduggery and corruption, cutting across party lines, have been rampant, eating into the moral fabric of the nation, leaving ordinary people befuddled and in despair. This is breeding a corrosive cynicism, leading people to believe that maybe this is the only way to be, that petty corruption and harassment is simply the new normal, whereby we should complain when we are left out of the gravy train and merrily join in if and when we get a foothold on that train. Yes, the economy has not done well over the last year or two. But once we look beyond the proximate causes we will realize that one important factor for the economy not doing well is the corrosion of values like trust and trustworthiness and their concomitant, poor governance.

The end of a long era

Branko Milanovic's picture

Is China, after a hiatus of 150 years, again the largest economy in the world? Not all sources of GDP data agree, but there is little doubt that China is either already now the largest economy, or it will, within a year, become so by overtaking that of the United States. Whichever the case may be, a long era when the American economy was the largest in the world and which began around 1860, is now reaching its end.

Data on gross domestic product (called now Gross Domestic Income) are available from three sources: the Maddison project, which is the only source for the long-run series of national GDPs, going back to 1820s; the World Bank or IMF annual data, going back to 1960; and Penn World Tables, produced periodically at the University of Pennsylvania, going back from their just-released version 8.0 to 1950 . All three sources produce GDP data in PPP (purchasing power parity) terms, which means that they adjust for differences in price levels between the countries. The easiest way to explain it is to say that PPPs try to account for each good and service using the same price for it around the world, so that a mobile phone, a kilo of rice and a haircut would each be valued the same in China as in the United States. Only thus can the real sizes of the economies, and the welfare of people, be truly comparable. These PPP data, in turn, are obtained through a massive worldwide project called the International Comparison Program, which is run every five to 10 years and collects more than 1,000 prices in all countries.

Kaushik Basu at an Italian festival of thinkers

Merrell Tuck-Primdahl's picture

 www.investintrentino.it/Festival-of-Ecomomics-2013Evocative of the freewheeling talks in Athens’ open spaces by Socrates and Plato, last week’s Festival Economia Trento in Italy explored themes related to ‘Sovereignty in Conflict’, covering the Euro-zone debt crisis, global manufacturing chains, a new and more somber wave of globalization, welfare and social citizenship and a range of other topics.

Fluttering banners with the faces of Michael Spence, James Mirrlees and others lined the cobbled streets and media stages as well as giant video screens populated the piazzas lined by renaissance buildings and historic chapels, with the Italian alps serving as a picturesque backdrop. Performances at the Teatro Sociale in the evening provided extra color. Click here to watch a brief video interview with Kaushik in Trento. 

Kaushik Basu, the world economy, humility, and jobs

Merrell Tuck-Primdahl's picture

At his Sabanci lecture yesterday on ‘Emerging Nations and the Evolving Global Economy’, Kaushik Basu predicted that sluggish growth will likely prevail overall for the next two years, as the baton of economic growth is handed over from industrialized countries to developing countries. He cautioned that countries have bought time with liquidity injections and other stimulus measures, but that will not do anything to fix deeper structural problems.

To hear his talk, along with his views on the recent austerity debate that reached a fever pitch over the past 10 days, listen to the audio of the full lecture and question and answer session here.

Kaushik elaborated on some of his ideas for getting the world out of the current ‘time-buying’ phase in an April 23 piece in Project Syndicate op ed ‘Two Policy Prescriptions for the World Economy.’ Dani Rodrik was especially taken with Kaushik’s opening line that “One thing that experts know, and that non-experts do not, is that they know less than non-experts think they do.” This pointed to the hard truth that the austerity debate has revealed that policy setting in today’s world is a highly uncertain business and that humility should be the order of the day.

New Pragmatism versus Failing Neoliberalism

Grzegorz W. Kolodko's picture

The source of the current global economic crisis lies deeply in U.S.-style neoliberal capitalism, or contemporary laissez faire. It could not have been triggered in countries with a social market economy, but only in the conditions of the neoliberal Anglo-American model. The intense shock the world experienced could take place only as a result of the coincidence of numerous political, social and economic circumstances (as well as technological ones, since it would not have been possible without the Internet). The overlapping of these conditions in a specific way, which accumulated the crisis-related phenomena and processes, was possible only under a special combination of values, institutions and policies — are typical of U.S.-style neoliberalism.

Talking development in two hundred years of books

Martin Ravallion's picture

  Photo: istockphoto.com
How long have we been talking about “economic development”? And what about concepts like “economic growth,” “poverty” and “inequality”? How old are they in the literature, and how has the frequency of their use changed over time?

We can now answer such questions thanks to a new software tool, the Google Books Ngram Viewer, introduced in a research paper by Jean-Baptiste Michel and others (13 authors are listed, plus the Google Books Team); the paper has just been published in the journal Science, and was picked up in the New York Times. The authors have formed a corpus of over 500 billion words (360 billion in English) from over 5 million books spanning 1800-2000.

Performance anxiety about the MDGs – are all poor countries lagging?

Delfin Go's picture

An old man, in Livingston, Zambia, stooped to scoop muddy water from a puddle into his pail. “What I want most is clean water,” he said, to me. I was conducting a World Bank field survey back in 2000 in Livingston. Even as the man expressed his desire for such a basic need, I could hear the roar of the mighty Victoria Falls just a few kilometers away. That was the sound of billions of gallons of fresh water, but not immediately drinkable. I never forgot the sound of it.

The extent to which people across the world have access to clean water, education, food, healthcare and other basic needs is measured by the Millennium Development Goals (MDGs), a set of internationally agreed targets adopted in 2000. Last week, world leaders and the developmental community gathered in New York for the MDG summit to urge the international community to speed up progress toward the MDGs.