Economy Jul 10, 2013
Amartya Sen, the intellectual patron of many of the UPA's economic follies, of which the latest - the Food Security Bill - is on the cusp of ruining things further, deserves to be debunked.
Once lauded for his work on famine and hunger, Sen today is a practitioner of charlatan economics that has very little to do with helping the poor.
Commonsense should tell us that acute hunger is more or less gone - except in some pockets of India. Malnutrition, of course, is another matter, since it involves a whole lot of other inputs from maternal care and giving children enough nutrition once they are born. Neither of these problems is going to be solved by giving two-thirds of India (more than 800 million people) rice, wheat and coarse cereals at Rs 3, Rs 2 and Re 1 a kg.
Ruining the economy, of course, is entirely possible with this mindless scheme.
Dealing with malnutrition calls for an entirely different approach to food security - and the UPA's next flagship folly comes nowhere near addressing it. And yet, Amartya Sen is backing a bad idea.
Sen's charlatan economics have been repeatedly exposed by more sensible economists.
Today's Business Standard, for example, has an article by Arvind Subramanian, Senior Fellow at the Peterson Institute for International Economics and Center for Global Development, which rubbishes Sen's stand on food security. (Read here).
Critiquing Sen's backing for the UPA's entitlements-based policy framework, of which the Food Bill is only the latest exhibit, Subramanian gives five solid reason why this approach is seriously flawed.
One, it causes economic instability and vulnerability. The domestic slowdown and the antics of the rupee are clear evidence of this. No further proof is required of the damage caused by UPA-nomics.
Two, the rights-based approach "legitimises atrocious policies". Leave alone food, Subramanian shows how energy subsidies have ballooned over the last 10 years of UPA rule, distorting the choices people make in multiple spheres - from bad crop patterns to wrong fertiliser use to under-investment in power.
Three, the rights-based approach also "undervalues opportunity costs". Subramanian gives the example of the right to education (RTE) - an enormously expensive exercise with doubtful payoffs. It would have been far cheaper and more effective to focus on ensuring teachers turned up for work - thus improving student learning. The RTE is an extravagance the country could have done without, when cheaper and more focused solutions were possible. The UPA never weighed the costs of what could have been done with the money spent - hence incurring a huge opportunity cost.
Four, Subramanian correctly suggests that the rights-based approach overburdens the state's capabilities. The state's first duty is to protect its people, deliver law and order, and ensure basic rights, and public facilities. When the focus shifts to private welfare benefits such as providing food and homesteads, the state fails to deliver on public goods, as Ajay Shah points out in this article.
Five, ultimately, overburdening the state leads to its weakness. Subramanian says that when the state does not provide the basics of protection, health and education services, and focuses instead on redistribution, it loses the allegiance of the middle class. They will evade taxes, educate their children abroad, live in gated colonies, and generally turn away from the state.
Concludes Subramanian, who started out as an admirer of Sen: "For this admirer of Professor Sen's exceptional academic work, two ironies stand out. His Nobel-winning insight was about the importance of broad purchasing power rather than the narrow (physical) availability of food in avoiding famines and mass starvation. It is curious, even mystifying, therefore, to see him forcefully advocate, through morbidity-laden polemic, the physical provision of one type of food - cereals, which are rapidly declining in people's consumption basket - to help reduce malnutrition."
But it is not only Subramanian who is disillusioned with UPA's voodoo economics and Sen's efforts to give it intellectual heft. Earlier, Arvind Panagariya of Columbia University spoke out when Sen made a fool of himself by claiming that every week's delay in the Food Bill caused 1,000 deaths.
Panagariya told The Economic Times: "I was taken aback when I heard Sen forcefully attribute a specific number of child deaths of "1,000 per week" to the lack of passage of the Food Security Bill on a TV debate... I am mystified by how one can attribute a precise number of child deaths to the absence of a policy that has not been in place for a single day, a policy that is subject to so many lapses and leakages along the implementation chain, whose impact critically depends on how the beneficiaries adjust their consumption in response to it, and which can after all potentially impact only calorie intake and no other causes of death."
Swaminathan Aiyar also scuttled Sen's pretentions by taking up Sen on his own calculations. Using figures for losses in the public distribution system caused by leakages and graft, he calculates that the Food Security Bill - which Sen claimed cost 1,000 lives per week due to non-implementation, or around 50,000 lives per annum - would cost at least Rs 50,000 crore more even according to official estimates.
Asks Aiyar: "Even if the Bill saves 50,000 lives, it will cost an additional Rs 50,000 crore. Aren't there cheaper ways of saving lives than Rs 1 crore per head?"
(Read Arvind Subramanian's full Business Standard article here)
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