BR Shenoy Memorial Lecture 2023 | Dr Surjit Bhalla

BR Shenoy Memorial Lecture 2023 | Dr Surjit Bhalla

Source: https://www.youtube.com/watch?v=hueoIh8a5So Duration: 6095.1s

Speaker 1 (00:00): live recording for a bit if you can you started already it’s getting started okay no problems I just wanted to talk a bit about logistics it’s okay then I’ll get started now Sharia

Speaker 2 (00:12): hello everyone good evening and welcome to the Biya Shunai Memorial Lecture 2023 part of a series started six years ago my name is Kumar Anand and I will be your host this evening

Speaker 1 (00:29): The talk by Dr. Bhalla will be for about 45 minutes and after which we will have about 30 minutes for question and answer session with the audience who are joining us live. You can of course like every year you can type your questions in the in the comment section on the zoom here or in the YouTube comment section wherever you are joining us from. The lecture series is in the memory of a courageous Indian economist who in the 1950s and 60s faced great challenges in arguing for desperately needed changes in Indian economic policy.

Speaker 2 (00:59): The economic reforms that Professor Biyar Shannoy had long advocated were finally implemented in part in 1991 and has helped transform India. People unfamiliar with the life in India before 1991 economic liberalization might scarcely believe that for 30 years you were not allowed to promptly purchase

Speaker 3 (01:18): even an old-style Westphal model scooter or a clunky black test telephone by simply walking into a dealership.

Speaker 2 (01:26): Even with Adqal advance payment, the wait for delivery could take a decade because a government permit was needed to spend your own money. The wrong-headed economic philosophy of the day was that private entrepreneurs might prosper

Speaker 3 (01:39): by serving the customer, and that was a danger which must be suppressed. Indeed, profit was a dirty world. Born in 1905,

Speaker 2 (01:49): Bellicote Ragunath Chenoy was son of a poor farmer in Bellicote village in North Kerala. Inspired by Gandhiji, the schoolboy Raghunath ran away from home

Speaker 3 (01:58): in to join the independence movement. He was arrested in Bombay and jailed in the same prison as Pandit Madan Mohan Malwia who promised him a scholarship at his recently founded Banaras Indian University. The young man did his BA and MA in economics at BHU and got a scholarship to

Speaker 2 (02:16): study at the London School of Economics. Returning to India, Bia Shanoi did monetary research at the Reserve Bank of India and served as executive director from India at the International Monetary Fund. Driven by increasing disagreement with the government policy at the time, he resigned to join

Speaker 1 (02:33): Gujarat University and later founded his own economics research center to independently argue for the removal of license permit Kota Raj. His basic philosophy was that economic progress meant

Speaker 2 (02:46): the generation of prosperity for the mass of the population and that the equal human dignity of every individual was the foundation of a decent society as a classical liberal he faced challenges

Speaker 3 (03:00): in the public square continuous abuse and ridicule by established opinion including the slander that

Speaker 1 (03:06): is that this proven patriot was an agent of foreign powers although the huge benefits of

Speaker 2 (03:12): a market economy are now generally accepted challenges to his liberal viewpoint remains today our speaker today is the distinguished academic professor sujit singh balla who recently completed his own term as the executive director from india at the international monetary fund professor bella did his phd in economics from princeton has worked at rank corporation and the brookings institution and has founded and managed investment from oxys research and investments he has taught at the Delhi School of Economics and has been on the governing board of the NCR

Speaker 1 (03:45): Professor Valla has authored five books including second among equals the mid-class kingdom of India in China 2007 the new wealth of nations 2017 and citizen Raj Indian directions 1952 to 2019

Speaker 2 (03:59): professor Valla has published widely in the media on the Indian economic situation in data-driven

Speaker 1 (04:06): articles a quantitative approach perhaps influenced by his undergraduate degree in engineering he has served on the prime minister’s economic advisory council and has had considerable experience in the formulation and presentation of public policy on behalf of the economics research center mangalore and the center for civil society new delhi it gives me great pleasure to

Speaker 3 (04:28): invite our speaker professor surjit bhala to deliver 2023 biash and i memorial lecture on

Speaker 2 (04:33): on the topic of the challenges of being a liberal today. Professor Balla. Thank you very much for the warm introduction. You know, when I was asked to present this year’s lecture on B.R. Shanoi, I had absolutely no hesitation in accepting the honor.

Speaker 4 (04:54): And the title of this talk,

Speaker 2 (04:56): Difficulties of Being a Liberal Today, is reflective of the life and times of Mr. Shanoi. When I entered graduate school in public affairs and economics in 1970, after an engineering undergrad degree, I had not heard of Mr. Chenoy or, for that matter, most economists. In addition, like most students in my age group of 20 to 24 years, and especially those unread in economics and liberal in quotes in outlook, I admired Nehru’s largely socialist outlook. And then I studied economics and learned about the severe follies of liberal in the name of the poor economists who were dominating the discourse in India and most of the developing world. Mr. Chenoy was a lonely, angry young man in the 1960s and 70s. His courage to persist in his intellectual beliefs, despite the overwhelming presence of left-wing economists and policy makers in India, is testimony to his strongly held liberal ethos and his courage. His descent now to the second five-year plan is well known and catapulted him into the ranks of the great and courageous thinkers. Like others of his genius, he was not to succeed in his country of origin. The conventional establishment non-liberal economists made sure that his recommendations would not be followed. He was engaged in 1966 by Mr. Jayavardhane, then the Deputy Prime Minister and later President of Sri Lanka. Now we’re talking about 1966 to confront the crisis facing Sri Lanka there. Jayavardhane looked for, and I quote, an economist or economists who would come up with some fresh ideas on how to deal with the malaise of the Sri Lankan economy. Jayavadhani did not trust academics at Sri Lankan universities because they were Marxists or advocates of policies that promoted state expansion as a solution to the crisis. Hence, he looked for someone who was free from such state-worshipping ideologues. Shunoi wrote the report somewhat, and perhaps decades ahead of his time. A report that argued for considerably less state intervention, greater role for markets, export-led growth, and a flexible exchange rate. His major intellectual mentor was Hayek. His report was rejected and gathered dust. But Singapore implemented a package very similar to his recommendations. The West, as they say, is history. I’m also a huge admirer of Hyatt. His book, The Road to Serfdom, radically changed my outlook on economics and economic policies and the recognition that the road to hell is paved with economic, non-liberal thought and actions. Now, here I need to define what a Hayekin liberal is, and if you will, the title of my talk. In many ways, it is the opposite of what is conventionally understood as being liberal. Perhaps over time, present day liberalness will be known as wokeness, and we can all get back to liberals being a 19th century liberal. What is a true liberal? Certainly one who speaks truth to power, truth to the establishment. In present day world, it is becoming increasingly difficult to define or identify truth. There’s artificial intelligence, fake news, and even worse, fake expert commentary. There’s a lot of information. How does one sift through this misinformation or ideologically laced commentary? That is a challenge for a liberal. I will provide four pointers. First, a true liberal changes his mind when confronted with strong evidence, which challenges her prior view or recommendations. Keynes, an original 19th century liberal, said it best when he stated, When facts change, I change my mind. What do you do, madam? My second info on liberal is from the movie Jerry Maguire, where a football player keeps asking his agent for evidence about his job prospects as to what is the money he’s going to get. He keeps repeating, show me the money, which for our purposes here is show me the evidence. The third benchmark about evidence and being a liberal is in the attempt to identify the truth, the reality, the facts. What passes for evidence today is a Rashomon effect. We all have our own facts and therefore our own interpretation of the truth. in all of this noise amplified many times by social media, how is one to act on the unknown truth? The fourth pointer is look out for spin, today called narrative, when you search for the truth. Nobel Prize winner Robert Siller faces the origins and development of the term narrative. His book is called Narrative Economics, a must read for all interested in identifying the truth in quotes and interested in how a rational mind often falls for irrational stories or spin or narratives. narratives. One can be a liberal precisely by identifying the truth in the noise, or at least

Speaker 5 (11:26): to the best of one’s abilities. This is what I will attempt to do in this lecture.

Speaker 2 (11:35): And I will look at economic facts and interpretations thereof. I will only present the evidence. I will not mention any names of the individuals involved in my journey. like yours and Shino’s journey, a journey in search of evidence which helps identify truth and helps in being a liberal. And remember, all mistruths have an element of truth in them, which is why identification of the most truth amongst the competing Rashomon truths is so difficult.

Speaker 6 (12:15): My first example is what happened in my second year as a World Bank economist.

Speaker 2 (12:22): This is 1980, 79, and the World Bank has embarked on the definition and the measurement of absolute poverty around the world.

Speaker 6 (12:35): Now, as it turns out, we in India provided the very first definition of poverty, almost absolute poverty, almost simultaneously with the U.S. war on poverty and the U.S. attempt at a definition.

Speaker 2 (12:54): Both definitions involve food consumption.

Speaker 7 (12:59): This is the element of truth. If you don’t have food, you don’t survive.

Speaker 2 (13:03): So in some ways, or if we were more than one way, food consumption is tied to being poor, but not identical to being poor.

Speaker 5 (13:18): So both these definitions, one in the U.S. and one in India, had an income or consumption based poverty line.

Speaker 2 (13:28): That is a minimum consumption in expenditures that is needed to define one as being poor.

Speaker 6 (13:36): And in case of India, the definition adopted by the Planning Commission in the mid-60s was rupees 20 per person per year in 1960-61 prices.

Speaker 2 (13:52): And in the U.S. was that income level which generated at least 33% of your food consumption.

Speaker 6 (14:02): If your food consumption was less than 33% of income, you were defined as poor.

Speaker 2 (14:08): So this set the stage for the measurement of poverty.

Speaker 6 (14:14): However, and you’re dealing with economists and you’re dealing with people wanting to establish their intellectual capabilities and credibilities, etc.

Speaker 5 (14:26): that two leading scholars at the World Bank came out with a report with a book called Malnutrition and Poverty. Now, malnutrition is somewhat different than lack of food consumption, though it’s related very strongly.

Speaker 6 (14:45): But they, like other scholars at the time, were interested in moving away from an income definition of poverty to a more absolute measure of poverty, such that individuals across the world could be compared as to who was poor and who was not.

Speaker 2 (15:07): So they came up with a definition of poverty, which meant that you went ahead and measured caloric consumptions, how many calories you were consuming. And the FAO was very much in the act. The whole world was in the act. And they adopted a caloric definition of poverty. And in 1979, India moved to a caloric definition of poverty. So many calories means you’re poor. I was asked in my second year at the World Bank to work on the World Development Report of 1980,

Speaker 5 (15:54): and which was to be on human welfare. And at that time, the central concern, at least for me, was identified to be as to how do you measure absolute poverty?

Speaker 2 (16:10): What are the numbers of absolute poverty around the world? And I was a keen enthusiast, a keen believer in the holy grail of malnutrition and poverty, i.e. measurement of calories.

Speaker 5 (16:26): So I thought this was the absolute measure and you can’t get better than this.

Speaker 2 (16:32): There’s no prices involved. Nothing is just how many calories you’re pursuing. As it happened at that time, the Haines, the nutrition survey was done in the U.S. And this nutrition survey was very, very careful, perhaps, and as the most careful of the nutrition surveys done then or since. Because when I talked to the surveyors who were involved in conducting the survey, they told me that, for example, hamburger, when it is cooked, loses some calories in the oil. And they said they accounted for the calories that remained in the hamburger in order to determine. OK, so here we have a systematic attempt, a very vigorous attempt to measure calorie consumption. And when I looked at the Hanes data, what did I find? And here let me go to that U.S. men, 25 to 34 years, had their caloric consumption was lower. 67% of the male population had calorie consumption lower than that recommended by FAL.

Speaker 5 (18:07): And FAO was the arbiter or the agency, international agency, which defined poverty or caloric consumption at that time.

Speaker 2 (18:18): And for U.S. women, as the page shows, 80 percent lower. So what it means is that if you win by caloric consumption, you had 80 percent of women were poor and 67 percent of men were poor. In other words, absolute poverty in the U.S. was 75% poor in the 1970s, mid-1970s. I mentioned earlier that they had an income poverty line, and that was showing 18% poor. So I wrote this report and I concluded that the Caleric report basis of poverty was to be not to be followed. And I tell you about the illiberal nature.

Speaker 6 (19:11): I mean, being liberal and fighting for liberal values is a centuries old phenomenon. But the World Bank or the World Bank administrators who are in charge of the working paper series refused to publish my paper, the World Bank itself paper, as a background paper, unofficially, just as a working paper, and it was categorically rejected.

Speaker 2 (19:41): That was my first encounter with, official encounter with liberals or lack of liberals. And it’s not quite changed because what we have is that 45 years later, history was to repeat itself.

Speaker 4 (20:02): This time, it was when I was an ED at the IMF.

Speaker 5 (20:08): I joined IMF as an ED in November of 2019.

Speaker 2 (20:15): And in 2020, as you know, we had COVID. And the world back, the IMF was very interested, like all of us, in terms of the what can be done and what should be done in terms of combating COVID. At that time in October, the authoritative IMFWEO came out with the conclusion that lockdowns were very effective in combating COVID.

Speaker 6 (20:53): This is November of 2020, when I don’t think even the U.S. had reached even a million COVID illnesses.

Speaker 2 (21:08): And so the IMF had two conclusions. Lockdowns are very good. Stricter lockdowns are even better. And early lockdowns are even better than later lockdowns.

Speaker (21:22): Okay.

Speaker 2 (21:23): Well, we in India know about early lockdowns.

Speaker 6 (21:29): And as we all know, that India was one of the first countries to enter into a lockdown. And incidentally, the first country in the world to get out of a lockdown in the space of three months.

Speaker 2 (21:43): So by June, end of June, we had dispensed with a national lockdown and was left to the states to implement whatever they wish to do.

Speaker 6 (21:53): So my analysis, I did a report in November of 2020 after the IMF-WEO report, and I concluded on the basis of extensive, from my vantage point, very, very extensive analysis of lockdowns. were they effective or not effective in reducing the incidence of COVID? And the answer was an overwhelming no.

Speaker 2 (22:27): The title of the paper was COVID versus lockdowns, COVID wins. So I presented this, I was at the fund as an ED,

Speaker 5 (22:41): and I asked for a seminar to be held on this since the IMF itself had been doing a lot of seminars and the WEO.

Speaker 6 (22:52): And I asked that, look, I’d like to present the findings, get the viewpoint so we can all learn from our respective analyses.

Speaker 2 (23:02): It was summarily rejected. Indeed, I was told, don’t call us, we’ll call you if we need to have a seminar. So that’s your second episode of Liberalist. So then I said, OK, let me send my paper to one of the specialized COVID journals. And the COVID Journal, in a four-line referee report, stated that, look, my analysis was all wrong, or the data was all wrong, very familiar.

Speaker 6 (23:40): And that in particular, it was wrong because it showed that Sweden had about the same amount of excess debts as Denmark. Right next door, Sweden had the same amount. My analysis in November of 2020 showed that Sweden had the same amount of excess deaths as Denmark.

Speaker 2 (24:06): And that this was claimed by the referee to be nonsensical. And I think he may have even used a harsher word than nonsensical. What I present over here is a Lancet study published in, I think, May of 2022.

Speaker 6 (24:28): And what Lancet and Lancet, mind you, is one of those that when facts change, they change their mind because they were one of the original journals dedicated to showing that lockdowns were working.

Speaker 2 (24:43): and that the world had adopted a correct policy of combating COVID. So what I present here, so a measure, as you all know, of whether lockdown succeeded or not, was excess deaths.

Speaker 5 (25:03): And Sweden, just to remind, was one of the very few countries in the world that refused to have a lockdown.

Speaker 2 (25:10): Okay. And so what this shows is at the end of the COVID period, the world had 120 deaths, deaths per 100,000 excess of what would have been expected given normal quote unquote

Speaker 4 (25:28): circumstances. The lowest important country to have excess deaths, the lowest amount of

Speaker 2 (25:37): excess deaths were registered by SPREIT. Notice the number 91.2. Notice also the number for Denmark 94.1. So in retrospect not only my analysis was exceedingly prescient or accurate even in the

Speaker 6 (25:59): comparison of all the countries chosen by looking at the data it’s all available in the paper which the IMF refused to even have a seminar on, let alone publish it, that Denmark had 94.1.

Speaker 2 (26:15): Very, very close and much lower than the rest of the world. Now, one other incident about liberalness or lack of liberalness at the fund was that I published another paper, this time in a newspaper,

Speaker 5 (26:34): on, you know, super spreader events.

Speaker 6 (26:38): And remember, there was this big discussion about outdoor rallies

Speaker 2 (26:43): causing the spread of COVID, election rallies, the spread of COVID.

Speaker 4 (26:50): And if you will, the conclusion that we reached,

Speaker 6 (26:54): Karen Basin and I, my co-author, was that the election rallies did not contribute in any manner whatsoever to a higher COVID rate because we identified if there were certain areas which were having elections, certain states which were not having elections, and that was the analysis.

Speaker 2 (27:15): The important fact, a newspaper article, and I get called in by senior manager at the IMF to say, please, this is not on.

Speaker 4 (27:29): This is not correct. Just like the COVID expert on excess tax in Sweden, that this is clearly wrong. And that’s how you identify whether somebody is liberal or not.

Speaker 2 (27:43): And you cannot really publish this without first funneling it through senior management to look at any articles you write. My answer to that politely was thank you, but no thank you. I will continue to try and publish my research, obviously outside of the IMF, if I get the chance. And thank you, but no thank you. So those are the two stories, what, 50 years apart with almost identical behavior, illiberal behavior by institutions that were congested with so-called liberal intellectuals, liberal analysts behaving, in my view, in a most illiberal manner. Okay, now let’s move a little bit to India. And this was also India, but now the economics in India, economic data in India, and which has been subject to a lot of narrative challenges coming up. One such narrative is that Bangladesh is richer than India in per capita dollar terms. Okay.

Speaker 7 (29:16): So it’s not in PPP terms, but in nominal dollar terms. Now, what do you need to establish, and population is known, so nobody is debating the size of the population, and how do you establish that a country has higher per capita income than another?

Speaker 2 (29:36): You take nominal income and you divide it by the exchange rate.

Speaker 6 (29:42): Now, the exchange rate is given to you, determined by market forces or whatever, by interventions or any combination of the above.

Speaker 5 (29:49): So there’s no controversy on the exchange rate, the denominator, but there is controversy, as I will show, that there is controversy on the numerator.

Speaker 2 (30:00): Because what happens in developing countries go through the visions in their national accounts and the division in the national accounts updates the GDP in nominal rupees. So for the same year, you can, the update will give you a different level of nominal rupees. Let’s look at, so I decided to look at four states, all in our neighbors, Bangladesh, India, Pakistan, and Sri Lanka.

Speaker 4 (30:41): And then national accounts since 1960, 61 or 1975, 76, wherever the case might be, where the first national accounts estimate was there.

Speaker 2 (30:56): I didn’t fill in for Pakistan and Sri Lanka, but it’s either 1960 or 1970. So and then established how much was the upgrading in the nominal income. And therefore, Kedrus Paribus, all other things being equal, given the exchange rate, the upgrading in per capita dollar income. India has only an 18% change from 1960.

Speaker 6 (31:31): So therefore, what we measured in 2011-12 as our nominal income was only 18% higher than what we would have thought it would be if you went by the 1960 and then 1980-81. and then you had 99 of the several base years that came along.

Speaker 2 (31:55): So only 18 percent. Sri Lanka was 37 percent. Pakistan, 51 percent. And Bangladesh, 79 percent. In other words, Bangladesh’s per capita in dollar terms has been upgraded by 79% over the last 25, 30, 35 years. You know, this analysis needs to be done for other countries,

Speaker 5 (32:27): but I would hasten to add that it will be very, very difficult

Speaker 4 (32:32): to find another country with as large an upgrading.

Speaker 7 (32:38): The upgrading should be for developing countries about 5, 10, 15%, but something like 79% is unheard of.

Speaker 2 (32:47): But I’ve only done the analysis for these four countries. And what I want to emphasize through this is how you create a narrative based on very imperfect data, and you don’t bother to try and see how accurate the data is. Okay. Now, and it’s all to whether it is politically inspired or not, ideologically inspired or not, I don’t know. My purpose here is to just to present the data as is. Now, so Bangladesh is not richer than India. What about that the Indian GDP growth rate is much lower than that stated by national accounts.

Speaker 6 (33:35): And as you recall, this has been much in the news of the last decade. A prominent scholar, an expert on the Indian economy, came out with the observation that rather than six and a half percent, that India’s GDP growth was likely to be closer to three and a half percent.

Speaker 2 (33:57): I repeated that exercise for about 60 countries.

Speaker 6 (34:01): It’s very easy to do that because you use electricity consumption and some other variables, and all of them are available for 60 countries. Some develop, some developing, and publish those research results.

Speaker 2 (34:17): And it turns out that that very same methodology, which showed that GDP growth in India was 3% rather than 6.5%, that the country that had overstated its growth the most was Germany.

Speaker 6 (34:35): So, again, I think the emphasis, my emphasis as a liberal, I consider myself a card-carrying liberal, again, of the 19th century, not much later than that, is to look at the evidence and then decide and look at the facts.

Speaker 2 (34:57): And if they change, then decide.

Speaker 6 (34:59): Another intimation or another conclusion reached by many scholars now is that, look, you know, India wants to grow at a six and a half, seven, seven and a half percent GDP growth in order to reach developed country status by 2047.

Speaker 4 (35:28): an ambitious goal articulated by our Prime Minister, Mr. Modi. And the attempt here, the narrative here, if I may say so,

Speaker 5 (35:38): is to show that really the data and what is happening cannot

Speaker 2 (35:44): in any way substantiate that that’s a possibility. Now, one of the major factors for growth, as we all recognize, is investment. and, you know, is the number one factor contributing to growth and its acceleration. Look at the investment rates, stupid. So it can be the refrain. When you look at the investment rate, you find out, and I’ve got the nominal savings, and the second line is nominal investment to GDP,

Speaker 5 (36:22): And you find the nominal investment to GDP in the latest quarter, April to June, was only 29.9 percent.

Speaker 6 (36:32): And clearly much lower than what was experienced in 2004 onwards during UPA1 and UPA2. And therefore, there’s just no possibility that we can achieve a respectable growth rate to achieve developed country status, let alone to compare ourselves with the golden years of 2004 to 2013.

Speaker 2 (37:02): Well, you know, one stark reality around the world, actually, is that the price of investment goods has risen by less than the price of overall GDP. When you take nominal investment to nominal GDP, you are taking a higher price level for the same nominal in order to arrive at what the real investment is.

Speaker 5 (37:33): What matters for growth is not nominal investment, as argued by leading scholars in India and leading policymakers in India.

Speaker 2 (37:41): What matters is real investment. And if you look at real investment to GDP, that the average between 2004 and 13 was 35 percent. If you look at the 2014 to 2022, the average is 33%, almost identical.

Speaker 6 (38:03): And if you look at 2023 April to June, the second quarter growth, which has, or the first quarter, fiscal first quarter growth, it is 35.5%. And very close, about 37.5% is the maximum achieved in the Halcyon days of 2004, Halcyon GDP days of 2004 to 2013. So in other words, there is zilch evidence that we are investing too little and therefore the prospects of us achieving on this basis developed country status. The argument is that we can’t. If you look at the data, then the argument and the result comes out that it is look, if you’re experiencing the highest investment growth ever in your history or very close to it, then there’s no reason to think that we will not grow at seven, seven, eight percent.

Speaker 2 (39:05): So we have established then that Bangladesh is not richer than India.

Speaker 6 (39:12): And indeed, the PPP data does show that India is considerably richer than Bangladesh. And we have established that, look, the investment rate in India is at a very healthy clip at present.

Speaker 2 (39:28): Then what else is a problem? So now for the narratives, it comes out, okay, we try to attack that the GDP growth was low. We try to attack that the investment rate was low. Ah, look, we have a huge level of unemployment. So in order and then the estimates come out that in order, I’ll go back, say in order for India to take care of so the labor side so we’ve established that the capital side that the narrative is the

Speaker 6 (40:10): capital side is very weak and the narrative is that the labor input side is very weak because

Speaker 2 (40:18): there’s massive unemployment in India. One scholar estimated that over the next 10 years and it’s very explicit over the next 10 years India will need 200 million jobs in order to accommodate

Speaker 5 (40:35): the huge unemployment problem that we have.

Speaker 2 (40:40): Another scholar estimates, equally distinguished, perhaps more distinguished, estimates that no, it’s not 200 million, but we’ll need, certainly need 100 million jobs

Speaker 6 (40:52): over the next 10 years. That is 10 million jobs a year or 20 million jobs a year.

Speaker 2 (40:59): as it happens that, you know, something accepted worldwide, used by all researchers, including,

Speaker 7 (41:07): I would hope, by these people making these estimates, has a, you know, your population

Speaker 6 (41:14): profile. The kids have been born who will enter into the labor force over the next 10 years. There are at least five years at the time, in the beginning now, for them to enter. So we know

Speaker 2 (41:28): pretty accurately the data. And what happens when you look at this UN population division data used, as they said, authoritatively by almost everybody, what you get is that there will only be 100 million people in the overall population in the age group of 50 to 64. So those who could be eligible for work are only 100 million over the next 10 years. The average labor force participation rate, men and women both together, is about 51, 52 percent. What we get then, the data very strongly shows that in order for India, that basically 5 million jobs are needed,

Speaker 6 (42:24): If more jobs are created over the next 10 years, the unemployment rate will fall, not rise to the skies, and is falling as the latest data shows.

Speaker 2 (42:38): It’s now, I think, 4% rather than 6.5%, 7% about four or five years ago. So that’s the story. That’s the data. And that’s, I emphasize, the narrative. One other. And, you know, if all the narratives, perhaps the one that bothers me the most that it’s even got to this stage is what is the labor force participation rate of women? And, you know, I must say, I must confess that in my entire career as an economist at think tanks, at leading institutions, etc.,

Speaker 4 (43:29): I’ve never, ever encountered anything even close to improbable, even close to the junk narrative on female labor force participation rate in India.

Speaker 2 (43:46): So let’s look at, again, what the data shows.

Speaker 6 (43:50): And the data here shows that in this thing is hiding. How do I get this here? Yeah.

Speaker 2 (43:57): So the data shows that in 2022, the women in labor force ages 25 to 64, by the usual status, 46% of them, which is one of the highest levels of labor force participation observed in India. I report the 1993 one, which was 48.1, 2004, 48.7.

Speaker 5 (44:26): We are very close to the highest ever. And so what is the problem? What is the data that shows the labor force participation rate in India is abysmally low? Well, there is a data. The CMIE, which all of us who worked in stock markets, et cetera, a very reputable data dissemination and data analysis firm on stock markets.

Speaker 2 (44:54): Well, in 2014, coincidentally, the same year that the PM Modi was elected

Speaker 4 (45:02): and there was change in government from the Congress, from the UPA to the NDA,

Speaker 2 (45:08): that that very same year, the CMIE decided that they were going to enter into the very difficult business of estimating labor force participation, estimating consumption, and therefore estimating poverty.

Speaker 5 (45:27): What do their data show?

Speaker 2 (45:30): Well, their data shows, and they’ve been doing it continuously since 2014-15, is that female labor force participation rate in India is somewhere around 8 to 10%.

Speaker 5 (45:45): Please listen carefully.

Speaker 2 (45:47): 8 to 10% is what they are saying is the female labor force participation rate in India today. The lowest ever observed in the world and lower than even war-torn Yemen. Now, how has this data gained this kind of following? It’s clearly somebody has to sit down and look at the data and say, you know, do a smell test.

Speaker 5 (46:22): Does it look like 8 to 10 percent? Is the female labor force participation rate in India? It doesn’t. So what is it that makes a lot of intellectuals, a lot of academics,

Speaker 2 (46:39): conform to rejecting the PLFS data, which is, you know, NSS data prior to 2011, now called the PLFS. So when I ask them as to why you don’t believe these data, they don’t have an answer. So either they can say, listen, we think that the data is wrong for the following reasons. Nothing, nothing. They just assert in what I would say a very illiberal manner that the labor force participation rate is 8, 10 percent because the CMIE says so.

Speaker 4 (47:18): that it is 8 to 10 percent. And when you ask them as to how accurate that is,

Speaker 6 (47:24): again, there is no response. I would say one of the more illiberal conclusions

Speaker 2 (47:33): that I have seen. I want to go to the next slide, and this is the final slide. And this has to do with the gender wage gap.

Speaker 6 (47:44): Remember, the previous slide had to do with the labor force participation gap and Claudia Golden got the Nobel Prize this year

Speaker 7 (47:54): for identifying these gaps and testing them and establishing their pattern form history

Speaker 6 (48:01): in history and especially US history. But it seems that the U-shaped curve on labor force

Speaker 7 (48:08): participation and the wage gap, gender wage gap, women earn less than men, all other things being

Speaker 2 (48:14): equal is a phenomena around the world. So I decided let us examine that phenomena in India and is there discrimination. So if there is a gender wage gap then it means that women are

Speaker 6 (48:31): being discriminated against and clearly that is not very conducive to growth or welfare or any other. It’s unfair and you lose output when there is such widespread discrimination.

Speaker 2 (48:51): So what does the data show? And I take India and the USA at the same point in time, which is 2022. So if we look at the wage gap for all workers, all wage workers in India, the wage gap is 30%. percent and in USA the wage gap is 17 percent. So both large India perhaps larger than US but really

Speaker 4 (49:17): this wage gap that is measured is the average wage gap does not control for education experience

Speaker 6 (49:25): etc which in the case of US is very much uh controlled for in their analysis. In India it is

Speaker 2 (49:33): not this is just the raw figure as to what is the wage gap between men and women in India. Now since education we all realize that education is a is a major determinant of your wages that I look at then college educated women and college educated men and I look at two separate components of college educated women. The first is unmarried and single or widowed or separated. So that’s the, so in other words, those who are single and perhaps can participate more in the labor force, they don’t have the responsibilities of children, etc, whatever. And what you find that the wage gap, college educated women in India is as low as 3%. The US by comparison, 6%. If you look at married women in India, it is 16%. And in the US is 20%. So when I presented these findings, as well as in a Times of India article, I was questioned. And, you know, that’s the natural order of things.

Speaker 6 (50:59): You come up with any result and there’ll be somebody questioning you. And these are senior people questioning these results or these findings. And their thing was that, look, and as I said, on labor force participation rate, there’s no defense or no argument. On this one, there’s a slightly more sophisticated argument as to why these data are wrong and misleading.

Speaker 5 (51:27): And that is that, look, we are not controlling for natural ability of the woman and the man.

Speaker 2 (51:36): And that the natural ability of women who enter the job market is higher than the natural ability of men.

Speaker 6 (51:45): And therefore, you observe only a 3% of zero difference. If you really had control for ability, you would find the wage gap to be much higher.

Speaker 7 (52:01): So when I tried to address this discussion, I said, you know, really, economists have tried, and you’re an economist.

Speaker 5 (52:11): economists have tried to measure ability. It’s not the easiest of tasks and is composed of a lot of

Speaker 2 (52:21): measurement error, which this person did not deny that there was a lot of measurement error. And that but still asserted that look, you are measuring it wrong. This cannot be the case that the wage gap is only. So in conclusion, what on this liberal nature, so as I said, nobody bothers of the intellectuals who believe in a alternative virtual reality or alternative narrative do not come up with the evidence and therefore violate the essential nature

Speaker 5 (53:09): of being a liberal where you look at the facts and you go with the facts if you don’t you say

Speaker 6 (53:19): why the facts are wrong you cannot assert okay you’re not measuring ability so they are wrong well which survey is measuring ability correctly so you have to be able to come up with an alternative interpretation rather than with the very illiberal conclusion of don’t confuse me with

Speaker 2 (53:39): facts my mind is made up if you are going to be a Hayekian Shnoyan liberal you change your mind when the facts change stupid thank you very much Thank you, Dr. Thank you, Professor Balla. Thank you very much for that interesting talk. You raised several points and we now have some questions from the audience. Before we get to the question, I’ll use my privilege as the host and the moderator to make one small point. What fascinated me most about Professor Chinoy is that going from the mainstream view of

Speaker 3 (54:29): looking the prosperity of a society or a country in aggregate terms he was probably the only only

Speaker 2 (54:37): economist I know who during the planning era first few at least second and third five-year plan looked at the disaggregated numbers not that aggregate GDP numbers or per capita GDP numbers

Speaker 3 (54:48): but looked at like you also pointed out the consumption number so he was looking at the amount of cereal grain cereal grains which were in terms of brands and amount of cotton cloths for example so if you have to you know make an extension of roti copper and macacons he was looking into roti cupra what is the amount of availability per person you know as the population is growing and what lot of economists have said the second and third five-year plan were a success I think professor Shinoy is unique in pointing out by looking at these disaggregated numbers that look the number both the amount of per capita food grain availability and the amount of cotton and cloth availability those second and third fiber plans it hardly grew in terms of per capita numbers and therefore those those second and third third five year plans may have given us higher GDP aggregate numbers but did not not did not do much for the lot of common people so this is one kind of story about second and third fiber plan which get lost that who is the plan for and and professional I always made the case that look we should be looking at the if the growth is happening for the people or

Speaker 2 (56:03): not and so that is a unique lesson so I just wanted to make that point so we’ll

Speaker 1 (56:10): move to the questions there are many questions from anonymous attendees maybe don’t want to identify but one that comes immediately and it it relates to the the many

Speaker 3 (56:25): many data stories that you have talked about comes from sharia and many people have raised objections to in recent times about the data so his question is considering political incentives can the government ever be considered a reliable source of data unless the same can be a reliable uh

Speaker 2 (56:42): reliably cross-verified. Can the government ever obtain a reliable source of data?

Speaker 1 (56:50): Considering political incentives, political economy, etc. Can the government ever be considered?

Speaker 2 (56:58): So what incentives are there at play for government officials themselves, the politicians and

Speaker 6 (57:03): bit of heads. Yeah, no, very important. Look, that’s what, you know, I have had two, if you

Speaker 2 (57:12): will, dictums. First is have data, we’ll analyze. Second, the mark of a good economist is what she does with bad data, not what she does with good data. So my point being that even bad data can yield interesting insights. Now to the larger question of can the political compulsions

Speaker 6 (57:41): may lead to the data not being very reliable.

Speaker 2 (57:45): And this is being recognized around the world that basically by other countries as well.

Speaker 6 (57:53): And the U.S. has a policy now of looking at administrative data rather than survey data. They look at both, but they use administrative data, local data, etc., as a cross-check, unemployment exchanges, and so on and so forth. Those people who file for unemployment, they have separate firm-level surveys, and as you know, they have separate

Speaker 2 (58:19): individual surveys. So I think around the world, there has been increasing disappointment with the accuracy of survey data. One recent example is that the England has stopped what I read now, how true that is and when this will be put into effect, that the UK will no longer do employment surveys because they find that Generation Z is really too preoccupied with a mobile and don’t have time. Remember, surveys take a lot of time, and they don’t really have that much time to bother.

Speaker 4 (59:08): And this is the other thing, non-response in surveys has gone up to amazing record highs around the world.

Speaker 6 (59:17): People are just not willing to respond to surveys and waste their time. So either you give them tons of money or to participate in the survey,

Speaker 5 (59:28): and most of the time you don’t give them any money.

Speaker 7 (59:32): You just say, thank you very much. You have helped us do the survey. So I really think this is a mega concern as to the accuracy of the surveys. And I think increasingly the world, including us, will move to more administrative data, like national accounts is what I call administrative data.

Speaker 5 (59:58): How many cars were sold and so on and so forth, rather than go and ask person.

Speaker 2 (01:00:04): You know, the NSS survey on consumption of cars said that in 2011-12, I think the average per car expenditure was something like 100 rupees or 150 rupees a month.

Speaker 6 (01:00:21): I mean, it just is mind boggling as to how inaccurate those data are.

Speaker 5 (01:00:27): And I said it’s not in particular with India. It’s around the world. So I appreciate that question. Very true. And I think we will see less and less survey data.

Speaker 6 (01:00:40): And, you know, what we have also are survey data are now because of the political economy, because of the polarization around the world, not just in India, because of the presence of social media that you go for clickbait type of conclusions and don’t really worry about the accuracy of the data.

Speaker 4 (01:01:06): Don’t let the data go through tests in order to establish whether they accurate. No smell tests are ever done.

Speaker 6 (01:01:15): Matter of fact, the nastier the smell, you approve of the data. That’s the unfortunate reality of most data producers and most data users today.

Speaker 2 (01:01:26): That the worse the smell, the worse the accuracy, the easier the acceptance. Because it’s all guided by what you used the phrase, the political economy. That is what is determining what is happening. Thank you for that.

Speaker 3 (01:01:46): One quick addendum on the same point, and I think you are in a unique position to illuminate on that, is does government of India use such survey data as part of their own policymaking when you were part of Economic Advisory Council to the Prime Minister? because I know RBI uses, if I’m not wrong, survey data in terms of inflation. For example, what kind of price rise the households are seeing.

Speaker 2 (01:02:10): So does the government of India is looking at those survey data to what extent or not at all? No, I don’t think it’s the case, not at all. I think the government of India pays a lot of attention

Speaker 6 (01:02:20): and has consistently paid a lot of attention to the data and the accuracy of the data. I must say that, you know, I was a member of the first National Statistical Commission back 2006 to 2009 under Tendulkar.

Speaker 2 (01:02:38): And there were two things I argued very, very strenuously for.

Speaker 6 (01:02:44): One, to have an expanded annual employment, unemployment data, because we were moving towards from a developing economy to a low middle income, middle income economy.

Speaker 7 (01:03:00): And I’m pleased that the government listened to the advice of the National Civil Commission and established the PLFS survey, which is being done on a quarterly basis for urban areas, not even annual, quarterly basis, and annual basis for the rural.

Speaker 6 (01:03:21): And that was the data I used. And I think their unemployment, employment is easier to measure than most other things. So I think we should move. The other thing, the other data that I argued very strongly for established for conducting was an income distribution survey.

Speaker 7 (01:03:44): Because, you know, politically and otherwise, for policy purposes, what your income distribution is, is very, very important.

Speaker 4 (01:03:52): Unfortunately, if you will, many before me and many after me and I myself have lost that battle to date.

Speaker 2 (01:04:01): I do hope that sometime in the very near future, the government will engage in conducting an income distribution survey in India.

Speaker 6 (01:04:14): Many countries do it. We are one of the few large countries, small countries that doesn’t do an income distribution survey.

Speaker 7 (01:04:22): And when I went to the National NSS in Calcutta, headquartered in Calcutta, again, no answers. You know, as I was saying, my mind is made up. I mean, whether it’s by researchers or by survey authorities, you should at least have a reason why you don’t want to do it when you’re doing consumption.

Speaker 6 (01:04:42): Now, we all realize that income is more difficult to measure than consumption.

Speaker 2 (01:04:48): But, you know, another incident of our collection of data that I wanted to point out, that the NSS surveys, consumption surveys, since 1983, first of all, there’s just too many questions. Okay. One of the many questions is how much salt did you consume? Not how much was the expenditure on spices. How much salt? And this is an inheritance from the salt march. I mean, you know, what do you do? So you’re wasting time. You’re wasting information. Much rather have limited set of questions rather than worry about salt because that was important 100 years ago. So, you know, I think the government and the policymakers as well as the survey authorities,

Speaker 6 (01:05:38): MOSP, NSS, you know, we have to get real in terms of gathering data, interpreting data,

Speaker 2 (01:05:48): and improving the accuracy of the data collected. I will take up the first question that was put out in the chat. And the question is, what is one policy of the current government that Dr. Shinoy would have disagreed with

Speaker 1 (01:06:03): in the opinion of Dr. Bhalla? So in your opinion, what is the policy?

Speaker 2 (01:06:06): Very good question. Look, it’s very clear what Dr. Shenoy believed in. And as I said, in the case of Sri Lanka and other, he was heavily against input substitution policies.

Speaker 6 (01:06:25): He was heavily pro-market, pro-modern economy. He was a visionary, a real visionary. And he saw where India was going, other countries were going, and he was in a hurry to get there. And I, for one, I don’t think I’ve ever read a single article of his

Speaker 2 (01:06:46): that I disagreed with, either for the timing at the time or for the forecast. So I think there are several policies he would agree with and several policies he would disagree with. So the import substitution, the increased protection. Now, mind you, times have changed. One of the countries with the largest increase in protection now is the U.S. So I don’t know how to incorporate, how Mr. Chenoyer would have incorporated the fact that the world dynamic has changed.

Speaker 6 (01:07:22): on the import substitution policy. And I myself have written on it both in the 80s and 90s and 2000s, as well as I had the privilege of being head of the HLAG committee on high-level advisory committee on trade. So, you know, it’s very difficult to find an economist who’s against import substitution.

Speaker 4 (01:07:49): The other thing I think what he would, it was for import substitution, sorry. The other thing that Mr. Shanoi would strenuously argue for is the, you know, nationalized banks and nationalized public sector.

Speaker 6 (01:08:07): and you know it’s only now we have at least done air India but the banks are still too many or too

Speaker 5 (01:08:18): many state sector banks and you know you have to have an argument how in 2022-23 or 2010 or 2000

Speaker 7 (01:08:27): you can have the other area that he would be very much against the government policy and to this government’s credit they try to change it are farm laws you know and the massive pds system

Speaker 6 (01:08:44): which is highly highly distortionary and you saw you know I must commend the government for having tried hard uh land consolidation was another thing that he would want to happen and therefore

Speaker 2 (01:09:00): the fact it hasn’t happened he would disagree with um so i think you know let let my people be

Speaker 5 (01:09:09): let the market be and what the important one one aspect that he will really agree with

Speaker 2 (01:09:15): is I think this government has got a very commendable record on redistribution.

Speaker 6 (01:09:23): You know, the food subsidies, the manner of food subsidies, he would go for cash transfers, which is what is happening today. So, you know, the in-kind transfers of COVID, well, you know, at that time,

Speaker 5 (01:09:39): you couldn’t really give cash and we didn’t have the fintech advanced as it is today. So the entire advancement by this government of providing, you know, bank accounts to every individual and having them, you know, I’m really amazed around the world.

Speaker 2 (01:09:59): And the world has recognized, including at the IMF everywhere, as to the immense gains in terms of inclusive growth that your UPI financial technologies in India have been

Speaker 4 (01:10:15): able to achieve.

Speaker 2 (01:10:16): It’s one of the most progressive policies ever done anywhere in the world. So he’ll have a lot to criticize, but I think much more so to appreciate and agree with than when he was writing in the 70s and 80s.

Speaker 1 (01:10:35): On a related note, Giridhar Prabhu asked this question. What do you recommend today’s students look at Shinoa’s work to have rapid growth at all

Speaker 2 (01:10:44): low income nations? How do you kind of get the growth going? So what would I say to students to have economic growth? And then I didn’t get the second part.

Speaker 1 (01:10:55): So what do you recommend today’s students look at Shunai’s work to have rapid economic growth at all low-income nations? How do you leverage? I suppose what Girda wants to ask is what policies can get the economic growth going, especially for low-income countries?

Speaker 2 (01:11:11): I don’t, you know, what he was saying then, and he was talking, whether Sri Lanka or India or any other country that was willing to listen, he was talking for low-income countries.

Speaker 5 (01:11:25): And I don’t think the reality has changed for him to change his recommendations.

Speaker 6 (01:11:31): You know, as he age old, we do have now flexible exchange rates.

Speaker 7 (01:11:35): At that time, that was a major battle, having a fixed exchange rate.

Speaker 2 (01:11:41): At his time, the macro concerns, major battle wars on inflation, which has, you know, we have come a long way on terms of controlling inflation.

Speaker 6 (01:11:57): Fiscal deficits, I’m not so sure. You know, you do need, you know,

Speaker 7 (01:12:02): I’ll be very interested to find out as to what he said then as to public investment. We have said that ownership of public firms should not be in the hands of the government,

Speaker 6 (01:12:20): but they are public goods like infrastructure investment that cannot be done by the market. And I think he would approve of the large investment program that the government has undertaken, especially over the last five, six years. You know, when I went to graduate school in 1970, the first thing that was told to me,

Speaker 2 (01:12:46): and as I said, I came from an engineering background. I didn’t know anything about economics. But the first lesson I learned in the experience of other countries and by economists was the biggest bang for the buck for growth was infrastructure investment.

Speaker 6 (01:13:03): At that time, infrastructure was roads. OK, and then electricity. Now we’ve achieved a lot of road and dams, water supply. We’ve even got sanitation, which is another huge public gig that Indian governments had ignored until 2015 when the Swachhbhahat movement took off in India. Which is an important infrastructure.

Speaker 2 (01:13:36): You can’t rely on the market to give you that. So I think, you know, it is, if you will, I’m trying to think of words to describe, let me put it this way. What he would say is that whatever the policies that the government undertakes, infrastructure, etc., should be, should have a market discipline to them. And I think in infrastructure, you know, that also means a minimum of corruption.

Speaker 7 (01:14:12): I don’t think you’ll ever get to the point where there’s zero corruption anywhere in the world.

Speaker 2 (01:14:17): So that’s not what bothers me. But you have to minimize corruption. And I do think, you know, we are somewhat getting there. But, you know, it’s a political economy game.

Speaker 5 (01:14:32): and what I would like to find out at that time it was too early, now it’s very onerous what he said or

Speaker 2 (01:14:44): if he did say anything on the fact that we are in election mode every minute of every year and I think that is

Speaker 7 (01:14:56): the only other country which is in bad election mode and which has been severely criticized, I don’t know, is the US. You know, Europe, rest of

Speaker 2 (01:15:06): the world, most of the civilized world is not in election mode all the time. And we are in election mode all the time, as is the US. I’ll try and locate what Professor Shinoy would have thought

Speaker 3 (01:15:20): about public ownership and in terms of public investment and share if I can find that. Next question is from Professor Subodh Shinoi. He asked what is the best definition of a developed country status and based on estimated GDP growth rates is it possible for India to reach developed country

Speaker 2 (01:15:38): status by 2047? Okay very I could have paid him to ask that question. It’s very important and I I actually was asked to write a report for a seminar or conference that state secretary’s conference that the government of India organized back in, I think, early January. I think it’s a very important sign. This obviously has come about after the Modi’s challenge and ambition and vision of India being developed country by 2047. So I took to heart as to how to do this. Now, let me. There’s only one country in the world that in our lifetimes has moved former developed country to developed country and universally considered to be a developed country. and that’s Korea. There’s no other example. And Korea in 1996 was considered by the OECD. They were admitted into the big boys club as a developed country. And a lot of the indicators at that time suggested that they were developed countries. Now, so then I looked at what is conventionally known as developed country which is Western Europe, Australia, New Zealand etc. Everybody knows which those countries are and there’s a large amount of variation in their

Speaker 6 (01:17:32): per capita income whether measured in PPP or in dollar whichever way. So and one tendency amongst maybe Indians is we take the US which is one of the richest countries in the world to say that level we cannot achieve of per capita income so how can we be a developed country that’s

Speaker 5 (01:17:55): completely erroneous if you look at what career was in real terms and ppp dollar terms real per

Speaker 2 (01:18:06): capita terms that i estimated that even with a four and a half percent per capita income growth between now and 2047 that we will reach developed country status by the early 2040s. So we can obviously raise, but this is something, you know, will be researched more.

Speaker 6 (01:18:34): I myself am doing more research on the subject. This is, I think, from a policy point of view, from an intellectual point of view,

Speaker 2 (01:18:42): from world interest point of view, this is a very important question. And my, you know, I did a, if I can take this time to, did another study, which is related to this, and which has been even more controversial, or more of interest than when we’ll reach developed country status is the how far behind are we China and when will we reach the same income level as China per capita income

Speaker 7 (01:19:22): level and this story has a lot of meaning and you had mentioned you were kind to mention

Speaker 5 (01:19:26): my book, The Second Among Equals, and I discussed in there that India was China with a five to ten year gap. And I documented the history of per capita incomes in China and India being

Speaker 2 (01:19:43): almost identical from 1500 to 1980. Okay, so there’s a lot of meaning attached to two large economies, one democratic, one not democratic, which have a shared history, at least in per capita income levels. And post 1980, you know, China is per capita income level is two and a half times India in PPP terms today. And in dollar terms is four and a half times India. So the question is, you know, when will there be convergence between India and China in terms of per capita income? And this analysis suggests that by if all India has to do is to grow at three to three and a half percent per capita in excess of China. So let me expand

Speaker 5 (01:20:44): on that. If China grows at minus three and a half, we grow at zero, we will converge. If China grows

Speaker 2 (01:20:51): at zero and we grow at three and a half over the next 20 whatever years, we will converge. Okay, so it’s not what you’re not looking for. People often confuse, oh no, no, there’s that per head.

Speaker 5 (01:21:04): Remember, they are that far ahead because of higher per capita growth. They were the same

Speaker 2 (01:21:11): because of the same per capita. So when does it take and it it also converges on reasonable

Speaker 5 (01:21:18): assumptions of excess growth to the 2040s. So I think it’s an interesting convergence of various

Speaker 6 (01:21:30): incidents, realities, that India will be the same per capita income as China in 2047. By 2047,

Speaker 5 (01:21:44): India will be a developed country by most, I think, since I came up with that analysis on Korea, by most reasonable estimates of how to do the exercise.

Speaker 2 (01:21:58): So really look forward to the next 20 years of Indian growth.

Speaker 3 (01:22:04): Fingers crossed. Let’s see. The next question I’ll take up is from Arj Taneja.

Speaker 2 (01:22:10): And the question is, what does one mean by, in quotes, natural ability when entering the job market? And if, then why do women possess it more than men? Why do women have more ability than men? More natural ability. Okay. I don’t think, let me ask, it’s a good question.

Speaker 5 (01:22:31): I don’t think women have more ability than men. And I don’t, certainly don’t think men have more ability than women.

Speaker 2 (01:22:38): So we all have the same. What I will say is because of the nature of society around the world for the last millennium, is that women have had to carry a larger burden of work, both housework and outside work, and therefore they multitask a lot more. So in that sense, if you include multitasking,

Speaker 6 (01:23:09): ability to do multitasking, I am very bad at multitasking. Most of the men I know are very bad at multitasking,

Speaker 7 (01:23:17): And every woman I know is very good at multitasking. So in that sense, I think the women are more able than men.

Speaker 2 (01:23:26): But I wanted to qualify not natural ability, but societal imposed abilities due to the functions assigned unfairly to men and women that they have generated. The other thing I want to say on how you measure natural ability, the very famous article back in 1971 in the American Economic Review, I think by John House, and it’s called, If you are so smart, why aren’t you rich? So that’s I think it’s a mug’s game to try and measure. There are other things that are coming out, learning, you know, abilities and where you are, etc.

Speaker 6 (01:24:13): That I think is more tractable rather than natural ability.

Speaker 2 (01:24:19): As it happens in my PhD thesis, because I panel data, I was able to estimate statistically, not natural ability, but the natural permanent income, if you will.

Speaker 4 (01:24:35): But anyway, that’s as an aside.

Speaker 2 (01:24:37): No, I think, you know, science is progressing. We do have broadly good measures of IQ, etc. But there’s so much variation that I don’t, you know, on that and in terms of what I talked earlier, and on calories again, that P.V. Sukhatme had a very important paper in the 70s, where he said when this caloric norms were the range. Very, very important paper where he said inter-individual variation in means of calories

Speaker 6 (01:25:20): is about 15%, which is quite large to one standard deviation. So it’s just large to encompass almost any. So he was also argued correctly against not using the FAO or the World Bank caloric norms.

Speaker 2 (01:25:38): So net net on ability, you know, I don’t know with artificial intelligence how much need we lab to measure ability. But I’ll take a rain check on that. But the other one, I do think

Speaker 6 (01:25:56): the ability to multitask is an important aspect of what modern day we call ability.

Speaker 2 (01:26:05): You’re more efficient and therefore you are more able.

Speaker 3 (01:26:11): Thanks. We’ll take two more, two last questions. We are coming to a close. Next question comes from Narendraji and his question is, what is the impact on the economy of the sort of rat race for freebies in the country?

Speaker 2 (01:26:27): What is the impact of the economy on? On sort of a culture of freebies, giving freebies to other governments. Yeah, negative. You know, that’s a crossroads we have come to.

Speaker 4 (01:26:46): And I’ve done several papers on leakages in government administrative systems. And that was before freebies. So just when that was difficult to target individuals. So there was a lot of leak rate. And remember Rajiv Gandhi’s famous conclusion in 1985 that only 15% of the money is meant for the poor, actually reach the poor.

Speaker 2 (01:27:19): And my conclusion based on much research is that Rajiv Gandhi was an optimist. So we now have considerably less leakage, but there is a growing tendency for freebies.

Speaker 4 (01:27:41): And I think regardless of who is in power, which party is in power, that this is a tiger we must contain.

Speaker 6 (01:27:55): It can ruin an economy and has ruined many economies, not just one. Look at Argentina, you know, all in the name of the poor. I think freebies are all done in the name of the poor.

Speaker 2 (01:28:14): And, you know, I had an article, I think, must be 20 years ago, which I called I begin in the name of the poor. So we have to get away from that and let’s hope. I think the information set that the government has and the people has and the communication that we can address this leakage and this tendency in a much more efficient manner than we ever did before. But the political compulsions, again, for winning the next election, are huge. That’s another reason why we should move away from having an election every minute. I think the question was qualified by the person who asked the question.

Speaker 3 (01:29:12): It’s about the rat race. So each state or each party trying to outdo the other or outpromise the other. right uh we’ll take the we’ll take the last question and on the scene on the last question i think uh shinoa’s paper and his suggestions to the sri lankan government is could be a useful

Speaker 2 (01:29:26): guide you know which stands the you know test of time okay so uh last question is is there a risk

Speaker 3 (01:29:33): in calling issues of science as in the case of kovid deaths as liberal or illiberal and what is a more effective way to discuss scientific issues so that science is not turned into ideology

Speaker 2 (01:29:45): You know, I can’t, I gave an example, I think, of how I was and others with similar analysis and conclusions were boycotted and considered stupid.

Speaker 4 (01:30:06): I mean, I can’t begin to tell you the kind of discrimination by officialdom, by people who should know better on this, by the vendetta almost, that those who believed in lockdowns in particular, and what causes the disease to transmit itself.

Speaker 2 (01:30:32): You know, prior to this time period, the world never, ever had a lockdown. The closest it came to lockdowns was a quarantine of 40 days or whatever, when smallpox was arranged. And allow me to take this opportunity, you know, in my paper, I discuss this in detail. In 1957-58, October 57 to April 1958, there was a very severe case of flu in the U.S.

Speaker 7 (01:31:12): The Spanish flu was 2018, and this is now 1957-58.

Speaker 2 (01:31:19): And there’s a lot of literature available on it and a lot of discussion. And the CDC, the very same organization that now turned nihilistic in present time, came out with dissemination that, look, we cannot, you know, they did not advocate shutdowns or lockdowns of any form whatsoever.

Speaker 6 (01:31:49): Now, it’s not as if they didn’t have debts. The excess debts between October of 1957 and March of 1958 were higher than the excess debts in the first six months or nine months or 12 months in the U.S. Okay. And as you’ve seen now in the case of Sweden, almost negligible excess deaths. So with no lockdowns. So I think my description of lockdowns analysis, and this is a multi country, you know, and one of the things that lockdowns did and COVID did was there was increased dissemination of data.

Speaker 2 (01:32:39): Some of it not so accurate, but nevertheless, you know, I remember reading articles as to some scientific experiments that when I go to a restaurant, how far my breathing would hit somebody.

Speaker 6 (01:32:54): And I remember the dictum, you know, if you bought vegetables, you should wash them with your hands. And if you’ve got a package, you should put it aside for 24 hours before you picked it up.

Speaker 2 (01:33:09): You know, the only way you can describe what happened was utter madness. And we all subscribe to it, including the leading intellectuals in the world and leading governments in the world. So I think the kind of punishment, and you saw the whole debate on vaccinations versus non-vaccinations.

Speaker 6 (01:33:36): and the anti-vaxxers were really discriminating.

Speaker 2 (01:33:41): And now New York, policemen were fired who refused to get a vaccine

Speaker 5 (01:33:47): and they have now all been reinstated.

Speaker 6 (01:33:50): So, you know, it’s another deep question as to what do we learn from COVID mania and how did it happen and why did it happen? testimonies to in the US Congress where they’re doing the most in terms of public dissemination are very disturbing as to that era. You know, we were lucky in the sense of in three months, we had moved away from lockdowns. And indeed, the policy of targeting, you know, the three Ts was quite effective in terms of and analysis has shown that it was quite effective

Speaker 2 (01:34:36): in terms of reducing. See what people don’t understand or don’t want to understand,

Speaker 6 (01:34:42): nobody argues that there weren’t deaths. Okay, the whole question because it’s a contagious,

Speaker 2 (01:34:51): It was a deadly disease. But the question has to be, what can you do to minimize the deaths?

Speaker 5 (01:34:59): Not that because people died, therefore we must do something and have lockdown. So I think history will document this more and more.

Speaker 6 (01:35:12): And we’d be better prepared.

Speaker 2 (01:35:15): the world will be better prepared when the next uh contagious disease happens hopefully the right lessons will be learned uh we are uh short on time our time is up but if you allow me one final question uh uh professor balak of time okay so this is the final question uh this comes from mansa and she asked on multi-dimensional poverty economists disagree on india’s poverty levels improving. What is the reality? It’s the political economy is stupid. So look who’s disagreeing and who’s not agreeing. But I think behind that there is an important question.

Speaker 5 (01:35:56): And that is, and it goes back to the question of caloric norms to measure poverty versus an

Speaker 2 (01:36:05): absolute measure income measure of poverty. So the question has to be, does this improve our understanding of who’s poor and what can be done to alleviate? So first identification of the poor and what can be done to reduce it, reduce poverty. And I’m afraid my view is that, you know, the multi-dimensional poverty index is very similar to a caloric poverty index.

Speaker 4 (01:36:37): There’s zero value added, indeed there’s negative value added, and using the multi-dimensional poverty index. Let me just give you my example as to what difference it makes.

Speaker 2 (01:36:50): the multidimensional poverty index from 2015 to 2020 shows that 135 million people were brought out of poverty, okay, which is commendable. Now, you know, we were measuring and the World Bank had continued to measure it.

Speaker 5 (01:37:15): Now, I think they might be moving against it. Poverty is like a salt measure, the way we measured it, or consumption, the way we measured it in 1951, when the first survey was done.

Speaker 2 (01:37:28): And the way we did the first survey, measure salt, how much did we spend on salt, but all items were asked on a 30-day recall period.

Speaker 5 (01:37:40): So last month, how much salt did you consume? How much subsidy did you consume?

Speaker 2 (01:37:45): Particularly, how many cauliflowers did you consume? And so on and so forth. And how many bicycles did you buy? How many radios you buy? And later on, how many cars you bought? And what did you spend on the purchase of cars?

Speaker 6 (01:38:00): So everything was in a 30-day recall period.

Speaker 2 (01:38:04): In the mid-90s, and a World Bank-sponsored project, and led by Angus Deaton, Nobel Prize winner, on the basis of several studies that the World Bank itself had conducted, came to the conclusion that really the periodicity of different items of consumption is different and you should measure it to get a more accurate measure of poverty or

Speaker 5 (01:38:32): consumption, you should have perishables like fruits, vegetables, and eggs, and meat on a

Speaker 2 (01:38:42): seven-day basis. Normal goods on a 30-day basis and consumer durables on a 365-day basis, which is

Speaker 5 (01:38:52): very sensible. And indeed the government of India adopted it and in 2009-10, in 2011-12,

Speaker 7 (01:39:03): two independent surveys were done. One by the traditional uniform recall 30-day period measure

Speaker 6 (01:39:10): and the other by this new more defined measure. You’re all trying to measure the same thing,

Speaker 4 (01:39:18): That is the consumption and therefore the poverty level.

Speaker 2 (01:39:21): Well, in 2011-12, the traditional uniform recall period measure of poverty in India was 23%. The correct measure or more correct measure or less incorrect measure was yielded a poverty level of 13%. In other words, the policymakers, as well as the world, as well as our knowledge, 100 million people who should have been considered poor or were considered poor by the uniformed culture were not poor. So, you know, measurement matters. Definition matters. And my argument for all those people who want, for whatever reason, political economy or non-political economy, a higher level of poverty than 13%, as the case was in 2011-12, you raise the poverty line. And we have raised the poverty line over the last 50, 70 years. And, you know, continue doing that.

Speaker 5 (01:40:26): But don’t mess up with coming out with yet another measure of poverty.

Speaker 2 (01:40:32): I mean, I try to reproduce the multidimensional index of poverty for education.

Speaker 5 (01:40:37): It’s just a, I don’t want to go into the, it’s, I don’t think it, as I said, in my view, it has negative value added.

Speaker 2 (01:40:47): Zero knowledge, negative knowledge, while using the multidimensional index.

Speaker 1 (01:40:53): Okay, thank you very much, Dr. Bhala. So with that, this brings to a close the Beershanoy Memorial Lecture 2023. On behalf of Economic Research Center, Mangalore and Center for Civil Society, New Delhi, I would like to thank our speaker, Professor Sujit Bhala, for such an interesting and illuminating talk and engaging with questions from the audience. Thanks also to the audience for engaging with the speaker and asking very interesting questions.

Speaker 2 (01:41:20): And many thanks to Sorsha Devanerji at CCS and the rest of the team at CCS for helping us organize this lecture. Thank you very much and good night. And thank you from my side. I really enjoyed it and I learned. Thank you.