Feud Watch: India's Two Most Famous Economists Get Snippy

India's two most prominent economists have never really seen eye-to-eye. Amartya Sen, a Nobel Prize-winner and Harvard professor, believes in public interventions to alleviate extreme poverty and reduce inequality while Jagdish Bhagwati, a professor at Columbia and author of the bestselling book In Defense of Globalization, favors a more free-market, growth-first approach.

In recent weeks, the two have caused something of an uproar -- "Academic Brawl," proclaims the Economic Times -- with a terse back-and-forth in the letters page of the Economist.  It started with a June 29 review in the magazine of a new book by Sen and frequent collaborate Jean Dreze, which contrasted the two views on Indian economic development:

Jagdish Bhagwati and Arvind Panagariya, both professors at Columbia University, and long (and, at times, bitter) sparring partners with Mr Sen and Mr Drèze, argued forcefully in a recent book (see review) for more liberal reforms, notably to labour laws and land ownership. They say that pushing GDP growth back above the current 5% level, creating jobs, letting business flourish and raising revenue for government would all cut poverty.

They are surely right. But Mr Sen and Mr Drèze hope to go much further, faster. The lesson of just about every emerging economy-China and Brazil today, Europeans before-is that as economies grow, big public interventions aimed at lifting health, education and other standards result in rapid social gains. India, however, is the exception. Worse, its lagging social problems actually serve to drag down economic growth.

Bhagwati and Panagariya countered in a letter to the editor:

Your claim that Messrs Sen and Drèze wish to go “much further” leaves us puzzled.

The truth of the matter is that Mr Sen has belatedly learned to give lip service to growth, which he has long excoriated as a fetish. He did not explicitly advocate any pro-growth policies, such as opening India to trade and to direct foreign investment, in practice before or after the 1991 reforms. Nor does he recognise that significant redistribution to the poor without growth is not a feasible policy.

Sen then responded last week:

I have resisted responding to Mr Bhagwati’s persistent, and unilateral, attacks in the past, but this outrageous distortion needs correction.

Their letter says that, "Mr Sen has belatedly learned to give lip service to growth." On the contrary, the importance of economic growth as a means- not an end-has been one of the themes even in my earliest writings (including "Choice of Techniques" in 1960 and "Growth Economics" in 1970). The power of growth-mediated security outlined in another book I co-authored with Mr Drèze in 1989, "Hunger and Public Action", is a big theme in the present book. Economic growth is very important as a means for bettering people's lives, but "to go much further, faster" (as your reviewer commented) it has to be combined with devoting resources to remove illiteracy, ill health, undernutrition and other deprivations. This is not to be confused with mere "redistribution" of incomes, on which Messrs Bhagwati and Panagariya choose to concentrate.

Ordinarily a fundamental philosophical disagreement between two economists, even such prominent ones, whose positions are pretty well established at this point wouldn't get that much attention, but the Indian press seems to be treating the feud as a proxy battle ahead of next year's general election, with Sen taking the side of India's Congress-led government and Bhagwati Gujarat Chief Minister Narendra Modi of the nationalist BJP.

LiveMint's Niranjan Rajadhyaksha writes:

"Indeed, if Sen and his long-time collaborator Jean Drèze are supporters of the entitlement-led public schemes launched by the Congress-led United Progressive Alliance government, then Bhagwati and his long-time collaborator Arvind Panagariya are admirers of what they call the Gujarat model. Sen is a strong supporter of the proposed right to food law while Bhagwati has lashed out at it. Drèze is a member of the powerful National Advisory Council that has the ear of Congress president Sonia Gandhi. And Panagariya has written in support of the economic policies of Gujarat chief minister Narendra Modi.

According to the Economic Times, Bhagwati has repeatedly challenged Sen to a public debate, which the Harvard economist has declined, saying, "Jagdish has tried it many times, but I have never said a thing about him."  Indians may get a chace to weigh in indirectly on the argument next year at the ballot box. 

Further reading: I interviewed Sen for "Epiphanies" in 2009. 

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