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Thursday, August 18, 2005

Different approaches to fish

Pratap Bhanu Mehta writes in the Telegraph:
The Left thinks that throwing state money with good intentions is the solution to most problems. The Right on the other hand, seems to move from the plausible assumption that throwing money is not always a solution to the more dubious proposition that it is not a necessary part of a solution. The Left is enamoured of a certain kind of idealized statism, the Right of a knee-jerk cynical anti-statism. The Left argues that more spending on welfare is necessary, the Right cautions that almost all of it will go waste. The Right speaks of regulatory reform, freeing up the markets, protecting property rights, privatizing, removing labour market rigidities, balancing the budget as crucial ingredients of sound economic policy. The Left gives all of these things short shrift and argues instead for greater spending on social security, employment guarantees, welfare schemes, job security and so forth. The Right wants to remove the barriers that bind those who want to create wealth. The Left is interested in the fate of those who might not be able to. The Right wants reform of the state first; the left does not want the cause of justice to wait till the state puts its house in order.

Of course, these contrasts are stylized. In principle, few economists of the Right will deny that they are for more social welfare. They just disagree about the means and strategies that will make welfare programmes efficient and sustainable. It is often patently disingenuous of the Left to accuse those championing the cause of trade and privatization to be anti-poor. Nothing could be farther from the truth. As Burke said, those who yelp loudest on behalf of the poor do not always do the most to help them. But it has to be acknowledged that sometimes excessive attention to a particular class of issues relating to efficient markets can render some important welfare challenges invisible. It is more likely that economists on the Left will oppose some of the market discipline and regulatory sanity of their colleagues on the Right. But they have something of a point in bringing to attention the fact that India will, down the line, need not just pro-market reform but something like a genuine welfare state as well.
What's my take on this? Well, I quite agree with what Lao Tzu once said: "Give a man a fish and you feed him for a day. Teach him how to fish and you feed him for a lifetime." A welfare state gives fishes. Genuine free markets enable fishing. Only the latter is a viable long-term solution.

Cross-posted on The Indian Economy.
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