Sunday, 27 November 2016

Amartya Sen on why India can't be a global economic power- unless it can.

'India is the only country in the world which is trying to become a global economic power with an uneducated and unhealthy labour force. It’s never been done before, and never will be done in the future either. There is a reason why Europe went for universal education, and so did America. Japan, after the Meiji restoration in 1868, wanted to get full literate in 40 years and they did. So did South Korea after the war, and Taiwan, Hong Kong, Singapore and China.' Amartya Sen

Rwanda has 97 percent Health insurance coverage. It will never be a 'global economic power' but remain a basket case kept going by foreign aid. South Korea, which could have stagnated like India- its politicians were even more corrupt- pursued global economic power under a ruthless military dictator from the early Sixties. Still it wasn't till 1977 that modest health insurance coverage was mandated for employees of big firms. Universal coverage only came in 1989. The country first grew economically and then looked after the health of its people. Still, even under Kim Dae Jung- the Nobel peace laureate and former political prisoner- the State put a cash limit to its support for the Health Insurance scheme. There was no blank check. Nevertheless, significant deficits built up from '96 and the Government response has been irrational causing some bizarre pathologies to develop in the Health system. The health of Koreans has suffered as a result. However, their rise to global economic power status has not been affected at all.
Similarly Taiwan, which ended martial law in 1987, waited till 1995 to institute universal health coverage. Why? It first had to get rich enough to afford to do so. India, contra Sen, has in fact been committed to free universal Health Care for some time. It fails to meet this aim because Doctors won't go to the villages and, as Dr. Jack Prager pointed out, the money in the budget gets misspent. Predictably, the Public Health Service is horrible, as is the Public Education System, while the Private Sector does most of the work- for which however, in medicine, it charges too much.
 Economic development by itself isn't enough to improve Health coverage. It is also important that not-fit-for-purpose Public initiatives be shut down so as to free up resources. Cash transfers or a Voucher system are one way to make Govt. spending on Health and Education somewhat effective. Sen, of course, is against this.

Countries which want to end up healthier, better educated and richer have to make sacrifices in the short run and even the medium term.
Economic development, initially, means the vast mass of people take up jobs which endanger their health and reduce their educational prospects. Being a coal miner is bad for your health and interferes with your education. Quitting your PhD in Gramscian Grammatology at Nalanda International University and moving to a highly polluted city like Delhi to work in a call centre is bad for your health but good for the economy.
Over time, as a country gets richer, it has the resources to protect health and promote education. If no sustainable economic development occurs, health and education will worsen anyway for demographic reasons.
Amartya Sen is a very old man and the quotation given above is from an interview, not a book. Still, ordinary people of his age know full well that every country which became a 'global economic power' started with an uneducated and unhealthy labor force. Nobody said, 'first we must spend ten years educating our people and making them healthy. Then we can start earning money globally to pay for that education and health care.' Why did this not happen? Aren't under-developed countries like children? Shouldn't we first vaccinate an under-developed country and put braces on its teeth and then send it to Cambridge for a degree and only then ask it to start earning money as a global economic power?
The answer is countries are not like children. They don't have loving parents with plenty of money in the bank. No one will pay for their education and health care and then wait patiently for them to start earning so as to pay back the investment.

Which countries, by common knowledge, became global economic powers while displaying a cruel indifference to their  uneducated and unhealthy labor force? Answer- all Democratic ones. America did not introduce Social Security till 1935. Britain did not introduce free compulsory education till 1870- and its relative economic decline began a few years later. It didn't have a National Health Service till after the Second World War.
An unhealthy uneducated workforce- kids working down mine shafts- turned Britain into the richest and most powerful maritime nation in the world. Professor Sen has lived in England for many years. Why does he not know this?
What about the US? Surely it had an 'educated and healthy' workforce before it became a global economic power? Nope. Between 1870 and 1890, school enrollment rates fell to below 50 percent. Illiteracy, however, increased more because of the influx of migrants. Health outcomes worsened for the majority because of poor living and working conditions as well as simple ignorance and superstition. Still, America had a dynamic economy and the returns to education- even for disadvantaged groups like African Americans- were high. 

By contrast, authoritarian militaristic regimes- Germany, Japan, Korea, Taiwan- saw universal education and improved health care as a way to indoctrinate and turn their populations into better soldiers and more productive workers in the factories and mines which furnished the sinews of war. Italy is a good example of how authoritarian regimes, like that of Mussolini, can raise school enrollment where liberal societies fail.  In Law, free compulsory education had existed from 1860 but illiteracy was rampant especially in rural areas. Interestingly, East Germany did better than West Germany in education- an effect which still persists- because authoritarian regimes have more power to force kids to acquire useful skills.

In a sense, India is in advance of America because the Government, not the parent, bears the legal obligation to educate all children. However, India is not an authoritarian country. It can't even punish teachers who play truant, in State Schools let alone force parents to educate their children. Sen knows full well that such schools are often very badly run. However, the teachers count votes in the elections so nobody has the guts to crack the whip on them. Similarly, there is massive corruption in Public Health provision. In China, a bunch of corrupt Doctors or lazy teachers can be shot to set an example. In Cuba, Doctors are punished if infant mortality goes up- as a result their statistics show a suspiciously high rate of third trimester miscarriages. In India, Doctors can't be forced to do what the State requires. Nobody can.

Some countries have high literacy but pursue stupid economic policies and thus don't fulfill their economic potential. Japan had a literacy rate similar to European countries before the Meiji revolution. But it was stagnating economically. 
Countries which have low literacy but pursue sound economic policies will see an increase in education because the return to investment in human capital has increased. After a demographic transition, other human development indices also rise. Sometimes the State plays a role, sometimes the impetus is from Religious organisations or is a feature of traditional culture. 

Turning to Health, Cuban health outcomes improved during the famine because people had to do more exercise and got less nice food to eat.. This effect was reversed after economic conditions started to improve. Even if reforms now come to Cuba, which does have well educated people- especially in Health & Pharma- and a healthy population, it is unlikely to do particularly well because it has gone through demographic transition and has an average age of 38. India too may get a demographic transition without becoming a manufacturing giant. What matters in determining whether a country will become 'a global economic power' is whether or not it has risk-takers with a global perspective. Health and Education are irrelevant. Rising real wages may worsen health outcomes initially. Education levels may fall because young people can earn more in a factory than doing a PhD in Gramscian Grammatology while waiting for a Government job as a peon.

Amartya Sen has wasted his life comparing apples to oranges. Totalitarian regimes can do things which are not feasible for Mixed or Free Market Economies. But, the latter can- if it has risk-takers with a global perspective- turn a nation into a 'global economic power' if some comparative advantage exists and 'the gravity model' of Trade does not forbid it. India is now well placed in that respect. Bureaucratic restrictions haven't improved Health or Educational outcomes but have strangled Economic activity. Sen must bear part of the blame for this.

1 comment:

Anonymous said...

Sen was close to the previous Administration. He is persona non grata to Modi's people. It may be that Manmohan Singh said to Sen- 'Listen here, Amartya yaara, I've decided to make India a global economic power utilising only sick and illiterate workers because I am an evil bastard.' That's why Sen keeps complaining about the stupidity and vile character of Indians. However, his remarks can only apply to the last Govt. not the present one because none of Modi's people will talk to this senile buffoon.