The need for a development strategy can be denied at two rather different levels.
No. Not having a strategy is still a strategy- a laissez faire one. The fact is, if there is a Government budget, then there has to be a plan- or strategy- to secure revenue to cover expenditure.
First, it could be argued that public policies, in general, do not actually facilitate economic development. Perhaps the government could do better by letting well alone, and by permitting people to pursue their private gains, without let or hindrance. The point is also made that the rich countries today were once poor too, and managed to achieve development without any fancy public policy for economic development.
But they had fiscal policies and thus a plan of some sort to cover Government expenditure and pay for Public Goods.
Why can't the poor countries today do much the same?
Because there is a reason they are now poorer. Generally this has to with the fact that rural women are having too many babies. Get the women in to big factory dormitories. They will quit after a few years but then go on to have just one or two babies. But those babies will be educated and well nourished. That's how you get demographic transition. This also means that 'club goods' can be funded by local taxation and this leads to 'Tiebout sorting' as people leave bandit ridden shitholes and move to the bright lights of the city.
Second, even if it is thought that there is a reasonable case for having some public policies for economic development, it could be doubted that these policies should take the form of some great design that the government should try to impose on the economy. The doubt here is not about the need for public policy, but about having it in so grand a form that it could be called, without blushing, "a development strategy."
This is nonsense. It is obvious that a strategy which sustainably and consistently boosts tax revenue is a 'development strategy' because the country is developing, it is growing, it is overtaking other similar countries which have followed a different path.
An alternative would be to leave matters to rational microeconomic evaluation and to cost-benefit analysis of projects, and then to accept whatever overall pattern results from such evaluation and analysis.
This is not an alternative. Cost-benefit analysis costs money. Even it is supplied gratis, it does not actually promote any 'over all pattern' because people keep telling it to fuck off or else it will get its fucking head kicked in. Sen forgets that CBA only happens if Government money is going into the project or else there is a legal requirement. If tax revenues rise as a result, the thing 'pays for itself' or yields a profit. No doubt some 'externalities' may arise. But there too fiscal policy- e.g. 'Pigouvian' taxes or subsidies- has salience.
My point is that 'Development strategies' are part and parcel of Government budgeting. As with private investment decisions, what matters is whether the 'thing pays for itself' or else yields utility to the tax payer as 'collective consumer'.
Scepticism of "development strategy" can combine well with an affirmative belief in governmental cost-benefit analysis
Skepticism of Socialism or Government control of the economy is one thing. But if there is a budget, then there is a development strategy because Governments need to ensure that they will have rising not falling tax revenue.
These sceptical questions are important to address.
No. It is obvious that bureaucrats and politicians shouldn't control enterprises. They simply lack the necessary skills or motivation.
In responding to them, it is useful to note that a development strategy need not be particularly despotic,nor be a very grand and neatly designed scheme. It is mainly a question of what a government can sensibly do on a systematic basis, and what approach it should take in deciding on what it can sensibly do.
This depends wholly on the budget. If what you are doing leads to more tax revenue and a smaller deficit as a proportion of National Income, you are on the right track, ceteris paribus.
When Sen was a young man there was a theory that rich people were idle. Poor people were forced to labor but only paid enough to keep body and soul together. Thus they had no incentive to become more productive since the idle rich would swoop down on them and confiscate the 'surplus value'. It was in this context that things like land reform and 'super-tax' for the idle rich were considered a panacea. Sadly, increased equality didn't actually mean increased opulence. It meant a large and costly bureaucracy and a vast machinery of tax evasion and avoidance. The talented ran away. The fiscal deficit gave rise to 'Stagflation' as politicians printed more and more money to balance the books.
Sen ignores these developments though he emigrated to England just when this problem had grown acute.
He writes-
in addition to favouring general economic development, any responsible state has to consider issues of equity and disparity.
No. A responsible state has to tell its citizens that taxing the supposedly idle rich won't help, it will harm, the working population. That's what happened in the UK and the US. Thatcher and Reagan were re-elected by working class folk. Even the Scandinavians gave up on 'solidarity wages'.
Even very fast economic development can neglect some people,
but collective insurance can provide them a social minimum. This is pure fiscal policy.
while others do extremely well, and there is no escape from encountering distributional issues. How the distributional problems are to be tackled by the state, the civil society and social groups remains an important question, but the concern for social justice cannot be brushed aside in thinking about the promotion of economic development.
The history of every country since about 1970 shows that the opposite is the case. There is no constituency for fiscal redistribution save perhaps in some small, relative homogeneous nation states. But, even there, mass immigration is causing voters to rebel against high taxes and generous welfare provision.
Sen does mention 'Financial prudence' as relating to Development Strategy. He doesn't get that all Accountants- even those who work on the Government budget- have to be prudent. He says- We may however ask: why is financial prudence so important for determining development strategies anyway?
The answer is that development stops when you run out of money. You can't service your debt. The IMF scolds you and makes you cry.
The answer lies in the recognition that immoderate inflation brought on by fiscal indulgence and irresponsibility can extract a heavy price on the real economy.
Sen, poor fellow, was only taught about 'closed economies'. How was he supposed to know that countries can borrow and trade with each other? Yet, Sen was in India when successive Plans had to be put on hiatus because the country ran out of foreign exchange. Prudence should have counselled only green lighting projects which would quickly earn more hard currency than was sunk into them. But Ind's Sen-tentious cretins hadn't been taught Accountancy. They only knew some garbled 'mathematical econ' which was based on crap math and crappier econ.
Financial prudence demands that we must take note both of (1) the identified economic costs of budget deficits and their likely inflationary implications,
only the Balance of Payments matters. If f.d.i is flowing in and economies of scale and scope are being exploited there are no 'inflationary implications' though, no doubt, you will have bubbles in real estate and some areas of the stock market.
and (2) long-run risks of macro-economic instability, and that can be done in assessing alternative choices of development strategies,
no, it can't. We don't have the relevant information. One plan is as good as another till Reality bites back.
paying full attention to the direct as well as indirect effects of social development,
which are known only to God. We have no access to any such information. What we do know about is the budget. Good accountants can forecast it well enough in the short to medium term. This means you change tactics depending on the projected deficit.
in terms of their overall impact in enhancing the lives of people.
Fuck that. Just concentrate on the budget. Nobody knows what will or won't enhance the 'lives of people'. Maybe, starving and muttering 'Ahimsa! Ahimsa!' while the Chinese invade will make them very very happy.
The costs associated with the budget constraint will apply to all alternative avenues of public spending, and the case for social development has to meet that test of doing comparatively well.
Fuck does this mean? There's a budget constraint and therefore you need to keep costs down while trying to boost revenue without killing the golden goose that is the tax paying sector. Otherwise, there will be no fucking 'social development'. Instead the IMF will turn up and make fun of your puny genitals and you will cry and cry.
It is sad that people like Sen wasted their lives- and destroyed the life chances of hundreds of millions of Indians because they didn't know that
1) India is not a closed economy. Apparently there's something called Planet Earth which has many countries. India trades with them or, if it can't trade with them, then Pandit Nehru goes and tries to beg for food or money from them
2) Economics is just an extension of Accountancy. Plans are about what to do with the money that is coming in. But all that matters is that money comes in. If it doesn't you don't got a fucking Plan and the IMF will come and scold you and scold you and you will run weeping to Mummy but she will give you tight slap when she discovers you fucked over the economy instead of getting a job with a Multinational.
Finally, there are important questions of ends and means in deciding on the concept of development.
No there aren't. Economic Developing is about having more and being more secure. That's it. Nothing else matters. Spiritual Development may be about getting by with less and spending every moment in dread of the Day of Judgement. But Economics is not concerned with Eschatology. Fiscal policy reflects Development Strategy. If the money runs out, there is no fucking Strategy- just a Plan that failed or was put on hiatus. Sen should have known this better than anybody. The Second Five Year Plan ran out of money. Only budgets matter. Gassing on about 'choice of technique' or 'Project Evaluation' was useless. You had to approve whatever got funded. Sen and his best pal wrote a paper saying as much. Then Sen ran away to England with his best pal's wife. He had to pretend he knew about Development. He didn't. Development is about budgets. Do stuff which pays for itself in terms of higher tax revenue down the road. If you don't, you run out of road.
There is much evidence that the big upward jumps in life expectancy in Britain during the decades of 1911-21 and 1940-51 were connected with the increased use of public distribution of food
fuck off! 'Voluntary rationing' only began in 1917 and it wasn't till February 1918 that everybody got a ration book. I suspect the Bolshevik Revolution had something to do with this.
and health care in the war years, related partly to the culture of sharing during those beleaguered times.
No. There was a great increase in female participation in the work-force. Indeed, there could have been no expansion in the public distribution system or in health care without female labor. Germany had much lower female participation and saw a significant drop in life expectancy- including starvation deaths- though it initially had greater state capacity in these areas.
There were other factors to do with diet and lifestyle which were important. Germany, which introduced rationing in 1916, followed a foolish Food strategy- killing off the pigs on the grounds that they were 'co-eaters' lowered agricultural production. Various 'ersatz' food stuffs promoted by the government turned out to be useless or harmful. There was massive mortality as a result of 'food availability deficit'.
Indeed, even though the average quantity of food 7 0.3 consumed in Britain during the war years fell significantly, cases of acute undernourishment virtually disappeared in the same period, because of the guaranteeing of minimal nutrition through public distribution systems.
Tegart, who had crushed the Revolutionaries in Bengal, was given the job of cracking down on the Black Market. But it was the civic sense of the Brits- and things like moving kids from urban slums to rural areas- which made all the difference.
Sen doesn't seem to understand that how a country responds to an existential threat has a lot to do with how 'developed' it already is.
Public health and nutritional care are also "economic" matters,
but they are a function of Development in previous decades or- in the case of England- previous Centuries. The Elizabethan Poor Laws had criminalized idleness among the poor. The Work House literally made everybody who was poor work long hours in the most tedious manner possible. Still, without the safety valve of emigration on the one hand, and the immigration of enterprising folk on the other, the condition of the poor would have remained dismal.
and since they do influence the variables that make a difference, why should that part of the story not come into the choice of development strategy, going well beyond the pursuit of fast economic growth?
But health and nutrition is reflected in productivity which is what causes economic growth. There is no need to consider them separately save under extraordinary circumstances- e.g. a total war. The GNP matters because it is directly related to how much tax revenue can be raised. Fiscal policy should try to increase that revenue without harming work incentives or lowering the material standard of living. That's why GNP- not virtue signaling bullshit- matters for Development Strategy.
One might as well say 'Like health and nutrition, defecation and micturition are vital aspects of human welfare. Why should questions re. access to places in which to shit and piss not come into questions regarding the choice of development strategy? It is commonly believed in the UK that a pregnant woman has the right to relieve herself in a policeman's helmet. Sadly, the Law Commission has rejected this view. Is it not the case that Rishi Sunak's Development Strategy must reinstate this traditional right so as to positively impact the capabilities and functionings of not just pregnant British peeps but blokes who look like we might be preggers and, having spent all day in the pub, are busting for a wee?
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