According to some, Economists are a quarrelsome lot, apparently because their subject is too much inward directed… not daring to move outside the boundaries of the subjects and invading the turf of other social sciences- political science, sociology, psychology, etc. Hendrik Van Dalen, a famous Economist felt that the ‘economist needs the eye of a biologist, the sharpness of a spin doctor, the gift of the gab of an orator and the common sense to understand the man-in-the-street’.
Whilst the view of Dalen is little startling, it is also thought provoking. Ever since the times when a formal shape was sought to be given to the subject, “Economics” it is being said that where a half-a-dozen Economists are present, there would be at least eight views on any issue. Why so? Mainly because the subject matter of Economics is not confined to limited and specific areas in the factors and forces influencing the economic phenomena are too many and often unanticipated too. So much so, to arrive at correct predictions becomes a difficult exercise, as with meteorologists, who have to contend with many uncertainties when forecasting weather conditions. In which discipline, the ceteris paribus condition [other things remaining constant] is as essential as in Economics? Worse, ‘economic systems do not necessarily work as they do in standard Economics’ [George Akeolf]. Such concept as ‘inflation’ and ‘deflation’ are easily understood; but quite often, with neither being evident, condition of stagflation confuses the observers. Besides, what havoc the vagaries of monsoon play in Agriculture Economics and how they upset the normal calculations of Economists and even Statisticians, are too well known.
Crowing all this, is the recent findings of the behaviorist researchers that the behaviour of men is not as rational as is often assumed. Behaviour economists attribute ‘mental accounting’ which often goes against the basic principle of classical economics. For example, the family members insist that they want a new car. You have some money and credit is easy to come by. When a decision is taken by you to buy the car, your father falls ill and you spent half a million for his hospital expenses. It caused you lot of pain, that the hard earned money you saved, was spent for an unexpected cause. You give up your idea to purchase a new car. Suddenly you get arrears of the sixth pay Commission difference between your old salary and new salary. What will you do? You and your wife will go and buy the car instaneously. When you paid the hospital bill, you felt your hard earned money was used for the hospital bills. It was a hard decision. When you got the arrears, you thought this was good money which needed to be spent on luxury. You did not have second thoughts. This was an easy decision. Both were your money. Yet the mental calculation made all the difference.
The Economy, according to some of the behaviour researchers also responds to skewed reasoning, self destructive actions and a host of other human frailties. Could it be that even as of now, the scope of Economics continues to be expanding, ecology (sustained growth) and psychology, being the latest edition in its realm?
Like the Meteorological department, which will predict sunshine for the next 2 days, but there will be heavy downpour instead; however, when they indicate that the next few days will be full of rain, there will be sunshine. So also, the prophetic prediction of some of the most efficient planners and Economists. There will be sunshine in the economy, predict India’s tallest economists and planners, but the growth rate predicted by them, will be seldom correct. They reel out figures, which will go awry by at least by numericals. The Indian agricultural policy is often skewed. We do not have any fixed formula for taking our agriculture industry forward. We depnend upon seasonal monsoon. All our calculations are built around the arrival of monsoon. Any straying of the rains, the agricultural output will hit the plains. Our ground water depletion and our ability to use the natural resources properly have cost us dearly. Granite mines, coal mines, iron ore mines have been devastated due to indiscriminate and unscientific mining. Our Kolar Gold fields have become empty and our Kudramukh Iron Ore Company has been closed. There are many coal pit heads, which are abandoned. We convert lush agriculture fields for industry, while fallow and useless lands will remain useless. We do not have a firm agrarian policy, or a proper policy to utilize waste lands. The aqua fliers have all been destroyed. Our ground water source has dried up. Our agricultural growth is a fad at 0.4%. There was negative growth during the last two years. Our economists predicted that the agriculture growth for 2009-10 would be (-) 0.2%. It turned out to be (+) 0.2%. Our XI Five Year Plan anticipated compounded growth for agriculture is 4% growth. It is worst than the ‘Hindu rate of Growth’. With Rs 70,000 Cr of farm loans being written off, our intake should have been better. But callous policy, unpragmatic logistics, poor infrastructure, vagaries of monsoon, unimpressive Credit, poor R&D, have eroded our ability to go in for a leap in the Agricultural front. People like Shri C Subramanian had a depth in agricultural knowledge that helped him to shape a people’s movement to increase yield, post better productivity per hectre, with the farmer getting sufficient returns. NABARD, IFFCO, NAFED, etc were organizations conceptualized to support the farm produce reach the markets. Unless the Plans are growth oriented with impetus for rural economy, with the contribution of Agri,agro, rural industry being able to increase the Market Potential Indices, and Market Potential Value, which should be able to proportionately increase the sectoral contribution, both innocuous and highly potential varieties having an edge in the urban, developed markets of India.
Whilst the view of Dalen is little startling, it is also thought provoking. Ever since the times when a formal shape was sought to be given to the subject, “Economics” it is being said that where a half-a-dozen Economists are present, there would be at least eight views on any issue. Why so? Mainly because the subject matter of Economics is not confined to limited and specific areas in the factors and forces influencing the economic phenomena are too many and often unanticipated too. So much so, to arrive at correct predictions becomes a difficult exercise, as with meteorologists, who have to contend with many uncertainties when forecasting weather conditions. In which discipline, the ceteris paribus condition [other things remaining constant] is as essential as in Economics? Worse, ‘economic systems do not necessarily work as they do in standard Economics’ [George Akeolf]. Such concept as ‘inflation’ and ‘deflation’ are easily understood; but quite often, with neither being evident, condition of stagflation confuses the observers. Besides, what havoc the vagaries of monsoon play in Agriculture Economics and how they upset the normal calculations of Economists and even Statisticians, are too well known.
Crowing all this, is the recent findings of the behaviorist researchers that the behaviour of men is not as rational as is often assumed. Behaviour economists attribute ‘mental accounting’ which often goes against the basic principle of classical economics. For example, the family members insist that they want a new car. You have some money and credit is easy to come by. When a decision is taken by you to buy the car, your father falls ill and you spent half a million for his hospital expenses. It caused you lot of pain, that the hard earned money you saved, was spent for an unexpected cause. You give up your idea to purchase a new car. Suddenly you get arrears of the sixth pay Commission difference between your old salary and new salary. What will you do? You and your wife will go and buy the car instaneously. When you paid the hospital bill, you felt your hard earned money was used for the hospital bills. It was a hard decision. When you got the arrears, you thought this was good money which needed to be spent on luxury. You did not have second thoughts. This was an easy decision. Both were your money. Yet the mental calculation made all the difference.
The Economy, according to some of the behaviour researchers also responds to skewed reasoning, self destructive actions and a host of other human frailties. Could it be that even as of now, the scope of Economics continues to be expanding, ecology (sustained growth) and psychology, being the latest edition in its realm?
Like the Meteorological department, which will predict sunshine for the next 2 days, but there will be heavy downpour instead; however, when they indicate that the next few days will be full of rain, there will be sunshine. So also, the prophetic prediction of some of the most efficient planners and Economists. There will be sunshine in the economy, predict India’s tallest economists and planners, but the growth rate predicted by them, will be seldom correct. They reel out figures, which will go awry by at least by numericals. The Indian agricultural policy is often skewed. We do not have any fixed formula for taking our agriculture industry forward. We depnend upon seasonal monsoon. All our calculations are built around the arrival of monsoon. Any straying of the rains, the agricultural output will hit the plains. Our ground water depletion and our ability to use the natural resources properly have cost us dearly. Granite mines, coal mines, iron ore mines have been devastated due to indiscriminate and unscientific mining. Our Kolar Gold fields have become empty and our Kudramukh Iron Ore Company has been closed. There are many coal pit heads, which are abandoned. We convert lush agriculture fields for industry, while fallow and useless lands will remain useless. We do not have a firm agrarian policy, or a proper policy to utilize waste lands. The aqua fliers have all been destroyed. Our ground water source has dried up. Our agricultural growth is a fad at 0.4%. There was negative growth during the last two years. Our economists predicted that the agriculture growth for 2009-10 would be (-) 0.2%. It turned out to be (+) 0.2%. Our XI Five Year Plan anticipated compounded growth for agriculture is 4% growth. It is worst than the ‘Hindu rate of Growth’. With Rs 70,000 Cr of farm loans being written off, our intake should have been better. But callous policy, unpragmatic logistics, poor infrastructure, vagaries of monsoon, unimpressive Credit, poor R&D, have eroded our ability to go in for a leap in the Agricultural front. People like Shri C Subramanian had a depth in agricultural knowledge that helped him to shape a people’s movement to increase yield, post better productivity per hectre, with the farmer getting sufficient returns. NABARD, IFFCO, NAFED, etc were organizations conceptualized to support the farm produce reach the markets. Unless the Plans are growth oriented with impetus for rural economy, with the contribution of Agri,agro, rural industry being able to increase the Market Potential Indices, and Market Potential Value, which should be able to proportionately increase the sectoral contribution, both innocuous and highly potential varieties having an edge in the urban, developed markets of India.
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