Archive for February, 2015

"The opening deal"

I liked this quote from economist Karthik Muralidharan, which is pulled from a conversation at Ideas for India with Kaushik Basu of the World Bank:

My own take on what is happening in economics as a profession, talking to people in other disciplines, is that our fundamental weakness at some level is that because the touchstone of policy evaluation is the idea of a Pareto improvement (is someone better off and no one worse off) – effectively, economists do not question the justice of the initial positions. You kind of take the initial position as granted and say that conditional on this, how do I improve things on the margin.

Given vast inequalities in the opening deal of cards, so to speak, there is obviously a deep political need to create the space for more pro-poor policy. I think because the professional economists have abdicated that space to saying that it is a philosophical debate and we have really nothing to say, the rights-based movement that has created the political space for pro-poor policy has also then occupied the space of how to design it because they are the people who have created the political movement.

My own view on this is that because economists have kind of been seen as apologists for the status quo in many settings, we have lost the credibility to say that we are as pro-poor as you are, but conditional on these objectives there are much better ways to design it.

Lots on poverty policy, inequality, etc at the link.