Prelude
The title of this post is borrowed from a YouTube video. Shri Rajiv Malhotra interviewed Shri S. Gurumurthy recently and the first two of a three-part series have been published on YouTube here and here. I confess to great trepidation in addressing myself to the matters that the two discussed, not because I am not confident of my own position but rather because of who they are.
I have deep respect for Shri Malhotra whom I have had the distinct privilege of spending time with. He is inspired and inspiring. He is one of those rare successful American NRIs who employ their fame, fortune, talents and energy in the service of not just the mother country but all humanity. The members of that tribe you can count on the fingers of one hand.
§ An Eminent Accountant
I have never had the opportunity of meeting Shri Gurumurthy although some years ago, I had participated in a panel discussion in Boston, MA, on which he had joined remotely from India. He is widely known to be very influential in the BJP circles. Although he is an accountant, he is considered to be very “eminent” economist.
It’s been a source of perpetual mystery to me how some accountants acquire a reputation as economists in the popular mind. Accounting and economics have little to do with each other. But because bean counters speak in terms of money, and the popular propensity is to consider all who deal with money matters (not all economists study money) as economists, the result is the conflation of the two. Be that as it may, accountants are definitely not economists however much the accountants may wish it to be so.
(I cannot resist the joke that notes that an economist is an accountant who lacks personality.)
The unfortunate fact is that the discipline of economics is among the most misunderstood by the lay person. Economists have much to blame for this dismal state of affairs regarding their discipline. With very rare exceptions, economists rarely deign to explain themselves to others outside their domain. But they should because understanding economics actually matters a great deal in our everyday world.
§ Economics is Unnatural
You can get by perfectly well without the least familiarity with atomic physics or organic chemistry; but without a passing acquaintance with the fundamental principles of economics, you are likely to misapprehend the world to your material detriment. Widespread misconception of the basics of economics leads to much avoidable misery.
But let’s be absolutely clear about one thing. The fundamentals of economics are not natural or intuitive, any more than one can intuitively arrive at the fundamentals of particle physics. The good news is that anyone can — and should — learn economics. However it has to be taught and can be learned. We all behave “economically” because that’s part of our evolutionary endowment. Those people who were incapable of behaving economically did not become ancestors.
Behaving economically is instinctive. We all do it and necessarily do it because our survival depends on it. Understanding the principles of economics is a different matter, though. The analogy is language and writing. Humans have an instinctive ability to speak and comprehend their mother tongue. But reading and writing, in whichever language, have to be taught and learned.
§ Economics Has to be Learned
Therefore it is understandable that most people are ignorant of economics. In the first video of the conversation between Malhotra and Gurumurthy, Malhotra admits at the beginning that he is no expert in economics but claims that Gurumurthy “is a great economist.” What gives Malhotra that confidence? I presume that Malhotra’s assessment is based purely on hearsay and reputation. He must be one because many people think he is one.
Fortunately for me, I can make a more reasoned judgment. I have spent several decades studying economics. I know economics. I think my knowledge of accountancy (which is practically zero) compares favorably with Gurumurthy’s knowledge of economics. But I never talk about accountancy while Gurumurthy talks economics with enthusiasm, and that too to great popular acclaim.
That brings to mind what the great economist Murray Rothbard wrote.
It is no crime to be ignorant of economics, which is, after all, a specialized discipline … But it is totally irresponsible to have a loud and vociferous opinion on economic subjects while remaining in this state of ignorance.
Shri Gurumurthy has “a loud and vociferous opinion on economic subjects.” He is highly respected. His opinion is sought by politicians, the media, and corporations. He gets interviewed on national TV. I will never be interviewed even by Shri Malhotra, leave alone on national TV. It will be a pollution-free day in Delhi when politicians seek my opinion on matters economic.
That’s why I wrote at the start of this piece — “I confess to great trepidation in addressing myself to the matters that the two discussed, not because I am not confident of my own position but rather because of who they are.”
I know economics. And I know that I know. I also know that although what transpired in the conversation between Shri Malhotra and his guest is just plain nonsense, it has the potential for great harm considering the reputation and reach of Shri Malhotra’s channel.
Why do I wade into that cesspool? Because I foolishly agreed in a comment to a previous blog post that I will. I am naturally lazy and undisciplined but even I cannot resist standing and delivering when the provocation is so strong.
Now that the prelude is done, it is time to address the substance. In the next bit I will address why discussing “Indian development models” is meaningless. Stay tuned. In the meanwhile, try watching those two videos.
{Read the followup post here.}
NOTES:
- The image at the header of this post is just a filler. It has nothing to do whatever with the content of this post. Scan-the-navy-in. Scandinavian. A pun is the lowest form of humor.
Life is a Random Draw 
As a lay person one of the question I have always had in my mind about economics is that how exactly should I separate good opinion from bullshit vending. I know nothing about medicine but visiting Yelp gives me a fair idea of who is a better doctor in this area. I do not know how bread is made and yet the cost of bread in whole foods tells me which one is likely to be better. I do not know how to fix a car but again Yelp helps me find the better mechanic.
What is different between above three examples and economics is that bad economists do not necessarily go out of business with time. Dr. Paul Krugman who once claimed internet will simply vanish in some time continues to be employed and invited for talks as an expert on these subjects.
An economist does not pay price for his wrong opinions. Economists do not have that kind of skin in the game.
Coming back to Mr. Gurutmuthy’s words about “Indian Development Model”, how do I evaluate all this claim ? If Mr. Gurumurthy sets up a company (or adopts some village) which operates on this new development model and achieves some kind of tangible excellence. Otherwise for ordinary layman it is just words. (This is pretty much like how Henry Ford’s assembly line way of manufacturing or Japanese manufacturing processes like Kanban etc. proved to be superior or the alternatives).
Then comes the second question. If as a layman I can’t tell the difference between informed opinion on economics v/s Bullshit why should I take Mr. Atanu Dey more seriously or why should I waste my time supporting Milton Friedman’s ideas.
I find that whenever an economist argues in favour of individual liberty he is arguing my case because I see that me getting more freedom can only have a positive impact on my life. So my litmus test for such talk is mostly “is he arguing that all people should get more freedom from government or experts? ”
From the video 1 I have watched Mr. Gurumurthy seems to criticise Individualism. Sorry to say but it does not pass my BS filter.
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In my opinion, the fundamental flaw in the second part of the video is to reduce the so called ‘western model’ to a model of economics which favors centralization and control.Mr. Gurumurthy evidently has in his mind the top down approach of Keynes when he speaks, thinking this to be the sole ‘western model.’ However, there’s already abundant literature in economics, which came from the west, and which has strenuously stressed on Decentralization.
Also, when he speaks of ‘Western model’ and ‘Indian Development Model’, the implicit assumption is that economics is not a science, for if it is, his whole talk is not only meaningless but nonsense.
Economists have always argued on how the science of economics is to be done(Whether a priori theorization or building laws inductively or empirically).But no economist of importance has ever argued that economics is not a science.
As regards the first part, his claim that ‘economics transcended sociology via Max Weber’, and that the whole of neo classical economics came from his work can hardly withstand to the scrutiny of history of economic thought.
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