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Overview
In December 2009, the economist Kaushik Basu left the rarefied world of academic research for the nuts and bolts of policymaking. Appointed by the then Prime Minister of India, Manmohan Singh, to be chief economic adviser (CEA) to the Government of India, Basu—a theorist, with special interest in development economics, and a professor of economics at Cornell University—discovered the complexity of applying economic models to the real world. Effective policymaking, Basu learned, integrates technical knowledge with political awareness. In this book, Basu describes the art of economic policymaking, viewed through the lens of his two and a half years as CEA.
Basu writes from a unique perspective—neither that of the career bureaucrat nor that of the traditional researcher. Plunged into the deal-making, non-hypothetical world of policymaking, Basu suffers from a kind of culture shock and views himself at first as an anthropologist or scientist, gathering observations of unfamiliar phenomena. He addresses topics that range from the macroeconomic—fiscal and monetary policies—to the granular—designing grain auctions and policies to assure everyone has access to basic food. Basu writes about globalization and India's period of unprecedented growth, and he reports that at a dinner hosted by Prime Minister Manmohan Singh, President Obama joked to him, “You should give this guy some tips”—“this guy” being Timothy Geithner. Basu describes the mixed success of India's anti-poverty programs and the problems of corruption, and considers the social norms and institutions necessary for economic development. India is, Basu argues, at an economics crossroad. As CEA from 2009 to 2012, he was present at the creation of a potential economic powerhouse.
Product Details
| ISBN-13: | 9780262331685 |
|---|---|
| Publisher: | MIT Press |
| Publication date: | 10/09/2015 |
| Series: | The MIT Press |
| Sold by: | Penguin Random House Publisher Services |
| Format: | eBook |
| Pages: | 256 |
| File size: | 1 MB |
| Age Range: | 18 Years |
About the Author
Table of Contents
Preface ix
1 Arriving in Lutyen's Delhi 1
From the Slpes of Raisina Hill 1
Speaking in Subsequences: The Extended Sen Rule 4
2 India's Growth Story: Stagnation, Crisis, and Takeoff 9
Delicious Bengali Dishes 9
The Coffee House at the Delhi School of Economics 10
Intellectual Roots of the Economy 11
The Growth Trajectory 18
Crisis as Opportunity 26
Growth Surge 31
Gathering Storm: The Global Financial Crisis and Its Fallout 36
The Tea Leaves 40
3 Inflation: The Emperor of Economic Maladies 45
Understanding Inflation, Understanding Deflation 45
Inflation in India and the World 48
Interest Rates and Liquidity 53
Benefits for the Poor and Inflation 61
Salad Bowl Stagflation 63
4 Fiscal and Other Macroeconomic Policies for an Emerging Economy 67
A "Repo" Mishap 67
Fiscal Policy in the Emerging Economy 68
Infrastructural Investment and Government Guarantees 72
Exchange Rate Management 74
Managing and Predicting Macro Parameters: A Conundrum 81
5 Globalization and the Challenge of Development 85
Tips to Industrialized Nations 85
Povert, the Sharing of Prosperity, and Policy 90
Inequality and Taxation 92
Globalization and the Taxation Game 95
6 Food and Poverty 99
The Challenge of Poverty 99
Food Buffers 101
Inda's Food Grain Market: Description 105
Theory of Food Market Intervention 106
Redesigning India's Food Grains Policy: Price Stabilization 110
Food Security for the Vulnerable 112
7 The Nuts and Bolts of the Economy 119
O-Rings 119
Contracts and Pareto 121
Finance and Development 125
Ponzis 129
8 Law and Economics 135
Preamble 135
Corruption and the Law 136
Law's Responsibility 142
Law as Focal Point 148
Postscript 155
9 The Social and Organizational Foundations of Economic Development 157
A Critical Flaw 157
Guarding the Jewelry and Stealing in the Bazaar 158
Utilizing Norms and Modifying Norms 160
Teacher Absenteeism in India 163
The Sociology of Bureaucracy 166
10 The Road Ahead 171
India's Prospects 171
Striking Gold with Higher Education 176
The Invisible Hand, Markets, and Interventions 182
Development without Borders 186
Notes 189
References 209
Index 229
What People are Saying About This
One of the important lessons of this wonderfully interesting book is that sophisticated economic reasoning can be very fruitfully used to tackle extremely complex practical problems. Since that powerful lesson comes here accompanied by wit and humor—typical of Basu's writings—the reader is at once entertained and amused as well as illuminated. It is hard to ask for more.
When a top-notch theorist is given a leading policy post, we anticipate getting interesting musings on the application of economics to politics. But when that post concerns as complicated and chaotic an economy as India's, the reflections turn out to be utterly fascinating.
An Economist in the Real World is a book of tales regarding what economic policy looks like from the inside out. It is also a book of interpretation, in which Basu's reflections explain in a deep way why economic policy so frequently goes wrong. Like all great books, and especially those that are a lot of fun, it is to be read, and appreciated, by many different audiences and at many different levels.
Kaushik Basu offers a unique perspective on India's economic development that is both analytically rigorous and deeply personal. He speaks with authority as a noted economic theorist who has been chief economic adviser for the Government of India and chief economist for the World Bank. If you want to understand the great problems and successes of economic development in our time, this book is a good place to start.
From my corporate perch, I approach tomes on economics with some trepidation. However, An Economist in the Real World turns out to be a treat. Filled with careful deductive reasoning and free of jargon, it is an important book that urges government, corporations, and civil society to come together to tackle India's problems and realize India's full potential.
—Anand Mahindra, Chairman, Mahindra Group
This is a beautifully written and engaging book describing Basu's years as chief economic adviser to the Government of India. An Economist in the Real World reveals a brilliant and lively mind combined with a compassionate humanity. But more than that, it conveys an understanding of the rich complexities of India, the challenges and the hopes of this great subcontinent with more than a billion people. A must-read for anyone interested in either development or India—or who simply wants to learn about the adventures of an academic entering the terrain of high-stakes politics.
—Joseph E. Stiglitz, Nobel Laureate in Economics, 2001An Economist in the Real World is a book of tales regarding what economic policy looks like from the inside out. It is also a book of interpretation, in which Basu's reflections explain in a deep way why economic policy so frequently goes wrong. Like all great books, and especially those that are a lot of fun, it is to be read, and appreciated, by many different audiences and at many different levels.
—George Akerlof, Nobel Laureate in Economics, 2001Kaushik Basu offers a unique perspective on India's economic development that is both analytically rigorous and deeply personal. He speaks with authority as a noted economic theorist who has been chief economic adviser for the Government of India and chief economist for the World Bank. If you want to understand the great problems and successes of economic development in our time, this book is a good place to start.
—Roger Myerson, Nobel Laureate in Economics, 2007When a top-notch theorist is given a leading policy post, we anticipate getting interesting musings on the application of economics to politics. But when that post concerns as complicated and chaotic an economy as India's, the reflections turn out to be utterly fascinating.
—Eric S. Maskin, Nobel Laureate in Economics, 2007One of the important lessons of this wonderfully interesting book is that sophisticated economic reasoning can be very fruitfully used to tackle extremely complex practical problems. Since that powerful lesson comes here accompanied by wit and humor—typical of Basu's writings—the reader is at once entertained and amused as well as illuminated. It is hard to ask for more.
—Amartya Sen, Nobel Laureate in Economics, 1998From my corporate perch, I approach tomes on economics with some trepidation. However, An Economist in the Real World turns out to be a treat. Filled with careful deductive reasoning and free of jargon, it is an important book that urges government, corporations, and civil society to come together to tackle India's problems and realize India's full potential.
—Anand Mahindra, Chairman, Mahindra GroupThis is a beautifully written and engaging book describing Basu's years as chief economic adviser to the Government of India. An Economist in the Real World reveals a brilliant and lively mind combined with a compassionate humanity. But more than that, it conveys an understanding of the rich complexities of India, the challenges and the hopes of this great subcontinent with more than a billion people. A must-read for anyone interested in either development or India—or who simply wants to learn about the adventures of an academic entering the terrain of high-stakes politics.
From my corporate perch, I approach tomes on economics with some trepidation. However, An Economist in the Real World turns out to be a treat. Filled with careful deductive reasoning and free of jargon, it is an important book that urges government, corporations, and civil society to come together to tackle India's problems and realize India's full potential.