September 27, 2017

Slowdown and the Perils of #hashtag Economics

In this New Indian Express piece,  Shankkar Aiyar,  Visiting Fellow at IDFC institute, argues that the 'let us do something' attitude has led to quick fixes being touted without regard for costs and consequences. 


He writes "In the 1840s, Claude Frédéric Bastiat, thinker and economist, wrote a seminal essay, Petition of the Candle-makers. Deploying satire in a fictitious petition to the lawmakers, Bastiat stated that candle-makers are “subjected to the intolerable competition” of sunlight, and how it had reduced the candle industry “to a state of complete stagnation”. The solution to revive the fortunes of candle-makers, he mooted sardonically, was “to pass a law, whereby shall be directed the shutting up of windows, dormers, skylights” to enable “shutting out as much as possible all access to natural light” and “thus create the necessity for artificial light” to drive demand and the multiplier effect for growth.


The essays Bastiat wrote were aimed at mocking/exposing many popular, ideological and influential economic fallacies—which prevailed then and continue to prevail now. They also illustrate the distortionary potential of misplaced notions, the impact of voodoo politics on the economy and the perils of short-termism. Ever since the slowdown in the economy has come to be accepted—a reality visible since many quarters, but evaded consistently—there has been a rash of ideas from within and outside the government to revive the it. The policy air is being pollinated with theories—many of which have the scent of the candle-makers’ petition and reek of absurdity."


Read the full article here.

Topic : State Capacity / In : OP-EDS
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