Three Key Points from World Bank’s Chief Economist
I recently had the privilege of not only attending a two-part on-campus lecture by Kaushik Basu, but also, of chatting with him for a quarter of an hour following his second talk. Basu, a Cornell University academic, is currently the chief economist and a senior vice president at the World Bank, and was at Brown to deliver the inaugural O.P. Jindal Lecture at the Watson Institute for International Studies, as part of my school’s India Initiative program.
A former advisor to the government of India, Basu spoke about the Asian giant’s post-colonial economic history, and the country's relationship with the crisis-ridden economies of Europe and the United States. As a growing aficionado of lists, I decided to distill a few of the interesting things I gleaned from this experience into 3 points, below:
1. If you’re not an expert in the field, thou shalt not “BS”
As listeners threw one question after the other at the eminence in the room, Basu, who gave back solid responses, struck me by his answer to one or two of those queries: “I’m not well-versed in that area,” or “I am fully caught up with the latest literature in that field, but...” One of those questions pertained to climate change, and it was very refreshing to see Mr. Basu prefacing his response that way.
Not only do most experts in one area feel the need to be all-knowing textbooks of every field, but also, they often go right ahead and feign knowledge, just in case everyone else holds them in less regard. Imagine if this sort of intellectual humility beyond one’s field was seen in, say, Washington. Senators and Congressmen admitting that climate science, or women’s reproductive rights, or the statistics of polling, or even basic economics was not their piece of cake — how much better would America’s political discourse and the resultant policies be? Now apply that to every field and every person who, for one reason or the other, wants to be a wide-ranging — but ultimately depthless — force of influence.
2. The idea of Indian "dependency" on the West is now a misnomer
Basu spoke insight-fully about India’s past and future economic prospects — including bits about bribery, India’s central Bank, its potential for a stronger economic ties with Australia, his opinion on free markets and enterprise — but my favorite Econ wisdom away from the lecture podium. To an assertion, during Q&A, that India had some sort of dependency on Western aid and exports, Basu replied that this characterization was, simply, a misnomer. He cited India’s indifference to the soon-ending aid from the UK, and his country’s direct foreign transfers to the UK, which are now greater than the transfers going tin the opposite direction. This is a key point for all sorts of emerging economies, many of whom are finding ways to survive in a world where EU demand of their exports is being hollowed out by the sovereign debt crisis.
3. Hungary, not Zimbabwe, has history’s worst-ever inflation rate
Yes, I know, the last point is kind of personal, since I’m Harare born and bred, but I’d casually assumed no other country had ever surpassed the billions-of-percentage-points inflation that I witnessed first-hand in the climactic year of my native country’s economic crisis, 2008. 1946 Hungary, it turns out, recorded inflation that soared above anything else ever seen - and this epiphany was mine thanks to Mr. Basu’s remark during our sideline chat, where he also cited a Lucas and Fallon report about labor demands in India and Zimbabwe.
The biggest reason why this point matters, though, apart from historical accuracy, is the contrast it shows between the Zimbabwe of 2008 and Zimbabwe today. A less-than-ideal coalition government in Zimbabwe dollarized the economy, and inflation has plunged to standard levels, within the 2-4% range. This, among other macroeconomic considerations, makes it a more attractive destination for investor funds, and it’s hardly the only African country making upward strides despite some caveats. A lot of investors who are keenly interested in tapping into the emergent frontier that is sub-Saharan Africa — several of whom were 2012 Business Today International Conference attendees I met in New York last month — ought to take note of the fast-changing narrative: the movement from basket cases and war-riven countries, to deliberately reforming, soon-to-be investment destinations.
VIDEO LINK: Kaushik Basu's full lecture at Brown
Pictured above: me and Mr. Basu.
@ 5:05 am careermom said:
Enlightening talk by Mr. Basu. This all knowing attitude has taken over many of the principal of the US market economy. Washington should step up and forget it's concerns about intellectual humility which are preventing a healthy corporate field of business. American could learn from India and the rest of Asia to make the concept of a career something far more valuable.
Post new comment