"We do not need economists, but philosophers to run the country"

International political economist Jean-Pierre Lehmann in conversation with Governance Now

trithesh

Trithesh Nandan | July 25, 2011


Prof. Jeane-Pierre Lehmann, Director, Evian Group
Prof. Jeane-Pierre Lehmann, Director, Evian Group

India is big on theory when it comes to development and poverty reduction, says international political economist professor Jean-Pierre Lehmann.

He says the approach should be pragmatic, not theoretical. The French economist, working in Switzerland for over 13 years, favours philosophers running the country - in line with philosopher Plato's beliefs. In an interview with Trithesh Nandan, he says, “We have more influence from economists now but we need more influence from philosophers on what kind of society do we want.”

He stressed on social reforms instead of second generation economic reforms in India where social issues like education, gender are given prominence.

Edited excerpts

How does the international community see India's growth trajectory?

With certain amount of admiration and interest. Earlier, the focus was on China but now it is also on India. I would say there is considerable amount of interest in the Indian growth story.

But many international reports say the current inflationary trend may bring down growth.

India, like many other countries, is facing a number of headways and pressures. Inflation is one of them and other related issues like food prices, social expectations will combine to make growth little bit lower. What I gather from the Indian story is there is quite a lot of variation between the states. There are different levels of performance among the individual states. But the world sees India in aggregate terms.

However, given the tremendous complexities, there is need for good governance, which is in very short supply. There is also question mark on distribution of growth.

Do you think that the high food prices are going to stay worldwide?

I think so, but also it is very dangerous to predict because there might be some technological breakthrough, which can change the scenario. But if you take the current situation and extrapolate it then, yes, the age of cheap food is over. When we talk about the age of cheap food, this was on the basis of high and middle income people having cheap food. If the food prices increase, it is going to be felt in urban areas but the farmers will be able to increase their incomes.

But in India the policy makers say that high growth will lead people out of poverty. But several other do not think so…

India, over the last twenty years, has run in the right direction. There have been significant number of people who have risen out the poverty pool. But we have to go beyond statistics. I do not think it is healthy to just debate on the basis of numbers. We can see that there are lots of destitute people.

What is the way out then?

More work has to be done at grassroots level. The approach to solve the problem is more top-down. It should have been bottom-up instead. However, it is more time consuming but developing skills, education, infrastructure, creating connectivity are the things which will give people the tools to lift themselves up. Also, it is of tremendous advantage to have a young population. But this population has to be educated, employed and motivated. In India, the education system seems to be very deficient. Teachers do not show up. It is bad for the country. One has to progress but those who are responsible should be held accountable. It is not just governance but requires people-oriented policies that are going to assess people by lifting them out of poverty rather than giving them subsidies. I am not saying that is not important but they are not making too much difference.

You wrote that too much theorising has come into the policy implementation? Can you elaborate on that?

Most of the debate going on between economists is a little bit sterile and abstract. What one needs is much more pragmatism. I am not an unqualified admirer of China by any means but one of the strengths of the Chinese system of poverty reduction is that despite being a communist state they are very pragmatic. Poverty reduction should come through action not through debates as the discussion seems like metaphysics.

The problem with development and the poverty reduction is too much theorising and second self-perpetuating bureaucracy. These people necessarily may not have interest in poverty reduction because if poverty is reduced than they will be out of jobs. It may be not good news for bureaucrats if million of people are lifted out of poverty. Also, we talk about funds being divested from the particular projects but people do not talk about the outcomes, which is very important. So, on the one side there is too much theorising and on the other  there are inefficiencies of the bureaucracy that is responsible for poverty reduction.

Also, there is a lot of influence from economists. We should have more from the philosophers on what kind of society we want. There should be social means to make people happy. Growth should be a key objective but it has to be tempered with a vision for the society.  

Do you see any ray of hope?

Yes, of course. There is greater awareness and challenge now. People are conscious about threat of widespread social destruction. But if there is no hope then a lot of people will feel alienated. Policy makers have to target the young generations.

India is a very resilient society and a very deep-rooted democracy. The economy could be more open not just to the outside world but itself. I feel that if India can lower barriers among the states itself this will add to the percentage to the growth.

You talk about opening of economy. There is a lot of talk going on on the opening up of multi brand retail sector to foreign direct investment. What are your thoughts on that?

If I were Indian, I would have been particularly hesitant in supporting Walmart’s entry to India. I favour the market, but with some regulations. You can’t let market determine everything. We have to think about what kind of society we want, what kind of planet we want. As a Frenchman, I can tell you that we liberalised the retail laws but the outcome is not socially satisfactorily. Before Walmart's entry in French villages, we had butchers, candle makers, bakers who have now virtually disappeared. Virtually all of the shops in the villages disappeared and instead we have banks, insurance offices and hair-dressers. People do not go for shopping anymore because there are no shops left anymore.

What about India's fight with black money?

It is affecting the Indian economy. Illegal capital outflow that is not translated into tax revenue happens in huge amounts. I do not know the size of it. But the Swiss authorities are now seeking to reform the system because their reputation is also at stake. Black money is not just economic problem but also an ethical problem.

Do you think that India should go for second generation reforms?

More than second generation economic reforms, there should be reforms in society. Like gender is important. Indian population needs to be convinced that daughters are important. This is where you need reforms as these are not structural reforms. Reforming has to be a constant process in any society.

There are protests in India on land acquisitions. What is you thought on this subject?

It is a governance issue. There should be some sort of social consultations on the issue of land, infrastructure. The consultation process might make things slower but the government should go through that.

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