Amartya Sen on Keynes, Robinson, Smith, and the Bengal Famine

17 Aug

Sen in conversation with Angus Deaton and Tim Besleypdf and video.

Excepts:

On Joan Robinson

“She took a position—which has actually become very popular in India
now, not coming from the left these days, but from the right—that what you have to concentrate on is simply maximizing economic growth. Once you have grown and become rich, then you can do health care, education, and all this other stuff. Which I think is one of the more profound errors that you can make in development planning. Somehow Joan had a lot of sympathy for that position. In fact, she strongly criticized Sri Lanka for offering highly subsidized food to everyone on nutritional grounds. I remember the phrase she used: “Sri Lanka is trying to taste the fruit of
the tree without growing it.”

Amartya Sen

On Keynes:

“On the unemployment issue I may well be, but if I compare an economist
like Keynes, who never took a serious interest in inequality, in poverty, in the environment, with Pigou, who took an interest in all of them, I don’t think I would be able to say exactly what you are asking me to say.”

Amartya Sen

On the 1943 Bengal Famine, the last big famine in India in which ~ 3M people perished:

“Basically I had figured out on the basis of the little information I had (that indeed
everyone had) that the problem was not that the British had the wrong data, but that their theory of famine was completely wrong. The government was claiming that there was so much food in Bengal that there couldn’t be a famine. Bengal, as a whole, did indeed have a lot of food—that’s true. But that’s supply; there’s also demand, which was going up and up rapidly, pushing prices sky-high. Those left behind in a boom economy—a boom generated by the war—lost out in the competition for buying food.”

“I learned also—which I knew as a child—that you could have a famine with a lot of food around. And how the country is governed made a difference. The British did not want rebellion in Calcutta. I believe no one of Calcutta died in the famine. People died in Calcutta, but they were not of Calcutta. They came from elsewhere, because what little charity there was came from Indian businessmen based in Calcutta. The starving people
kept coming into Calcutta in search of free food, but there was really not much of that. The Calcutta people were entirely protected by the Raj to prevent discontent of established people during the war. Three million people in Calcutta had ration cards, which entailed that at least six million people were being fed at a very subsidized price of food. What the government did was to buy rice at whatever price necessary to purchase it in the rural areas, making the rural prices shoot up. The price of rationed food in Calcutta for established residents was very low and highly subsidized, though the market price in Calcutta—outside the rationing network—rose with the rural price increase.”

Amartya Sen

On John Smith

“He discussed why you have to think pragmatically about the different institutions to be combined together, paying close attention to how they respectively work. There’s a passage where he’s asking himself the question, Why do we strongly want a good political economy? Why is it important? One answer—not the only one—is that it will lead to high economic growth (this is my language, not Smith’s). I’m not quoting his words, but he talks about the importance of high growth, high rate of progress. But why is that important? He says it’s important for two distinct reasons. First, it gives the individual more income, which in turn helps people to do what they would value doing. Smith is talking here about people having more capability. He doesn’t use the word capability, but that’s what he is talking about here. More income helps you to choose the kind of life that you’d like to lead. Second, it gives the state (which he greatly valued as an institution when properly used) more revenue, allowing it to do those things which only the state can do well. As an example, he talks about the state being able to provide free school education.”

Amartya Sen

Disgusting

7 Feb

Vegetarians turn at the thought of eating the meat of a cow that has died from a heart attack. The disgust that vegetarians experience is not principled. Nor is the greater opposition to homosexuality that people espouse when they are exposed to foul smell. Haidt uses similar such provocative examples to expose chinks in how we think about what is moral and what is not.

Knowing that what we find disgusting may not always be “disgusting,” that our moral reasoning can be flawed, is a superpower. Because thinking that you are in the right makes you self-righteous. It makes you think that you know all the facts, that you are somehow better. Often, we are not. If we stop conflating disgust with being in the right or indeed, with being right, we shall all get along a lot better.

The Best We Can Do is Responsibly Answer the Questions that Life Asks of Us

5 Feb

Faced with mass murder, it is hard to escape the conclusion that life has no meaning. For how could it be that life has meaning when lives matter so little? As a German Jew in a concentration camp, Victor Frankl had to confront that question.

In Man’s Search for Meaning, Frankl gives two answers to the question. His first answer is a reflexive rejection of the meaninglessness of life. Frankl claims that life is “unconditional[ly] meaningful.” There is something to that, but not enough to hang on to for too long. It is also not his big point.

Instead, Frankl has a more nuanced point: “If there is … meaning in life …, then there must be … meaning in suffering.” (Because suffering is an inescapable part of life.) The meaning of suffering, according to him, lies in how we respond to it. Do we suffer with dignity? Or do we let suffering degrade us? The broader, deeper point that underpins the claim is that we cannot always choose our conditions, but we can choose the “stand [we take] toward the conditions.” And life’s meaning is stored in the stand we take, in how we respond to the questions that “life asks of us.”

Not only that, the extent of human achievement is: responsibly answering the questions that life asks of us. This means two things. First, that questions about human achievement can only be answered within the context of one’s life. And second, in responsibly answering questions that life asks of us, we attain what humans can ever attain. In a limited life, circumscribed by unavoidable suffering, for instance, the peak of human achievement is keeping dignity. If your life offers you more, then, by all means, do more—derive meaning from action, from beauty, and from love. But also take solace in the fact that we can achieve the greatest heights a human can achieve in how we respond to unavoidable suffering.

Firmly Against Posing Firmly

31 May

“What is crucial for you as the writer is to express your opinion firmly,” writes William Zinsser in “On Writing Well: An Informal Guide to Writing Nonfiction.” To emphasize the point, Bill repeats the point at the end of the paragraph, ending with, “Take your stand with conviction.”

This advice is not for all writers—Bill particularly wants editorial writers to write with a clear point of view.

When Bill was an editorial writer for the New York Herald Tribune, he attended a daily editorial meeting to “discuss what editorials … to write for the next day and what position …[to] take.” Bill recollects,

“Frequently [they] weren’t quite sure, especially the writer who was an expert on Latin America.

“What about that coup in Uruguay?” the editor would ask. “It could represent progress for the economy,” the writer would reply, “or then again it might destabilize the whole political situation. I suppose I could mention the possible benefits and then—”

The editor would admonish such uncertainty with a curt “let’s not go peeing down both legs.”

Bill approves of taking a side. He likes what the editor is saying if not the language. He calls it the best advice he has received on writing columns. I don’t. Certainty should only come from one source: conviction born from thoughtful consideration of facts and arguments. Don’t feign certainty. Don’t discuss concerns in a perfunctory manner. And don’t discuss concerns at the end.

Surprisingly, Bill agrees with the last bit about not discussing concerns in a perfunctory manner at the end. But for a different reason. He thinks that “last-minute evasions and escapes [cancel strength].”

Don’t be a mug. If there are serious concerns, don’t wait until the end to note them. Note them as they come up.

How Do We Know?

17 Aug

How can fallible creatures like us know something? The scientific method is about answering that question well. To answer the question well, we have made at least three big innovations:

1. Empiricism. But no privileged observer. What you observe should be reproducible by all others.

2. Open to criticism: If you are not convinced about the method of observation, the claims being made, criticize. Offer reason or proof.

3. Mathematical Foundations: Reliance on math or formal logic to deduce what claims can be made if certain conditions are met.

These innovations along with two more innovations have allowed us to ‘scale.’ Foremost among the innovations that allow us to scale is our ability to work together. And our ability to preserve information on stone, paper, electrons, allows us to collaborate with and build on the work done by people who are now dead. The same principle that allows us to build as gargantuan a structure as the Hoover Dam and entire cities allows us to learn about complex phenomenon. And that takes us to the final principle of science.

(Numb)ers

7 Jan

Limited Time Only

Lifespan ~ 80 years*52 weeks/year ~ 4k weeks

If you are 40: 2k weeks to go.

If you are 70: another 500–700 weeks.

Interpolate for rest.

Well-read

If you read a book a week for 50 years, you will read ~ 2500 books.

Approximately 130M books have been published.

Wage

India’s PPP adjusted median per capita income was $1,497/yr in 2013. So ~ 550M people < $1500/yr.

  • Since it is PPP wage, think about living on $1500/year in the US
  • Another way to think about it:
    Wage of median American working for a year ($26,964) > wage of 18 Indians working for a year
  • Yet another way to think about it:
    Avg. career ~ 35 years (30–65)
    What median American will earn in 2 yrs = lifetime earning of an Indian earning median income
  • Yet another way to think about it:
    median CEO/median worker wage ~ 4x
    median US Worker/median Indian worker ~ 18x
  • Yet another way to think about it:
    From a company’s perspective, median American has to be more than 45x productive (where shipping 0, as in lots of digital products) than median Indian or outsourcing or automation makes more sense.

Capuchin Monkeys and Fairness: I Want At Least As Much As The Other

1 Dec

In a much heralded experiment, we see that a Capuchin monkey rejects a reward (food) for doing a task after seeing another monkey being rewarded with something more appetizing for doing the same task. It has been interpreted as evidence for our ‘instinct for fairness’. But there is more to the evidence. The fact that the monkey that gets the heftier reward doesn’t protest the more meager reward for the other monkey is not commented upon though highly informative. Ideally, any weakly reasoned deviation from equality should provoke a negative reaction. Monkeys who get the longer end of the stick, even when aware that others are getting the shorter end of the stick, don’t complain. Primates are peeved only when they are made aware that they are getting the short end of the stick. Not so much if someone else gets it. My sense is that it is true for most humans as well – people care far more about them holding the short end of the stick than others. It is thus incorrect to attribute such behavior to an ‘instinct for fairness’. A better attribution may be to the following rule: I want at least as much as the others are getting.

Fairly Random

15 Mar

The lottery is a way to assign disproportionate rewards (or punishments) fairly. Procedural fairness—equal chance of selection—provides legitimacy to this system of disproportionate allocation.

Given the purpose of a lottery is unequal allocation, it is essential that we seek informed consent from the participants, and that we only use a lottery in important areas when necessary.

Fairness over the longer term
One particular use of lottery is in the fair assignment of scarce indivisible resources. For example, think of a good school with only a hundred open seats that receives a thousand applications from candidates who are indistinguishable (or only weakly distinguishable)—given limitations of the data —from each other in matters of ability. One fair way of assigning seats would be to do it randomly.

One may choose to consider the matter closed at this point. However, this means making peace with disproportional outcomes. Alternatives to this option exist. For example, one may ask the winners of the lottery to give back to those who didn’t win, say by sharing the portion of their income attributable to going to a good school, or by producing public goods, or by some other mutually agreed mechanism.

Fair Selection
Random selection is a fair method of selection over objects where we have no or little reason to prefer one over the other. When objects are observably—as much as the data can tell us—the same, or similar, same within some margin, random selection can be seen as fair.

One may extend it to objects that are different but for no discretionary action of theirs, say people with physical or mental disabilities. However, competing concerns, such as lower efficiency, etc., exist. More generally, selection based on some commonly agreed metric, for instance, maximal increase in the public good, may also be considered fair.

As is clear, those who aren’t selected don’t deserve less, and indeed adequate compensation ought to be the formal basis of selection, unless of course rewards once earned cannot be transferred (say lottery to get a liver transplant, which leaves others dead, and hence unable to receive any compensation, though one can imagine rewards being transferred to relatives, etc.).

Structural Inequality

27 Nov

Nick Clegg, leader of the Liberal Democrats, recently spoke about social mobility. He said,

My particular focus is on inter-generational social mobility – the extent to which a person’s income or social class is influenced by the income or social class of their parents. Social mobility is a measure of the degree to which the patterns of advantage and disadvantage in one generation are passed on to the next. How far, if you like, the sins of the father are visited on the son.

There is, of course, plenty of argument within the social science community about precise measures, international comparisons, and preferred metrics. But I think intergenerational social mobility speaks to most people’s definition of fairness.

Fairness means everyone having the chance to do well, irrespective of their beginnings. Fairness means that no one is held back by the circumstances of their birth. Fairness demands that what counts is not the school you went to or the jobs your parents did, but your ability and your ambition.

In other words, fairness means social mobility.

Social mobility is only half-imagined — as movement from lower rungs to upper rungs, not vice versa. Society, currently constructed, offers a relatively fixed (likely declining) number of upper shelf jobs, and it thus reasons that for every n transitioning to the upper echelon, a similar ought to transition to the lower rungs. Now a politician wouldn’t sell his idea — that he wants a certain number of rich people to make way for the poor and in turn take their place — but then we all expect such diplomacy from politicians.

Fairness as a level playing field or a fair lottery is widely accepted as an ideal. Wide acceptance is no insurance against fundamental problems. To help illustrate the problems, here’s an example.

Imagine a fair marriage in which at the beginning husband and wife flip a coin — heads the wife does all chores for the entire tenure of the marriage, tails the wife never has to do chores. Of course, marriages based on this fair coin toss don’t seem fair to us — we would ideally want all couples to share the unpleasant chores equally, or by some such equitable arrangement arrived at by mutual agreement.

Carrying over the analogy to society — we would want everyone to take part in unpleasant chores, and everyone to take part in more pleasant activities, equally; we simply don’t want everyone to just have an equal shot. Of course, such lack of specialization makes for a very inefficient system. So perhaps one can prorate the wage to the unpleasantness of work, with people stuck doing unpleasant work being provided wages at higher rates, greater leisure time, etc. exactly opposite the system we have in place now.

Summarizing, the current society is unfair not only because not everyone has a similar chance of success, but also because there are only a few good opportunities — mandating that there be a large set of losers, and a small set of winners.

Discussion on education and economic equality can be accessed here.

The Democratic Idea of Knowledge

3 Jul

In their misguided battle against ‘global warming’, the phrase, “science is not a democracy” has become a favorite with conservative pundits.

Well, I am co-opting their slogan to initiate discussion about something else—the future of knowledge.

Let us imagine that Google’s model of site ranking trumps all others. The Google model relies on the fact that if an information source is reliable, people will “vote” for it with a link. So more the number of links to the site, higher the ranking.

There are serious issues with this “democratic” model of ranking information. One falsehood linked again and again can give it the same credence as a fact. This theory is just an extension of the corner-shop gossip analogy with one substantive difference – in a linked online world, the effects are not localized but global. The model is troubling especially given that more acerbic, vituperative articles very likely get linked more than the dry, measured pieces. To drive home the point, let me etch out a particularly troublesome outcome – a world where all the knowledge is hijacked by zealots of either persuasion.

The democratic idea of knowledge rests upon the twin facts that information choices are diverse enough on the Internet to allow people to choice of source that has the most accurate information and that people who see the source with “right information” will know it is the “right information” and will be involved enough to “vote” with their links to the site. The paradigm just ignores one key thing -Internet, counterintuitively, doesn’t allow many choices. Ahem…

Hegemony is not only a problem with the mass-communication world but also with the Internet model. We are right now emerging from decades of a communication model dominated by mass-media where only a few outlets controlled the majority of the information. From this relatively oligarchical model, we are moving to a “distributed” model. The key problem with this distributed model is firstly that it is not really distributed. It is, in fact, narrower – a vast majority of the people look for information using just three tools – Google, Yahoo, and MSN. While these search engines spit out millions of results to our queries, studies show that most people never get beyond the first page. In this media market, the information hierarchy is in fact even more entrenched.

The other key issue that is at the heart of the problem of determining the veracity of information on the Internet is the relative anonymity of the Internet. The pedigree of knowledge is an important part in establishing the veracity of a piece of information and the relative anonymity of the Internet has raised concerns about the veracity of the information on it.

So, in all the Internet poses unique challenges for the existence and acceptance of “real” knowledge.