27 December 2011

Sen on the Folly of Austerity

At the Financial Times online you can find this text of a recent talk by Amartya Sen. He directs much of his analysis at India and its economic foibles of its government. But he starts out by castigating the popular austerity policies being peddle in the developed world.
"Like many board games that were developed in India, of which chess is perhaps the most important and famous, the game of “snakes and ladders” too emerged in this country a long time ago. With its balancing of snakes that pull you down and ladders that take you up, this game has been used again and again as a metaphor for life, telling us about our fortunes and misfortunes, and going further, about the consequences of good deeds and bad actions. Good decisions yield handsome rewards – taking us rapidly up a ladder – and bad moves yield severe penalties – making us suffer a precipitate decline through the mouth of a long snake, all the way down to its distant tail.

[. . .]

I begin with snakes. I cannot hide from this audience my belief that a great many countries in the West seem to be doing their best to go straight into the mouth of a fairly hefty snake. In an economic world that is still emerging very slowly from the gigantic crises of 2008, with the continuation of huge unemployment, very low growth, and languishing demand – as is the case in many of the traditionally rich countries, particularly in the bulk of Europe – it is hard to think that anything can be further from a ladder and as close to a snake as huge programmes of comprehensive economic austerity. It is certainly true that many countries in Europe need – and have needed for some time – a better system of economic accountability and more responsible management of the economy. But to regard large-scale cutting of every kind of government expenditure, including those that decimate the quality of vulnerable human lives and the bases of centrally important human security, and create havoc to the possibility of economic growth, would be a very odd vision of a ladder."
Sen, of course, advances a set of fairly broad criteria for assessing economic development. And he staunchly defends democratic politics against technocratic incursions. But the immediate point is clear.

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