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The uses of a Nobel prize in economics

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The 2015 Nobel prize for economics has been awarded to Angus Deaton, who is based in the Princeton University, in USA. Deaton’s work has been on poverty and his contemporaries in the field are Amartya Sen and Jean Dreze; all three have focused on poverty, malnutrition, consumption by households and how to measure these.

Herewith my view which I set out in a series of 37 tweets:

1 – like every single Nobel award category, the one for economics is calculated recognition of the use of Western ideas.
2 – There is no Nobel in economics for, say, Pacific islander economics or nomadic/pastoral economics. The boundary is clear.
3 – There is the additional problem, and it is a weighty one, of what is being recognised: a science or a thought experiment?
4 – Western economics can only ever and at best pretend to be a science (ignore the silly equations). There’s more.
5 – It has to do with food and food consumption choices. Do remember that. For the last 5-6 years the food MNCs and their..
6 – collaborators in Bharat have moved from hunger to nutrition. Remember that we grow enough food for all our households..
7 – and there are in 2016 about 175 million rural and 83 million urban households. So, food is there but choice is not yet..
8 – as clear as the marketeers and retailers pretend. No one truly knows, but economists claim to, and this one does.
9 – What then follows is the academic deification of the thought experiment, done carefully over a decade. The defenders..
10 – of the postulations of Deaton, Dreze, Sen et al turn this into a handmaiden of poverty study. And India is poor..
11 – (but Bharat is not). So we now have consumer choice, poverty, malnutrition and a unified theory to bridge the mess..
12 – for such a third world mess can only find salvation through the scientific ministrations of Western economics. The stage
13 – was thus set some years ago, when the Congress/UPA strove abundantly to craft a halo for this thought experiment..
14 – and in the process, all other explanations concerning food and the manner of its many uses were banished from both..
15 – policy and the academic trend of the day. But Deaton’s experiment is only as good as his references, which aren’t..
16 – for the references, as any kirana shop owner and any mandi bania knows, are more unreliable than reliable. What our..
17 – primary crop quantities are have only ever been a best estimate subject to abundant caution and local interpretation..
18 – for a thought experiment which seeks to unify food, malnutrition, poverty and ‘development’ this one has clay feet..
19 – which nevertheless is good enough for the lords of food crop and seed of the world, for it takes only the shimmer of..
20 – academic respectability such as that accumulated by Deaton, Dreze and Sen to turn postulate into programme. What we..
21 – will now see is what has been seen in medicine (and therefore public health) and in ‘peace’ (hence geopolitics) because..
22 – of the benediction the Nobel aura confers. This work will be press-ganged into the service of the new nutritionists..
23 – whose numbers are growing more rapidly than, a generation ago, did the numbers of the poverty experts. It is no longer..
24 – food and hunger and malnutrition but consumer choice, nutrition and the illusions of welfare. This is the masala mix..
25 – seized upon by those who direct the Nobel committee as they seek to control our 105 million tons of rice, 95 of wheat..
26 – our 43 million tons of coarse cereals, 20 of pulses, 170 of vegetables and 85 of fruit and turn this primary wealth..
27 – of our Bharat into a finance-capital manifesto outfitted with Nobel armoury that is intended to strip choice (not to..
28 – support it) from our kisans who labour on the 138 million farm holdings of our country (85% of them small and marginal)..
29 – and from our 258 million households (as they will be next year) towards whose thalis is destined the biofortified and..
30 – genetically modified menace of hyper-processed primary crop that is digitally retailed and cunningly marketed. This..
31 – is the deft and cunning manoeuvring that has picked on the microeconomist of post-poverty food study aka nutrition..
32 – as being deserving of Nobel recognition (when five years ago the Nobel family dissociated itself from this category).
33 – And so the coast has been duly cleared. The troublesome detritus of poverty macro-economics has been replaced by the..
34 – big data-friendliness of a rickety thought experiment which lends itself admirably to a high-fashion ‘development’..
35 – industry that basks in ‘sustainable’ hues and reflects the technology-finance tendencies of the SDGs. Food is no longer..
36 – in vogue but the atomisation of community crop and diet choice most certainly is. The pirate pennant of Western macro-
37 – economics is all aflutter again, thanks to the Nobel wind of 2015, but I will not allow it to fly over my Bharat. Never.

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May Day 2015

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Garment workers take part in a protest calling on the government to raise wages during a march to mark Labour Day in Phnom Penh, Cambodia.

Garment workers take part in a protest calling on the government to raise wages during a march to mark Labour Day in Phnom Penh, Cambodia.

All the substantial issues confronting the working class today — the rapid growth of social inequality, a tattered veneer of ‘democracy’ behind which ever more rapacious forms of neo-liberal economics rule over peoples and the environment, the explosion of police violence within countries (as in the USA) and of armed conflict between countries and regions — all these are bound up with the struggle against new forms of dominance.

The dangers of war loom more menacing today than they did in 1914 and in 1939. But for many workers in many countries on this May Day in 2015, war has never gone away. It persists because of the division of the world into what are called competing economies (as if ‘country’ and ‘economy’ are synonymous: they are nothing of the kind). On May Day, the subordination of the productive forces of households, families, communities and villages to the corporate and financial elite is protested and revoked.

Workers carry banners with messages in support of workers' rights during a march to mark Labour Day in Yangon, Burma (left). Members of the Group of the National Confederation of Trade Unions, raise their fists and shout slogans during their annual May Day rally in Tokyo.

Workers carry banners with messages in support of workers’ rights during a march to mark Labour Day in Yangon, Burma (left). Members of the Group of the National Confederation of Trade Unions, raise their fists and shout slogans during their annual May Day rally in Tokyo.

The world of work has been reshaped by globalisation. Today, much of global trade involves global buyers and suppliers, which has implications for workers’ welfare. Multinational enterprises source from a network of suppliers, who, in turn, compete with one another to obtain business. The task of providing compensation is therefore left to the supplier of the product or service, who is under considerable pressure with regard to the wages and conditions they can offer workers.

There are no mechanisms within the political system (there are scant differences between political systems installed today, for their methods are so similar) through which any of the grievances of the vast majority of the population can find expression. These democratic demands should be linked to programmes that advances the social rights of the working class. Chief amongst these must be a massive redistribution of wealth, which has been snatched away by what is mockingly called the ‘market’, itself a ghastly amalgam of banks, technocrats, commodity speculators, global finance capital, lobbyists and consultants, the multi-lateral lending organisations (like the World Bank and the Asian Development Bank), and all their cronies and cabals fostered by politicians.

Technological advancements and the expansion of the internet have caused temporal and physical distances to vanish. They have accelerated sweeping and damaging changes in the organisation of production and work. There has been a growth in the number of hours that enterprises operate (24 by 7 has become a household term) and therefore in the times when workers at all levels of service and production must be available to work. If they are not they are summarily sacked, fired, dismissed.

Protesters from the trade union PAME hold red flags during the May Day rally in front of the parliament building in Athens, Greece (left). People march in Moscow marking Labour Day.

Protesters from the trade union PAME hold red flags during the May Day rally in front of the parliament building in Athens, Greece (left). People march in Moscow marking Labour Day.

Since the 1980s, but especially in the 2010s, under the pressures of ‘competition’ but in fact as a strategy to create an ever-greater pool of consumers who are otherwise disenfranchised, companies and corporations run by the financial puppeteers have demanded greater flexibility in production and organisation. This has abandoned the traditional employment relationship which, for all its faults, has been one that has survived the Modern Era. It was the basis for labour protection measures. No longer. Non-standard employment arrangements have become common features in what are now cynically called labour markets, no matter where they are – Argentina, Micronesia, Scandinavia, sub-Saharan Africa. Work has become unstable and frighteningly insecure for families. Work has in fact been deliberately caused to become chronically unpredictable.

A concerted assault on the domination of our societies by this putrid but dangerous financial aristocracy is needed. For this enemy is determined to maintain its stranglehold through violence and through the punishment of poverty. This grip over our economic and political lives must be broken, for only when our societies are based on public ownership and democratic control of the forces of production and the means with which to safeguard ecology, natural resources and cultural values can genuine ‘development’ (a grossly abused term) take place.

Expanding India’s WPI, neglecting its CPI

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There are some 130 food items in the proposed WPI whereas the retail price collection basket with the most items has only 46.

There are some 130 food items in the proposed WPI whereas the retail price collection basket with the most items has only 46.

The Planning Commission is to agree by the end of 2014 March on the composition of an expanded set of items for the wholesale price index. The expanded index – with a few new categories and some reclassifications – is a proposal, formally, by the Office of the Economic Adviser, Ministry of Commerce and Industry.

But there are retail wheels within wholesale ones, and there are indications provided by the financial and business press that it is the Prime Minister’s Office that is backing the revision – which will also allow the Reserve Bank of India to make decisions about interest rates that could benefit industry.

My interest was drawn to the several additions that have been made to the category of ‘food articles’ (some of which has been covered by media reportage, which quite typically has ignored the changes proposed in the rest of the categories). More important than these few changes to the components of wholesale food price are the additions made under the ‘manufactured products – food products’ category.

This is a greater expansion of items (although the weightages for the new items have not yet been made public) and reflects the shift in what is being purchased by households – more packaged and processed food in place of raw cereals, pulses, fruit and vegetables. The expanded list also signals the dietary shift – a nutritional time-bomb whose effects can already be seen in the rising rates of youth becoming overweight – towards processed cereals, sugary drinks, edible oils, and snack foods.

The tall and narrow chart you see here shows the difference between the sets of items covered by the proposed new WPI and the current sets of items that are monitored for consumer retail prices. The three sets that do this are from: (1) the Ministry of Agriculture, Directorate of Economics and Statistics, (2) Ministry of Labour and Employment, Labour Bureau, and (3) Ministry of Consumer Affairs, Food and Public Distribution, Department of Consumer Affairs.

This is the second expansion in the number of items that make up the WPI in the last three years, whereas the relatively much smaller list of items that are used to monitor the prices of food for consumers has remained the same over the same period (the last revision was about five years ago in the Ministry of CAF&PD system).

As usual, there is little or no public discussion on the additions to the WPI and the continuing neglect of the items that are used to compute the consumer price index – some of those collection systems are 30 years old. The proposed expansion of the WPI food and food-related items will deepen the already very serious lack of correspondence between the WPI and CPI.

More troubling is the deepening meaninglessness of the CPI numbers – rural and urban for major states doesn’t help one bit if the list of items is not expanded to reflect more accurately what households actually buy, rather than ignore the growing list of items they do. Continuing to ignore this long overdue need for correction will short-change India’s salaried workers and wage earners, and very seriously under-report true inflation especially for food.

How the geography of world obesity has shifted

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(1) Obesity is on the rise globally: One in three adults in the world (1.46 billion) were overweight or obese in 2008, up by 23% since 1980. (2) Where overweight or obese people live is changing: North Africa and the Middle East, and Latin America now have almost the same percentage of overweight or obese people as Europe. Graphics: ODI

(1) Obesity is on the rise globally: One in three adults in the world (1.46 billion) were overweight or obese in 2008, up by 23% since 1980. (2) Where overweight or obese people live is changing: North Africa and the Middle East, and Latin America now have almost the same percentage of overweight or obese people as Europe. Graphics: ODI

For the last few years, food scarcity and the effects of industrial food have co-existed, often within the same demographic circle and within countries. This is no contradiction (although it demands far more attentive food policy) because the in the world’s industrialised agriculture and processed food system, both must exist in order that profits are made, in order that ‘economic growth’ is fulfilled.

Now, the BBC has reported that the number of overweight and obese adults in the ‘developing world’ (an unnecessary hangover that label, which media organisations must outlaw) has almost quadrupled to around one billion since 1980. The BBC report is based on a study by Britain’s Overseas Development Institute, which has said that one in three people worldwide was now overweight – the study uses these findings to urge governments to do more to influence diets.

(1) Obesity is growing in the developing world: In the developing world, the number of overweight or obese adults more than tripled from 250 million in 1980 to 904 million. (2) Where overweight or obese people live is changing: More adults were overweight or obese in developing countries than in rich countries in 2008. Graphics: ODI

(1) Obesity is growing in the developing world: In the developing world, the number of overweight or obese adults more than tripled from 250 million in 1980 to 904 million. (2) Where overweight or obese people live is changing: More adults were overweight or obese in developing countries than in rich countries in 2008. Graphics: ODI

There has indeed been a dramatic increase in the numbers of overweight or obese people in the past 30 years, as anyone who has passed through public places is likely to have observed. Previously considered a problem in richer countries, the biggest rises are in what those familiar with ‘development economics’ (another term that means effectively nothing) call ‘middle income countries’ and the ‘developing world’.
The ODI study, called ‘Future Diets’, has traced how the changes in diet – more fat, more meat, more sugar and bigger portions (what the Americans loving call ‘supersize’) – have led to a health crisis. It also looks at how policy-makers have tried to curb these excesses, usually with little success.

[Use this calculator to check where you are on what the BBC calls ‘the global fat scale’]

The official line on the causes of obesity includes higher incomes. The rationale is that those households which earn more are now able to choose the kind of foods they want, and that they choose poorly. Changes in lifestyle are mentioned, as is the increasing availability of processed foods, the dreadful impact of advertising in and on every space discernible by our senses, and the co-option of media by the food industry (along with most other consumerist industries that require propaganda to ensure quarterly profit and expectations are met and that shareholder value is protected).

(1) Sugar and sweetener consumption is rising: An indicator of changing diets is the increasing consumption of sugar and sweeteners, which has risen by over 20% per person between 1961 and 2009. (2) Change is possible: South Koreans ate 300% more fruit and 10% more vegetables in 2009 compared to 1980 thanks to concerted government-led campaigns. Graphics: ODI

(1) Sugar and sweetener consumption is rising: An indicator of changing diets is the increasing consumption of sugar and sweeteners, which has risen by over 20% per person between 1961 and 2009. (2) Change is possible: South Koreans ate 300% more fruit and 10% more vegetables in 2009 compared to 1980 thanks to concerted government-led campaigns. Graphics: ODI

But this is the very alarming result. In what are also called ’emerging economies’, where a large middle class of people with rising incomes lives in urban centres and takes less physical exercise than their parents and grandparents did, there is “an explosion in overweight and obesity in the past 30 years” which of course will lead to serious implications for public health.

The consumption of fat, salt and sugar has increased globally according to the United Nations, and these increases are significant factors in the increase seen in cardiovascular disease, diabetes and some cancers. The study has recommended more concerted public health measures from governments, similar to those taken to limit smoking in developed countries, but of course, to really bring about a change in the way new entrants into the urban middle classes eat, there must be the admission that economic ‘growth’ should first stop, then reverse. How likely is that in the next generation?

‘Thou shalt not’ to an economy of exclusion and inequality

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"Those excluded are no longer society’s underside or its fringes or its disenfranchised – they are no longer even a part of it. The excluded are not the 'exploited' but the outcast, the 'leftovers'." - Pope Francis. Image: L'Osservatore Romano

“Those excluded are no longer society’s underside or its fringes or its disenfranchised – they are no longer even a part of it. The excluded are not the ‘exploited’ but the outcast, the ‘leftovers’.” – Pope Francis. Image: L’Osservatore Romano

Pope Francis has issued, a month before Christmas, a blunt and plain message to the political and financial masters of our societies. That message is: the economics of exclusion and inequality must stop.

The message comes early in his ‘exhortation’ (called ‘Evangelii Gaudium’) and which has just been released by the Vatican. You will find it in Chapter 2 which is titled ‘Amid the crisis of communal commitment’. The main body of the exhortation has a lot of the usual evangelical language that such messages from the Vatican typically contain, but this chapter rings stark and true.

Francis has begun this section with: “It is not the task of the Pope to offer a detailed and complete analysis of contemporary reality, but I do exhort all the communities to an ‘ever watchful scrutiny of the signs of the times’. This is in fact a grave responsibility, since certain present realities, unless effectively dealt with, are capable of setting off processes of dehumanisation which would then be hard to reverse.”

Vatican_Francis_evangelii_gaudiumHe gives a nod to the proponents of technological remedies to many of our contemporary problems: “We can only praise the steps being taken to improve people’s welfare in areas such as health care, education and communications.” And then gets to the root of the issue with “at the same time we have to remember that the majority of our contemporaries are barely living from day to day, with dire consequences. A number of diseases are spreading. The hearts of many people are gripped by fear and desperation, even in the so-called rich countries. The joy of living frequently fades, lack of respect for others and violence are on the rise, and inequality is increasingly evident”.

“It is a struggle to live and, often, to live with precious little dignity. This epochal change has been set in motion by the enormous qualitative, quantitative, rapid and cumulative advances occurring in the sciences and in technology, and by their instant application in different areas of nature and of life. We are in an age of knowledge and information, which has led to new and often anonymous kinds of power.” This is a complaint as plain as any we have seen from those suffering from the effects of climate change, from the forced economics of austerity, from the land grabs and the perversions of democracy. It is possible that in the last sentence, Francis has also warned against the global spying (by the USA and its feckless allies) which included the Vatican too.

In the sub-section titled ‘No to an economy of exclusion’ Francis has made plain his opposition [get the English pdf here] to the current systems of power and control:
“Just as the commandment ‘Thou shalt not kill’ sets a clear limit in order to safeguard the value of human life, today we also have to say ‘thou shalt not’ to an economy of exclusion and inequality. Such an economy kills.”
“How can it be that it is not a news item when an elderly homeless person dies of exposure, but it is news when the stock market loses two points? This is a case of exclusion. Can we continue to stand by when food is thrown away while people are starving? This is a case of inequality. Today everything comes under the laws of competition and the survival of the fittest, where the powerful feed upon the powerless. As a consequence, masses of people find themselves excluded and marginalised: without work, without possibilities, without any means of escape.”

Vatican_Francis_main“Human beings are themselves considered consumer goods to be used and then discarded. We have created a ‘throw away’ culture which is now spreading. It is no longer simply about exploitation and oppression, but something new. Exclusion ultimately has to do with what it means to be a part of the society in which we live; those excluded are no longer society’s underside or its fringes or its disenfranchised – they are no longer even a part of it. The excluded are not the ‘exploited’ but the outcast, the ‘leftovers’.”

And in one angry paragraph, Francis effectively sends packing the army of macro-economists and financial manipulators who continue to claim that constant growth (GDP, economy, consuming, and so on) brings people out of poverty thanks to the ‘free market’.

“In this context, some people continue to defend trickle-down theories which assume that economic growth, encouraged by a free market, will inevitably succeed in bringing about greater justice and inclusiveness in the world. This opinion, which has never been confirmed by the facts, expresses a crude and naïve trust in the goodness of those wielding economic power and in the sacralised workings of the prevailing economic system. Meanwhile, the excluded are still waiting.”
“To sustain a lifestyle which excludes others, or to sustain enthusiasm for that selfish ideal, a globalisation of indifference has developed. Almost without being aware of it, we end up being incapable of feeling compassion at the outcry of the poor, weeping for other people’s pain, and feeling a need to help them, as though all this were someone else’s responsibility and not our own. The culture of prosperity deadens us; we are thrilled if the market offers us something new to purchase. In the meantime all those lives stunted for lack of opportunity seem a mere spectacle; they fail to move us.”

This is indeed revolutionary material from the Vatican. Now let’s see what effect it has on the suits in the G20, the banking parasites, the stock marketeers, the land grabbers, the ecological criminals in all our countries.

Why the global consultants want to see more Asian megacities

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The urbanisation-mongers say that more than 20 of the world’s top 50 cities ranked by GDP will be located in Asia by the year 2025, up from 8 in 2007.

The mantra of urbanisation has been at the forefront of the exploitative and socially destructive economics of the last 20 years.

In recent years it has been chanted loudest by the global consulting firms – the same ones which audit the books of the banks that collapse, taking small savers’ money with them, and the books of the Wall Street firms, which destroy jobs and abet the plunder of resources the world over.

Why are they saying this? Let’s look at what one of these firms, McKinsey, has been saying about urbanisation (this firm has concentrated heavily on pushing urban finance, and is lobbying hard with Asian governments to do as it recommends).

“Asia’s growing economic power manifests itself in many ways,” McKinsey has said. “Back in 2007, for example, only 8 of the top 50 urban areas (by GDP) were located there. Half of global GDP came from the developed world’s top 380 cities, with 20-plus percent from just 190 North American ones.”

The urbanisation-mongers say that in this new landscape of urban economic power, Shanghai and Beijing will outrank Los Angeles and London, while Mumbai and Doha will surpass Munich and Denver.

Over the next 15 years, McKinsey has said, the urban centre of gravity will move south and east. In the geography of globalisation, South means South Asia and India, East means China.

By 2025, this forecast posits that Asia will have upward of 20 of the top 50 cities, and Shanghai and Beijing will have GDPs higher than those of Los Angeles and London, according to this city-obsessed firm.

Why are they saying this? Pushing urbanisation means getting into one administrative unit more workers and more consumers at once. It means markets for goods and services (think finance, insurance, health, education) that are easier to reach and easier to shoehorn into uniform regulations.

The urbanisation-mongers say that the implications for companies’ growth priorities, countries’ economic relationships, and the world’s sustainability strategy are profound. They're right, and we must beware.

It also means creating nuclei for rural migrants, who will be gradually but inexorably pushed out of their villages as the costs and burdens of smallholder farming become more unbearable, and as the levels of rural food and fuel inflation become more unendurable.

The success of the urbanisation that McKinsey and its peers and the collaborators in government want depends on the steady depopulating of the rural districts of our countries, the abandoning of land that will then be taken over by corporate and industrial agriculture which will then supply crop monocultures to the food processing industries and retail systems designed to feed the miserable millions in crammed, unlivable cities.

Written by makanaka

October 5, 2011 at 22:24

Economics is not physics

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From ‘India and the Global Financial Crisis What Have We Learnt?’, by Dr Duvvuri Subbarao, Governor, Reserve Bank of India, as the K R Narayanan Oration, at the South Asia Research Centre of the Australian National University, Canberra on June 23, 2011.

A few months into the crisis [the 2008-09 financial crisis], the Queen happened to be at the London School of Economics and asked a perfectly sensible question: ‘how come none of the economists saw the crisis coming’. The Queen’s question resonated with people around the world who felt that they had been let down by economics and economists. As economists saw their profession discredited and their reputations dented, the economic crisis soon turned into a crisis in economics.

What went wrong with economics? It now seems that by far the most egregious fault of economics, one that led it astray, has been to project it like an exact science. The charge is that economists suffered from ‘physics envy’ which led them to formulate elegant theories and models – using sophisticated mathematics with impressive quantitative finesse –  deluding themselves and the world at large that their models have more exactitude than they actually did.

Admittedly, in a limited sense there may be some parallels between economics and physics. But similarity in a few laws does not mean similarity in the basic nature of the academic discipline. The fundamental difference between physics and economics is that physics deals with the physical universe which is governed by immutable laws, beyond the pale of human behaviour. Economics, in contrast, is a social science whose laws are influenced by human behaviour. Simply put, I cannot change the mass of an electron no matter how I behave but I can change the price of a derivative by my behaviour.

The laws of physics are universal in space and time. The laws of economics are very much a function of the context. Going back to the earlier example, the mass of an electron does not change whether we are in the world of Newton or of Einstein. But in the world of economics, how firms, households and governments behave is altered by the reigning economic ideology of the time. To give another example, there is nothing absolute, for example, about savings being equal to investment or supply equalling demand as maintained by classical economics but there is something absolute about energy lost being equal to energy gained as enunciated by classical physics.

In natural sciences, progress is a two way street. It can run from empirical findings to theory or the other way round. The famous Michelson-Morley experiment that found that the velocity of light is constant led to the theory of relativity – an example of progression from practice to theory. In the reverse direction, the ferocious search now under way for the Higgs Boson – the God particle – which has been predicted by quantum theory is an example of traversing from theory to practice. In economics, on the other hand, where the human dimension is paramount, the progression has necessarily to be one way, from empirical finding to theory. There is a joke that if something works in practice, economists run to see if it works in theory. Actually, I don’t see the joke; that is indeed the way it should be.

Karl Popper, by far the most influential philosopher of science of the twentieth century, propounded that a good theory is one that gives rise to falsifiable hypotheses. By this measure, Einstein’s General Theory was a good theory as it led to the hypothesis about the curvature of space under the force of gravity which indeed was verified by scientists from observations made during a solar eclipse from the West African islands of Sao Tome and Principe. Economics on the other hand cannot stand the scrutiny of the falsifiable hypothesis test since empirical results in economics are a function of the context.

The short point is that economics cannot lay claim to the immutability, universality, precision and exactitude of physics. Take the recent financial crisis. It is not as if no one saw the pressures building up. There were a respectable number of economists who warned of the perilous consequences of the build-up of global imbalances, said that this was simply unsustainable and predicted a currency collapse. In the event, we did have the system imploding but not as a currency collapse but as a melt down of the financial system.

We will be better able to safeguard financial stability both at global and national levels if we remember that economics is a social science and real world outcomes are influenced at a fundamental level by human behaviour.

[The entire oration is here.]

MDGs, hunger and the global food system

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Rawal Dam Running Dry

Rawal Dam Running Dry: A canoe near the former bank edge of Rawal Dam reservoir was left high and dry when waters receded to dangerously low levels due to the prolonged drought afflicting much of Pakistan. Officials of Pakistan’s Small Dams Organization (SDO) told the nation’s English-language Dawn newspaper that dam water was just 20 feet (6 meters) above the dead level and that the current supply might last only until mid-July. The reservoir has reached such low levels only once before, during the drought year of 2003. Photograph by Aamir Qureshi, AFP/Getty Images

A new report from the International Food Policy Research Institute (IFPRI, a US-based think-tank), discusses meeting the UN Millennium Development Goal to halve hunger. The report is called Business As Unusual.

The report says that the global food governance system itself needs to be reformed to work better. Reforms should include (1) improving existing institutions and creating an umbrella structure for food and agriculture; (2) forming government-to-government systems for decision-making on agriculture, food, and nutrition; and (3) explicitly engaging the new players in the global food system-the private sector and civil society-together with national governments in new or reorganised international organizations and agreements. A combination of all three options, with a leading role for emerging economies, is required.

The first step in reducing poverty and hunger in developing countries is to invest in agriculture and rural development. Most of the world’s poor and hungry people live in rural areas in Africa and Asia and depend on agriculture for their livelihoods, but many developing countries continue to underinvest in agriculture. Research in Africa and Asia has shown that investments in agricultural research and extension have large impacts on agricultural productivity and poverty, and investments in rural infrastructure can bring even greater benefits.

After the 2006-08 crisis, when staples such as maize, rice and wheat climbed to their highest prices in 30 years, many donor countries, aid agencies and analysts suggested that the existing Committee on World Food Security (CFS) be reformed. The CFS is a technical committee of the FAO, and serves as a forum in the UN system for the review and follow-up of policies on world food security, food production, nutrition, and physical and economic access to food.

Islamabad Water Carrier

Islamabad Water Carrier: Water shortages have become common for many people in the capital who must gather their daily water from government tankers or private trucks, when it's available at all. The nation’s acute rainfall shortage has also cut water supplies at hydroelectric dams, exacerbating disruptive power shortages and forcing officials to implement some rather dramatic solutions. Photograph by Aamir Qureshi, AFP/Getty Images

Jacques Diouf, director-general of FAO, announced last week that the CFS was being reformed to make it a “global platform for policy convergence and the coordination of expertise and action in the fight against hunger and malnutrition in the world”.

Uncoordinated policy actions of governments across the world during the 2006-08 food crisis made prices even more volatile and affected access to markets, said a new joint Agricultural Outlook for the next 10 years, produced by the Organization for Economic Cooperation and Development (OECD) and FAO. Food prices have come down, but are still high, according to FAO.

“While food prices have dropped, incomes because of the recession have been reduced by a much higher rate,” said Holger Matthey, an economist at the UN Food and Agriculture Organization (FAO). Some aspects of this “business as unusual” approach have already been successful in a few countries, but they need to be scaled up and extended to new countries to have a real impact on the reduction of global hunger.

Scaled-up investments in social protection that focus on nutrition and health are also crucial for improving the lives of the poorest of the poor. Although policymakers increasingly see the importance of social protection spending, there are still few productive safety net programs that are well targeted to the poorest and hungry households and increase production capacity.

The OECD-FAO Outlook has acknowledged that the 2006-08 food price crisis “was due to the contemporaneous occurrence of a panoply of contributing factors, which are not likely to be repeated in the near term. However, if history is any guide, further episodes of strong price fluctuations in agricultural product prices cannot be ruled out, nor can future short-lived crises”.