Mint opinion: India’s descent into stepwells of growth

Important long read by Kaushik Basu. How India started out as a promise and is now fast deteriorating into decline.

Remembering Emmanuel Farhi

This month, thousands of readers have read my posts on Emamnuel Farhi, which is why I think, along with me, they would also like to join this online memorial service for the economist who would have turned 42 on September 8th. For those who missed my posts, you could read them below:

Emmanuel Farhi

Emmanuel Farhi, too young to say goodbye

Dear beautiful minds, don’t be perfect

Do sign up for this event being organised by Harvard University, Department of Economics.

Stephen Marglin

Everyone this week has been raving about this interview and it’s not for no reason. Harvard economist Stephen Marglin talks about his India connection in this interview with Maya Adereth, Shani Cohen and Jack Gross on Phenomenal World. Interesting conversation, richly framed. Don’t miss it.

Ruth Alice Allen

Ruth Alice Allen, born in Texas in 1889, could be justly called a role model for women economists, if nothing more, and with a burst in feminist scholarship in recent years, it is only befitting that Allen’s work is rediscovered now.

At a time when it was difficult for women to secure academic positions, Allen earned professorship at the University of Texas Department of Economics, one of the USA’s leading centres of institutionalism.  Through her career defining work, she paved the way for women economists who followed in her footsteps. She taught a course titled ‘The Economic Status of Women’, which was one of the earliest courses in the US that examined the economic position of women.

But her interest in the subject can be traced back to her dissertation in 1933 on the labour of women in the production of cotton, which was later published as a monograph. In the work, Allen combined socioeconomic approaches to the institutionalist tradition of labour studies as pioneered by John R Commons and investigated the implications of women’s labour in the production of cotton for its price in the market and the living standards of families involved in cotton farming.

Allen’s findings established the role of tradition in leading women to take up unpaid labour, which depressed the wages of paid farm workers and led to overproduction of cotton, which in turn kept the price of cotton artificially low. The work also touches upon the effects of economic change on the lives of the women. This work put Allen in parallel to Margaret Reid and Charlotte Gilman Perkins in placing women’s production at the centre of economic analysis.

‘East Texas Lumber Workers’ (1961) is yet another pioneering work of Allen focusing on the economic conditions of the Texan lumber country, in which Allen viewed people’s physical, social and economic environments as the most important influence on their behaviour. Besides these, Allen worked on a range of collections and monographs on the labour history of Texas, historical account of a famous rail strike that rocked the region in 1886, and other labour issues in Texas, leaving behind a rich historical record that researchers can benefit from even today.

Allen spent six years of her retirement at Huston-Tillotson College, a predominantly black school in Texas, and retired in 1968. In 1979, she died at the age of 90.

Credentials:

BA in 1921 and her MA in 1923 – University of Texas at Austin
PhD – University of Chicago
Professor – University of Texas until retirement in 1959
Post retirement teaching position – Huston-Tillotson College

Emmanuel Farhi: Too young to say goodbye

I didn’t know Emmanuel Farhi except as someone invested in economics and the scholarship of economists. But his death has left me with several pressing thoughts. In an earlier post on this blog written immediately after his death, I had laid out the condolences and conspiracy theories around his death. Today, I am writing more to reflect on his death and why it’s sparked such sorrow and curiosity.

Emmanuel Farhi was just too young to die. To make it harder on people who were familiar with his work, he was brilliant. It is the coming together of both that makes his death so tragic.When you are barely 40 something, you are at once old enough to be respected for your ideas and young enough for the world to expect more from you. You are somewhere between accomplishment and greatness, shining bright enough for the world to almost picture you with your pioneering contributions in the future. At such a young age, his contributions carried a unique diversity of thought and depth of scholarship – from fiscal policy, public finance, exchange rates, to international macro and monetary systems, productivity and international trade. He transformed the theory of taxation, macroeconomics, and international finance.

In a column in Mint, economist Ajit Ranade wrote:

He challenged the notion of the “liquidity trap”, made famous by Keynes during the Great Depression. Keynes had said monetary policy would be ineffective in spurring investment during deep recessions. Farhi said that in the modern context, especially after the crisis of 2008-09, we have a “safety trap”. The world is facing a shortage of safe assets such as US Treasury bonds. And yields cannot go any lower, since zero is an effective lower bound. How do you deal with this? With the unorthodox monetary policy of creating new “safe assets”; i.e. central banks buying AAA-rated corporate bonds. The European Central Bank is already doing so. The second example is of the impossible trinity in macroeconomics, which says you cannot simultaneously control interest and exchange rates if your capital account is open. Farhi’s insight was that partial capital controls are a solution for open economies fighting an onslaught of inflows and battling volatility in exchange rates—a practical guide to countries like India. A third example is Farhi’s boldness in taking on an old debate called the “Cambridge capital controversy”. This was a critique by Joan Robinson of Robert Solow, Paul Samuelson (both Nobel winners) and others that you can’t describe an entire economy’s aggregate production function in terms of “capital stock”; buildings and machinery cannot be aggregated into one number. This debate fizzled out in the 1960s, but Farhi’s work has reopened it, examining it rigorously from the very foundations.

In the bright world of academia where brilliance is never in short supply, Farhi also symbolized the pinnacle of attainments one could achieve in his field – he was tenured at Harvard within five years of defending his PhD at MIT and his admirers called him a future Nobel winner. Being young and bright is a promise to not just people who want you to succeed, but to the field you contribute to. Bring all these together and you have the picture of a success story. Yet, Farhi was humble and generous and open to collaborations more than anyone of his intellectual stature would admit to. He published a significant number of his papers as a co-author.

Success, recognition and superlative achievement may not always translate into joy or happiness or attainment of whatever it is that holds one together, though. With strictly limited coverage of Farhi’s death, we don’t know what it is that he wanted or what it was that he could no longer bear. Perhaps, at such a young age, we are still figuring out life stuff, even though academically or professionally, it may be possible to excel and lead.

Here is a detailed interview with Emmanuel Farhi and another obit that I strongly recommend to understand his work.

100 years of Bombay School of Economics

Cafe Economics (and my former boss, if you don’t follow him already, do so pronto) paid a brilliant tribute to his alma mater in his Mint column last week.

Click below to read:

Emmanuel Farhi

Prof. Emmanuel Farhi was too young to die. Just as SSR was too young to die too. Farhi was 41; SSR was 34. In both events, we lost bright stars. This post is on Farhi’s passing away which has shocked people who knew, loved and admired him.

Moving tributes poured in from people who knew Dr Farhi when he passed away on July 23rd, 2020. Just 41, Dr Farhi was a brilliant economist and as some of his colleagues described him, a future “Nobel winner”. Robert C. Waggoner Professor of Economics in the Economics Department at Harvard University, Farhi was a member of the Commission Economique de la Nation, the National Bureau for Economic Research, and the Center for Economic Policy Research.

The Econ Focus once profiled him thus:

A young Emmanuel Farhi knew that his father, who passed away when Emmanuel was 10 years old, was an economist. But the boy never fully knew during his father’s lifetime just what an economist was.
Three decades later, Farhi is one of the pre-eminent macroeconomists of his generation in both the United States and his native France. It was a roundabout journey: At age 16, he won first prize in the French national physics competition. Two years afterward, on the threshold of entering university, he attained the highest score in the nation on the entry exam for France’s elite engineering school, the École Polytechnique. But he turned it down for another coveted institution, the École Normale Supérieure in Paris, often called ENS. (Today, ENS is also the alma mater of numerous other notable French economists, including the University of California, Berkeley’s Emmanuel Saez, MIT’s Esther Duflo, Farhi’s Harvard colleague and frequent co-author Xavier Gabaix, and Thomas Piketty, author of the 2014 bestseller Capital in the Twenty-First Century.)
At ENS, he planned at first to be a mathematician, but became drawn to economics instead. In his spare time, he read MIT professor Paul Samuelson’s classic economics text.
“I think what drew me in particular was the ability to model economic phenomena,” he says. “And I thought that was a powerful way of deeply understanding these forces and how they were shaping the world.”

Here is the best piece I read on him – I downloaded the English translation and there was no way to link to the translated version so please download to read:

Another excellent piece on French economists and their phenomenal success in the US – again, download English translation below:

There was an eerie silence around the cause of his death until this professor at INSEAD tweeted, hinting at mental illness in academia:

While none of the op-eds on his brilliant career as an economist mentioned “suicide” as the cause of death, a debate on Twitter erupted urging the need for openness and compassionate discussion on the subject. Another blog said he “died by his own hand” adding it to the list of four academics in the US who committed suicide over the past year.

The Future of Capitalism blog stated and I quote:

David Warsh reports: “Emmanuel Farhi, 41, of Harvard University, died last week, apparently by his own hand. It was the fourth such death of a prominent economist in a year, following those of Martin Weitzman, also of Harvard; Alan Krueger, of Princeton University; and William Sandholm, of the University of Wisconsin at Madison.”
Suicide is always, or at least often, something of a mystery, but if I had some reporters to assign, I’d send one to go investigate these four deaths and come back with a story about something—academic economics, mental health, something. It is of interest beyond academia. The Centers for Disease Control and Prevention reported in April 2020 that in the U.S., “From 1999 through 2018, the suicide rate increased 35%, from 10.5 per 100,000 to 14.2. The rate increased on average approximately 1% per year from 1999 to 2006 and by 2% per year from 2006 through 2018.” Also, that “Suicide is a major contributor to premature mortality as it ranks as the second leading cause of death for ages 10–34 and the fourth leading cause for ages 35–54.”

Here is a range of theories around his death. Whatever that it was that led to his death, the speculation must stop. What needs to be grieved is the definitive loss that his going away brings to the field of Economics. May he rest in peace.

I leave you with this video of him speaking on The Microeconomic Foundations of Aggregate Production Functions (and my heart just breaks watching this:

Edith Abbott

I am going to blog about 100 women economists and economic historians. I start with Edith Abbott.

Edith Abbott: From Economics to Social Work (1876-1957)

Credit: Wikimedia Commons

Edith Abbott, labour economist and economic historian, was the second woman to earn an Economics PhD from the University of Chicago in 1905. Interested in labour statistics and employment trends, Abbott published her first article ‘Wage statistics in the twelfth census’, in 1904 in the Journal of Political Economy. The article critiqued the statistical methods used in a report by Davis Dewey on the wage and employment trends of the 1900 census. Her next article, ‘Wages of unskilled labor in the United States, 1850–1900’, was the first statistical study of the wages of unskilled labour in the USA, often termed the ‘first step toward a complete history of wages’.

Abbott went on to write a large portion of the history of US wages and employment centering on women, all of which culminated in her seminal book, ‘Women in Industry’ in 1910. She wrote many books before and after but her work – ‘Women’s wages in Chicago: some notes on available data’ – led to several contributions that are relevant even today. In her documentation of the work lives of 17th and 18th century American women, she showed that the rate of labour market participation of working class women had remained substantially unchanged over the last century. Her research showed that the movement of women’s work out of the home into the factories was a significant result of the Industrial Revolution owing to the development of specialized machines and the economies of scale and subsequent division of labour, and not the advent of women’s employment.

In 1906, Abbott studied at the London School of Economics and Political Science and secured a teaching job at Wellesley College. However, that didn’t satisfy Abbott, who later took up teaching statistics at Chicago School of Civics and Philanthropy while also teaching part-time at the University of Chicago. Over the years, Abbott led many research projects and published several books and scores of articles in both scholarly and popular journals on her ongoing research into a variety of social problems and her opinions on social welfare laws.

Abbott also developed a reputation as an educator. In 1920, University of Chicago renamed the school the University of Chicago Graduate School of Social Service Administration, making it the first graduate school of social work in the US affiliated with a major research university. Abbott went on to become its dean in 1924 and over the years, drafted a curriculum that secured social work’s place as a new field within the social sciences with its focus on social statistics and on the historical, legal, economic and political underpinnings of social problems and public welfare efforts. To this effect, she also authored ‘Social Welfare and Professional Education’ in 1931. She also co-founded ‘Social Service Review’ published by the University of Chicago Press.

Abbott was one among the very small group of super cerebral American women who graduated out of US colleges and universities in its early years of opening to women. Committed to social causes, she started off as a labour economist and economic historian, and eventually pursued an academic career in social work.

Credentials:

PhD in Economics from University of Chicago
Professor and Dean of the University of Chicago Graduate School of Social
Service Administration
Long-time editor of the Social Service Review
Co-founder of Social Service Review published by the University of Chicago Press

Notable Publications:

The Real Jail Problem (1915)
Crime and the War (1915)
Recent statistics relating to crime in Chicago (Journal of the American Institute of Criminal Law and Criminology, 1922)
Are women a force for good government? (National Municipal Review, 1915)
Statistics in Chicago suffrage (New Republic, 1915)
The Administration of the Aid-to-Mothers Law in Illinois (1921)
Poor people in Chicago (New Republic, 1932)
Public Assistance (1941)

Joan Robinson

‘[M]y brain is quite congealed. I cannot think of a word to say to anyone.’

In India of the 1920s, a socially awkward young woman said this of her experience at the parties in Gwalior, India. In less than a decade, she joined Cambridge and became one of the foremost economic thinkers of our time.

I couldn’t help but read Joan Robinson while working on a book on unemployment. Her contribution to the understanding of unemployment remains unmatched.

Issue #6 of EconHistorienne, to be out late July, is dedicated to her. Keep watching this space.

Happy birthday to Dietmar Rothermund!

For a budding economic historian, reading Dietmar Rothermund’s work on India can be an illuminating experience, given that apart from the works of Indian scholars on Indian economic history, Rothermund’s books provide a refreshing view of history. But what can be really special about this veteran historian is his extremely warm demeanour even to those decades junior to him in age and experience.

The first time I ever wrote to him, Dr Rothermund replied within a day, with generous praise for my ideas and thoughts. I didn’t expect this, given that my experience with academics in India has always been mixed. Some of them can really be unwelcoming of young scholars, with their tardy and brief responses, and this is where Rothermund stands out and makes it a humbling experience for someone like me.

Yesterday, Dr Rothermund turned 87 years old and continues writing. This year, two of his books have been released, and he has been kind enough to send a copy my way for the review. It will take a while, I guess, because the copy will come from Germany, but do look out for my review (reviewing these would be my privilege) when you can in a couple of weeks, hopefully.

A very happy birthday, sir. It’s wonderful to know you and read your work.