In Lighter Vein: Of Budget, Gyan, Economics & Experts
For every economist, there exists an equal and opposite economist, goes the joke. This realisation perhaps prompted another, often attributed to playwright and social commentator George Bernard Shaw: If all the economists were laid end to end, they would never reach a conclusion. Why begin an article with jokes? Someone might wonder. Well, there’s a reason.
The annual Budget is upon us. One needs to be armed with a good sense of humour to tolerate the heavy gyan on the media on matters economy over the week to follow. As economists, wannabe economists and non-economists hold forth on how budgetary provisions are life-changing agents, for good or bad, and produce an avalanche of numbers and complex words to prop up their view, life for the less knowledgeable is not going to be easy. They can end the bout of yawns and the struggle to keep eyelids apart by switching off, which is not such a terrible idea. For others, compulsive Budget watchers specifically, and those deciding to be a cricket equivalent of Cheteshwar Pujara and brave the blows, a good idea would be to see the lighter side of things and smile through it.
Admitted, it’s difficult to break into a smile at the mention of words and phrases such as fiscal deficit, demand, animal spirit and stimulus, but there’s scope for levity if one brings in a dispassionate view of the whole process. Didn’t they tell the same things last year, the year before and three years earlier? Didn’t they make the same brilliant observations and predictions earlier? For all we know, we stand where we were, economically that is; perhaps a tad worse than earlier. Why are they off the mark so often? These irreverent observations probably led to this joke: God created astrology so that economics would appear like an accurate science.
The beauty of economics is in views. Every compelling view has an equally compelling counter view; every impressive idea has an equally impressive one negating it; and every number is open to contrasting interpretations. If a glass is half-full for a set of experts, it is bound to be half-empty for another. What the heck is this fuss over a glass and water? An ordinary soul might wonder. He should be forgiven because he is no expert; he knows not what he thinks as simple water to be drunk is much more profound in import. It keeps an entire community of experts up and running, and earning. It does not matter whether they agree on anything.
Yes, we would notice a lot of disagreement in post-Budget analysis. There would be heated arguments over ways to revive a Covid-battered Indian economy. The country required a substantial stimulus package to recover its animal spirit. The Budget delivers just that, would assert one set of experts. Nope, would go the others. Wouldn’t it hurt fiscal discipline? Are you going to print money to fund the package? What about inflation then?
The economy is sluggish because there’s no demand. Businesses don’t borrow and invest in new activities because the appetite among the public to spend is low. More money in people’s hands means the more they will consume. This Budget is the perfect testosterone boost to spur all-round demand, would go one point of view. “Oh Yeah?” quick would come the response. “People save more and cut down on avoidable consumption as instinctive response when they are not too hopeful of the economy. Why would they go on a shopping binge when they have more money?”
The economy is doing great because four-wheelers are selling more. No, the economy is doing bad because two-wheelers are selling less. Check the data, inflation is under control. Oh really, how come petrol has touched Rs 90 and veggie prices are up? We foresee a V-shaped recovery; nada, it would be W-shaped. And so it would continue, point vs. counterpoint, one incomprehensible jargon vs. another, glass half-full vs. half-empty, and finally no agreement. Ever wondered why politicians finally take the call on economic matters? Surely for good reason. Economists have too many ideas but no solution. Politicians have no ideas but solutions to everything. In the end, neither makes dramatic difference to people.
Before someone concludes that this article aims to berate experts on the economy, and trash their knowledge, let’s be clear: that is not the case. Economics operates in a hugely complex universe with too many moving parts. The law of causation doesn’t quite hold good here because changes in point A may not trigger anticipated changes in point B. There are chances of unexpected developments, the Covid pandemic, for example, which can shake the economy to the bone. Moreover, when around 90 per cent of the economy functions in the unorganised sector — read off the official records — it is bound to make all analyses look a pointless exercise in extrapolation. And people can be irrational in their economic behaviour. How does one explain people forming mile-long queues to buy alcohol after the lockdown relaxed?
The very presence of numerous variables, however, should make our media experts more sober and guarded in their views on the economy. Scottish writer and essayist Thomas Carlyle called economics a dismal science. One hopes the analyses post-Budget don’t make it more dismal. To conclude, good luck to those choosing to be Pujara. May humour give them strength. They can catch a few jargons and hurl them at unsuspecting friends. It’s unlikely they would be mighty impressed though.