econ-cover

<div class="at-above-post-homepage addthis_tool" data-url="https://blog.lareviewofbooks.org/essays/o-big-brother-art-thou/"></div>The Trump administration’s handling of COVID-19, from early denials of a pandemic to recent refusals to wear face masks, has been widely critiqued. This indifference and inaction have been attributed to science-phobia, cronyism, fragile egotism, and administrative ineptitude. But another factor, one that predates the current administration and is therefore underemphasized by the president’s critics, is our collective fetishization of capitalism.
Last year, a majority of Americans were <a href="https://www.realclearpolitics.com/real_clear_opinion_research/sweeping_new_poll_reveals_american_attitudes_toward_the_american_dream_and_capitalism.html">opposed</a> to further government involvement in the economy. Today a majority are <a href="https://www.washingtonpost.com/opinions/2020/05/12/trump-is-failing-disastrously-americans-know-it-new-polls-show/">critical</a> of President Trump’s response to the novel coronavirus. But his response is at least in part a reflection of our prevailing beliefs about the role of government.
This ideological aversion to government intervention can be traced back to Adam Smith’s “Invisible Hand,” an idea later formalized by Kenneth Arrow and Gérard Debreu as the “First Welfare Theorem” of economics. The theorem states that under some conditions, self-interested individuals operating in free markets will bring about efficient outcomes.
Smith was indeed fascinated by the idea that the pursuit of self-interest could contribute to public well-being. But he was also vocal about the many ways in which it might not. As Smith’s biographer Jesse Norman <a href="https://www.google.com/books/edition/_/_Y26swEACAAJ?hl=en&amp;sa=X&amp;ved=2ahUKEwjuwOeF9pDpAhWioXIEHZiwA4gQre8FMAB6BAgAEA4">writes</a>, the term “invisible hand” shows up only three times in his entire body of work. Arrow was even more <a href="https://www.dissentmagazine.org/article/a-cautious-case-for-socialism">skeptical</a> of markets’ capacity for self-management.
Nonetheless, many influential economists have been quick to appropriate these results in support of laissez-faire capitalism. Consider Milton Friedman, a particularly gifted practitioner of the sleight of hand. In his widely read book Capitalism and Freedom, he uses Smith’s appreciation of self-interest to argue against other-interest. In Friedman’s words: “Few trends could so thoroughly undermine the very foundations of our free society as the acceptance by corporate officials of a social responsibility other than to make as much money for their stockholders as possible.”
These conclusions have become embedded in the public imagination over decades. In the current scenario it is once again important to question their foundations.
Firstly, for unregulated markets to be efficient, businesses must be small enough that they lack market power. With powerful corporations, the First Welfare Theorem falls apart. Firms like Google and Walmart, which can manipulate wages and prices and influence policy, have almost nothing in common with my neighborhood bodega, which will suffer acutely during the current pandemic.
Secondly, for unregulated markets to be efficient, there should be no externalities, meaning one person’s choices must not impact another’s well-being. But externalities are unavoidable in a pandemic. My decision to go out for groceries affects not just me but others by adding to the risk of contagion. In the absence of regulation, people tend to ignore such social costs — consider the spring-breakers in Miami Beach, the anti-lockdown protestors, or the crowd around the man lecturing on God’s wrath in Manhattan’s Union Square. This is especially pertinent during the current crisis, where actions that were formerly harmless may still be harmless to oneself but potentially deadly to another.
Given the above, in the age of COVID-19, unregulated markets are not likely to deliver efficiency. But so what if they were? Efficiency is the concept of minimizing waste, of ensuring that resources are allocated towards those who would pay the most for them. This is largely irrelevant in the fight against a disease where the most vulnerable are rarely the most able to pay for their own protection. And yet we would agree that their inability to pay should not give them less access to testing and medical care than we give to actors and professional basketball players.
In contrast to the United States, many other governments, for all their flaws, are actively involved in the production and delivery of crucial goods and services in an effort to contain the virus. In <a href="https://www.nytimes.com/2020/02/03/world/asia/coronavirus-wuhan-hospital.html">China</a>, hospitals were constructed in days. In <a href="https://observers.france24.com/en/20200305-south-korea-coronavirus-COVID-19-kits-masks">South Korea</a>, the government provided survival kits and home visits to incentivize people to stay self-quarantined. <a href="https://www.theguardian.com/world/2020/mar/22/germany-low-coronavirus-mortality-rate-puzzles-experts">Germany</a> has been experimenting with heavy testing combined with innovative testing protocols.
These strategies recognize that free enterprise alone cannot meet the needs of an unprecedented public health crisis and that governments must be actively involved in subsidization, procurement, and production. But the United States has resisted granting a significant role to the public sector (an example being the president’s reluctance to invoke the Defense Production Act). This preference for markets and corporations was in full display at President Trump’s early press briefings on the coronavirus, where he stood flanked by business leaders with whom so much <a href="https://www.whitehouse.gov/briefings-statements/remarks-president-trump-vice-president-pence-members-coronavirus-task-force-press-conference-3/">mutual admiration</a> was exchanged that, were it not for the demands of social distancing, one would have suggested they all get a room.
The problem is not intrinsic to corporations, which often display an admirable spirit of innovation. For example, <a href="https://ny.eater.com/2020/3/20/21188605/brooklyn-distilleries-hand-sanitizer-coronavirus-shortage">gin distilleries</a> in Brooklyn have repurposed their equipment for the production of hand sanitizer. The trouble is a pervasive free-market philosophy that puts business on a pedestal and disparages state action.
This philosophy today gets amplified, reiterated, and legitimized by social media stars. As the government considers its options during the current crisis, Charlie Kirk, the president of Turning Point USA, <a href="https://twitter.com/charliekirk11/status/1246749851737415680?s=20">reminds</a> us that “Socialism Sucks because it lets government pick winners and losers.” Tom Fitton, the president of Judicial Watch, <a href="https://twitter.com/TomFitton/status/1242137862344249345?s=20">warns</a>: “Shutting down all businesses is the gov&#8217;t equivalent of hoarding toilet paper — and far more damaging to the pubic [sic] health and welfare.” (The latter being a curious case where a typo makes a nonsensical statement more coherent.)
Trump, while no doubt lacking in leadership, is obliged to cater to Americans’ mistrust of a socialized state. Before the next national disaster strikes, free market ideologues would do well to reassess their assumptions and understand that a step in the direction of state planning is not a step into a communist abyss.
&nbsp;
Karna Basu (<a href="http://www.karnabasu.com/">www.karnabasu.com</a>) is an Associate Professor of Economics at Hunter College and The Graduate Center, City University of New York.
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O (Big) Brother, Where Art Thou?

modi

<div class="at-above-post-homepage addthis_tool" data-url="https://blog.lareviewofbooks.org/essays/artifice-anti-elitism/"></div>There is a growing trend of characterizing anti-liberal political leaders as &#8220;anti-elitist&#8221; — from Brazil’s Bolsonaro to Turkey’s Erdogan. The tag has also been applied to India’s ruling party, the BJP, and Prime Minister, Narendra Modi. In India, at least, it is time to put this notion to rest.
In recent weeks, <a href="https://www.bbc.co.uk/news/world-asia-india-48579626">journalists</a> have been arrested for Twitter posts and a <a href="https://thewire.in/rights/rapper-hard-kaur-charged-with-sedition-for-posts-against-adityanath-bhagwat">rapper</a> has been charged with sedition for Facebook and Instagram posts. An ex-police officer, <a href="https://www.bbc.co.uk/news/world-asia-india-48704352">Sanjiv Bhatt</a>, was sentenced to life in prison by a state court. The official charge was murder in 1989, but his conviction is widely viewed as revenge by a government he has lambasted.  A <a href="https://www.bbc.co.uk/news/world-asia-india-48742961">Muslim man</a> suspected of theft was forced to recite Hindu chants before being lynched by a mob. And most recently, India’s Central Bureau of Investigation raided the offices of two prominent <a href="https://www.livemint.com/news/india/cbi-searches-premises-of-advocates-anand-grover-indira-jaising-1562823694843.html">human rights lawyers</a>.
These acts of intimidation come on the heels of the BJP’s overwhelming victory in recent parliamentary elections and Modi’s reappointment as Prime Minister of India. Upper-caste Hindu supremacists, the lifeblood of the BJP, celebrated the election results. But there was also notable enthusiasm from other quarters, including from some liberals who value secularism and free-speech. One theme, expressed not just in the dens of Twitter but by prominent writers in both the <a href="https://www.washingtonpost.com/opinions/2019/05/29/modis-india-is-aspirational-assertive-anti-elite/">Western</a> and <a href="https://www.livemint.com/opinion/columns/opinion-why-liberals-fully-deserved-to-lose-this-battle-1558615543189.html">Indian</a> media, was that Modi and his movement principally represent anti-elitism rather than religious nationalism.
This is a specious argument that positions the Indian electorate within a supposed global trend, while ignoring the specific dangers of the BJP’s illiberal sectarianism. Equating liberalism with elite-domination has become a means of justifying the majoritarian assault on hard-won minority rights. In India, for example, the BJP is no doubt sympathetic to anti-liberal causes, as its squelching of the press, religious intolerance, and attitude towards LGBT rights make clear.
Anti-elitism is well worth discussing on its own merits. India’s political and intellectual life has indeed long been dominated by urban English speakers. Since independence in 1947, the Congress party has been mostly controlled by Jawaharlal Nehru and his descendants, many of whom have also served as Prime Minister. In contrast, Modi comes from humble origins.
However, if the BJP were interested in anti-elitism rather than cultural hegemony, it has been coyly withholding. One needs only to turn to well-documented statements by senior party members, very often targeting non-elites. The Home Minister <a href="https://www.reuters.com/article/india-election-speech/amit-shah-vows-to-throw-illegal-immigrants-into-bay-of-bengal">Amit Shah</a> has called Bangladeshi Muslim migrants “termites” and promised religious discrimination in India’s migrant policy; member of parliament <a href="https://www.thehindu.com/elections/lok-sabha-2019/pragya-singh-thakur-calls-nathuram-godse-a-patriot-bjp-disagrees/article27149158.ece">Pragya Thakur</a> faces terrorism charges and referred to Mahatma Gandhi’s assassin as a “patriot”; Union Minister <a href="https://thewire.in/politics/minister-of-state-pratap-sarangi-criminal-cases">Pratap Sarangi</a> has been implicated in the killing of a Christian missionary family and described missionaries as “idiots”; and the Chief Minister of Uttar Pradesh, <a href="https://edition.cnn.com/2017/03/21/asia/india-uttar-pradesh-hindu-priest/index.html">Yogi Adityanath</a>, has demanded that those who dislike yoga leave India.
Furthermore, hate speech does not live and die in a vacuum. Recent years have seen a <a href="https://www.hrw.org/report/2019/02/18/violent-cow-protection-india/vigilante-groups-attack-minorities">rise</a> in crimes against outspoken critics of the BJP and religious minorities, including several lynchings in the name of protecting cows (which are holy to Hindus). In 2018, Reporters Without Borders ranked India 138 out of 180 countries on its press freedom index and noted a striking <a href="https://rsf.org/en/news/rsf-issues-warning-india-first-world-press-freedom-index-incident-report">increase</a> in the murder of journalists and in the rise of hate speech.
Analysts that downplay this point may argue that assaults are infrequent and that BJP leaders, despite being charged with serious communal crimes, have generally not been convicted. But this is akin to viewing the Mueller Report as an “exoneration” of Trump.
In fact, this continued tacit acceptance of intimidation and occasional violence allows the BJP to evade the difficult choices — both in its statements and political appointments — that would be required to earn the support of those who find its sectarianism unpalatable.
Soon after his win, Modi made a conciliatory <a href="https://edition.cnn.com/2019/05/29/asia/india-modi-muslim-fear-intl/index.html">speech</a> in which he referred to the “imagined fear” faced by minorities. But the fear is real. As members of a rare breed (we are a Hindu-Muslim couple), we can attest to it.
Much of our Muslim family resides in Ahmedabad in the western state of Gujarat. It was here that in 2002, <a href="https://www.telegraph.co.uk/news/2019/04/24/indian-woman-awarded-50000-compensation-gujarat-gang-rape-17/">riots</a> claimed nearly 2,000 lives, most of them Muslim, after a train fire in which sixty Hindu pilgrims were burned alive. Modi was then the Chief Minister of Gujarat. His role in the riots is a point of contention among Indians. Depending on one’s reading of the reports, he was either a violent instigator or, at best, grossly negligent. In either case, his leadership should be constantly scrutinized for signs of communalism and possible calls to violence.
Since the riots, most Muslims of Ahmedabad, our family included, have banded together and ghettoized, partly by choice, partly because of discrimination in the rental market. Everyday interactions are fraught with tension in this city where Modi is lionized and muscular religiosity is a badge of honor. For example, we recently saw, on the fringes of a Muslim neighborhood, that every pharmacy had a cow welfare donation box at its entrance.
Also striking is how Indians from elsewhere perceive Ahmedabad today. There is casual talk of the city’s beauty, its wide roads and expanding malls, and of how it must be a nice place to live. The terrifying and gruesome riots — where an estimated 250 girls and women were gang raped and then killed — have seemingly receded from the collective imagination despite the fact that the same animus persists, the vast majority of the perpetrators are free, and the scars have not healed. <a href="https://www.telegraph.co.uk/news/2019/04/24/indian-woman-awarded-50000-compensation-gujarat-gang-rape-17/">Bilkis Bano</a>, one of the only survivors of the riots to take her case to the courts, received a ruling just a few months ago, when the Supreme Court ordered the government of Gujarat to pay her $71,000 in compensation. Bano’s family had been caught by rioters while fleeing her village. Bano was gang-raped and thirteen members of her family, including her daughter, were killed. Bano survived only because the rioters believed she was dead.
In a country as thrillingly big and diverse as India, it is natural for people to be uninformed about their fellow citizens’ lives and fears, but this phenomenon is made worse by attacks on the press, lawyers, and whistleblowers like Sanjiv Bhatt. As a result, the persecution of dissent is met with apathy, and liberal values, including the protection of minorities, are regarded as the frivolous concerns of out-of-touch elites. It is this cultural shift — not anti-elitism but the acceptance of intolerance — that is a hallmark of this regime.
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The Artifice of Anti-Elitism

Karna Basu is an Associate Professor of Economics at the City University of New York and currently a Visiting Fellow at the London School of Economics. His website is&nbsp;<a id="LPlnk558327" href="http://www.karnabasu.com/" target="_blank" rel="noopener noreferrer" data-auth="NotApplicable">www.karnabasu.com</a>.