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Deepak Lal's findings



PRE-DEBATE

Two quotes I liked, whose sum and essense must somehow be put into the
Preamble:

"Hence, the best that can be expected in the real world of imperfect
markets and imperfect bureaucrats is a second best. But judging between
alternative second-best outcomes involves a subtle application of
second-best welfare economics, which provides no general rule to permit
the deduction that, in a necessarily imperfect market economy, particular
dirigiste polices will increase economic welfare. They may not; and they
may even be worse than laissez-faire." (page 16 of his book, Against
Dirigisme)  

	[I differ a bit. Welfare economists might have no clue about
	which activity can fail in government, but experienced and
	well-trained bureaucrats themselves can tell. Also, data is
	now available for comparing the overall results of say,
	public sector industries vs. private sector ones. I would
	say: go empirical. Go well beyond equations and into data as
	well as 'focus groups' of human brains, each equally or more
	competent, at least in some things, than that of the best
	economists who write the welfare theorems]

p. 22, Deepak Lal says, "[M]ost of the more serious distortions are due
not to the inherent imperfections of the market mechanism but to
irrational governmental interventions, of which foreign trade controls,
industrial licensing, various forms of price controls, and means of
inflationary financing of fiscal deficits are the most important. In
seeking to improve upon the outcomes of an imperfect market economy, the
dirigisme to which numerous development economists have lent intellectual
support has led to policy-induced distortions that are more serious than,
and indeed compound, the supposed distortions of the market economy they
were designed to cure."

For those not familiar with the word, dirigisme, Prof. Lal explains the
'dirigiste dogma' to mean "the major thrust of much of development
economics has been to justify massive government intervention through
forms of direct control usually intended to supplant rather than to
improve the functioning of, or supplement, the price mechanism." (page 14)

I had requested Deepak Lal to join us in these discussions/ debates, but
he has not yet done so. I hope Barun can make him join. We are talking
about the same things dear to his heart, and this is a forum to discuss
and take his message to the people directly. The ivory towers have to be
lowered to the village level. The internet global village, that is.

SS