There’s a catchy phrase that Bangkok’s streetside vendors invoke to hardsell knock-offs: “Same same but different” — advertising their distinctiveness and, simultaneously, their verisimilitude with the real stuff. That earthy slogan has become something of a national signature statement, summoned up with a casual, self-deprecating pidgin pride: it comes emblazoned on t-shirts, and, according to associates who have — ahem! — willy-nilly savoured the full kathoey experience, the lady-boys offer this as consolation to startled clientèle making anatomical discoveries they hadn’t quite bargained for.

Much the same ‘same same but different’ spirit underlies the Finance Ministry’s recent exertions in India to defend the plunging rupee and the widening current account deficit — encouraging capital inflows, curbing “non-essential” imports, and stimulus for exports. The most striking aspect of these measures is that they represent, in sum and substance, the triumph of futile hope over fruitless experience, given that the UPA government had in 2013 harnessed these same tinker-tools without much to show for it. Although it’s fair to say that the macro fundamentals of the economy today are somewhat more robust than they were back then, it says something about the politicisation of economic policy that the BJP would have us believe these measures are merely intended as becalming prophylactics — whereas, when in the Opposition in 2013, and therefore evidently unmindful of the need for rhetorical moderation, it had characterised them as adrenaline shots to a heart at risk of seizure.

Gyrations in both the currency and stock markets since mid-September, when the Finance Minister unveiled these underwhelming proposals, have validated the scepticism that they engendered. That’s hardly surprising, given that the seeds of failure are embedded within those policies. Not all the enticements that Arun Jaitley may line up can conceivably induce global moneybags to loosen their purse strings until planetary configurations are propitious. Like the deaf adder in the Scriptures, capital flows, particularly from Foreign Portfolio Investors, will not “hearken to the voice of the charmer, charm he ever so wisely”. As one analyst put it, they are driven more by global push factors than by domestic pull factors. That’s not to make the case for Caesarean “it will come when it will come” fatalism, but to account for why the markets figured out soon enough that the government was firing blanks with these ‘same same but different’ policies.

Similarly, the markets appear to have discounted the government’s stated intention to abide by its fiscal deficit target of 3.3 per cent of GDP in financial year 2019 without having to make cuts to capital expenditure. Evidently, the government wished to signal that it would not sacrifice growth, buthistory shows that an inevitable shortfall in government revenues will almost certainly necessitate capex cuts later in the year, which in turn will impact growth. That’s the downside of rinsing and repeating ‘same same but different’ policies.

In a broader sense, the BJP-led government has, for all of Prime Minister Narendra Modi’s pre-2014 promises of “minimum government, maximum governance”, expanded governmental intervention in ways that belie both those claims — and, in fact, invoke the worst statist impulses of an Indira Gandhi on a bad hair day. In particular, the Modi government’s frequent use of LIC to bail out troubled public sector undertakings comes right out of the ‘same same but different’ copybook she blotted with cavalier disdain for public resources.

Of course, the affliction under whose malefic influence policymakers trot out tired, second-hand, failed policies of yesterday isn’t confined to the BJP. Both at home and abroad, the disease has countless governments and leaders in its grip, and through the Cycle of the Ages, bad economic history has played itself out over and over again.

In The General Theory of Employment, Interest, and Money , a masterly exposition of economic failings, written in the years following the Great Depression, John Maynard Keynes sought to explain why the ghost of bad ideas is never exorcised. He wrote: “The ideas of economists and political philosophers, both when they are right and when they are wrong, are more powerful than is commonly understood... Practical men, who believe themselves quite exempt from intellectual influences, are usually the slaves of some defunct economist. Madmen in authority, who hear voices in the air, are distilling their frenzy from some academic scribbler of a few years back.”

Unsurprisingly, therefore, outdated economic shibboleths find expression right across the ideological spectrum. And each time they are invoked, it represents both a failure of economic imagination and an unwillingness to learn the harsh lessons of history. The ongoing trade wars, with countries around the world, including India, lining up walls of tariffs and non-tariff protectionist measures, are only the most recent manifestations of this. Although the global financial crisis of 2008 comprehensively exposed the limitations of the efficient-markets hypothesis — insofar as they relate to the financial markets — and austerity-centred policy responses of governments worldwide, the same-old, same-old theories and fallacies continue to stagger around, sucking the oxygen out of the limited space there exists for envisioned — and imaginative — policymaking.

(Eco-latte is a new monthly column about the politics that drive economic policies)

BLINKVENKYNEW
 

Venky Vembu is Associate Editor, BusinessLine

e-mail: venky.vembu@thehindu.co.in

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