conomist Abhijit Banerjee went straight back to sleep after getting an early morning call from the Nobel Committee that he and his wife, Esther Duflo, were winners of this year’s economics prize for their “experimental approach to alleviating global poverty.” But it wasn’t long before the phone started ringing off the hook with congratulatory calls. Banerjee’s new star status was also clear from the moment he landed in India. He met Prime Minister Narendra Modi in the capital and then flew home to a red-carpet welcome in Calcutta. Banerjee’s Nobel Prize coincided with an already planned trip to India to promote his latest book, Good Economics for Hard Times: Better Answers to Our Biggest Problems, published by Juggernaut Books in which he and Duflo seek to unpack the reasons – and offer some solutions — for the great challenges facing the world from climate change and migration to massive inequality and slowing growth. Banerjee took time aside to chat with The Telegraph about Calcutta and the different institutions where he studied and how they influenced him as well as his work as an economist.
Telegraph: You start with an advantage. I was your father’s student. It is difficult for me to be as combative as I once was. I once bowled you a googly about Nash (the American mathematician, the subject of the Hollywood movie, A Beautiful Mind). Not today. Not after the Prize.
Abhijit Banerjee: I am thankful for that. I had at least one interview that was relatively combative. I am happy to not have to do it again.
I am making a virtue out of necessity. It is always a mistake to enter into combat with a person who knows more than you do.
AB: That logic has not pervaded the world, let me say.
Tell me, Professor Banerjee…
AB: Don’t call me Professor Banerjee. That’s my father. Call me Abhijit.
I used to call him Dipakbabu though he was DB to most. Nine Indians have received the Nobel. If you do a demographic study, you will find there are four from Bengal, three from Chennai. And there is Har Gobind Khorana (a biochemist who won the Nobel for medicine) and Kailash Satyarthi who got the Peace Nobel. So around 80 per cent for Calcutta and Chennai. What would your neighbour in Boston, the Harvard geneticist David Reich, make of it? (Dr Reich famously explains history through DNA.)
AB: I would ignore it. I think there are two separate pieces to that story. There was a period in history when Calcutta was the intellectual hub. So, the three people from Chennai you could say they also passed through Calcutta. Two of them at least.
(Sir Venkatraman Ramakrishnan, President of the Royal Society, won the Nobel for chemistry).
AB: Easy to pick up a bunch of these correlations but I think there are reasons why Amartya and Rabindranath are from Calcutta. This was partly because at one point of time because of a series of accidents, this was one of the intellectual hubs of India and it is no longer so, and that is a sad fact. It is no longer the central intellectual hub of India. But you could say that five of the Nobel Prize winners have some connection to Calcutta. That’s another statement you could make.
My view of this is that there is very little to do with linguistic affiliation and a lot to do with the usual reason why great cities are important, which is that they attract the top talent and the top talent does things inspired by other top talent. And they all want to be better than each other and that’s what generates greatness in cities. Top talent brought together, competing with each other to be even greater. I think that’s the nature of great cities.
That’s why at some point, every artist wanted to go to Paris and every writer of a particular period went to New York. You had to succeed in New York if you had to be a great writer. I think that is the particular pressure of great cities. And Calcutta, at one point of time, was a great city and that had to do with a lot of it. I was at the fag end of that through my father who was inspired by the same culture of a great city as Amartya Sen was. It was such a remarkably vibrant intellectual culture.
I don’t think it is because Bengalis are special. I think it is because big cities are special.
So you are saying that after Professor Sen and you, Bengal’s chances of getting another Nobel are somewhat slim.
AB: It’s like many other cities in India but probably less than in Delhi because I think Delhi actually at this point might be a more vibrant city than Calcutta. I think intellectual vibrancy feeds on itself. That is the particular theory I am offering which is that the sense there are other really bright people is extremely important.
My father used to tell stories about Presidency College when he joined. He came from a small town. He studied in school and then went to Hooghly for a year or so. And he got to Presidency College and there was a 13-year-old Boudhayan Chattopadhyay expositing about Marx and other things. These were 13-or-14 year olds who were in their intermediate. I think my father was also 13-and-a-half when he joined. So, it is like there were people who were 13 and 14 who came to do their intermediate. And 13-year-old Boudhayan Chattopadhyay spouting poetry and Marx and all that. This and that is what inspires people. Somehow a sense that, oh my god, he knows so many things.
Why did Calcutta lose it?
AB: Partly economics. This was also the time when Calcutta was the richest city in India. I don’t think this is accidental. I think some surplus is needed to create this social class which is able to provide its young with education and lessons of freedom. You know, you can study whatever you want. Don’t worry about the IIT exam. The alternative is a very motivated education system. One that focuses on very narrow metrics of success. It is only a solidly confident, affluent class which can afford to tell its children, ‘Look, do what you want, and you will be fine because you have all the protection.’
May we challenge you? Education thrived when your father or Amartya was there. Education in Calcutta has since undergone a cultural revolution, almost on a Chinese scale. Those institutions outside the pale of the state government survived and are still surviving. The quality of work in the Indian Statistical Institute may not be gold standard but it is very good.
AB: Not as impressive as it was in the 1950s. At that time, if you had to name four world centres of work in statistics and a particular type of mathematics, the ISI was one. Kolmogorov (a Russian mathematician who revolutionised the study of probability) would come there and spend weeks working with people there. It was like the centre of the world. The ISI is the only institution we ever created that was world-dominating. I don’t think we are there now. I mean, I know a bit about it.
Talent today would veer towards the United States, to MIT and Caltech. Also, during the 1950s, Indian Planning would attract a lot of people. They all came to ISI.
JBS Haldane (the biologist and Marxist who left London and gave up British citizenship to work at ISI, Calcutta) and those kinds of people. This traffic vanished with the declining interest in Planning. The question is not whether it is as great as before. It is not, but it is still extremely good.
AB: I, too, think it is extremely good. I think you are perfectly right in saying the state government particularly failed to support these institutions. But if you look at institutions that were… for example, I think, lots of people who went to private colleges. Bangabasi and other colleges. If you think of many of the great literary figures, they didn’t go to Presidency College. The average was very high. It was not the government sector alone. These were outside the government sector. They were inspired by some culture that was bigger than that.
So, surely the government did a bunch of stupid things. I have no brief for what the series of Communist governments did to the education system. I saw it first-hand. My father would be pissed off about it all the time. Transferring people everywhere. Not putting any money into it. Imposing bad vice-chancellors on the university. Everything, I grant you. But even the private colleges produced so much talent.
Think of the great literary boom of the ’30s, ’40s, and ’50s. How many people went to Presidency? They all went to Bangabashi, City College and other places. They went to Scottish Church.
That is true. The median was very high. But what happened is with the teachers’ DA and the government paying the salary, in effect, the private colleges became government colleges.
AB: That may be. Maybe the government was appointing all the wrong people. So, I think you are right that for some time the pay scales were flattened but for a while, even into the 1980s, these were reasonably well-paid jobs. I don’t think we can resolve this, but I do think there was something about the fact that it is no longer a great city.
That there was a sense of — think of this whole generation of extraordinarily talented people like Utpal Dutt, Badal Sircar in theatre. I think all of them came out of a sense that we can do what we want. We don’t have to worry about our livelihood. They didn’t have a great livelihood, but people didn’t expect a great livelihood. They were not rich or anything.
Even when I was growing up there wasn’t this complete obsession that I have to get into IIT. Some ease is important. Some sense that I am going to try something different from everybody else. Now people are really worried that if they don’t make it into these top institutions that give them an exit route, they are going to be trapped in something very mediocre.
But Delhi is managing?
AB: I think Delhi is managing better, partly because Delhi has a large entrepreneurial class. Many of the people I know in the arts, if you trace them back, they have some family connection. They are not from the poorest of the poor. They are from a solid middle class. I know Delhi has plenty of those people. They had some real estate so they sold it. They have some ease in their life.
Also, they are mostly migrants in the sense you write about it in your new book Good Economics for Hard Times, Delhi is a migrant city. When you came to JNU, for instance, you were a migrant. Which was a greater influence: Delhi or Calcutta? Presidency and JNU were very different institutions.
AB: I think they were entirely different. I was very lucky to be born into a very academic family. I was well-read, well-trained in mathematics. I had lots of advantages to start with. Delhi exposed me to India in a sense. In Calcutta, Presidency College was entirely homogenous, upper-caste, middle-class Bengalis. There was no one who was not upper caste. Upper caste in Bengal is a bigger caste and the divide between the upper castes is not very significant. But that means that it was to the exclusion of everybody.
If you look at the Communist Party, how many people are there who are not upper caste? Other than Harekrishna Konar — if you even know who he is (a politician who played a major role in land reforms) — there were no other top leaders of the Communist Party who were not upper caste. It was really homogenous.
Not the wretched of the earth, ha! ha!
AB: Or low caste, even prosperous low caste. I think Harekrishna Konar was from a prosperous, low-caste family. But even that wasn’t there. You didn’t see them.
It was all very Brahminical. Even Mamata (Banerjee) is a Brahmin, her predecessor (Buddhadeb Bhattacharjee) was a Brahmin too. Jyoti Basu was the only Kayasth. Prafulla Sen, too.
AB: All upper caste. Every single chief minister of West Bengal has been an upper caste. And there is really remarkable homogeneity there. So, I had no exposure to caste as a real issue. Of course, in my immediate world, caste was not an issue. All of us were from essentially, to all intents and purposes, the same caste. Then, to be honest, within those caste groups for the people who came to Presidency if they happened to marry somebody who was not exactly in their same caste, it was not such a big deal. Everybody could see that there was enough negotiation space for a Brahmin to marry a Kayasth or something. These are still very much the traditional elites of Calcutta. So, I had no idea of caste.
I came to JNU which was full of caste discussion. Everybody knew who was which caste, etcetera. Caste was a very big deal. Are you Maithil Brahmin or are you an SC from Bihar? This we knew and caste discrimination was there, and caste anger was there. All of these things I had never met. For me, it is easy to be a Bengali upper caste and say we have no caste war and then you come to JNU and you see there are all kinds of fractures here which we had never encountered at all in Bengal. For me, it was a hugely educative moment.
I actually wrote about it. There is a book coming out about the golden jubilee of JNU. I wrote a piece about caste consciousness. It was not a war. Just a consciousness. Somebody would mention somebody’s caste, usually not in a confrontational way — just a consciousness of caste. A middle-class Bengali is almost homogenous, and it is interesting how quickly that world view changed.
This is what made JNU a big part of my education. A big part of a very specific part of my education. I was an Indian with zero sense of caste till I was 20. That’s an unusual privilege but it came out of the fact that I was a middle-class Bengali.
Was this the biggest lesson?
AB: This was the biggest. Caste and poverty. There were many people in JNU who were just very poor.
But not in Calcutta?
AB: Not in Presidency. Lots of people go to Presidency but they were not my intellectual compatriots. There were many poor people. I knew many of them. We would play carrom with them, but we didn’t talk about economics or history or politics. And they had political views that were often different from mine.
And in that process, you learnt that their life experience was so different from mine. And that was super-interesting.
Old boys’ network?
AB: Yes. I came from an old boys’ network. At JNU, I was suddenly thrown into a world where there were very few people like me. And many people who were lower middle class. There was a small farmer’s son from Orissa who was a top student. A Brahmin but from a small farmer family. His parents had no money. And that is just a different world.
Did you mix freely?
AB: Freely? I don’t know. They have to judge. But we mixed.
You are saying that homogeneity is a contributing cause, if not the principal cause, of West Bengal’s sterility?
AB: That’s an interesting hypothesis. I didn’t say that. You said that. But I think potentially you are right. Think of a West Bengal Dalit movement. Can you think of anything? Marathi Dalit movements I know about. My mother, Nirmala, is Marathi. I know something about the Dalit movements in Maharashtra. Is there a Bengali Dalit movement? I just don’t know. But I have never heard of it.
Everybody is us.
AB: Yes. Everybody is us. But that is partly because those people have been excluded fully. Maharashtra has a very live Dalit movement. In Marathi culture, it is more confrontational, but it changes the way cultural transactions are conducted because suddenly caste becomes a very salient issue and you have to think about which side you are on and where this is coming out of. And where your sympathies are. You have to place yourself. I am just agreeing with you in a sense.
Take it further. In a Toynbeean (English historian Arnold Toynbee) sense, it is conflict that leads to progress in history. Conflict leads to challenge. Challenge leads to response.
AB: Marx, I would say, also had the same view. Many people have that view, not me. I think you are right. Caste has never been salient despite the fact that there are lots of Scheduled Castes in Bengal actually. And OBCs. We really don’t have very much of a consciousness of caste.
Take the Bengal Vaishnavites. They are largely converted from the lower caste. But social prejudices do not vanish easily. This is not true for the rest of India where Vaishnavism is part of mainline Hindu traditions.
AB: Like Tamil Nadu.
Then you made one more jump to Harvard. How was that?
AB: That was a very big jump. JNU didn’t help me with my work habits. It was not a place where I learnt how to work hard. I don’t think the pressure of grades was that high. So, I went to Harvard and I got exposed to American work habits. I didn’t even realise for a while that I was behind. I kind of had the illusion that I was understanding things. But people worked so hard and the thing I learnt first in America was that people work incredibly hard. I had no exposure to that. So, it was interesting.
So, we can say that in Bengal you were within a comfort zone and among like-minded people. When you went to JNU you met India and the heterogeneity impressed you. And enriched you. But you still did not get the discipline of hard work, which the United States gave you?
AB: Absolutely. I learnt hard work.
Let’s look at Good Economics For Hard Times, your new book. Let us look at the chapter on immigration. How does this experience colour your writing?
AB: We give the example of people who I knew were typical Bengalis, who would have never washed their plates at home, moving to actually starting to work in a restaurant and then becoming entrepreneurs. They might start their own chain of Dunkin’ Donuts rather than become a chemistry professor at a university. I think I give that example in the book and that is very much this transition. America is a place where, in the end, hard work used to be valued a lot. I think it is less valued because it has become so class structured now. But it has changed in the last 40 years. America has changed a lot.
The only way forward for Bengal, using the Banerjee equilibrium, would be to have a national population registration. Throw out some people and replace them with migrants. Will that work?
AB: I think it is totally true that one of the things that happened to Bengal is migration. You know it used to get top talent from, let’s say, Tamil Nadu. Bengal, when I was growing up, was full of Tamil Brahmins. They were thrown out by the Dravida movement and settled in south Calcutta. We had tenants who were Tamils.
May I challenge you here? Some of the best Tamil minds worked in Calcutta during the Mukherjee family reign in the Calcutta University. So, you had CV Raman and Krishnan and Chandra (the astrophysicist Subrahmanyan Chandrasekhar, a Nobel laureate and Raman’s nephew) also came to Calcutta for a while. Chandra says in his authorised biography and CV Raman also says elsewhere that there was a strong anti-Tamil attitude. CV Raman was forced to leave. He was hounded out.
AB: That may well be true. But it was also true that relative to being in Tamil Nadu, it was a pretty good place to be. So even when I was growing up there was a lot of talent.
In fact, we have a few professors from Calcutta at MIT.
One is a Marwari, from Calcutta, Agarwal and one is a Tamilian from Calcutta. In English there is a guy called Shankar Raman who is a Tamilian. All from south Calcutta.
Professor Agarwal, what does he teach?
AB: He teaches industrial organisation. Calcutta was a city where lots of people came from different places. Now they are leaving, basically. When the next generation get a chance, they leave. So, we are really not attracting talent. I think your project, I am not signing on to. You know, deporting a lot of people.
Not mine. BJP’s may be.
AB: I don’t want to get into that. If Bengal has to survive, it has to attract new talent. That is the way of all great cities. They live by attracting talent.
It would appear that you have a sneaking admiration for the economic policies of this government, at least till the budget presented by your JNU colleague, Nirmala Sitharaman. Subsequently, you said they spoilt it by lowering the taxes. It was a panic decision and not one that came from the heart. But even now, you are not disapproving of the policies. You are actually approving of them. But you want it to be tax-funded whereas they are now partly funding it by deficit financing. So, your nature of disapproval is only procedural. The substance you still support.
AB: There are different programmes. I have said this in many places. One of the things that I think they have done to the detriment of the economy is over-centralise. Decision-making is over-centralised, and that is costing us. Investors don’t like being in a world where everything is held up by and waiting for an approval from a very small number of people.
So, with the programme per se you have no problem?
AB: To me, it (the funding method) is part of the programme. If you want to say the programme of raising taxes and doing more welfare, I do support it, I have always taken the view that we can afford to do more welfare if we raise more taxes.
I said that when everybody attacked me for supporting NYAY. My point was not that NYAY was a very well-designed programme but the idea that we should attack this because it is a sop to the poor and we should never tax the rich, I have zero sympathy for that. That is a big point in our book.
You have made another argument. High taxation, you say, is neither right nor left. No less than the patron saint of modern capitalism, Milton Friedman, proposed a negative tax. The so-called rightist governments in the US, such as Richard Nixon and others, have proposed legislation where there is a transfer of funds. Not a minimum basic income.
AB: The right and the left didn’t disagree on this for 35 or 40 years. Between Eisenhower and 1980, there was no disagreement that taxes should be high and social transfers should be generous. There was consensus on that. It was Reagan who changed that.
Why did it get contentious?
AB: This is the story we tell in the book. (It became contentious) because growth stopped, and people panicked.
So, growth stopped from the later Manmohan Singh era and that continued to Modi-1 and Modi-2?
AB: I think the fact that growth was slowing and, therefore, we needed to do something about it. I actually think that the over-centralisation might have had something to do with the fact that growth slowed as much as it did.
Real life is complicated. Four types of slowdown are being mentioned. Bimal Jalan said it is cyclical — cyclical like day comes after night. Omkar Goswami claimed it was structural. The current mantra is that the world is slowing, but in the US and in Europe, there has not been a slowdown. Fourth, Manmohan Singh says it is a man-made slowdown, given the way demonetisation took place.
AB: I don’t know. I am not convinced that the evidence one way or another is dispositive or whether demonetisation was a big part of this story or not. I still don’t know.
Gita Gopinath (Harvard economics professor and now IMF chief economist) wrote a piece in the Quarterly Journal of Economics.
AB: Yes, I have seen that.
What about the 41 per cent drop in sales in the Tirupur textile hub soon after demonetisation, which you mention in your book?
AB: I am sure something happened. The question is whether that was a persistent shock or not (re: drop in textile sales). I don’t disagree. We did our surveys as well. The question is whether, absent the other problems in the economy, in particular (demonetisation was responsible). I tend to worry about the fact that the support prices were pushed down and the terms of trade in agriculture. That is sort of my personal worry, that is the biggest piece in that story. I think Gita is not claiming that she explains all of this. She is claiming that something happened. For how long, we don’t know. Would it have recovered faster if the economy was not in a demand slump already?
A few things may have happened simultaneously. Support prices. Centralisation. Along came demonetisation.
AB: Economists rarely agree.
But they want to play god. Skidelsky (Robert, Oxford historian) titled his much-praised biography of Keynes with the words The Economist as Savior. An American editor has written a book bemoaning the Chicago take-over of government policy (notably referring to Friedman).
(Binyamin Apelbaum editorial page writer of The New York Times wrote the book The Economists’ Hour.)
AB: I absolutely wrote my book to defend the fact that economics is the most useful discipline. The one thing that we try to do here, which is maybe different from most economists, is that I think economists take an oracular stance: they pronounce. We try to give reasons. We want people to participate in understanding why certain arguments are right, and that gives them a certain freedom to judge and say, ‘Look but this evidence is different. We are trying to make the case.’
You are being a teacher.
AB: We are teachers.
Your father’s son?
AB: Absolutely. I am 100 per cent instinctively a teacher, I want people to understand, to participate in a civic conversation on this subject, I don’t think this should be a closed machine for pronouncing truth. It should be a place where all doubts are aired. It is a framework where doubts can be discussed and resolved.
I think of economics as being very friendly to disagreement as long as we step out of the public space. In our private space, we disagree, we have good discussions. But in our public space, we are oracles. This book is a resistance to being oracles, all of the oracles in history, including Chicago, especially of the very learned oracles, they scare people, they tell people the truth. More importantly, they don’t speak the language of the common man. We write in hopefully extremely common language. We try to write very much in the most mundane language possible.
The book is very lucid.
AB: That is what we are aiming for. Whether we are right or wrong, we are first trying to be lucid.
How do you write? Separately and then merge the narrative?
AB: Usually, Esther (Duflo) and I will have a long conversation over two or three days and then she will put down a lot of material and my job is to reorganise the material and make it into a flowing narrative. Think of it as being a set of long narratives about specific things and turning it into a single narrative. So, my job is to create a narrative out of it. She gives me the raw material often. I will create a narrative out of it. Here (in this book) I wrote a couple of chapters from scratch.
So, she still remains your doctoral student?
AB: No. She is much more efficient than me at that. She is very decisive. So, she will say, ‘This one I can throw out, this one I will put in.’ The two chapters I wrote, I spent an infinite time agonising over everything. I am a natural agoniser. She is not. It is very efficient for her to put down everything she thinks is important. She makes the first judgement call. I might decide she needs to add something else. But mostly I take the same material, I want to construct an arc. A narrative should flow, surprise, it should turn. I am very conscious of the mechanics of reading. We do very different things. That is what makes it work.
At home, do you talk about work? Dining table conversation?
AB: Sometimes we talk about work. At the dinner table, we have children, we don’t talk about anything else at all, zero — unless we have guests over.
What was your first reaction when you got the call about the Nobel?
AB: The Swedish Academy of Sciences — we had been told how it would sound. It sounded very much like that. Then, afterwards, I thought: ‘Could it have been a hoax?’ But at that point I was convinced. I went back to sleep, I mean it was 4:45 in the morning, I went back to sleep. It is the honest truth.
How did you celebrate?
AB: I made dinner and the main course was omelette stuffed with chanterelle, green peas and feta cheese.
Did you beat the yellow and the white separately?
AB: No. I beat it together.
We look surprised
AB: But I add water.
AB: I don’t put milk in, it is rich enough. I think it should be made with a low heat, should be soft. It works well, I think. I am very instinctive in these things — I have done enough omelettes in my life to get it mostly right.
Source: The Telegraph