Will future historians think of 2013 as a pivotal year for Bangladesh? If they were to do so, it will not be because of anything that happened in the first half of this eventful year. The Shahbag Awakening, violence following the verdict in Delwar Hossain Sayedee’s war crimes case, peaceful and violent rallies by Hefazot-e-Islam, the Rana Plaza tragedy — none of these will rate alongside even 1975 or 1990, let alone 1947 or 1971.
All those events, and yet, as the year draws to a close, we are seeing replays of a drama we witnessed in Decembers past, where a government wants to hold an election come what may, citing the Holy Constitution, while the opposition wants to resist it at any cost, citing the fear of rigging. The political gridlock leads to violent images like this.
There is not much to say about one of the greatest persons of our time. Still, just for the record, I found the Onion to be particularly insightful in its irreverent way: Nelson Mandela’s death is the only one on record that people everywhere unanimously agree has left the world notably worse off.
I certainly don’t remember Bangladeshi aantels agreeing on anything in the past year. But then again, the word irony is not enough to capture the sight of Shahbag revelers’ sorrow for Mandela. On the other hand, stuff like ‘if only Mujib was like Mandela’ does not to justice to either men.
When I first started to form my views, on music, not politics, Mr Mandela was still in jail, still reciting these words:
It matters not how strait the gate,
How charged with punishments the scroll,
I am the master of my fate,
I am the captain of my soul.
And I listened to this:
The macroeconomic fact is, in the last decade, under all three governments, per capita GDP have grown by around 4½ per cent a year. At that rate, average real (that is, inflation-adjusted) income doubles in 16 years. …. This is impressive stuff, for which every recent government deserves some credit.
That’s the conclusion from the post on real GDP per capita growth under different governments. Of course, real GDP per capita is a means to the end, not the end in itself. What we really care more about is the standard of living that higher real GDP per capita entails —that is, it’s the development record, and not just the growth, under different governments that we want to know.
This, however, raises two questions. First, how do we attribute to any particular government the growth and development record when policies under any particular government are likely to have long term consequences? And second, how do we explain the Bangladesh Paradox:
The belief that growth brings development with it—the “Washington consensus”—is often criticised on the basis that some countries have had good growth but little poverty reduction. Bangladesh embodies the inverse of that: it has had disproportionate poverty reduction for its amount of growth.
That quote is from a November 2012 Economist article. That article, and accompanying editorial, had a go at explaining the paradox. Joseph Allchin had a crack more recently at the NY Times. The suspects are usual: garments, remittance, NGOs. But we economists are a parsimonious lot, or so we like to think. We would like to know exactly what contribution each of these factors made, what was the channel through which the factors affected growth and development, what role, if any, did government policy play, and what all that means for future.
I haven’t seen a comprehensive analysis of the Bangladesh Paradox. And no, I am not going to provide the answer in this post. Rather, over the fold is a research agenda on how to analyse the Paradox.
Raghuram Rajan is as close to a Bollywood star an economist is ever likely to be. He may have saved the Indian rupee from a collapse by simply showing up to work — okay, that’s a slight embellishment, but only just (see here for a more nuanced take). Before that, way back in 2006, he said that the global financial system was at risk of being in considerable trouble — that’s the closest to predicting the global financial crisis anyone has ever been. Months before that celebrated paper, he wrote a paper with his Chicago colleague Luigi Zingales that may give us some reasons to be optimistic about Bangladesh.
To be sure, Bangladesh is never mentioned in The persistence of underdevelopment: institutions, human capital, or constituencies? – not even once. But their neat little model doesn have some strong relevance for the present day Bangladesh (and no — this post has nothing to do with the current political crisis).
It’s the 50th anniversary of JFK assassination. When he first became the president, JFK was viewed by many in a similar way as how people viewed George W Bush —a not-too-bright son of a political dynasty who got the top job through money and dirty deals. Then, just like Bush, Kennedy’s stock rose because of an international crisis — the Cuban missile crisis was JFK’s 9/11 moment. He was hailed as a great leader. And then he was killed, and became a martyr.
His successor, LBJ, was far less charismatic. While JFK was the suave Boston Brahmin, LBJ was an uncouth Texan. Still, LBJ won a landslide — largely on JFK sympathy — and pushed through a lot of progressive legislation, including giving Black Americans the right to vote. But then the Vietnam War escalated, US was gripped by race riots and cultural changes, and LBJ’s presidency ended in failure —he didn’t seek re-election in 1968.
Graham Greene’s The Quiet American was published in 1955, after the Dien Bien Phu, but years before America bumbled into Vietnam. A film version was released in 2002, after Tora Bora, but before America bumbled into Iraq. Without giving away the story, anymore than you can discern from the trailer above, this is one of the best work on the unintended consequences of American intervention.
Americans are, of course, interested in Bangladesh too. They have been for a while. In the post-9/11 world, how can they be not interested in one of the largest Muslim countries in the world? And their interest has been registered not as quietly as was the case in Greene’s Saigon. In 2007, as in now, their interest was expressed vocally. Nonetheless, the plot went awry in 2007. Will this time be different?
Need succulent, greenish okra. Cut the stem. Put it in hot oil, with sliced onion, green chili, and salt. Stir. Cover until cooked.
Simple. And delicious.
What political factions seek is not the construction of a coalition that can mobilize votes to allow a transparent renegotiation of taxes and subsidies, but a coalition that can mobilize organizational power at the lowest cost to the faction leader, to achieve a redistribution of assets and incomes using a combination of legal, quasi-legal, or even illegal methods. The organizational power of the faction is then used either directly to capture state power or to force an accommodation in the form of payoffs from the factions who are currently controlling the state. The faction’s access to economic resources either in the form of revenue or in the power to grab valuable economic resources legally or otherwise is then used to benefit faction members all the way down the pyramid, though the payoffs may be very unequal for different levels of the faction.
While factions may use generalized arguments based on class, region, or interest in its public discourse, no-one in society is under any illusion that the faction is out to look after itself at the least cost in terms of paying off voters and others who need to be mobilized occasionally. When factions do not deliver on these generalized aims, broader social constituencies may grumble but they do not really expect anyone to deliver on the publicly stated general social goals. However, if factions cannot deliver acceptable payoffs to faction members, the leaders are likely to get into serious trouble. Factions rarely fear a general public revolt, given that no other political organization can deliver what the public wants. What factions actually fear is that their sub-factions may be bribed away by other factions and that the coalition may crumble. Indeed, this often happens and accounts for the frequent changes of government in developing countries that usually lead to no discernible changes in government policies, but do lead to different sets of individuals making money in turn. Given the opportunistic nature of factional membership and the shifting offers and counter-offers made by different factional leaders, it is possible to explain the extreme volatility in the factional politics of developing countries in a context where government policies are often remarkably constant.
The question then is, how does a country like Bangladesh escape this patron-client democracy? Khan’s implicit message is that one needs an important capitalist sector for there to be functioning democracy. But there is nothing in Khan’s story about the dynamics that produces the capitalist sector.
Turns out that Khan believes government has a role to play in kicking off that capitalist transformation. It’s just that his prescription for reform is quite different from the traditional Washington Consensus stuff.
In the previous post in this series comparing various governments’ economic and development records, we saw that when it comes to growth in average income, there hasn’t been much difference between the three latest governments. The increase in average income in that post is real, that is, after allowing for inflation. However, inflation is an important economic indicator in its own right.
In fact, as far as average person is concerned, real GDP per capita is an abstract construct, whereas prices of everyday commodities is, for the lack of a better word, much more real! Arguably, more than the war crimes trial or Digital Bangladesh, it was the promise in the video below that brought Awami League its 2008 landslide. And arguably, more than India or Islam factors, it’s the failure to meet this promise that’s behind AL’s sagging popularity.
Politics in Bangladesh, as the saying goes, is price of rice.
This post looks at the recent governments’ record when it comes to inflation. However, we need to begin with a bit of wonkery because when evaluating different governments on inflation, we need to keep some basic economics in mind, some of which may be counter intuitive
Once we go beyond the wonkery, three charts will show that the current government performs poorly compared with the last BNP government as far as inflation is concerned.
Bollywood just doesn’t do epics well. But then again, who needs Bollywood in the age of HBO. Why not an epic TV series?
No, not the Great Epic —that was done a quarter century ago. And it has been ripped off shamelessly, and unsuccessfully, by Bollywood already. Instead of yet another attempt at that, let’s flesh out an old idea.
We want something with: a battle around a fortress; a royal scandal involving a famous diamond; complicated love stories; Sufis, nautch girls, elephants, snakes, jadu-tona, tantriks and tigers; and a whodunnit.
Let’s see if we can weave a story out of these.