What if my altruism comes at your expense?

Three-and-a-half centuries ago, the Scotsman Adam Smith, the Bhishmapitamaha of western economics, wrote a book called ‘A Theory of Moral Sentiments’. His better known work, The Wealth of Nations, was based on the ideas in this book.

In a sentence, the former’s purpose was to explain to the morally underdeveloped English that human beings could be selfish and altruistic at the same time. A key purpose was to get the rich to be more caring for the poor.

That was fine except that he overlooked one thing: what if my altruism came at your expense and vice versa? That problem had to wait for Keynes to come along and create it. For, in 1936, Keynes enunciated a new idea, at least for the West. (It had been known as raj dharma in India for at least a couple of thousand years).

The basic idea is simple: it is the duty of the state to intervene to raise the level of economic activity in the country when it has dipped below morally acceptable levels. Its success was based not on an appeal to charity — as Smith’s had been — but to force. The state would levy fresh taxes on the rich to help the poor.

Your money, my happiness

This problem, of getting others to pay for your sense of morality, is what underlies the NAC’s (National Advisory Council) formulations. Had Mr. Smith been asked to review its antics over the last nine years, I am sure he would have written a companion volume called ‘A Theory of Moral Immorality’.

At the core of this confusion lies a problem that was identified by Kaushik Basu, now Chief Economist at the World Bank, in the mid-1980s. It asks the following question: why is aircraft design not determined democratically?

It was not a frivolous question. Dr. Basu was simply saying that no matter what it is, expertise is important. In creating and paying heed to the NAC, Sonia Gandhi disregarded this injunction because, thanks to Keynes, it was possible for her to pass on her pain to the taxpayer. Their collective altruism would be financed by you.

In some one-sided sense of morality, I suppose even that would be acceptable except that in this case, the noble intentions of persons like Aruna Roy and Jean Dreze became the vehicle of Sonia Gandhi’s political objectives.

Hence MNREGA. Hence the Food Security Bill (FSB).

The former has cost the taxpayers almost Rs.400,000 crore with very little to show for it in terms of fixed rural assets such as roads or water tanks. But it won the Congress the 2009 elections.

Now the 2014 election has arrived and the Congress is hoping that the FSB will do what MNREGA did in 2009. This gives up even the pretence of creating fixed assets. The message to the poor is as crude as it can get. The Congress is saying “We know inflation has wreaked havoc with your diet, but will you vote for us if we inflation-proof your food purchases?”

So, see how far we have travelled. Adam Smith had no economic policy agenda in mind and saw no direct role for the State. Keynes had no political agenda in mind in that he never intended his theory to be used for garnering votes.

Yet, that is what all democracies have ended up doing.

How it happened

It is a myth that only good ideas have many fathers. Even bad ones do. In this specific case, it happened because the idea of justice morphed into the idea of a just society — no one has ever rigorously questioned this transition because it is seen as being in bad taste — and the idea of a just society led to the politically beneficial idea of entitlements.

Leading the charge for the last was our own Amartya Sen. Inadvertently he created the intellectual basis for decent people, knaves and politicians to achieve a common purpose.

Sen’s idea that in a just society people have entitlements has been transformed to convert an entitlement into a legal right.

Well, Sir, as your former student, let me ask a question: if you think I am entitled to good ideas from you would you say that good ideas from you should become my legal right, failing to fulfil which, you could be penalised?

tca.tca@gmail.com

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