Murari Sharma: War of Ideas

Thomas Picketty’s book has become a phenomenon and has energized both left and right in their war of ideas. Picketty says the rich and their political clients have bent the rule in their favor, prompting the poor to fight back. Only time will tell which side wins this war.

Thomas Picketty’s book, Capital in the Twenty-First Century, has become a phenomenal sensation in the west and has energized left and right. This is one of groundbreaking books of our time that could deeply influence public policy around the world and that takes the war of ideas a notch higher.

After studying long-term economic data, Picketty, a liberal French economist, has concluded that wealth is concentrating in fewer hands, that the wealth of top one percent is growing 2-3 times more than others, that the concentration of wealth leads to concentration of political and institutional power, and that global capital is too mobile for any one country to control. His solution to this burgeoning problem is higher income tax for higher income and a global wealth tax, which are not, according to him, necessarily detrimental to growth.

Liberals see in Picketty’s work a concrete proof of what they have been arguing all along: that growing inequality is harmful, that it is not merit of the rich rewarded but their wealth, that slightly higher taxes on the rich do not necessarily deter investment and growth, that inequality is not only morally wrong but also socially disruptive. For them, Picketty debunked the conservative argument that the rich deserve greater reward for their merit and ingenuity.

The opinion section of The New York Times of 25 April 2014 presents an example of this ongoing battle. Liberal Economist Paul Krugman, a Nobel Laureate, wrote, “. . .Picketty’s contribution is serious, discourse-changing scholarship . . .(which) demolishes that most cherished of conservative myths, the insistence that we’re living in a meritocracy in which great wealth is earned and deserved.”

Conservatives are on the defensive. Rather than presenting an alternative narrative to win the war of ideas, they have been trying to politicize his findings as Marxist and undermine his credibility highlighting the universal weaknesses from which all social sciences researches suffer.

The conservative columnist of NYT David Brooks has, in the article published on the same day, dubbed Picketty as quasi-Marxist and blamed him for pandering his liberal constituency by arguing against the inheritors of wealth. Elsewhere, James Pethokoukis of the American Enterprise Institute has asked conservatives to refute Picketty’s work because it could “reshape the political economic landscape on which all future policy battles will be waged.”

Political wrangling apart, Picketty’s book is based on a longitudinal study and is comprehensive, which make his prognosis well-grounded and credible. That does not mean it is free from the typical weaknesses associated with social research in which variables cannot be isolated or controlled to ensure lab-test like precision. On the whole, there is little basis to refute his research and findings, though we may disagree with his policy prescription.

Although Picketty researched mostly the data from Europe and America, his book is extremely relevant to developed and developing countries alike. According to Oxfam, 85 individuals own as much wealth as do the bottom 50 percent in the world. In the United States, top one percent population owns 40 percent of national wealth and the bottom 80 percent people only seven percent. Europe is not far behind in inequality.

In the developing world, let us look at the BRICs countries. China, politically a communist country still, has the second highest number of billionaires, after the United States. Russia has the third largest number of billionaires, Brazil and India claim fifth and sixth positions. Nepal has also produced one global billionaire. But an overwhelming majority of people in these countries live in wretched, desperate poverty and destitution.

Due to globalization that was accelerated by the revolution in technology and easing of east-west tensions, people across the globe, except in the few conflict-ridden countries, have experienced democracy, growth, and improved standards of living.  But those who already enjoyed wealth and political power have benefited more than the poor and weak.

This has accentuated the divide between rich and poor and fueled sub-national conflicts seen across the world. In its initial stages, democracy often contributes to conflict by giving the disadvantaged people the freedom of expression and development by generating competition over resources and opportunities. The conflicts of the last 20 years or so – for instance, in the constituents of the former Soviet Union and Yugoslavia and the Maoist Movements in Nepal and India – bear it out.

That is only natural. When everyone is walking on a dirt road, living in similar shacks, tilling the land with similar equipment, eating similar food, wearing similar clothes, or having similar services, there will be no or little sense of injustice and resentment. But the sense of discrimination arises and intensifies when some people begin to drive cars, live in better houses, buy tractors to farm, eat better food, wear expensive clothes and get better service, than the deprived groups.

“Occupy Movement” and bankers bashing in the west are the poor’s war by another name on the wealthy and their political clients, senior politicians. The rich have not only been expanding their share in national wealth by reducing labor cost directly but also by making their political clients slash benefits for the worse-off and cut their taxes. The World Bank and the IMF largely serve the interest of the wealthy as well.

So much so, government has become the backyard of bankers and businessmen. Economic policy makers shuffle between government and the private sector in the United States, United Kingdom, Australia, Japan, and elsewhere. For instance, many important policy makers — including Henry Paulson, Mario Draghi, and Mark Carney – came from Goldman Sachs, the investment bank. Dick Cheney, Tony Blair, and Dick Gephardt went to the private sector after retirement from their political career.

The impact of this collusion between the rich and their political clients has rigged the market and government in favor of the wealthy and powerful. The poor and middle class have lost out, and it has generated more resentment giving rise to high- and low-intensity conflicts in societies across the length and breadth of earth, depending on the perception of the degree of injustice.

Thomas Picketty’s book proves this development with hard data and provides intellectual foundation for liberal politicians and academics to make a case for equality through policy intervention. Alarmed by this, conservative are trying to discredit his intellectual contribution and undermine his research’s heft. Only time will tell as to who wins this war of ideas.


Murari Sharma: Prime Minister Koirala Should Learn, Not Lament

Prime Minister Koirala needs single-minded devotion to national interest, open mindedness, and the willingness to listen and appoint good advisors to learn on the job quickly and become an effective and successful prime minister.


Prime Minister Sushil Koirala’s supporters, competitors and opponents alike have dubbed him as inexperienced and undermined him. He has taken it with grace, which must be commended. Recently, he conceded to his party workers that he did not have time to consult with them on the common minimum program and increase in petroleum prices. It was his humility, which ought to be appreciated.

But he should not let his inexperience ruin his tenure as prime minister. Neither should others interpret his grace and humility as his weakness and underestimate as to what he could do. With a few intelligent measures, he could prove to be a robust and successful prime minister.  

History suggests that a lack of experience could actually be a source of strength, not an impediment. Jawaharlal Nehru, the first prime minister of India, did not have prior executive experience. US President Barack Obama and British prime ministers Tony Blair and David Cameron were in the same category. All of them learned on the job to make themselves good chief executives.  

In Nepal, several prime ministers in the last 25 years did not have prior executive experience — as a minister or as the chief of a public or private organization. Girija Prasad Koirala, Manmohan Adhikari, and Pushpa Kamal Dahal come to mind immediately. The lack of experience when they acquired the top post did not prevent Mr. Koirala and Mr. Dahal from becoming strong and Mr. Adhikari from becoming popular.   

Prime Minister Sushil Koirala should use the lack of experience as an opportunity. He can do so by pursuing the right approach – single-minded devotion to national interest and open mindedness — and the right help – from good advisors – to learn on the job quite quickly and become an effective and successful chief executive. 

An “Arjun dristi” on advancing national interest will never fail him. Even when he deviates for a second, the goal will pull him back to the pivot. Punya Prasad Dahal, my mentor and friend, who retired as Secretary of Industry and Commerce, used to say: Anything you do putting your country at your heart will never go wrong.   

No one is ever experienced as prime minister before he/she becomes one. One who comes to the job with an open mind tends to do better or vice versa. Prior experience could even be a drag for the top post. Baburam Bhattarai, a successful finance minister but a flopped prime minister, is a good example. His pre-programming as a minister significantly contributed to his failure as prime minister by giving him false confidence and closing his mind to new ideas and experience.

That brings me to securing the right help. Those who do not stand up for their principles may last but they do not enjoy respect and esteem. So Mr. Koirala should reach out to opponents whenever possible but must not compromise his principle for their support at any cost. He should listen to a cross section of people before making up his mind. And he must have a right pool of advisors to help him do his job.

Since the first two points are self-explanatory, let me focus on the third — building the right team of advisors.  Prime ministers often appoint their party colleagues and supporters as advisors to buy or entrench support. But such advisors do not add value by bringing a different perspective, one the prime minister does not already have, which is essential to succeed.

To get a wider perspective, the premier must appoint as advisors not only his supporters but also independents and opponents. US presidents consistently do it. So do UK prime ministers to a lesser extent. Jawaharlal Nehru of India had retained the British loyalist Foreign Secretary to reshape the foreign service, even though he knew the other guy was not his friend or supporter. 

Besides, Mr. Koirala ought to appoint those experts as advisors who have no other personal agenda – profit or post – to pursue by exploiting their access to him. Those who have such an agenda tend to provide advice or rig the system and information in their favor. And it will work against the premier, his party and the country at large. 

Prime Minister Koirala has already appointed some advisors. We know who they are and what they want. But in the remaining appointments, he should keep these considerations in mind.  

Some may argue that finding people not seeking personal profit or post beyond the advisory role might be difficult. I agree. But Mr. Koirala can overcome this difficulty easily. He should make it clear to the candidates that they would not get any additional reward for their work with him. It should be like barring the Auditor-General from doing private audit for the next six years after retirement. This measure will motivate the advisors to offer the premier an honest and sincere opinion, free of narrow personal interest.   

Girija Prasad Koirala followed this approach during his first stint (1991-1994) as prime minister. For instance, he appointed people like Dirgha Raj Koirala, a retired civil servant with no further ambition, and Krishna Khanal, a professor with no interest in executive positions to provide unbiased advice. His government proved to be  one of the most effective, efficient and forward-looking governments in Nepal’s history.   

There is no reason for Sushil Koirala not to succeed. He, like Krishna Prasad Bhattarai, is unmarried and free from the urge or pressure to build a prosperous future for his wife and children. He, unlike Mr. Bhattarai, is also his party’s president. He has won the leadership of his parliamentary party in a contest, fair and square. The main coalition partner – CPN (UML) – shares his views on major issues such as federalism and democratic governance. And the main opposition party, UCPN (Maoist), is quite weak in the house. 

These are unprecedented strengths for a prime minister. By using them, Mr. Koirala can easily become one of the most successful prime ministers of the democratic Nepal. He should take a page from the late US President Ronald Reagan, a somnolent and mediocre guy, who turned himself into one of the most popular and effective presidents of his country by keeping his mind open and by appointing the best people to advise him. 

Leftists say you should try to turn sorrow into power. By the same token, Mr. Koirala can convert his inexperience into strength by becoming a quick study, stopping lamenting about inexperience, and preventing his competitors and opponents turning him into a mat to his and to the country’s disadvantage.