Tuesday, February 14, 2017

When we mistake the real for the ideal world

In recent weeks I have blogged on multiple occasions (here, here, here, and here) about how  intellectuals, barring a few honourable exceptions like Dani Rodrik, have got completely wrong the interpretation of important global trends like free trade and globalisation, financial deregulation and capital account liberalisation, premature deindustrialization and automation, cross-border labor migration, and global citizenship.

It does not require too much exploration to realise that large numbers of people lose their jobs either due to premature industrialisation or automation or off-shoring or competition from migrants. Similarly, national businesses lose market share to multinationals and finally exit the market, and economies are ravaged at increasing frequency by the vagaries of cross-border capital floods and sudden-stops. And the corollary of global citizenship is most often an abdication of actual "citizenship" responsibilities. 

In all these cases, the intellectual argument is that market adjustments happen to mitigate these effects. This is despite ample evidence that such adjustments, like with most other market based adjustments, take an inordinately long time, long enough to cause irreversible pain and damage to people and their societies. And the fiction continues that public policy will somehow redistribute gains from the winners to compensate the losers despite not even a single instance of such explicitly targeted redistribution initiative in any country of note in recent times.

There are two explanations for such responses. The materialistic explanation is that these trends have limited adverse impact on those who call themselves middle class and above. It can even be said that these trends even enhance their economic and social prospects. In fact, the "global citizens" may be the biggest beneficiaries of all these trends. In contrast, the brunt of each of these trends is felt by those at the lower levels of the income ladder. 

There is also a deep psychological explanation. All of us who consider ourselves a liberal, feel compelled to be politically correct and be on the right side of the ideological orthodoxy, a view reinforced by intense peer pressure as well as an urge to be doing and supporting the 'good', which has become intimately linked with the liberal ethos. Therefore, in all these cases, we try to complicate and over-intellectualise trends whose proximate effects are egregiously disturbing for the vast majority of citizens. Sometimes, instead of searching for rigorous enough evidence, which is invariably elusive, we just need to put aside our ideological blinkers and be practical in observing and using judgement to draw conclusions about what is happening around us. 

Free trade, globalisation, automation, financial market liberalisation, open borders and liberal immigration, and global citizenships are unqualified positive ideas, intimately associated with the progressive ideal. Critics of these ideals are the antithetical straw-men, undesirable vestiges of a less progressive and anti-liberal bygone era. Accordingly, any scepticism about them is not only anti-liberal, but also a concession to, even appeasement of, the critics. As Rodrik has acknowledged himself, such political correctness is pervasive even at the highest levels of the academia.

Politicians, whose incentives are closely aligned towards responding to the concerns of actual people living in the real world, cannot be faulted if they perceive these trends and respond to the concerns. As intellectuals and opinion makers, with their largely unqualified and vocal support for these trends, have abdicated the debating space for an engagement on realistic terms, it is only natural that extremist opinions and forces gain traction and become platforms for political mobilisation. 

None of this is an argument to pitch our tents behind the critics of all these trends, but a plea to be more nuanced in our appreciation of them. We need to appreciate the world for what it actually is and likely to be so for the foreseeable future and not what the world ought to be in our ideologically coloured imagination. 

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