Economists and knowledge of Constitution (and other laws)

One serious drawback in economic teaching is increasing homogeneity (i.e. everything seen from US lens or US alone matters) and ignorance of subjects like law, society and so on from the subject. The end result is economists from US alone matter and all advice comes as it applies in US. It also means complete ignorance of things which matter to the country who is being adviced. A bigger problem emerges when country based economists start copying those in US and stop reading and knowing things that matter to the country.

TCA Srinivas Raghavan has a piece which broadly talks about this trend. He speaks about several NRI economists who advice India to unleash labor reforms without  reading the constitution and other labor laws. He starts with him viewing several presentations and equal disappointments with the usual talk of labor reforms. He asks most such presenters on whether they have read Indian (not US) Constitution and Industrial Disputes Act. Most say no and those who say yes are clueless as well. So what is there in these 2 frameworks:

The philosophical aspect is more complex in that it has to do with Constitutional rights. Article 19(1)(C) of the Constitution has made the right to form unions a fundamental right. Hence, we have the Trades Union Act, which lays down the procedures for forming and operating unions.

In order to form a union, however, you need a leader. All leaders promise more entitlements to their members. But by definition an entitlement comes at someone else’s cost, in this case the employers.

This leads to disputes. Hence the Industrial Disputes Act. But then come three huge contradictions.

One is that many mainstream political parties take money from the capitalist employers only to go and expand labour’s entitlements. The second is that after winning an election the politicians come under pressure from their benefactors to abridge 19(1)(C) – which they can’t because it is a fundamental right. The third is the result of the first two: governments find themselves expanding the entitlements of the least productive – farmers and bureaucrats – and abridging those of the more productive parts of the workforce, industrial labour.

All of this happens because of Article 19(1)(C). If you want it to go, and have the courage, say so.

If not, shut up and put up.


How many of us even know about all these issues (this blog included)?



One Response to “Economists and knowledge of Constitution (and other laws)”

  1. Anantha Nageswaran Says:

    I think Mr. Raghavan doth protests too much. Certainly, knowing the country intimately helps. Who can say NO to that. But, is not knowing the presence of Article 19 (1) (C) such a barrier to commenting on some of the arcane provisions of India’s labour laws.

    Well, let me add that I did not know about this article either, until I read this post. Thanks for that.

    However, before I wrote a column for MINT on how much the International Labour Organisation was stymiing India’s labour reforms, I spoke to a friend who specialises in labour laws and he sent me a detailed spreadsheet on the existing labour laws and the proposed IR code.

    Knowing that the laws prescribe so many approvals and clearances before firms can take business decisions and knowing those provisions are important. If they do their homework on them, that is good enough.

    There is no objection to knowing more. That can only make one’s prescriptions richer. But, is that a ‘deal breaker’ in this specific instance? I think not.

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