This word big bang reforms remains the most hyped and yet poorly defined term in economics. I was really happy that India’s PM responded to WSJ editors that he did not know the meaning of the term. Nor his experts could define it:
Prime Minister Narendra Modi has rejected the notion that his government has failed to pursue “big bang” reforms, saying he has undertaken “maximum reforms”. He, however, told The Wall Street Journal in an interview ahead of his visit to the US next month that his government faces “an enormous task ahead”. “When I came to the government, I used to sit down with all the experts and ask them to define what is ‘big bang’ for them,” he said, adding, “Nobody could tell me.”
It will be great to get rid of this term altogether. To compare economic changes to big bang developments of science which explain many things around us is making latter too shortchanged. But till we have the media and all the hype, this term is not going anywhere (see this article for instance). This despite knowing quite a few so called big bang economic reforms end up being duds later as there are always unintended consequences.
The PM also gave his piece of mind on other topics:
On privatisation and labour reforms, Modi sought to portray a balanced image of his government. “In any developing country in the world, both the public and private sector have a very important role to play. You can’t suddenly get rid of the public sector, nor should you,” he said.
While saying this, he also counted a number of areas where his government has allowed private investment. “In defence, there was no private investment. Today, I have allowed it to 100 per cent. In insurance, private investmentwas not allowed. I have allowed it. In the railways, I have for the first time developed a public-private partnership model for railway stations, which will raise the economic strength and efficiency of the railways.”
When asked if his government would ease hire-and-fire rules, the PM said it was “a western phrase”. “Labour reform should not just mean ‘in the interest of industry’. Labour reforms should also be in the interest of the labourer,” he said.
Most of the foreign media is highly ignorant of development of their own countries which have been full of public sector, labour non-reforms, protection and what not. Reading Ha Joon Chang will help.
But then this is not just the media problem. The core problem is state of economics education which is highly biased and taught in a highly selective fashion. Economics is hardly a linear subject as taught in books.