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Sunday, April 18, 2021

Joseph and the Amazing Technicolour Dreamcoat

Bibek Debroy<br> On public policy,there are three clear lessons. First,create fiscal space when going is good. We are in a mess because we didn't do that between 2003-04 and 2007-08.

Written by Bibek Debroy |
April 4, 2009 4:27:44 pm

There is merit in reading the Biblical Joseph story. Joseph eventually ended up in Pharaoh’s prison and successfully interpreted dreams of the chief butler and chief baker,both of whom had been imprisoned. Pharaoh dreamt of seven thin cows that ate up seven fat cows and seven thin ears of corn that ate up seven thick ears of corn. Recommended by reinstated chief butler to Pharaoh,Joseph successfully interpreted the dream. “Behold,there come seven years of great plenty throughout all the land of Egypt: And there shall arise after them seven years of famine; and all the plenty shall be forgotten in the land of Egypt; and the famine shall consume the land.”

So the solution was to store up grain during the good years and Pharaoh appointed Joseph Viceroy for this task. Joseph stored up grain and this was sold to Egyptians and foreigners when famine struck. In distress,farmers sold up land and Joseph bought it in the name of Pharaoh and leased it out. In Egyptian tradition,Joseph is credited with many public works (Memphis,obelisks,pyramids),much before Keynes.

On public policy,there are three clear lessons. First,create fiscal space when going is good. We are in a mess because we didn’t do that between 2003-04 and 2007-08.

Second,in tradition,though not in Bible,there is an emphasis on public works as counter-cyclical instruments,assuming fiscal space has been created.

Third,in Egypt of those times,there is an emphasis on land reform,a point still valid in India four thousand years later. Now that all parties have brought out manifestoes,one should remember these morals. Because of fiscal profligacy under UPA,we don’t have resources.

However,this isn’t about resources alone. It is also about efficient utilisation of what already exists in the system. Pharaoh didn’t face this administrative delivery problem,because as Viceroy,Joseph had untrammeled powers. Unfortunately,beyond general assertions about improved governance,no manifesto gets into nitty-gritty details about public capacity to deliver on expenditure promises.

We also have the rural reform issue,as cushion to provide endogenous sources of growth,relatively unaffected by global slowdown. Nowhere does Bible say grain was sold to distressed people at lower-than-market prices. Subsidisation,including interest rates for farmers,isn’t the point. The point is systemic reforms to improve credit delivery and look beyond banks. But no manifesto looks at key structural issues.

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