In the November edition of the North Melbourne Books Newsletter we talk to esteemed economics commentator Satyajit Das about his new book, A Banquet of Consequences. Despite the business as usual model that politicians, bankers and pundits continue to rely on, lulling us into thinking that everything is travelling quite smoothly, Das convincingly argues that the global economy remains in deep trouble. To view our latest November newsletter, featuring new releases and book reviews, click here.
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North Melbourne Books talks to Satyajit Das
North Melbourne Books: A Banquet of Consequences paints a picture of a deeply troubled global economy. There is too much debt and growth is sluggish. Environmental issues add further pressures. Despite this, the world is stuck in a massive policy drift. Politicians don’t really understand the forces at work and are making it up as they go along. You point to the need for greater democratic involvement in these issues. What do you think politicians should be telling their constituents?
Satyajit Das: The truth! To quote a politician from an earlier age: "you can't get quarts from pint pots". Though it might need updating for the metric age. It is important that leaders provide "leadership" in debating the crucial issues and an informed as well as considered debate takes places about these issues. There has to be a discussion about what is feasible and what is not. Also about how the adjustment will need to be managed and the sharing of the burden. Without these simple steps, we risk serious social and political problems emerging as in the 1920s/ 1930s.
NMB: One of your own possible solutions to these problems is for a steady state economy, one with zero growth. This would involve a considerable amount of pain initially. To keep it on a sustainable footing we would all have to live far more frugal lives. Do you see any evidence that people living in developed economies are willing to make changes for this sort of lifestyle?
SD: You have to understand that only a small percentage of people on the planet enjoy the type of lifestyle and choices that Australians believe is their right. It is not clear to me why a garment worker in Haiti who barely earns enough to match calorie input and output should support people whose only concern is pedicures and manicures or what latest electronic gadget they can upgrade to. But few people in developed countries want to face that reality. So few people will make that election but it will eventually be forced on them, which is the wrong way to go about it.
NMB: The Industrial Revolution, you suggest, was maybe a one off historical event, delivering huge increases in economic growth. Yet those good times may have come to an end, with the Internet unlikely to reproduce similar patterns of growth. Do you think the Industrial Revolution lulled us into a form of magic thinking about what was normal economic growth?
SD: I don't know that the human race ever has had a long term plan in that sense. But the advance of science and technology, of which the industrial revolution is an essential part of, encouraged us to think we can solve all problems. But continued wealth and prosperity is never a given. Especially since the industrial revolution was underpinned by the ability to convert fossil fuels into energy which is one of the key foundations of modern societies. But we are likely to exhaust several millennia of stored sunlight in a few hundred years. While we can still get energy from renewable sources, it is less flexible and more expensive placing some constraints on us. Also we have to pay for the environmental damage of the last few hundred years.
NMB: Besides economics, you also have a passion for the environment and conservation. Do your environmental interests inform your economic thinking in any way, or are they totally separate?
SD: Human beings are just animals on two legs. We like to think ourselves superior. We are not. We are just different. Our basic drivers are those of every species I have encountered on the planet. So in that sense my interest in natural history does inform my approach to thinking about things. As we cause species to go extinct, it is useful to reflect on the fact that we are not immune from those same forces.
NMB: What books are you enjoying reading at the moment?
SD: Certainly, not books on finance and economics! I read mainly history and philosophy with some classic fiction. So I have been re-reading Kafka (because he would have understood acutely the policy drift and the anxiety of ordinary people today) and Thomas Mann (for a good guide to the future of Europe). I am also reading a lot about the period between 1900 and 1945 as it may provide some clues as to how extreme economic pressure result in social and political changes. Almost forgot - I always read funeral notices, which are very reassuring!
Satyajit Das: The truth! To quote a politician from an earlier age: "you can't get quarts from pint pots". Though it might need updating for the metric age. It is important that leaders provide "leadership" in debating the crucial issues and an informed as well as considered debate takes places about these issues. There has to be a discussion about what is feasible and what is not. Also about how the adjustment will need to be managed and the sharing of the burden. Without these simple steps, we risk serious social and political problems emerging as in the 1920s/ 1930s.
NMB: One of your own possible solutions to these problems is for a steady state economy, one with zero growth. This would involve a considerable amount of pain initially. To keep it on a sustainable footing we would all have to live far more frugal lives. Do you see any evidence that people living in developed economies are willing to make changes for this sort of lifestyle?
SD: You have to understand that only a small percentage of people on the planet enjoy the type of lifestyle and choices that Australians believe is their right. It is not clear to me why a garment worker in Haiti who barely earns enough to match calorie input and output should support people whose only concern is pedicures and manicures or what latest electronic gadget they can upgrade to. But few people in developed countries want to face that reality. So few people will make that election but it will eventually be forced on them, which is the wrong way to go about it.
NMB: The Industrial Revolution, you suggest, was maybe a one off historical event, delivering huge increases in economic growth. Yet those good times may have come to an end, with the Internet unlikely to reproduce similar patterns of growth. Do you think the Industrial Revolution lulled us into a form of magic thinking about what was normal economic growth?
SD: I don't know that the human race ever has had a long term plan in that sense. But the advance of science and technology, of which the industrial revolution is an essential part of, encouraged us to think we can solve all problems. But continued wealth and prosperity is never a given. Especially since the industrial revolution was underpinned by the ability to convert fossil fuels into energy which is one of the key foundations of modern societies. But we are likely to exhaust several millennia of stored sunlight in a few hundred years. While we can still get energy from renewable sources, it is less flexible and more expensive placing some constraints on us. Also we have to pay for the environmental damage of the last few hundred years.
NMB: Besides economics, you also have a passion for the environment and conservation. Do your environmental interests inform your economic thinking in any way, or are they totally separate?
SD: Human beings are just animals on two legs. We like to think ourselves superior. We are not. We are just different. Our basic drivers are those of every species I have encountered on the planet. So in that sense my interest in natural history does inform my approach to thinking about things. As we cause species to go extinct, it is useful to reflect on the fact that we are not immune from those same forces.
NMB: What books are you enjoying reading at the moment?
SD: Certainly, not books on finance and economics! I read mainly history and philosophy with some classic fiction. So I have been re-reading Kafka (because he would have understood acutely the policy drift and the anxiety of ordinary people today) and Thomas Mann (for a good guide to the future of Europe). I am also reading a lot about the period between 1900 and 1945 as it may provide some clues as to how extreme economic pressure result in social and political changes. Almost forgot - I always read funeral notices, which are very reassuring!
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