Economists should make good astrologers; after all, they are in the same business. Astrologers can tell you everything about your past, but very little about the future, just like the economists. Both make all kinds of predictions and almost always go wrong.
Years ago when the planning commission was set up, it started something called perspective planning, which sounded so exciting that most of us fell for it. Its main business was to make predictions about the future-how much steel and power and wheat and rice India would require in, say, ten, fifteen or twenty years time, so that the government could allot proper resources and issue production licences accordingly.
It sounds wonderful on paper but is absolutely baseless, amounting almost to fraud. How do you know how much steel you would need, unless you know how cheap or expensive it was going to be? And why stick to steel produced in India only? Why not import steel, as we are doing now, if it is available cheaply?
Every ministry had an army of clerks working out detailed projections not just for basic things like steel and power, but also oil engines and screws and, believe it or not, aspirin and condoms. It was laughable and people like me who used to point out the absurdity were considered beyond the pale.
One day, I met Shantanu Kirloskar, the great industrialist from Pune, in one of those corridors of Udyog Bhavan which at the time used to crawl with businessmen like Kirloskar. He said that he had put up a plant for oil engines based on the ministry's bogus estimates but they were totally off the mark and he was now saddled with huge capacity for which the market had no use.
It took me a whole afternoon to calm him down. We agreed that this perspective business was a big fraud and we would have to expose it. Kirloskar was at the time president of FICCI, which was almost a government body at the time, but Kirloskar did manage to expose the absurdity of the exercise in many of his speeches.
The point is that in a complex world like ours, you cannot really predict the future, for we simply do not know which way things will move in the future.
In the sixties and seventies, it was fashionable to hail Japan as a rising industrial power, which, one day, would overtake the United States and go on to become the number one economy in the world. There used to be special institutes in the US to study Japan, just as at one time there were special institutes to keep track of the Soviet Union.
Even the so-called Soviet experts did not know right up to the day the Soviet Union collapsed that its end was near. They simply could not imagine that a colossus like Russia would one day just fold up and vanish from the map. These were the very same people who, a half century earlier, were sold on Hitler.
Now it is the turn of China. Week after week, US and British magazines bring out special editions on China, just as they used to do earlier on Russia. They believe that China is going to dominate the world and surpass the US in the next ten or twenty years, which is also what they used to say at one time about Russia.
I may be wrong, of course, but I don't think it's going to happen. Dictatorships carry within them the seeds of their own destruction, while democracies, like India, for instance, have a built-in mechanism for survival. I won't be surprised if China goes the Soviet way in a quarter century from now!
This column first appeared in January 2006.
This article was originally published on July 02, 2016.
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