Sen also does not see yet the proper solution to the Arrow paradox. I have discussed his statements in an appendix to the ‘Arrow chapter’ above. We should note that Sen in some respect suffers from a tragedy. On the one hand he wants to explain that social decision making is important (for example to guarantee freedom), on the other hand his erroneous presentation of the Arrow Theorem has blocked good research into social choice and has induced many to become very critical of social decision making.
In a next edition, this should be adapted: “The butcher sells bread to the consumer (…)” (p256). We find the correct ‘meat’ a few pages later, so it is not because Sen is vegetarian.
Sen’s discussion of Hayek I discuss again in the Hayek appendix below.
It should be observed that, when Sen’s argument is stripped from all its footnotes and its rooting into economic theory and history for the sake of the economic community, then many of the key insights are of such a character that they not only must be, but also can be, communicated to that larger public. For example, the relation of the emancipation of women to lower child mortality does require a statistics apparatus and an analytically proper explanation before it can be be established as a scientific finding, but once it has been established, then it is something that the general public needs to know, and can easily understand. Communicating these findings is, again, a task for the specialists.
The Dutch government could help create more public attention for Sen’s analysis, for example by starting to provide development aid to the poor in the US American cities who in some dimensions are worse of then the people in Kerala. It will be interesting to see how the US Congress reacts to that, and how the media will report on that.
Galbraith: “Created Unequal”
James Galbraith’s “Created Unequal” (1998) is advised reading. Galbraith provides a quite accurate and chilling history of how prosperity gave way to stagflation as a result of misguided policy - and he shows how economists provided the misdirections and the apologies. Galbraith is clear of thought and masterly in language, ‘another Paul Krugman’. And actually, Galbraith presents us with an original contribution to political economy, while Krugman is more of a chroniquer.
A useful qualifier to this: Galbraith also has many thoughts and ideas, and this makes the book on occasion a tough read. He admits: “This book began as an inquiry into the origins of the inequality crisis. It has become in part a tract on the reform of monetary policy.” (p232). The reader has to be as flexible as the author, otherwise this book will be lost to you. [126]
A good critique of the book has been written by Thomas Palley (1999). [127] Palley’s review is some six pages, and since it is a very good review I concentrate here on the relation of Galbraith’s analysis to my own.
