Greater democracy can cushion fiscal chaos Amartya Sen

[Ulhas Joglekar]

DEC 28 1999
The Economic Times Online
Greater democracy can cushion fiscal chaos: Amartya Sen
David Brunnstrom
BANGKOK 27 DECEMBER
NOBEL Prize winning economist Amartya Sen says there is every indication
that Asia is pulling out of its economic crisis and greater democracy would
help cushion the effects of future financial upsets.
The ’98 laureate said in an interview in Bangkok, where the crisis began two
years ago, that one of its positive effects had been democratic progress in
several countries.
"I think people have learned something from that,” he said. "The fact the
democracy movement became stronger in South Korea and moved dramatically in
that direction in Indonesia and became stronger in Thailand too, I think are
positive aspects.
"The crisis had the effect of bringing out the weakness of the previous
argument that democracy was not needed in Asia — that it's against Asian
values and it's not needed anyway.
"I think that argument has been currently busted because when the crisis
came, the poor in South Korea and Indonesia did need the voice they didn't
have.”
The Asian meltdown had forced countries to implement reforms to improve
financial transparency and accountability and these efforts had borne fruit,
he said.
"As far as the crisis itself is concerned, I think there is every evidence
that the entire region is pulling out of it now. But that doesn't mean a
crisis of this kind cannot come again in a few years time.”
Mr Sen is the first Asian to win the Nobel prize for economics. He is master
of Trinity College Cambridge and a professor emeritus at Harvard.
"One must not fight the past war but look at the future war and for that one
has to see the ways this crisis could come and how it could be prevented,”
he said. "My belief is democracy and greater practice of democracy will have
a very positive part to play.”
Asked if he thought recovery might have come too soon for reforms to take
proper root, a concern expressed by some economists, he replied: "I don't
think it came too soon. Even in the old business cycles in the West, if you
go down for a year or two you would expect by the third year to turn

 around.” Asked what could precipitate a future crisis and what form it
could take, he said: "I don't know that. You see that's the real danger,
that people always tend to imagine the next crisis will be very much like
the last one. I just don't know and I don't think anyone really knows that.”
One reason the crisis in East Asia had been so severe was warning signs had
been ignored.
"Unfortunately, people didn't react when there were straws in the wind and
sometimes they didn't even react when there were trees in the wind,” he
said.
A key problem now facing the region was securing a fair deal in the new
round of world trade talks, Sen said. "I think the unequal power of the US
is something worth worrying about. You need fairer trade conditions. You
don't want asymmetry where the US could have a lot of restrictions of one
kind or another — agricultural commodities for example — when other
countries are not allowed to have that.”
Smaller countries should follow the examples of trade unions standing up to
a powerful employer, he said. "You need a united voice of the smaller
countries put together.” He said he believed this month's protests against
US policy at the World Trade Organisation conference in Seattle had helped
wake up Washington to global concerns.
"Even the biggest countries, including US, have been put on alert that
people would like to see justice of international relations discussed
more.” — Reuters
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