Abhijit Banerjee, a brilliant theorist who decided the future was with empirical work, discusses topics such as premature deindustrialization, the influence of English intellectual life in India, Indian regional cuisines, the impact of coaching on the poorest individuals, and the importance of theory in economics for critical thinking and testing hypotheses.
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Quick takeaways
Abhijit Bonerjee emphasizes the importance of learning through listening and reading.
Premature deindustrialization poses challenges for emerging economies due to automation and income inequality.
Focus should be on supporting and scaling up the best petty entrepreneurs, rather than creating more entrepreneurs through initiatives like microcredit and universal basic income.
Deep dives
The power of learning through listening and reading
Abhijit Bonerjee discusses the importance of learning through listening and reading in the podcast. He emphasizes that the podcast Conversations with Tyler has been a rewarding and instructive experience for him. By listening and asking good questions, people can gain knowledge and contribute to making the world a wiser place.
Premature deindustrialization and its impact on emerging economies
Abhijit Bonerjee discusses the argument made by Danny Roderick that premature deindustrialization poses significant challenges to emerging economies. This is because they are moving into manufacturing when automation has already reduced the demand for labor in those industries. Bonerjee agrees with Roderick's argument, stating that there are additional challenges caused by income inequality and the high costs associated with ensuring product quality.
The prospects of shifting away from petty entrepreneurship in emerging economies
Abhijit Bonerjee shares his skepticism about the current strategies to transition petty entrepreneurs in emerging economies into larger-scale enterprises. He believes that the focus on creating more entrepreneurs through initiatives like microcredit and universal basic income is not sufficient. Instead, he suggests identifying the best among the petty entrepreneurs and providing support for them to scale up their business and create larger enterprises.
Understanding the positive externality of manufacturing jobs in emerging economies
Abhijit Bonerjee highlights the importance of middle-skilled jobs in fostering economic development in emerging economies. While not necessarily limited to manufacturing, Bonerjee argues that it is the skill range and accessibility of certain types of jobs, rather than the sector itself, that contribute to positive externalities. He questions the assumption that manufacturing is the only sector capable of providing these opportunities and suggests that services could achieve similar outcomes.
The potential of services as drivers of economic growth
Abhijit Bonerjee discusses the growth potential of services as an alternative to manufacturing in driving economic development. He points to examples like the software and business process outsourcing industry in India, which has helped create employment opportunities for individuals with lower levels of education. While acknowledging that services are also susceptible to automation, Bonerjee believes that significant growth and benefits can be achieved by leveraging human capital and skills in service-oriented sectors.
Long before Abhijit Banerjee won the 2019 economics Nobel with Michael Kremer and Esther Duflo, he was a fellow graduate student at Harvard with Tyler. For Tyler, Abhijit is one of the brightest economic minds he’s ever met, and “a brilliant theorist who decided the future was with empirical work.” But according to Abhijit, theory and practice go hand in hand: the real benefit of a randomized control trial isn’t getting unbiased estimates, he says, but in testing hypotheses borne out of theory.
Abhijit joined Tyler to discuss his unique approach to economics, including thoughts on premature deindustrialization, the intrinsic weakness of any charter city, where the best classical Indian music is being made today, why he prefers making Indian sweets to French sweets, the influence of English intellectual life in India, the history behind Bengali leftism, the best Indian regional cuisine, why experimental economics is underrated, the reforms he’d make to traditional graduate economics training, how his mother’s passion inspires his research, how many consumer loyalty programs he’s joined, and more.