Henry: Sen and Financial Conservatism

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In this blog post, I intend to make the case for what Amartya Sen calls "financial conservatism" (Sen 137) as well as what I will call "legislative conservatism." My argument will proceed from Sen's framework in which "substantive individual freedoms are taken to be critical" (18). Using Sen's argument, I urge caution in both the financial and legislative realms in order to ensure that substantive freedoms are not jeopardized by careless government action. In doing so, I attempt to demonstrate the possible tension between what Sen calls "political freedoms" (38) and other types of substantive freedoms.

Sen explains that "the case for financial conservatism lies, to a great extent, in the recognition that price stability is important and that it can be deeply threatened by fiscal indulgence and irresponsibility" (138). Sen sees financial conservatism mainly as a solution to protect against the threat of widespread macroeconomic instability, which would jeopardize the substantive freedoms of individuals. While Sen agrees that "financial conservatism has good rationale and imposes strong requirements," he rightly argues that "its demands must be interpreted in the light of the overall objectives of public policy" (141). Sen's assessment is keen—financial conservatism is not valuable for its own sake but only insofar as it ensures people's substantive freedoms. 

The threat posed by excessive government spending raises the issue of scarcity in the allocation of government funds. Sen acknowledges this scarcity, writing "given the limitation of economic resources, there are serious choices involved here, which cannot be altogether neglected on grounds of some pre-economic 'social' principle" (131). As a result, governments have to make difficult decisions about which programs to fund and which to leave unfunded. As Sen writes, "depending on the particular context, different public policy issues may end up being critically important" (141). For example, he argues that while health care remains a foremost unaddressed issue in the U.S., literacy should be the primary focus of the Indian government. Often, governments make mistakes about how to best allocate funds. Sen gives the example of the "social backwardness of India, with its elitist concentration on higher education and massive negligence of school education" (42). In Sen's estimation, the Indian government allocates funds to higher education in a way that doesn't adequately promote substantive freedoms. For these reasons, governments need to be careful about how they allocate scarce funds.

Sen also makes a partial case for what I will call "legislative conservatism," or the philosophy that  legislatures should be stringent in the crafting of laws. Policies that produce unintended consequences and generate perverse incentive structures pose a severe threat to substantive freedoms. Sen defines perverse incentives as "effects that a system of public support may have in discouraging initiative and distorting individual efforts" (130). For example, unemployment benefits may encourage persistent joblessness (130) and targeted nutritional support programs can encourage parents to intentionally starve one child (132). For these reasons, any legislature crafting laws must be cautious about the way that its laws create perverse incentive structures.

Sen's framework places a strong emphasis on what he calls "political freedoms," defined partly as "opportunities that people have to determine who should govern and on what principles" (38). At the same time, Sen also values what he calls "economic facilities," defined as "opportunities that individuals respectively enjoy to utilize economic resources for the purpose of consumption, or production, or exchange" (38-9) as well as "social opportunities," defined as "arrangements that society makes for education, health care and so on, which influence the individual's substantive freedom to live better" (39). Sen rightly notes that often "different kinds of freedom interrelate with one another, and freedom of one type may greatly help in advancing freedom of other types" (37). For example, Sen notes that "no substantial famine has ever occurred in a democratic country— no matter how poor" (51).
But political freedom does not always promote other types of freedom. Given the necessity of financial and legislative conservatism, political freedom may adversely impact the economic and social freedoms that people enjoy. For example, a people might democratically decide to implement Policy X that has unintended consequence Y or choose to fund Program A when Program B would have better promoted social and economic freedom. Thus, political freedom can often impede the exercise of economic and social freedom.

Given the heterogeneity of human freedoms, Sen raises the question of how the relative weights of different freedoms are to be assessed. Sen is rightly skeptical of the technocratic tendency to "pine for some wonderful formula that would simply give us ready-made weights that are 'just right'" (79). Sen firmly believes that the promotion of substantive human freedom is a "social choice" exercise that "requires public discussion and a democratic understanding and acceptance" (78-9). That said, while the selection of weights must be a social choice exercise, the implementation of policy to maximize weights may be best served by technocratic procedures. Sen himself acknowledges this possibility, writing "we are not prevented... from proposing that some particular formula... be used for aggregation, but in this inescapably social-choice exercise its status must depend on its acceptability to others" (79). Thus, in the implementation of policy, deference to expertise and empirical analysis is essential to ensure that economic and social freedoms are not jeopardized.

Sen's substantive freedoms do not always go hand in hand. Because of the importance of financial and legislative conservatism, political freedoms may impede social and economic freedoms unless properly implemented.  Policymakers should therefore exercise caution when appropriating funds and drafting legislation.

Comments

  1. Noah HendelmanMarch 30, 2023 at 9:57 AM

    Hi Henry, thanks for the post and for your well-crafted, very compelling argument.

    I think a good modern example of political freedoms infringing on others is the recent legislation passed in Uganda to criminalize identifying within the LGBTQ community. I personally find the law abhorrent, and were it to be assessed through technocratic procedures, I would assume it would be rejected based on the freedom of sexual identity relating to social freedoms. In addition, the unintended consequences of the measure (like disenfranchising the prosecuted LGBTQ members or precluding them from engaging in the market) could deem it invalid through its unintentional consequences of decreasing political or economic freedom.

    At the same time, I think it’s premature to throw strong condemnation for these procedures when the right to gay marriage has only been guaranteed in the US since 2015. Our past and ongoing fight for LGBTQ rights has been turbulent and winding, so standing on our moral high-ground and castigating Uganda because their culture is less liberal seems a bit tone-deaf.

    I very much agree that “deference to expertise and empirical analysis is essential to ensure that economic and social freedoms are not jeopardized.” But when international expertise and empirical analysis come into conflict with the existing democratic procedures of another country, what should we do? In this scenario, I think forcing Uganda to repeal this law on behalf of more prosperous development would fundamentally obstruct the democratic freedoms of those engaged in the political process and who navigated the legitimate procedures to pass this legislation. It would disrespect the will of its people. Moreover, coercing Uganda into repealing the law by restricting development aid or ousting them from the international circle also seems manipulative and disrespectful to their sovereignty.

    Yes, it is likely that this law will oppress already marginalized individuals further and have unintended consequences inhibiting freedoms. But there is also a respect for other countries, their cultures, and their sovereignty that must be weighed. I guess my question is at what point should expertise and empirical analysis step in to override precedent when the views of a nation’s people and its sovereignty come into may conflict with the intended measures?

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  2. Paul HurleyMarch 30, 2023 at 10:03 AM

    Your general point here seems to me to be a really important one. Sen emphasizes the interconnectedness of freedoms, and the ways in which expanding some freedoms also secures and expands others (the famine point, for example). You emphasize here, by contrast, certain ways that the exercise of certain freedoms might jeopardize the effective exercise of other freedoms and capabilities. The example of political freedoms exercised in ways the jeopardize economic capabilities is important. It is noteworthy that we take certain steps, e.g. with the federal reserve, to partially insulate economic capabilities from the exercise of political freedoms.

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