The economic consequences of Arvind Subramanian’s grandchild

The economics profession is in a tizzy. Chief economic adviser Arvind Subramanian’s announcement that he was quitting his post because he was expecting a grandchild in the US in September has bitterly divided economists.

Some have speculated whether there could be other reasons for Subramanian’s exit. An economics student, for instance, wondered aloud whether Arvind Subramanian, Arun Jaitley and Piyush Goyal constitute—what in economics is known as—the impossible trinity. Some believe Goyal to be exogenous variable that upset the general equilibrium. But ceteris paribus, we must take Subramanian at his word.

A guilt-ridden macroeconomist, shedding tears of repentance, regretted he had missed his daughter’s childhood because he was busy giving lectures on free markets. “I thought the invisible hand would take care of it,” he sobbed.

But many of his colleagues disagree. “It’s a matter of comparative advantage,” said a trade economist. “Does Subramanian think he has a comparative advantage in nappy changing or gurgling and cooing to his grandchild, rather than being a chief economic adviser?” he asked rhetorically. He claimed global productivity would rise if everybody did the things they were good at—economic advisers at dishing out economic advice and baby-sitters at baby-sitting. Adam Smith, he said, was a firm believer in division of labour, subtly adding there is no record of Smith having played with his grandchildren.

It is not only trade theorists who believe Subramanian has made a sub-Pareto-optimal choice. A neoclassical economist wondered whether it was good for children to be around economists. “After all, it IS the dismal science, you know,” he cautioned, warning that they could cloud the child’s outlook, making her gloomy and stingy, thus lowering effective demand. “We call it the grandfather’s dilemma,” said a game theorist solemnly.

A rational expectations expert said the whole thing was highly irrational. “Subramanian says being the economic adviser to the Indian government is the best job in the world, but he then goes and leaves it for being a grandfather,” he said, shaking his head sadly. When I suggested that much depends on the marginal rate of substitution of advising vis-a-vis grandfathering, he aimed an arsenal of algebra at me.

This is not the first time an economist has talked about grandchildren. John Maynard Keynes, who wrote ‘Economic Possibilities for our Grandchildren as far back as 1930, was a pioneer in the field. But a monetarist was quick to rubbish the essay. “That article was silly to think the economic problem would be solved in a hundred years. It proves Keynes knew nothing about either economics or grandchildren,” he ranted. He said the best way of keeping Arvind in India was to increase his money supply.

All this discord has led to attempts to find middle ground. A confused economist said being a grandparent may be a necessary, but not a sufficient condition for Arvind. A behavioural economist asserted that talking to children and talking to the government is much the same, because both of them don’t listen.

Some believe playing with a grandchild could strengthen the feel-good factor for economists, which could trickle down and ultimately increase gross domestic product. A free market economist hypothesised that playing with grandchildren would have a mellowing influence and Karl Marx’s Das Kapital may well have enthusiastically endorsed capitalism if he had dandled a child on his knee while writing it.

A policy economist said the need of the hour was grandpaternity leave, which would have allowed Subramanian both to keep his job and do some quality grandparenting.

However, another Subramanian, an anti-Arvind one, tweeted that swadeshi economists with swadeshi grandchildren would not have quit their posts. As for the impact on India, he predicted that India’s GDP would improve after his namesake quits.

While wishing Arvind Subramanian all the best in his new venture, we need to track closely where exactly in the US he finally ends up. As Dave Barry said: “The best baby-sitters, of course, are the baby’s grandparents. You feel completely comfortable entrusting your baby to them for long periods, which is why most grandparents flee to Florida.”