Fundamentals of Pragmatism

1. People only think of the pleasures of acquiring and don’t consider the trouble it involves. Suppose you have a hundreds of everything: cars, servants, houses…… life will be in a total mess!!
2. We are born with nothing and will die with nothing .
3. People who suffer most always find a way out, try squeezing a handful of mud it oozes between your fingers.
4. Just learning the theory want tell what the reality is, but practicing theory will.
5. Wisdom is in oneself, just like a sweet ripe mango is in a young green one.

(Adopted form- A tree in the forest by Ajahn Chah)

A tale of a theory

A keen observer will perhaps see that the modern day’s mainstream economics is largely neoclassical in assumption and implementation. And for many of us the neoclassical version of economics is the only economics we seem to know despite the existence of many other schools of thoughts. The popularity of Neoclassicism lies in its originality and its coherence with human nature.

Neoclassicism begins and ends with the single word, "maximization" and is sturdily built on the concept of "marginal’s". As far as neoclassicism goes maximization of desired marginals and minimization of the undesired seem to be the order of the day. The maximizing behavior is nothing new to humans. Realism believe that by nature human beings are greedy and self centric . Thus, "maximizing the marginals " approach is perhaps the closest theory that can explain man's behavior if one is to side with realism. Yet can ones maximization create anothers maximization? If one is to maximize at the expense of another can there be any progress in a society as a whole?Or else if maximization is rational behaviour what must be maximized in bringing harmony and prosperity to society ? (profit??)

In Aid of Aid

Aid and Development: Aid is currently looked upon as being instrumental for reduction of poverty and is being commonly defined as "concessionary loans" plus "Effective development Assistance". The modern day "aid bureaucracies” largely believe that aid disbursement has the potential to create growth through increased investment, a premise based on the "celebrated" work of Burnside and Dollar (2000) which has apparently become the "guiding angel" for many a western policy makers.

Contrary to this popular belief (of aid creating development through increased investment), Boone (1996), Hansen and Trap (2000) brings out solid empirical evidence that proves aid has increased consumption rather than investment. There is nothing wrong in financing consumption but financing consumption of a few against the general wellbeing of a society is something that is a bit hard to bite in.

William Easterly who tested the Two Gap Analysis on aid (which considers aid as a mechanism that first increases investment and then growth ) found that aid only increased the investment rates in 6 out of 88 countries that were studied and investment help increase the growth rates of only 4 countries, while both hypothesis tested to be significant for only one country(Tunisia).The international development policy establishments(IDEPs) can truly be happy for at least one out of the eighty eight had, for some reason or the other, benefited from foreign aid.

Aid & Distribution: The distributional mechanism of aid considers both the success of past aid to follow conditions and the failure of past aid to follow conditions as justification for future aid (Eastly:2003). Hence if a country is a good performer it will receive funds from the good performer fund and if it is a bad performer it will receive funds from the bad performer fund. Either way you end up getting aid as far as you need it!! Thus conditions become a mere wishful thought rather than having any significant impact on effectiveness in aid distribution. Aid agencies are reluctant to give honest and truthful evaluations regarding the performances of aid distributed so far, which if done will no doubt lead to a genuine acknowledgment that aid has failed to achieve sufficient levels of development.

Thus there should be a genuine commitment to evaluate aid. The results of such an evaluation can shed light on what must be considered as "best " in terms of the functioning of donors and receivers alike.

Aid and America: United States' 34th president, Dwight D Eisenhower believed that America's foreign aid could be just as important in fighting "wars" as its military might. Hence it is not surprising that Washington has been using aid as a tool for fighting terrorism. Aid now can be received as part and parcel of supporting America's war on terror, rather than as a instrument handled efficiently and prudently for inducing growth and development. This was seen happening with Pakistan.

 
Aiding development: Aid selectively and efficiently handled has the potential of increasing growth, yet it is not the so called IDPEs that must single handedly decide on what aid and how much must be given in order to finance development. Developing nations must be given sufficient amounts of freedom in deciding how the aid must be utilized under given domestic socio-economic or cultural conditions . Until such time "politicized" aid will not create growth or achieve development.