Sensible economics; Sharp Economist. A Review of Raghuram Rajan’s I Do What I Do

The excitement over Raghuram Rajan’s new book, ‘I do what I do,’ ends as soon as you finish reading the title. This is a serious, analytical book full of arguments and analyses. It is about the world of banking, finance, and economics. There will be two types of readers of this collection of speeches he made as Governor, and his writings earlier as the Chief Economist in the International Monetary Fund: those already acquainted with his work and ideas and those who want to find out by reading the book. For the first set, this book fills in some gaps in understanding how sensible economics is put to work by negotiating the system.

But it will be a pity if only the fluent in these subjects read it, for it speaks to any one wondering why the most obvious decisions are not taken, and how the system ends up constricting, rather than benefitting from, the brilliance of individuals. There’s a collective reluctance to recognise problems, he writes. The subjects are not discussed in a vacuum, making this a sort of commentary on the society, judiciary, and the political culture—the system. Talking about reforms, he writes, he decided changing mindsets would have to be the starting point.

In most lectures, arguments that often feature in policy debates are measured against evidence, which is instructive for getting rid of erroneous impressions. Dr. Rajan’s reputation is that he goes beyond the obvious. In Fault Lines, his other—award-winning and highly-acclaimed—book, he had argued that the serious flaws in the economy were to blame for the global financial crisis (which he had predicted before it hit), not just greedy bankers. He had traced the crisis to individual choices, made by ordinary American homeowners, government officials and bankers, that, he argued, were rational responses to the distorted incentives pervasive in the global financial system. And recommended the aligning of what is best for the individual with that is best for the system.

There is no identifiable central message in ‘I do what I do.’ The speeches are all already publicly available, have been reported and commented upon. Now, as they did then, the analyses inform our opinions and shape our expectations. Dr. Rajan has added a bit of context. He revisits the speeches that attracted adverse comments from his detractors towards the end of his career at the RBI and concludes yet again that it was their interests rather than economic logic that had motivated them. Still, this is not, as he says in the introduction, a tell-all memoir. It is silent on his interactions with the political bosses in government or his reasons for leaving the RBI. It does help somewhat in understanding the Rajan phenomenon, especially the media spotlight.

‘I do what I do’ is a teaser. It makes the reader want to know what Dr. Rajan really thinks, freed from the constraints of his past job. A sequel, more telling and probing, is awaited.

I Do What I Do is available on Amazon. Priced at Rs 491 for a hardcover copy and Rs 292 for a Kindle version.