On 15 July 2020, The Takshashila Institution and the Niskanen Center hosted an online conversation on “Free Markets”. This was the second event of a three-part series titled Beyond the Pandemic: A Battle for Ideas, it focused on the importance of free markets, prosperity in a free market, and its post COVID scenario. The speakers were Anupam Manur, Assistant Professor of the Takshashila Institution, and Steve Teles, Senior Fellow of the Niskanen Center. The conversation was hosted by Kodiak Hill-Davis, Director of Government Affairs at the Niskanen Center.
Steve started the conversation by talking about inequality, its causes, and the difference in the nature of inequality amongst countries. He observed that though the Left and Right may differ on most issues, both agreed on the inevitability of inequality in the market. In the American context, Steve said, “The paradox in the U.S. in an “unregulated era,” is that many fields have actually become more regulated. This matters for inequality, because in general, markets should create competition. But this gets broken down when there are regulatory constraints on entry.”
Continuing the conversation on the US, Anupam argued, consumption cannot fuel economic growth as much as it did before the pandemic. He emphasized on the importance of free markets by saying, trade helps with employment, as well as imports. By having a more free system, consumers benefit. Cheaper imports that customers can benefit from should be a goal.
Anupam stated, “Protectionist tendencies are not new and were growing prior to the COVID-19 pandemic. However, for its own sake, India must tell the world its doors are open for trade and investment.”
The conversation then moved into the themes of protectionism, free trade policies, and their relevance in the post-pandemic world.
Steve highlighted that, many years’ worth of change has happened within the last few months due to COVID. This will help us to rethink the speed of these systems going forward. Governments can make a stronger case for globalisation, but a combination of the vulnerability in supply chains and increasing geopolitical competition with China could make it difficult to maintain an open trade regime.
Anupam also gave some solutions for India, that India must decrease the universal tariff rate, must make a start by getting into bilateral and regional trade agreements with select countries, if necessary liberalising trade unilaterally.
He ended by stating that “Every 1 percent rise in GDP brings around 2 to 3 million people out of poverty in India.”
(For more information about this series and the participating organisations, please visit the series’ page in the Media section)