Pandemic - Happiness Conundrum

         

           What does happiness mean to us when   the  ferocity  of covid wave  hit the lives  of the people ?  Not a single day passes without hearing the loss of a person we know. What does happiness matter to a migrant worker who lost his job and income? an average middle-class family who lost their bread winner ? a poorer household without  three square meals a day?? Happiness is squandered when  Covid  withered huge psychological and emotional turmoil in the minds of people in all walks of life. SARS-CoV-2 has its origin in China and rapidly spread to countries across Europe where  there is high human development and better institutions to combat the menace. However, further spread to developing countries was beyond the control of  its institutions. Developing world is known for  less human development and it plunged into crisis  like never before, economically and psychologically.

This  human tragedy unfolds  the fact  that, as the death toll rise, only   human life is important, nothing else!  Although the economic policy makers are focused on wellbeing of the people, the  current state of the country negatively impacts  people’s happiness. Economists always correlate individual happiness with income Cantril (1965) .  Richard Easterlin (1974) explained the  paradoxical situation of Income and happiness. Philosophers like Aristotle  says  happiness is a virtue, and it is the noblest thing in the world. Thus, economists and philosopher’s enquire happiness in the lives  of the people.   

How economics inspires happiness? What makes people happy in life  is a crucial question in   happiness  research. It   relates  subject matter of  Economics with  life, or one  may call it ‘Economics of  life’ deviating from the neoclassical or mainstream economics. The works by Amartya Sen, Martha Nussbaum, Richard  Easterlin, Tibor Scitovsky etc are leading to  an enquiry into the nature of wellbeing of people than an enquiry of nature and scope of creation of wealth.  Prof. Amartya Sen tried to look at the wellbeing and happiness of the people from a development perspective.

The debatable questions in happiness research  start from the premises of  ‘are you happy’, what are the determinants of happiness. The determinants of happiness include  (1) Personality and demographic factors such as age, gender, attainment of education, political and religious factors, size of household, marital status and  health of the individuals. (2) Micro- and macroeconomic factors  such  as  income,  unemployment  and  inflation. (3)  Institutions. Institutions are responsible for the wellbeing and happiness of the people.

 

Effect of  Institutions on  Happiness

 

Empirical studies based on World Value Surveys(WVS) shows the relation  between  overall happiness and  institutions, Veenhoven (1993) and  Diener et al., (1995). It is bit  difficult to isolate the effect of  institutions on reported individual well-being and happiness because the countries differ  significantly in a great variety of aspects. In poor countries, the probability of recording the highest category of happiness increases with GDP per capita, and  not with the institutions. Easterlin (1995) observes  that in developed countries average happiness does not increase  with  the spike  in per capita GDP over time. On contrary, the developing world has not attained significant change in the institutional quality over the last decades, but they tried to advance  economically  to some extent.  Poorer countries like Malawi still fighting with malaria and smallpox, then it is not surprising to watch that the average happiness in these countries have not changed much over time. As a general rule, people living in  developed countries  with a  high  level of  human development with better institutions  tend to be happier. 

 

But, in the scenario of a pandemic, the happiness definition changes. How much income a typical individual would need  to achieve a level of happiness to compensate the loss in wellbeing resulted due to pandemic?  Happiness is related to good institutions and wellbeing of the people and good institutions can make people happy.  It is not about so much of wealth creation, but  public happiness is important.

Can Government Policy bring Happiness ?

Happiness is  considered  as a determinant of economic outcomes: it enhances  productivity, labour market performance and national output Bryson et al. (2016) and Piekalkiewicz (2017). Advocates of happiness economics assert that maximising happiness is  the art of  policymaking.  In order to ensure well-being and happiness, institutions  play a crucial role and there is a link between institutions and individual behaviour. Common man is happy when they meet basic need, away from infections and diseases and assured  vaccine - a universal public good. Like vaccine, happiness  is also a public good. We can’t be happy without  spreading  happiness in the lives of people.

A part of this article is   carried in the Christ University, Dehi NCR college magazine 2021

 

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Book Review on Mission Economy- A moon shoot guide to changing Capitalism (ISBN 9780241419731) by Marianna Mazzucato

 

At the time of a public health catastrophe, the economic analysis and moral logic of  many pointed out  the  current system failure in India. It is in this backdrop that I introduce, Mission Economy A moon shoot guide to changing capitalism -  a mission of the state at the time of  crisis beautifully laid down by Prof. Mariana Mazzucato, who already  portrayed  role of state by debunking myths of  Public vs Private sector in her previous works.

The worst health crisis that India is facing today is a result of  massive state failure and the entire nation is paying a heavy price. The author is  a  professor of Economics, who associate with several  leaders, policy makers across globe which brought the mission instrument with  common good approach in economics. The mission statement is  solely  with  her  expertise of working with UN, President of  South Africa and many other incumbent leaders and economists  especially during the time of pandemic.  Mazzucato   worked as a special adviser to Giuseppe Conte, Italy’s prime minister to restructure its Post Covid economy which is a mission undertaken for addressing the challenges and a rethinking of the capitalism.

The people of the country are for want of oxygen, ICU beds, ventilators and vaccines, the state has literally failed to give free vaccination to all and to ensure the  provision of  emergency health care facilities. When  entire world is resolving the crisis of a  pandemic, a country like  India is in the state of a health emergency like never before, and we need to rethink about the role of a risk taker government as  it is  need of the hour.

In the light of above, the mission approach is illustrated  here. All governments  across globe are combating the crisis in its own way. Author  seeks an alternative solution of a mission economy which boost its private and physical and social securities to defeat the pandemic. It requires something just more than money to solve the nations problem - that is definitely a concrete structure, partnership development of both public and private sectors.

Countrywide examples include the success story of Vietnam, through public private collaboration via commercialisation of kits, later exported to Europe and the other part of the world. The state of Kerala’s mission  in combating the Nipah virus and the first wave is stated as an elegant example of successful public-private partnership. It also addressed the scenario of  U.S.A, UK by stating the government should invest in building their muscles in critical areas such as productive capacity, procurement abilities, public -private partnership etc and she vehemently argues that we have lost one way and we cannot keep making the same mistake again.

To address the SDG’s for the entire world nation and to solve various developmental challenges, we need a different approach. It is about that aspect of sharing both risk and reward, it is possible to put an end to the problems of our time. Hence  it is a rethinking of the capitalism by Mazzucato.

A ‘mission grounds’- what stands in the way of next moon shoot is the first part of the book. The  capitalism in crisis and the five myths impede the progress is eloquently pointed out in this section. Next, a ‘mission possible’ what it takes to achieve our boldest ambitions and the last is a ‘mission in action’ - good theory, good practices and seven principles of a new political economy.

The initial example used in this book  to state the mission and the purpose is “Appollo Mission”, landing a man on the moon and bring him back safely. Kennedy’s farsightedness, vision and ambition  resulted in a landmark change in the history that  affecting life on earth. The same mission-oriented approach  and partnership can solve several  societal problems the economies are facing at present. I agree the lesson from space mission can’t be replicated  to any challenge of a developing world, but a moon shot therapy can rescue a country and its people at a critical time.

Mission oriented approach can change the direction of the economy and  it can foster innovation and catalyse growth with the public private partnership. However, there is a confusion, whether the discussion is all about rethinking government or rethinking capitalism. Capitalism was in crisis even before the Covid 19 pandemic time even during the time of financial crisis. Also, the example of the authoritarian government like China and other state-run capitalist societies inefficient to great extent.

 The covid 19  crisis also revealed how shaky capitalism is. The pandemic hit hard the global production. It is at this time that countries like USA and UK outsourced so much of their resources to private agents and consultants to accelerate production.  The mission economy stimulates how government change in order to derive better outcome and how it interacts with various agents.  Although the government has spent huge amount on to keep life support to people during pandemic, still the neoliberal economics portrays  government just as a bureaucratic master which suppress the system. Thus, she  debunks the  most common myth about government and explain why new approach is inevitable to change capitalism.

At the end, Mazzucato  suggests seven key pillars to better political economy that can guide the above-mentioned approach. It includes market sharing, organisational change, long term planning, distribution and production growth, partnership and stakeholder value, participation and cooperation. Therefore, to come out of the clutches of a deep crisis, we  can think of a mission-oriented approach to provide life support to its citizens and  to  rescue  a nation struggling to breathe.

 

Role of R&D capabilities in fostering India’s Pharma Industry

 

The second wave of  Covid  19 has spread quickly creating a public health catastrophe in India. This   put nation and individuals at great risk for want proper medical care and health  facilities. Therefore, the  challenge we face at present is different in its  nature and scope than we faced last year. There is on ongoing debate about vaccine nationalism and   government’s  failure to bolster its crumbling health care system. However, there are less discussions over state sponsored research and innovation in drug development in India.

India has a fast-growing presence in global pharmaceuticals. Hyderabad and Bengaluru are known for pharmaceuticals with high R& D capabilities and manufacturing. But during the second wave, many condemned  the state  for not  intervening successfully to provide lifesaving drugs to people though we claim India is the pharmacy of the world. And the state  failed miserably to adopt the  role of a risk taker at the time of a crisis.

Often, the role played by the centre and the various state governments are questioned in the current public health crisis. The subtle reaction of the centre suggests that the private players can accumulate their profit through vaccine production. The existing debates over accessibility and affordability of vaccines do not bring a relief to the suffering Indians. How can poor people be expected to vaccinate themselves, as they just do not have bare minimum a day?

Government is  a risk taker when it boosts state sponsored research  for drug development. Unfortunately, the  role of a losing state was evident  when it  obsessed with  the deadweight loss of the producers like Poonawalla. Even though there  was ample time to develop herd immunity from the first wave to the current period, it was not dealt effectively. In the meantime, countries in the Europe and USA  could manage the crisis.

USA is always in the forefront in extending state support  to sponsor innovation in the private sector for a common good. USA proved  state could take a massive scale risk to spur innovation. State played a significant role  in the fields of science and technology, small businesses etc. the invisible hand of the state was there in all radical areas including pharmaceuticals. The Orphan Drug Act  (2013) made it possible to develop drugs for rare diseases.

Orphan drugs

The drug which is used for a rare disease that affects less than 20000 people in a potential market cannot expand production without financial incentives is known as orphan drugs. The above-mentioned act supports the small firms to scale up production and allowing them to become a potential player in pharmaceutical industry. It is not only the small firms benefitted , but also the  giant firms such as Johnson & Johnson, Pfizer and many others was encouraged to use the same. Statistics shows 59 percent of total revenues of biopharmaceutical firms comes from sale of orphan drugs. In critical times, the government of our country can take a deliberate effort of being a subsidizer of drug development and the protector of the people of the state.

 

 

Is India really a global pharmacy hub?

Recent announcement of the prime minister of India had created discussions on India’s ability as a global factory of drug manufacturing. India is by now accounting for 16000 plus pharmaceutical firms including small and large ones. In terms of volume of production India’s pharmaceutical industry is the fourth largest globally but notably in terms of value, India rank at the 13^th position globally.  One reason for this dispersion between volume and value of production are embedded in certain specific characteristics of the pharma firms in India. An interesting observation in this regard is that by and large (though there are exceptions), Indian pharmaceutical firms are generic drug producers where the role of patents in capability accumulation is less compared to the other segments of the industry.  In the last years, more than 76 percent of the  patent applications filed in the Indian patent office are by foreign firms with USA, Japan and Germany accounting for 45 percent. This trend raises doubts over the technological capability of the Indian pharmaceutical sector in fostering the emerging needs.

Public funded innovations with fair risk-reward sharing are essential to boost capability-based drug development. The government has played an active role in the development of pharmaceutical industry in India especially through two remarkable Patent Acts. The Patent Act of 1970 permit pharma companies only for process patents but not product patents. This has encouraged firms especially generic drug producers in manufacture drug molecules cost effectively and efficiently. The Patent (Amendment) Act 2005 re-established the product patent regime after three decades. Now the need of industry lies in increased R&D capability with adequate support via public funding. University/research institutions - firm based collaborations as prevalent in developed countries can be a feasible business model in fostering the future need of the industry.