Wednesday, December 31, 2008

Books which I read in 2008

  1. Ludwig Von Mises-Bureaucracy 
  2. Ayn Rand-The Virtue Of Selfishness 
  3. Ken Schoolland -The Adventures of Jonathan Gullible: A Free Market Odyssey  
  4. P. Chidambaram -A View from the Outside: Why Good Economics Works for Everyone 
  5. Steven D. Levitt and Stephen J. Dubner-Freakonomics 
  6. Tyler Cowen-Discover your Inner Economist- Use Incentives to Fall in Love, Survive Your Next Meeting, and Motivate Your Dentist 
  7. APJ Abdul Kalam- Wings of Fire 
  8. Mainak Dhar-The Funda of Mix-ology what bartending teaches that IIM doesn’t 
  9. Thomas Sowell-Applied Economics 
  10. Dale Carnegie-How To Win Friends And Influence People

Keynes solution unlikely to do so

These are good questions actually but bad time to ask for action.

T. C. A. SRINIVASA-RAGHAVAN writes “After all, why should a taxpayer be made to pay for the mistakes of some bad decisions by directors? Even if there was a genuine error of judgment about the likely business environment, why should the cost of helping them out fall on the taxpayer when he or she was not sharing the benefits when the times were good?

True, a person could have become a shareholder, but that would have meant exercising a choice, which is right. But now taxpayers are not being allowed to do so. Whether they like it or not, their money is being given away to small groups of persons, some of whom may well have avoided or evaded taxes and, thus, become richer than those who paid their taxes”.

Except the above questions all other questions the author asked in the article was clear in the public debate.

College is for learning how to think

VV writes in the BS about “Elementary DNA of James Watson” 

What is interesting to me is the “College is for learning how to think  

“From Childhood:

  Accept only advice that comes from experience, not revelation.

  Hypocrisy in search of social acceptance erodes your self-respect.

From Adolescence: 

  College is for learning how to think.

  Knowing “why” (an idea) is more important than learning “what” (a fact.)

  New ideas usually need new facts.

  Seek out bright as opposed to popular friends.

From Young Adulthood to University:

  Keep Your Intellectual curiosity much broader than your thesis objective.

  Extend yourself intellectually through courses that initially frighten you.

From Observing Leo Szilard and Max Delbruck:

  Avoid Boring People.

  Science is highly social.

  Leave a research field before it bores you.

From Postdoctoral Years at Cambridge:

  Never be the brightest person in the room.

  Work with a teammate who is your intellectual equal.

  Always have someone to save you.

From Early Years at Harvard:

  Bring your research into your lectures.

  Challenge your students’ abilities to move beyond facts.

  Academic institutions do not easily change themselves.

From Chapters relating to Teaching Experience and the Nobel Prize:

  Travel makes your science stronger.

  Exaggerations do not void basic truths.

  Controversial recommendations require political backing.

  Challenge rage through intermediaries”.

Nonsense stimulus

Every time depression invent new stimulus which have no clear indication to combat demand deepening path. 

Madan Sabnavis disproves the stimulus theses. 

  • “Let us go back to the rudimentary text book where output is the sum of C(onsumption), I(nvestment), G(overnment), E(xports) and I(mports). This holds for any sector. The table shows that consumption growth does not have a strong relationship with industrial growth — which means that we need more of the other factors to help in growth. Government expenditure also does not impact industry in the same year — this means that all the fiscal stimulus packages would really take time to work out as the impact is indirect. Trade however is significant.
  • Therefore, the primary factors are really investment and foreign trade growth. Further, the growth in capital issues, foreign investment and the Sensex are not associated with industrial growth. This means that the rate of change in these variables is not correlated with the industrial growth rate. 
  • Given this picture, how can we relate the present circumstances with the industrial scenario? On the supply side, we have witnessed growth in bank credit rising and imports, which means that industrial growth has taken place up to October. Sentiments are low as gauged by FII, FDI and capital market indicators. There is a shoulder shrug as far as investment is concerned as we do not have clear indications — bank credit partly reflects growth but lower capital issues could negate this performance. The government stimulus package does not appear to have the strength to change things, nor would private consumption. As exports growth is not too impressive, the demand stimulus would not be there. The imports route will work provided the demand is there, as imports only talk of the supply side”.

I asked my Punjabi friends who is Bhimsen Sachar? they said he is Rajendra Sachar otherwise I do not know, was their answer

Chacha Manmohan Singh have quoted the following lines while delivering Bhimsen Sachar Memorial Lecture, December 2008. 

“The unity of India was of paramount concern as expressed by the great architect of our Constitution - Dr. Ambedkar, when he said: 

"Though the country and the people may be divided into different states for convenience of administration, the country is one integral whole, its people a single people living under a single imperium derived from a single source... The Drafting Committee thought it was better to make [this] clear at the outset rather than leave it to speculation...." 

In his submissions to the States Re-organisation Commission Dr Ambedkar spoke at length about the tortuous journey the “United States” of America had to make to become “One Nation.” He then went on to suggest: 

India is not even mentally and morally fit to call itself the ‘United States’ of India. We have a long way to go to become the United States of India. The Union of India is far, far away, from the United States of India.” 

Dr Ambedkar then went on to lament: 

“God seems to have laid a heavy curse on
India and Indians, saying ‘Ye Indians shall always remain divided and ye shall always be slaves’.”  

 I am reminded of the famous words of Swami Vikekananda: 

"Sectarianism, bigotry and its horrible descendant, fanaticism have long possessed this beautiful earth. They have filled the earth with violence, drenched it often with human blood, destroyed civilizations and sent whole nations to despair. Had it not been for these horrible demons, human society would be far more advanced than it is now". 

Macroeconomics counterfeit medicines has risen to record proportions

Richard A. Epstein writes in Forbes that the “Fancy high-IQ projects only offer an intellectual feast to regulators for which ordinary citizens pay. The libertarian offers this overarching resolution: Regulators should go for the low-hanging fruit.” 

Public school is anathema

“I find myself wondering how this can be, how an entire discussion of such a delicate matter can be confined so utterly to one dogmatic response. On this matter I call to mind another great conservative thinker, and in doing so find that I, too, am standing “athwart history, yelling Stop, at a time when no one is inclined to do so, or to have much patience with those who so urge it” writes Kain. 

Further he writes “Adam Smith was the first to argue in favor of school vouchers, a cause taken up later by Milton Friedman, and many of Friedman’s students and successors. …………Smith and Friedman argued that the public school system should follow the rules of the free market, and that the best way to do this would be to put the public schools in direct competition with their private counterparts. Conservative theorists today argue that taxpayers who choose not to send their children to public school ought to receive a tax subsidy, or voucher, to help pay for the private school of their choice. The voucher would be paid to the school of the taxpayer’s choice, rather than directly into the public school system”. 

Instilled in him

RAM JETHMALANI writes in the Outlook “When Thomas Paine was jailed and tried for treason for his pamphlet Rights of Man, the great advocate Thomas Erskine was briefed to defend him. Erskine, at that time, was the attorney-general for the Prince of Wales. Though he was allowed private practice, he was warned that if he accepted Paine's brief, he would be dismissed from office. Undeterred, Erskine accepted the brief and was deprived of office. His immortal words, which the editor of Howell's State Trials printed in capitals, stand out as a shining light:

"From the moment that any advocate can be permitted to say that he will or will not stand between the Crown and the subject arraigned in the Court where he daily sits to practice, from that moment the liberties of England are at an end. If the advocate refuses to defend from what he may think of the charge or of the defence, he assumes the character of the Judge; nay he assumes it before the hour of judgement; and in proportion to his rank and reputation puts the heavy influence of perhaps a mistaken opinion into the scale against the accused in whose favour the benevolent principle of English law makes all assumptions, and which commands the very Judge to be his Counsel." 

Tuesday, December 30, 2008

of free markets

The Mint has published a serious of article by different people about The Year I find less interesting to read those articles except Ramesh Ramanation’s “of free markets versus financial markets”. But I believe that if Sauvik would have written a piece on The Year could be loveable with his immense skill to interpret the events in such a way. But still there is room to bite:

  • “Free markets are about entrepreneurs, people who start off invariably as small business owners who hire from the ground up, maybe two, three or 10 people, and then grow from there. Most often, these entrepreneurs will never get to use the sophisticated tools of the financial markets, other than the typical loan from the neighbourhood bank. But that’s all they need, because they aren’t looking for more than their own appetite for risk, creativity and hard work to help them move up in life, and for government to get out of the way, set fair and transparent rules of functioning, enforce them correctly, reduce red tape and provide the necessary social infrastructure. The true engines of an economy are these entrepreneurs—big and small, but mostly small. Financial markets are about one aspect of facilitating this—and not the end-all of a free market system. They play a role, a critical role, but they are not the centre of the universe. In fact, 2008 showed that an overemphasis on financial markets, an over-monetization of economic activity can have devastating consequences. 
  • As we stumble into 2009, wallowing in our incoherence, doubts are beginning to emerge: Was it so bad to have a socialist mixed economy model, where the government was a benevolent dispenser of licences and all else? Is the market-based economy all that it’s made out to be? Could it really be possible that the communists—God forbid!—actually had it right, that we need to keep markets on a tight leash; that slow and steady is a much better path than see-saw uncertainty; that the Hindu rate of growth isn’t a bad thing after all?

Unending Keynesian phase

Meghnad Desai writes in the FE few observations on current financial crisis with murmuring the Keynes theory. 

  •  Previous booms were confined to the developed world, the Golden quarter century of Keynesianism, for example…. 
  • with long memories or at least a smattering of knowledge of Marx, Hayek or Keynes or even Charles Kindleberger and Hyman Minsky would know that capitalism has cycles of irregular length. Every boom breeds bad investments, over expansion of credit, over spending by consumers, acquisition of increasingly risky and dubious assets. 
  • If it does not work then we need a new economics. So far the boom has been a product of the sweetwater economics of Chicago and the cure will come from the saltwater Keynesians of the East Coast of USA. The rest may mutter about market failure or Lenin , but they don’t have any new answers. New economics will require some economist(s), who can think dispassionately, and rigorously leaving sentiments aside. John Maynard Keynes was one such. Another one will come along. How do I know? I know there are cycles in economic ideas just as much as in capitalism”.

Protectionist impulse

Deepak Lal writes in the BS “the possibility of the Great Moderation followed by the Great Crash being followed by another Great Inflation, the Great Crash could still turn into another Great Depression if the world slips into protectionism.

Free trade is a powerful dynamo

Abhijit Das says that ….implementation of free trade agreement negotiations with some of these countries could provide India with attractive markets for reducing the risk of overall exports being adversely affected by developments in a few big markets”. 

The education woes

Gurkirpal Singh Sidhu writes some woes on higher education in Haryana and Punjab state. It may not be surprise but it is noteworthy to observe few paragraphs.

  • the number of seats offered by 456 colleges in Haryana and 176 in Punjab far exceeded the number of students qualifying for admission to these colleges. In Haryana, against 53,000 seats, only 41,104 students appeared for the test, while 31,000 students appeared for counselling. Office-bearers of the Association of Educational Colleges (self-financing) observed that “self-financing BEd colleges are running into losses as many seats are vacant”. 
  • ….in Punjab where around 12,000 students qualified against around 21,000 seats. When the matter came up before the court, it observed that “the total number of seats available in these institutions is so large that even when the last candidate who appeared in the common entrance test (CET) for admission is admitted to the course, thousands of seats have remained unfilled”. Thus, the problem arose entirely due to setting up of a large number of institutions in this regio”. 
  • AICTE rolled back its norms fixed for nursing colleges. This led to the Indian Nursing Council, Ministry of Health and Family Welfare, relaxing the norms for running nursing colleges. Land requirement for running the institute has been reduced. The retiring age of faculty members has been raised to 70 years. What justification can ageing faculty provide for bringing in new ideas with his/her knowledge acquired about four decades back” 
  • Technical education is in dire straits, as is reflected from the fact that around 16,000 students out of 23,000, spread across semesters of 66 engineering colleges of Punjab Technical University, failed in their mathematics examination”.

Monday, December 29, 2008

Hey give me the propriety

By refereeing Mythili Bhusnurmat article Sauvik writes convincingly “Under the Rule of Law simple general rules should hold sway. That is, the paper note is a property title. It is to be redeemed on demand. Period. Once this is The Law, let private bankers adjust and play the game by these good rules. And let the mass of the people, wretched and poor, cheated so long by these counterfeiters, understand The Law as it pertains to Money. After all, what governs a society is opinion – especially opinion on The Law.

In is no away

While writing the top news that went with spotlight Rajrishi Singhal quote:

What a good year for the roses Many blooms still linger there. The lawn could stand another mowin’ Funny, I don’t even care As you turn to walk away As the door behind you closes The only thing I have to say Was what a good year for the roses .

— Good Year For The Roses/Elvis Costello (also performed by Counting Crows)” 

Tuesday, December 23, 2008

Outlier economists

Joseph Stiglitz says in The Hindu “the crisis was predictable, and predicted. But unfortunately, mainstream economists, politicians, and policymakers ignored the warnings. We have much to learn from these failures, as well as those of the economy itself.”

For your information I was told that about 200 students from JNU were attended his recent lecture on the Tenth D. T. Lakdawala Memorial Lecture delivered on December 20, 2008, New Delhi !!.

 What a tragedy for this nation.

Funny Old World

In a book review Professor VEDAGIRI SHANMUGASUNDARAM writes: “Funny Old World’ — the same words that Margaret Thatcher used at her last cabinet meeting to describe her experience as Britain’s Prime Minister. Here, Patten attempts to satirise nation states. ‘Mushroom Clouds’ is about nuclear weapons and nuclear proliferation. Patten notes how the US and some other countries attempted to block the re-election of Mohammed ElBaradei, director of the International Atomic Energy Agency, in 2005, because he advocated a strict and firm inspection schedule. Ironically, ElBaradei went on to win the Nobel Peace Prize the same year….best in Chapter 15, where he writes about a world without borders, a world invested in creativity, rationality and kindness. It is the grandfather in him, as he has remarked, that hopes and wishes for a better place for coming generations….Sir Winston Churchill once called a “third-rate watering place”, has now become the symbol of India’s IT might”..

Monday, December 22, 2008

Ghastly pink Drs Sen and Singh description

T. C. A. Srinivasa-Raghavan writes about Chacha Manmohan Singh and Amartya Sen “the two men share a quality that is absolutely central to their success but which, at the same time, makes it hard to form anything but a very blurred image of them and which makes them all things to all men”.

Whether printing money hay is myth?

Kaushik Das writes in the Mint “what most people fail to realize is that it is in these unusual times that the governmental non-interference in the economy’s recovery process is called for even more than at any other time. 

Taking a contrarian position, in the form of more government interference through providing fiscal stimulus packages, will unfortunately push the global economy into a massive depression, the very outcome that these policies are expected to prevent”.

Friday, December 19, 2008

Chacha economists Manmohan Singh and Amartya Sen dynasty

The Prime Minister, Dr. Manmohan Singh saidOur paths diverged thereafter but I have watched with great admiration as he went on to climb the dizzying heights of economic theory, followed by forays into esoteric fields of moral philosophy, ethics and logics and with occasional illuminating excursions into history. More recently, he has also descended into the humdrum plains of development policy to study issues which are the focus of attention of the development community in general and are certainly the subject of daily debate in India and indeed in most parts of the developing world and that is as it should be. When I was a student at Cambridge, A.C. Pigou’s ‘Economics of Welfare’ was the book which made a great deal of impact on me and there is a quote from Pigou’s opening chapter about what economics is about which if I remember correctly reads something like this – “when we study economics, our impulse is not the philosopher’s impulse, knowledge for the sake of knowledge but for the healing that knowledge may help to bring”.

India need Hayekian

S. S. Tarapore has an article on “Hayekian approach: Lasting relevance for India in the Business Line. 

Quite interesting article but along Indian economists made mess of teaching and research in economics including F A Hayek ideas which is totally invisible. It is worthwhile to note the following lines. 

“Despite the fact that that Keynes’ General Theory was written over 70 years ago, we in India treat it as contemporary thought. What is more unfortunate is that most Indian economists are not appreciative of the roaring debate in the 1930s between the theories of Keynes and Hayek. 

The absence of familiarity with the Hayekian approach is particularly unfortunate as it has great relevance to current macroeconomic policies in countries like India

Hayek was a multifaceted scholar, with monumental contributions in the fields of law, liberty and ethics. The young Hayek had made a lasting contribution to macroeconomic thought through his fundamental work on ‘Prices and Production (1929)’; this monumental work was difficult to follow, though it was published in English, as it was Germanic in thought and, therefore, not easily understood in Anglo-Saxon circles. 

John Hicks had postulated that it is desirable to creep along the ceiling of growth and to actively use monetary policy to ensure that the limit to growth is not exceeded. Neither the Hayekian approach nor Hicks’ recommendation is palatable to Indian policymakers and, hence, these theories have been totally banished from having any influence on Indian policymaking. 

Hicks, in his Critical Essays in Monetary Theory (1967), has an insightful Chapter on “The Hayek Story”. While the Keynesian approach was appropriate for the 1930s, the Hayekian approach could be relevant at other times, particularly in developing countries. In the heat and dust of the Third and Fourth Indian Five Year Plans, no economist in India would have dared to espouse the Hayekian approach, and the few who did were banished into oblivion”. 

The author has failed to point out several other important works done by F A Hayek.

Must have thought

The following text was published in the Business Line. 

Excerpts from Imagining India: Ideas for the New Century by Nandan Nilekani 

“The 1980s was a period that marked the rise of software firms in India. Right out of college, I had joined Patni Computer Systems (PCS), a family firm, whose CEO Narendra Patni came from one of India’s traditional business communities. I met Narayana Murthy here, and when Murthy’s plan to set up a small, new software company inspired six of us to join him, we walked into a minefield of regulations. We did not need much from the government, but the rare times we did have to travel to Delhi to get permissions to import a piece of hardware, we would be trapped in bureaucratic paperwork for months. Once, when one of the co-founders, N.S. Raghavan, went to Delhi to change the ‘port of arrival’ from Madras to Bangalore in an import permission letter, he had to hang around in the lobby outside a bureaucrat’s office for eighteen days. The corridors of these government buildings felt like a maze you could not find a way out of.

Additionally, since India had huge shortages of foreign exchange through the 1980s, every trip that we made abroad required the approval and sanction of dollars from the authorities. One time I had to make two trips to the United States in quick succession, and the clerk at the Reserve Bank of India demanded to know why I was travelling abroad so often—he did not see the need of it, and must have thought I was a hedonistic wastrel.

We also witnessed how much people favoured working in the Indian public sector at the time. Soon after Infosys moved to Bangalore in the early 1980s, we had hired a few bright young engineers from IIT Madras. Within a few weeks, one of them came up to me and said he wanted to quit, to join a public-sector company in Bangalore—he told me that ‘a government company will never go under, and the job I have will be for life’.

It took one more crisis to change our small steps towards reform in the 1980s into a single leap to the other side. India’s particular nemesis has been the oil price rise, which sent the economy reeling towards bankruptcy time after time. In 1991 yet another oil price rise triggered a crisis that I would call ‘third-time lucky’. It was one that transformed our attitudes towards India’s entrepreneurs. 

India was staring into an abyss by the end of the 1990s—thanks to reckless government borrowings, our foreign debt had more than tripled since 1981 to $64.4 billion. Then came the Gulf War and high oil prices. With the Indian economy on the ropes, the finance minister Manmohan Singh introduced a reform agenda… the baton for growth passed from the government to ‘the human spirit of creativity, adventure and enterprise’. 

A flurry of activity 

In the 1970s and 1980s, nearly every Indian middle-class home had a cupboard made of wood or steel, with multiple locks and several small drawers. The favoured brand was Godrej Storwel, with its hard-to-pick lock. Most Indian families kept their savings and jewellery here. People avoided putting money in stocks because of the ‘wealth tax’ on such investments. When the ‘wealth tax’ was eliminated, money came out of these cupboards and into India’s stock markets. This combination of stock-market modernization and a vibrant market enabled an explosion of new entrepreneurs, who could tap into market capital to compete across industries, and turned many once-oligopolistic industry sectors, such as airlines and telecom, into highly competitive ones.

The businesses that emerged at the top of the heap after this struggle were different from the ones before—half of the top ten companies in market capitalization in 1991 had disappeared from the list by the decade’s end. Some of the most prominent entrepreneurs who emerged post-1980, such as Sunil Mittal and Dhirubhai Ambani, had built their firms from scratch, and were a breed far apart from the closed circle, family entrepreneurs of the 1960s and 1970s. 

Leading the way 

It is also interesting how the Indian government has begun to leverage the strength of India’s IT industry in its foreign relations with other countries, as IT companies have established offices and made acquisitions across the world. In the Middle East, for instance, India has pushed governments to locate and deport terrorists, while using investments by India’s software firms there — and the threat of pullout — as leverage. As the technology economy has expanded in India, IT companies have also shifted from software exports to addressing domestic opportunities. 

Excerpted with permission from Penguin Books India”

Big Government means high social costs

M.N. Sabharwal and Manish Sabharwal quote “As Nandan Nilekani says in his exceptional book Imagining India: “Our failure to create opportunities can turn our demographic dividend into a crisis. We have already experienced these problems through the 1970s and 1980s when unemployment and the lack of income mobility for working-age Indians fed into criminality and extremist movements across India such as the extreme-left Naxalite and extreme-right Bajrang Dal movements, as well as the rise of the underworld in major cities. Key players in Mumbai’s underworld, for instance, were people belonging to discriminated groups and the impoverished underclass—Chota Rajan was the son of a Dalit sweeper, Abu Salem’s mother rolled beedis for a living, Chota Shakeel grew up in a Bombay slum and Arun Gawli’s father was a textile worker laid off during the mill strikes of the 1970s. While these circumstances do not exonerate their actions in the least, these are signs of how economic bitterness can create high social costs.”

I do not 'get' Joseph Stiglitz

Mike Moffatt writesI have read a number of his academic articles and followed his media appearances over the years and I cannot see for the life of me what other economists see in him. It is not an ideological thing - in the sense of understanding why they are well respected I get Hayek, I get Krugman, I get Prescott, I get Schumpeter, I get Veblen. I even get Gunnar Myrdal. But everytime I hear or read Stiglitz, I usually end up cringing”. 

Some of the comments posted in response to above post are worthwhile: 

Ben says Krugman is an idiot when it comes to economics. 

Marteen says I could not finish Stiglitz’s book, Globalization and its Discontents. After about a quarter through it I just had to put it down because it was like singing, “100 bottles of beer.” After get to 95 bottles of beer, it ceases to be enjoyable. It seemed that Stiglitz just went over the same theme again and again. 

Green says Unfortunatly Stiglitz has blurred the line between the social sciences- this is most definatly a mistake.

Thursday, December 18, 2008

What is good in India’s Education Bill 2008

What is good in the “recently introduced the Right to Free and Compulsory Education Bill, 2008”. It may the following says M R Madhavan   

  • ..parents should send their children to a school of their choice; competition would lead to quality; if required, the poorer sections of the society can be financed through school vouchers.  
  • …63 per cent of the children in urban areas and 20 per cent in rural areas are enrolled with private schools. 
  • ..the Bill requires each government and aided school to form a school management committee comprising local elected representatives, parents and teachers. This committee shall monitor the working of the school and the utilisation of grants given to the school. Evidence from Karnataka and several countries in Latin America and Africa on similar committees do not present any conclusive evidence of improvement in quality of schools”.

Class is like gathering sand with a sieve

When I see or meet a group of likeminded economists, policymaker and researcher I utterly deem every time what the Mint Columnist Ramesh Ramanathan saysI can honestly state that mobilizing the middle class is like gathering sand with a sieve”.

All kind of people make the world so need the freedom to trade

Pranab Bardhan says “it is often claimed, both in the media and academia, that it was global integration which brought down the extreme poverty that had afflicted China and India over many decades”.

Wednesday, December 17, 2008

Kids in school are not learning? Not a problem. Just promote them on to the next grade anyway

Thomas Sowell says “Unfortunately for all the good people who had in good faith gone into all the various lines of work revolving around horses, there was no compassionate government to step in with a bailout or a stimulus package”.

Central banks are villains in most countries

Walter E. Williams says “my recommendation for reducing some of that power is to repeal legal tender laws and eliminate all taxes on gold, silver and platinum transactions. That way there would be money substitutes and the government money monopoly would be reduced and hence the ability to tax -- some people would say steal from -- us through inflation”. 

Need one depression at least once in five years

A Commentary by Matthew Lynn in the Bloomberg says that “during the 1930s, new industries such as consumer electronics and plastics were created. In the turbulent mid- 1970s, the personal-computer industry was born, as companies such as Microsoft Corp. and Apple Inc. were founded. 

The economy didn’t look much good then, either, with soaring oil prices, rampant inflation and tumbling stock markets. That didn’t stop a young Bill Gates or Steve Jobs from setting up new businesses. No doubt there are now plenty of young entrepreneurs with bright ideas and loads of determination ready to build the corporate giants of the 2020s and 2030s. 

As Tom Nicholas, an associate professor at Harvard Business School, said in the latest issue of the McKinsey Quarterly, the 1930s became a period of intense innovation and experimentation. “For companies with cash and ideas, history shows that downturns can provide enormous strategic opportunities,” he said”.

Poor India gift rich University!

It is not surprise, at least to me,  if India proves that it is the ugly socialist drama creator and gives gift to rich US University on the name of the real enemy of India’s poor. 

If he wanted to gift and name as “Amartya Sen Fellows” he should gift from his own packets. By no mean it should be gifted from tax payer’s money.

It may be biggest folly of India to do.

(Thanks to Jayakamal for via mail)


A new book that fits their interests

Christmas Reads “The books to buy” By Thomas Sowell

This should change

Politicians walk and talk but failed to prove genuine public interest in policy making. 

The President Loksatta Party Mr Jayaprakash Narayan writes in today’s ET: 

  • “There is recognition that politics shapes our future. But there is also a sense of resignation that nothing much can be expected from current politics.   
  • We need several Gorbachevs in each major party to rejuvenate our political system from within.
  • ..politics shapes the world we live in, and the future of our children. We need to be engaged.  
  • Naoroji, Tilak, Gokhale, Gandhi, Ambedkar, Azad, Chittaranjan Das, Bose, Rajaji, Prakasam, Sarojini Naidu — all these represented the best and brightest in our society. They all entered politics, enriched our lives, and shaped our destiny. Today such people are deterred from public life. Pedigree, ill-gotten wealth, caste and criminality are the passports for political recruitment”. 

Anti-incumbent sentiment

Several analysts lamented the “Anti-incumbency” sentiments during the recently held five state elections. 

Swaminathan S Anklesaria Aiyar tries to prove his theses onAnti-incumbency and terror still matter” in today’s ET.

Tuesday, December 16, 2008

Kerala Model- highest suicide rate, unemployment etc

Shirin Shirin writes rather stupidly that “the Kerala model as a path to development? The answer may lie in when Kerala chose to follow this path. The 1960s and 1970s were before structural adjustment programs and free-market principles dominated the discourse of development economics. Kerala borrowed heavily - and still borrows - to finance its social investments. While other countries have made similar investments, IMF-backed austerity measures have rolled back those investments before they could bear fruit. Now that the age of Milton Friedman appears to be nearing its end, the world would do well to give Kerala another look.  

Only free market economics loath can say “the age of Milton Friedman appears to be nearing its end” 

However, “a study by two economists claims that a significant number of jobs are being created in the state by the private sector and by local entrepreneurs”.  

I mean essentially it is by the private sector that has created more jobs.

The cases of suicide are highest in Kerala-2004 and 2006.

Why economists love myths?

Arvind Panagariya writes in the Indian Express “in the aftermath of the May 2008 bomb explosions in my own hometown, Jaipur, both Hindus and Muslims lined up at hospitals to donate blood for surviving victims. In a similar vein, following the recent Mumbai attacks, the government has been unable to find a single Muslim group willing to accept the bodies of nine Pakistani terrorists for burial in its graveyard. Those who raise the spectre of retaliatory actions following terrorist attacks confuse them with communal riots. While communal riots by definition divide Hindus and Muslims, terrorist attacks usually bring them together”.

India needs Deng Xiaoping not Barack Obama

HUGO RESTALL writes in the WSJ “The drawbacks of the Communist Party's monopoly on power are becoming more evident, as vested interests protect their control of the economy by holding back development of the banking system and stock market. 

The coming year is expected to be critical, both economically and politically”. 

And India is no exception. 

John Forbes Nash on gold standard

According to this news report economist Nash said “financial crises would be less likely to occur if there was some international monetary standard, such as the gold standard or competition among worldwide currencies, to curb inflation and prevent the rise of mortgage abuses. He expressed some skepticism about a government bailout as a solution.” 

“Nash said that various interest groups that subscribe to Keynesian, or short-term, economic theories have sold the public on the notion that inflation is acceptable or that “bad money is better than good money.” Such a notion, he said, led to the dangerous proliferation of bad mortgage loans—loans made on the gamble that house values would continue to rise and eventually turn a profit”. 

Thanks to Jayakamal also!

Which we tend to hear about warming or cooling?

Bjørn Lomborg writes in the ET “implementing the Kyoto Protocol at a cost of $180 billion annually would keep two million people from going hungry only by the end of the century. Yet by spending just $10 billion annually, the United Nations estimates that we could help 229 million hungry people today. Every time spending on climate policies saves one person from hunger in a hundred years, the same amount could have saved 5,000 people now. Arguably, this should be among Obama’s top priorities”.

Saturday, December 13, 2008

Corporate Delimitation Commission's

A Bangalore-based IT entrepreneur writes in the TOI “the spontaneous outpourings in our cities over the terror tragedy have shown, there is change in the air. As India's urban population steadily grows it will demand more local empowerment. And the implementation of the Delimitation Commission's recommendations will increase urban representatives in the state legislature. But these are small steps. Crises like the one we just witnessed shows how urgent empowering our city governments have become. 

We cannot keep our cities the centres of our economic growth, innovation and places where we can dissolve our caste and our past weakened and marginal in our politics. This imbalance has led to the decline we can see in every Indian city, the apathy made concrete in our crumbling roads, massive encroachments, and our chaotic, unplanned growth. Without local governments that answer directly to its civic citizens, urban India will be mauled again when the next crisis hits”. 

The Surjit S Bhalla effect!

What an effect after all. If Mr Bhalla calls himself as a “liberal” in India ‘No proof required!’ 

He writes in the BS “if the policy hawks want to note, are as follows: For the eight months of this fiscal year (April-Nov), inflation is running at an annual rate of 5.9 percent; seasonally adjusted, 3.9 percent; since June, minus 3.3 percent. What is needed: immediate removal of all the cesses, surtaxes, and gratuitous taxes in the system (including the fringe benefit tax). Reduction in the repo rate to 4 percent, reverse repo to 2 percent, CRR to 2 percent. Then watch for a month, and if need be, reduce rates further — and perhaps even reduce corporate and income tax rates”.

Anti-terrorism laws are not meant for terrorists

What kind of response one can think on recent Mumbai attacks? Arundhati Roy writes: “Nor for that matter will any other quick fix. Anti-terrorism laws are not meant for terrorists; they're for people that governments don't like. That's why they have a conviction rate of less than 2%.  

As tension in the region builds, US Senator John McCain has warned Pakistan that if it didn't act fast to arrest the "Bad Guys" he had personal information that India would launch air strikes on "terrorist camps" in Pakistan and that Washington could do nothing because Mumbai was India's 9/11. 

But November isn't September, 2008 isn't 2001, Pakistan isn't Afghanistan and India isn't America. So perhaps we should reclaim our tragedy and pick through the debris with our own brains and our own broken hearts so that we can arrive at our own conclusions. 

The terrorists did not distinguish between poor and rich. They killed both with equal cold-bloodedness. The Indian media, however, was transfixed by the rising tide of horror that breached the glittering barricades of India Shining and spread its stench in the marbled lobbies and crystal ballrooms of two incredibly luxurious hotels and a small Jewish centre. 

Also, in our bid for the moral high ground, let's try not to forget that the Liberation Tigers of Tamil Eelam, the LTTE of neighbouring Sri Lanka, one of the world's most deadly terrorist groups, were trained by the Indian army.) 

The blood of "martyrs" irrigates terrorism. Hindu terrorists need dead Hindus, Communist terrorists need dead proletarians, Islamist terrorists need dead Muslims. The dead become the demonstration, the proof of victimhood, which is central to the project. A single act of terrorism is not in itself meant to achieve military victory; at best it is meant to be a catalyst that triggers something else, something much larger than itself, a tectonic shift, a realignment. The act itself is theatre, spectacle and symbolism, and today, the stage on which it pirouettes and performs its acts of bestiality is Live TV. Even as the attack was being condemned by TV anchors, the effectiveness of the terror strikes were being magnified a thousandfold by TV broadcasts. 

We had the rich threatening not to pay their taxes unless their security was guaranteed (is it alright for the poor to remain unprotected?). We had people suggest that the government step down and each state in India be handed over to a separate corporation. We had the death of former prime minster VP Singh, the hero of Dalits and lower castes and villain of Upper caste Hindus pass without a mention. 

hough one chapter of horror in Mumbai has ended, another might have just begun. Day after day, a powerful, vociferous section of the Indian elite, goaded by marauding TV anchors who make Fox News look almost radical and leftwing, have taken to mindlessly attacking politicians, allpoliticians, glorifying the police and the army and virtually asking for a police state. It isn't surprising that those who have grown plump on the pickings of democracy (such as it is) should now be calling for a police state. The era of "pickings" is long gone. We're now in the era of Grabbing by Force, and democracy has a terrible habit of getting in the way. 

Dangerous, stupid television flashcards like the Police are Good Politicians are Bad/Chief Executives are Good Chief Ministers are Bad/Army is Good Government is Bad/ India is Good Pakistan is Bad are being bandied about by TV channels that have already whipped their viewers into a state of almost uncontrollable hysteria. 

Eventually the courts acquitted two out of the four accused, including SAR Geelani, the man whom the police claimed was the mastermind of the operation. A third, Showkat Guru, was acquitted of all the charges brought against him but was then convicted for a fresh, comparatively minor offence. The supreme court upheld the death sentence of another of the accused, Mohammad Afzal. In its judgment the court acknowledged there was no proof that Mohammed Afzal belonged to any terrorist group, but went on to say, quite shockingly, "The collective conscience of the society will only be satisfied if capital punishment is awarded to the offender." Even today we don't really know who the terrorists that attacked the Indian parliament were and who they worked for. 

Only days after the Batla House event, another story about "terrorists" surfaced in the news. In a report submitted to a sessions court, the CBI said that a team from Delhi's Special Cell (the same team that led the Batla House encounter, including Mohan Chand Sharma) had abducted two innocent men, Irshad Ali and Moarif Qamar, in December 2005, planted 2kg of RDX and two pistols on them and then arrested them as "terrorists" who belonged to Al Badr (which operates out of Kashmir). Ali and Qamar who have spent years in jail, are only two examples out of hundreds of Muslims who have been similarly jailed, tortured and even killed on false charges.

There are those who point out that US strategy has been successful inasmuch as the United States has not suffered a major attack on its home ground since 9/11. However, some would say that what America is suffering now is far worse. If the idea behind the 9/11 terror attacks was to goad America into showing its true colors, what greater success could the terrorists have asked for?” 

Friday, December 12, 2008


How many politicians know that? “‘when you point a finger at someone, remember three little fingers are pointing back to you” writes Mythili Bhusnurmath in ET.


The pate democracy peril

Senior journalist Mr Prem Shankar Jha writes in the ET that “he rural poor were sending their children not to the state schools but were paying Rs 50 to Rs 150 as fees to send them to private schools which taught (or claimed to teach) English! ” 

Courage in venturing outside economics

Erik S. Reinert writesProfessor Krugman and the ancient Mexicans have something in common. Both made epochal discoveries, only to keep them as toy models instead of putting them to practical use. In my book How Rich Countries Got Rich…and Why Poor Countries Stay Poor, I refer to two important vices of the economics profession: what Schumpeter calls the Ricardian Vice, that is, the habit of piling a heavy load of strong policy recommendations upon very shaky assumptions; and what I have dubbed the Krugmanian Vice, the production of theoretical models that explain the real world better than Ricardo did – but not applying them to actual economic policy. In the third world the two vices combine to create serious obstacles to development.

Much of the author’s clime or understanding seems politics theories of blaming or criticizing the government and its policies.  

Breeding politics of politicians but people have no deliberate choice out of socialist minds

It may be interesting to read these lines of great visionary Sarvepalli Radhakrishnan, on (August 14, 1947, in the Constituent Assembly) Indian “While India is attaining freedom, She is attaining it in a manner which does not produce joy in the hearts of people or a radiant smile on their faces. Some of those who were charged with the responsibility for the administration of this country, tried to accentuate communal consciousness and bring about the present result which is a logical outcome of the policies adopted by the lesser mind of Britain. But I would never ever blame them. Were we not victims, ready victims, so to say, of the separatist tendencies foisted on us? Should we not now correct our fault of character, our domestic despotism, our intolerance which has assumed the different forms of obscurantism of narrow mindedness, of superstition, bigotry? Others were able to play on our weakness because we had them. I would like, therefore, to take this opportunity to call for self examination, for a searching of heart”.

But politicians use all the Nobel ideas to brutalize the free society. 

Never satisfied

Nithyananda says in ET Your life is a journey between birth and death. You have no idea why you were born. You have no idea when you will die. Your life is a bridge between these two unknown points. This is because you play with several pseudo identities, you have never asked yourself the question, who am I or what am I doing here?” 

The other massive trade journey

Mr Aiyar’s recent paper published in CATO institute says (excerpt published in BS) “Gujarat has pioneered the concept of port liberalisation in India and used this to become the country’s fastest-growing state. These results hold salutary lessons for other Indian states”.

 Also read my earlier post here


‘We choose butter rather than guns’ what economist can do?

Economist Bibek Debroy writesDoes an economy produce butter or guns? The UPA government’s choice was clear. It opted for butter rather than guns…”. Yet once again it seems that people are ready to choose “butter rather than guns” evidence from the recently held five state election of which three states voted for congress. 

However, let us note the terrorism trade “ndia may not be the country worst-affected by terrorist acts, but it has had its fair share in 2008 and December isn’t over yet. If one leaves out acts attributed to Maoists, there was Jaipur in May (63 dead, 213 injured), Bangalore (2 dead, 20 injured) and Ahmedabad in July (49 dead, 160 injured), Delhi in September (30 dead, 90 injured and 3 dead, 23 injured in a second incident), Gujarat and Maharashtra in September (8 dead, 30 injured), Agartala in October (4 dead, 100 injured), Guwahati in October (5 injured and 84 dead, 470 injured in a second incident), Srinagar in October (4 injured) and Mumbai in November (160 dead, 327 injured). There is a Worldwide Incidents Tracking System (WITS), with a broader definition of terrorism. Between 1 January 2004 and 30 June 2008, this database reports 4115 terrorist incidents for India. 4814 people were killed, 10658 injured and 2497 taken hostage. These figures are colossal and include less-visible incidents too”. 

But thanks to my friend Jayakamal who sent this article to me and don’t forget to read this excellent one by Economist Thomas Sowell who says “They didn't strike again here, even though they have struck in Spain, Indonesia, England and India, among other places. Does anyone imagine that this was because they didn't want to hit America again?”.

Monday, December 8, 2008

Change the Men and Ideas First?

Note the So called Liberal Mr Das 

I hate to read when people writes like this one by “Speaking of the global financial crisis, Sonia Gandhi recently applauded Indira Gandhi's bank nationalisation of 1969, saying that it had given India “stability and resilience”. Like the Bourbons of France, our political class neither learns nor forgets anything. I don't think Sonia Gandhi realises quite what she was saying.” 

It does not make sense if he says “I don't blame Nehru for adopting the wrong economic model as socialism was the wisdom of his age; I blame Indira for not reversing course as sensible countries in East and Southeast Asia did. Even China changed in 1978, but we had to wait till 1991. She multiplied by zero and put us back by a generation. ” 

If he don’t blame the Nehru folly ‘socialism’ who can blame then? There is no such thing as it is better to have lesser evil than the actual evil or the lesser evil is not revived the old evil.

It is once again that Mr Das mind losses the liberal idea.

Problem indeterminate: Freud, Marx and Darwin!

The ET column Jaideep Mishra some time attempt to shade the ideas and philosophy of economics with new muse, yet the present economic situation which push his mind to look back several years. 

Here are some from the recent article

  • The human, anthropogenic sciences have also had a similar transformation. A hundred years ago, a trio of big ideas — those of Freud, Marx and Darwin — held sway in the intellectual landscape. The ideas were no doubt intellectually seductive, proffering to theorise on the big ‘why’ of it all — of why we are as we are and not otherwise. Hence the essay to make sense of the here and now — Freud at the level of individuals, Marx that for whole societies and Darwin for all living things. 
  • Embedded in the thoughts, certainly in those of Freud and Marx, was the ‘promise of prediction’. The reasoning went that if this is how we traversed thus far, then that must be the way ahead; and if that is the way to go, then this surely is where we ought to be going anyway. 
  • There may well be a case for clear-cut financial innovation norms for orderly markets, but the seemingly loss of predictability in economics is the hallmark of all complex systems. 
  • The fact of the matter is that the role of prediction in economics involves a fundamental tension.

Noted the Point

When anybody says it is the economy, stupid I feel totally helpless to even to me. Because the economy is consist of individuals you and me, its not so? 

But Rama Bijapurkar writes in the ET “It is not the economy, stupid” . Who cares where the sensex is, when we have senselessness all around us. Who cares what kind of an economy we will be, if we are a battered nation, run by inept politicians or those obsessed with dynastic succession and / or vote bank politics?” 

Need genuine one or secular one

Meghnad Desai writes in the FE that no doubt honestly serving the people in their own humble ways. I don’t even mind their corruption, if they would only deliver the simplest public goods. But no such luck. What is to be done?” 

This is how corruption is granted like “take it easy” by an economists of this country. 

But it must be noted when he says “There is no political party today which is both genuinely secular and sound on economics. Swatantra was there in the sixties and seventies but was cannibalised by Janata and BJP. India badly needs a right of centre political party which will do what is needed—ensure a government which is at least a good nightwatchman. 

No party has commanded a majority of those voting, let alone the electorate since independence. Still governments claim that they have a mandate, to flout the constitution and abridge fundamental rights in the name of some flimsy ideology of socialism. Indira Gandhi laid the foundations of this tragedy by her arbitrary rule. Let us have proportional representation and strict limits on executive power as exists all over continental Europe”.