I plan to spend part of this summer watching movies, and this list seems to be a good way to get started with movies from India:
It’s time to bid adieu to the first batch of the undergrad program at the Gokhale Institute. The next sentence in such cases is usually along the lines of “time flew by so quickly” – but not in this case. Time dilated, it froze, and came out of hibernation only after two excruciatingly long years.
There’s so much that I wanted to teach them, but couldn’t.
But for what it’s worth, I’ve tried to distill some points of advice that I would want to pass on to them – and to any student graduating this year. If you’re graduating out of college this year, I hope what is about to follow will be of some help:
- Life is a non-zero sum game. If I’m wrong about this, my entire approach to life is wrong, so take this advice to heart at your own risk. But to me, it is a fundamental tenet.
- Surround yourself with people who like to play non-zero sum games.
- But note that this is hard to do! No matter where you go and what you do in life, you will find that most people prefer to play zero-sum games.
- The worst kind of zero sum games are those involving status and hierarchy as end goals. Unfortunately, these also are the most prevalent, no matter where you go and what you do.
- Read. Listen. See. Reflect. Discuss. Debate.
- Then speak and write.
- If you find yourself being sure about a thought, idea or concept, begin to worry. Certitude is the enemy, and doubt is your friend. Make peace with the fact that you will never know anything for certain, and learn to revel in this state of perennial uncertainty.
- “How can I help make this better?” is always a better question to ask than “But why does this suck so much?”. Hardly anybody ever does this, and you can corner the problem-solving market for yourself fairly easily.
- Never be afraid to ask very basic questions, no matter how complicated the problem. The more basic the question, the clearer your thinking will become.
- Never give up on a chance to travel. It is the best way to learn.
- Get mentors in all walks of life. Some of you have been mentors to me, and the reason I bring this up is because one should never assume that a mentor has to be older or more qualified than you. They just need to be better than you in one specific dimension – the dimension that you want to get better at.
- Mentor other people. There is no better way to learn than by teaching.
- When you build teams around you, optimize for passion. Everything else can be taught, but there is no cure for a lack of enthusiasm. In interviews, make sure you show your passion. If you don’t have that passion, maybe you shouldn’t be sitting for that interview.
- Curiosity is a magical thing, but it is also a delicate plant. Nourish it on a daily basis.
- Always make the mistake of being too enthusiastic. The other kind of mistake is an unbearable thing to think about.
Finally, a point that I have been thinking about recently. I have started to watch – but am yet to finish – Don’t Look Up, on Netflix. The movie is about a meteorite that will strike earth in about six months time, and the scientists who discover this fact simply aren’t taken seriously by everybody else they meet. I don’t yet know how it ends, but I have been thinking about the metaphor.
There’s going to be a meteorite in all of our individual lives – we are all going to die. That much is inevitable. In much the same way that the news of the meteorite galvanizes the two scientists who discover it, why does the certain knowledge of our eventual death not galvanize us? Why do we not have a sense of urgency about what we are going to do in what remains of our lives – regardless of how seriously or not the rest of the world takes us?
The pandemic has taught us the same lesson: we should make the most of the limited time we have in this course. I encourage you to apply the same lesson to the rest of your life: make the most of it.
Go well, do well and be well.
All the best!
Regular people everywhere are being deprived of purchasing power — and tricked by chauvinists and opportunists into believing that their interests are fundamentally at odds. A global conflict between economic classes within countries is being misinterpreted as a series of conflicts between countries with competing interests.https://noahpinion.substack.com/p/book-review-trade-wars-are-class?s=r
An extract twice removed, as it were, for Noah Smith extracted this bit in his excellent review of a book called Trade Wars are Class Wars, by Michael Pettis and Matthew C. Klein. I have not read it yet, but it has shot to the top of my reading list.
Any student who has attended a class in which I have taught aspects of international trade will tell you that I bore them to death with one particular theme: that the textbook study of international trade doesn’t adequately cover (in my opinion) the study of inequality.
Now that might sound weird if you are a student new to the study of international trade. What on earth, you might think, does inequality have to do with international trade?
Well, here’s the thesis put forward in the book, via Noah:
Trade Wars are Class Wars offers a provocative thesis — that what looks like economic competition between nations is actually just a manifestation of economic competition between classes within those nations.https://noahpinion.substack.com/p/book-review-trade-wars-are-class?s=r
Again, I haven’t read the book, but this is slightly confusing to me. I have always thought of the causality running the other way around: increased competition between nations has exacerbated economic competition (and therefore inequality) within nations. It would seem that the authors think of it differently. Excellent, more things to ponder upon!
Why do I think that international trade is one causal factor where inequality is concerned? Let’s begin with an excellent article published by The Economist a few years ago:
In rich countries, skilled workers are abundant by international standards and unskilled workers are scarce. As globalisation has advanced, college-educated workers have enjoyed faster wage gains than their less educated countrymen, many of whom have suffered stagnant real earnings. On the face of it, this wage pattern is consistent with the Stolper-Samuelson theorem. Globalisation has hurt the scarce “factor” (unskilled labour) and helped the abundant one.https://www.economist.com/schools-brief/2016/08/06/an-inconvenient-iota-of-truth
Please, pretty please with a cherry on top, read the whole thing, especially if you have studied the Stolper Samuelson theorem. This article remains the best explainer that I have come across.
But what is being said here should be at least somewhat surprising to a student just beginning to study international trade. Trade, it would seem, may well be welfare enhancing, but it does not affect everybody a) equally and b) not necessarily positively! But, you might think as an Indian student, this might imply that unskilled labor in India might benefit from international trade.
Remember, one thing a good student of economics always bears in mind is a specific question: relative to what? That is, unskilled labor in India might well benefit from international trade, but relative to what? And the answer turns out to be, well, an unexpected one:
But look closer and puzzles remain. The theorem is unable to explain why skilled workers have prospered even in developing countries, where they are not abundant.https://www.economist.com/schools-brief/2016/08/06/an-inconvenient-iota-of-truth
What might explain this?
Enter Professors Maskin and Kremer:
Nineteenth-century economist David Ricardo’s theory of comparative advantage predicts that China’s poorest workers should benefit most from the growth in trade. Before globalization, that country had a huge supply of unskilled workers and relatively few high-skill workers, who were thus in high demand; the situation was just the opposite in the United States. When two such countries begin to trade, the theory states, the less-developed nation has the advantage in producing relatively low-tech products—so demand and income for under-educated workers should shoot up, while their high-skill countrymen suffer. Thus, the theory predicts, globalization should lower inequality in the developing world.https://www.harvardmagazine.com/2015/03/how-globalization-begets-inequality
Instead, as Gates professor of developing societies Michael Kremer explains, in much of the developing world, “The empirical evidence is not really consistent with the idea that trade is reducing inequality.” He and Adams University Professor Eric Maskin, a 2007 Nobel laureate in economics, have therefore proposed a new model to help explain the discrepancy between traditional theory and current reality. The key, they say, lies in a more nuanced understanding of how global production cycles sort workers into different jobs.
Here’s one way to understand their model. Note, before you proceed to read, that this is my explanation of their model, and I have simplified it a bit. I’ll add more nuance in as we go along:
Think of two countries, and two types of workers in both countries. Let’s say country 1 has Type A and Type B workers, and Country 2 has Type A1 and Type B2 workers. A and A1 are skilled workers, and B and B2 are unskilled workers. Maskin and Kremer make the point that international trade and the advent of modern globalization has resulted in skilled workers across countries “matching” with each other. As a result, their incomes go up, relative to unskilled workers in their own countries. So while the Stolper Samuelson theorem may be unable to explain why skilled workers have prospered even in developing countries, we now have a plausible answer to the question.
As an illustrative example, consider the fact that I joined a multinational firm called Genpact straight out of college.
And of course, one can think of many countries, not just two, and one can imagine a spectrum of skill sets across workers, rather than a binary framing. The point still holds!
And to complicate the matter further still, there may well be explicit/implicit choices made by policymakers in their own countries.
Back in the good old days, FT Alphaville used to be a free blog. And about seven years ago or so, it carried an excellent, excellent post written by Isabella Kaminska. The title of the (two-part) post was “What Are Chinese Capital Controls, Really?”. The post is a must-read for any student of international trade, but this excerpt is especially relevant for us today:
What those who accused China of using its exchange rate to gain advantage probably misunderstood was that it wasn’t the currency which was being undervalued, it was the people.https://www.ft.com/content/d11a4c5e-d5fb-32f4-a606-e64d1483cea1 (Emphasis Added)
There are several other reasons why China should leave its currency unchanged. Contrary to widespread perception, China does not compete on the basis of an undervalued currency. It competes mainly in terms of labour costs, technology, quality control, infrastructure and an unwavering commitment to reform.
“It competes mainly in terms of labor costs” is a dry, academic way to put it. Elsewhere in this post, Isabella puts it much more plainly, when she says that it sucked to be a Chinese worker. And it did! Not just because of low labor costs, but because of a whole host of other reasons that should excite students of macroeconomics. Read the whole thing to get a richer understanding of how China has gone about doing what it has. As I always say to folks in my classes who wish we “grew like China”: be careful what you wish for!
You might also want to take a look at David Autor’s work on The China Shock. A good place to begin would be Russ Roberts’ podcast with David Autor, and for those who are interested, there’s a follow-up symposium about this episode as well. The point I’m making is that where trade between China and the USA is concerned, it would seem that inequality has gone up in both countries, but for different reasons.
This applies to international trade in general, of course – I’ve used China and US as examples because we are more familiar with them.
So, to return to the original question: are trade wars class wars? And more importantly, are class wars causing trade wars, or is it the other way around?
And so here we get to the book’s primary thesis. The authors only return to it in the conclusion, having reached it by a circuitous route that took them through history, data, theory, and more history.https://noahpinion.substack.com/p/book-review-trade-wars-are-class?s=r
The conclusion they ultimately draw is more nuanced than the one initially promised (and that’s a good thing, since nuance is good). In Klein and Pettis’ telling, global imbalances feed inequality in the U.S., but the fundamental cause isn’t inequality.
Yup, that I completely agree with, and “get”. But it doesn’t solve the original problem of course, it only helps us understand that it exists: trade does seem to exacerbate inequality.
How we should think of this problem, how we might resolve it, and with what consequences, is likely to be fertile ground for economic research in the years to come. If you are a student wondering about how to go about picking a topic to work on, well, please do consider this one! And a good place to begin would be Noah’s post, (and the book itself sounds like a must read too).
Bonus material alert: I simply had to share this extract from Noah’s blog, written by Paul Krugman. If you have recently studied macro, you can thank me later for bringing this to your attention:
[E]conomic explanations…have to [describe] how the actions of individuals…add up to interesting behavior at the aggregate level.https://krugman.blogs.nytimes.com/2012/01/16/mistaken-identities-wonkish/?pagewanted=all
And the key point is that individuals in general neither know nor care about aggregate accounting identities…. [I]f you want to claim that a rise in savings translates directly into a fall in the trade deficit, without any depreciation of the currency, you have to tell me how that rise in savings induces domestic consumers to buy fewer foreign goods, or foreign consumers to buy more domestic goods. Don’t tell me about how the identity must hold, tell me about the mechanism that induces the individual decisions that make it hold…. [O]nce you do that, you realize that something else has to be happening — a slump in the economy, a depreciation of the real exchange rate, it depends on the circumstances, but it can’t be immaculate, with nothing moving to enforce the identity….
Accounting identities… inform your stories about how people behave, [they do] not act as a substitute for behavioral analysis.
I ate a most delicious snack yesterday, and probably more of it than I should have. A student from Vasai had gotten along some fried surmai (which was also outstanding), but in a remarkable event where I am concerned, it was the vegetarian item that won the Kulkarni Tastebud contest yesterday.
The item in question was sukeli, and it looks like this:
This is what the website has to say about the product:
Dried bananas are 100% natural Dried Fruit, without any Artificial Flavor, Preservatives or Color. These are Soft, Chewy and full of Sweet Fruity flavor. These are rich in Potassium which regulates the Blood Pressure (BP). It contains Natural Sugar, Soluble Fiber, Minerals, Vitamins and Antioxidants which are essential to maintain good health. Dried Banana is great energy snack favorite of Athletes and Sportsperson. (sic)https://craftoindia.com/sukeli-sun-dried-banana-of-maharashtra-1kg.html
I wouldn’t know about the nutritional qualities, but I can attest to the sukelis being soft, chewy and full of sweet fruity flavor. Think of it as an intensely addictive cross between bananas and jackfruits.
Ah, but which kind of bananas? Nendran or Rajeli varieties and no other.
Do you know which is the most popular type of banana grown the world over? It is the Cavendish banana, and we produce a lot – a lot – of Cavendish bananas.
Here’s Vikram Doctor in on old piece from the Economic Times:
To get good bananas in Mumbai you must go to CST station. Not to take a train, but because every evening a few hawkers bring baskets of bananas to sell to the evening commuter crowd. The bananas are grown just outside Mumbai and they are small, fat and full of creamy-sweet flavour. They are usually not quite ripe when sold, and tend to ripen unevenly, but nearly all get sold by end of day. It used to be easier to get good bananas.https://economictimes.indiatimes.com/blogs/onmyplate/no-getting-away-from-cavendish-in-banana-republic/
Long Moira bananas from Goa, plantains from Mangalore that had to be kept till their skins turned black, several types of small bananas, thick red bananas, humble green Robustas and Rasthalis from Tamil Nadu so fat they were bursting out of their skin.
Today you mostly just find one cheap green banana, one small banana and then the type that now rules the market. It is perfectly shaped, perfectly yellow coloured and a taste that is perfectly boring, but just banana tasting enough to be acceptable.
Fruit vendors call it Golden Banana and push it hard, justifying its higher price by telling you it is meant for export. Which is correct since this is a kind of Cavendish, the banana variety that accounts for 99 per cent of the world market.
You might also want to listen to a podcast (now discontinued, alas, but it was truly excellent while it lasted) about the same topic. It used to be hosted by Vikram himself, and all episodes are worth a listen. It no longer seems to be online, more’s the pity, but perhaps the more intrepid readers might be able to surface a source for all of us? My top three episodes were about coffee, butter and bananas.
But back to bananas: as I said, we produce a lot of Cavendish bananas. Why? Well, economies of scale, in the jargon of my tribe. In English, we were optimizing for cost minimization:
Nature has a simple way to adapt to different climates: genetic diversity.https://www.theguardian.com/food/ng-interactive/2022/apr/14/climate-crisis-food-systems-not-ready-biodiversity
Even if some plants react poorly to higher temperatures or less rainfall, other varieties can not only survive – but thrive, giving humans more options on what to grow and eat.
But the powerful food industry had other ideas and over the past century, humans have increasingly relied on fewer and fewer crop varieties that can be mass produced and shipped around the world. “The line between abundance and disaster is becoming thinner and thinner and the public is unaware and unconcerned,” writes Dan Saladino in his book Eating to Extinction.
The first two lines of that extract above are now a problem, because mass production of one type of banana is the agricultural equivalent of putting all your eggs in one basket. And this is a problem for the same reason that putting all your savings into one asset class is a bad idea.
If a pest comes along that is particularly bad for that particular variety, well, we’re in deep doo-doo (and the infographic in the Guardian article is an excellent way to understand how we refuse to learn from history). And well, such a pest is now with us:
…diversity boosts the overall resilience in our food systems against new climate and environmental changes that can ruin crops and drive the emergence of new or more aggressive pathogens. It’s what enabled humans to produce food and thrive at high altitudes and in the desert, but rather than learn from the past, we’ve put all our eggs in a few genetic baskets.https://www.theguardian.com/food/ng-interactive/2022/apr/14/climate-crisis-food-systems-not-ready-biodiversity
This is why a single pathogen, Panama 4, could wipe out the banana industry as we know it.
It’s been detected in every continent including most recently Latin America, the world’s top banana export region, where entire communities depend on the Cavendish for their livelihoods.
“It’s history repeating itself,” said banana breeder Fernando Garcia-Bastidas.
And when they say “every continent”, they aren’t exaggerating:
Tropical Race 4 (TR4), the virulent strain of fungus Fusarium oxysporum cubense that is threatening banana crop globally with the fusarium wilt disease, has hit the plantations in India, the world’s top producer of the fruit. The devastating disease which surfaced in the Cavendish group of bananas in parts of Bihar is now spreading to Uttar Pradesh, Madhya Pradesh and even Gujarat, and threatening to inflict heavy losses to the country’s ₹50,000-crore banana industry.https://www.thehindubusinessline.com/economy/agri-business/india-in-a-race-against-wilt-in-cavendish-banana/article23650060.ece
Well, OK, you might say, bring on the guys in the white coats and figure out the solution. Here’s Wikipedia on the topic, and the relevant section doesn’t have a reassuring heading: it’s called “Disease Management”. Personally, I would have felt better if it was more along the lines of disease eradication. But the first line of this section gives one a sinking feeling:
“As fungicides are largely ineffective, there are few options for managing Panama disease”
The Wikipedia article on Cavendish bananas is equally gloomy on the topic, save for a single line of some hope towards the end:
Cavendish bananas, accounting for around 99% of banana exports to developed countries, are vulnerable to the fungal disease known as Panama disease. There is a risk of extinction of the variety. Because Cavendish bananas are parthenocarpic (they don’t have seeds and reproduce only through cloning), their resistance to disease is often low. Development of disease resistance depends on mutations occurring in the propagation units, and hence evolves more slowly than in seed-propagated crops.[https://en.wikipedia.org/wiki/Cavendish_banana#Diseases
The development of resistant varieties has therefore been the only alternative to protect the fruit trees from tropical and subtropical diseases like bacterial wilt and Fusarium wilt, commonly known as Panama disease. A replacement for the Cavendish would likely depend on genetic engineering, which is banned in some countries. Conventional plant breeding has not yet been able to produce a variety that preserves the flavor and shelf-life of the Cavendish. In 2017 James Dale, a biotechnologist at Queensland University of Technology in Brisbane, Australia produced just such a transgenic banana resistant to Tropical Race 4
It’s not just bananas, of course. The Guardian article is a lot of fun to read, and I would encourage you to arm yourself with a coffee and spend some time going through it. Corn is another great example!
Cost minimization is a great idea, but as with food, it is the dose that makes the poison. Long time readers will know that I have a bee in my bonnet about this, but I honestly think it is an idea that has been taken too far across multiple dimensions.
So what is to be done? I have absolutely no expertise in what the agricultural/scientific solutions might be, but as with JIT supply chains that focus on China, office redesign that sucks all the fun out of work and so much else besides, so also with this.
Ask what you’re optimizing for, and begin to worry if the answer is a single-minded focus on cost minimization.
Raghuram Rajan got this one right, in a different context: what matters is risk-adjusted returns. And it applies across multiple dimensions, not just finance. Moreover, when you design systems, think of risk across large horizons of time, not just short term optimization.
Be clear about what you’re optimizing for, and realize that cost minimization can only take you so far.
Simple lessons, but oh-so-underrated!
But hey, if you get a chance to try the sukeli out, please do!
Single narratives have never been able to explain all of India.S, Rukmini. Whole Numbers and Half Truths: What Data Can and Cannot Tell Us About Modern India (p. 220). Kindle Edition.
There is this line that is often quoted when big picture discussions about India take place, and it is only a matter of time before it comes up: whatever you say about India, the opposite is also true. The quote is attributed to Joan Robinson, and I can’t help but wonder if I will end up creating a paradox of sorts by agreeing wholeheartedly with it.
But I do agree with the spirit of the quote, which is why that one line extract from Rukmini S’s book, Whole Numbers and Half Truths, resonated so much with me. All countries are complex and complicated, but India takes the game to giddying heights.
Take a look at this map, a version of which is present in Rukmini’s book:
What is India’s TFR? First, for those uninitiated in the art and science of demography, what is TFR? It stands for Total Fertility Ratio, or as Hans Rosling used to put it, babies per woman. Well, it’s 2.0, which is good, because roughly speaking, two parents giving birth to two children will mean we’re at the replacement rate (note that this is a very basic way of thinking about it, but useful as a rough approximation).
But as any student of statistics ought to tell you, that’s only half the story (or half the truth). Uttar Pradesh, Bihar and Jharkhand are well above the so-called replacement rate, and that will have implications for labor mobility, taxation, political representation and so, so much more in the years to come.
Data then, is only half the story. How is the data collected? If it is a sampling exercise rather than a census, how was the sampling done? Has the sampling method changed over time? If so, are earlier data collection exercises comparable with current ones?
How should one think about the data that has been collected? What does it mean, and how much does context matter? For example:
‘That’s data about marriage, madam,’ he said—not about love. ‘I think if your data asked people if they have ever fallen in love with someone from another caste or religion, many will say yes. I see that all around me among my friends. But when it comes to getting married, most of us are not yet ready to leave our families. That’s why your data looks like that,’ he said. As for the rest? ‘There is a lot we will not admit to someone doing a survey. But things are changing. At least for some of us,’ he said.S, Rukmini. Whole Numbers and Half Truths: What Data Can and Cannot Tell Us About Modern India (pp. 127-128). Kindle Edition.
Rukmini’s excellent book is, in one sense, a deep reflection on the data that we have, have had, and would like to have where India is concerned. It speaks about how data has been collected, which are the agencies and institutions involved, how these have changed (and been changed) over time, and with what consequences.
But it also is a reflection on a truism that many economists and statisticians underrate: data can only take you so far. As the subtitle of her book puts it, it is an analysis of what data can and cannot tell you about modern India.
And what data leaves out is often as fascinating as what it includes:
Yet, most people know little about the NCRB’s processes and methodology. For instance, the NCRB follows a system known as the ‘principal offence rule’. Instead of all the Indian Penal Code (IPC) sections involved in an alleged crime making it to the statistics, the NCRB only picks the ‘most heinous’ crime from each FIR for their statistics. I stumbled upon this then unknown fact in an off-the-record conversation with an NCRB statistician in the months after the deadly sexual assault of a physiotherapy student in Delhi in September 2012. In the course of that conversation, I learnt that the crime that shook the country would have only made it to the NCRB statistics as a murder, and not as a sexual assault, because murder carries the maximum penalty. This, I was told, was to prevent the crime statistics from being ‘artificially inflated’: ‘If the FIR is for theft, there will be a[n IPC] section for assault also, causing hurt also. If you include all the sections, people will think these are separate crimes and the numbers will seem too huge,’ he told me. After I reported this,2 the NCRB for the first time began to include the ‘principal offence rule’ in its disclaimer.3S, Rukmini. Whole Numbers and Half Truths: What Data Can and Cannot Tell Us About Modern India (p. 13). Kindle Edition.
The paragraph that follows this one is equally instructive in this context, but the entire book is full of such Today-I-Learnt (TIL) moments. Even for those of us involved in academia, there is much to learn in terms of nuance and context by reading this book. If you are not in academia, but are interested in learning more about this country, recommending this book to you is even easier!
Rukmini’s books spans ten chapters on ten different (but obviously related) aspects of India. We get to learn how Indians tangle (or quite often choose not to!) with the cops and the courts, how we perceive the world around us, why Indians vote the way they do in the first three chapters. The next three are about how (and with whom) we live our lives, and how we earn and spend our money. The next trio is about how and where we work, how we grow and age and where Indians live. The final chapter is about India’s healthcare system.
Each chapter makes us familiar with the data associated with each of these topics, but each chapter is also a reflection on the fact that data can only take us so far. When you throw into the mix the fact that the data will always (and sometimes necessarily) be imperfect, we’re left with only one conclusion – analyze the data carefully, but always bear in mind that the reality will always be more complex. Data is, at the end of the day, an abstraction, and it will never be perfect.
One reason I liked the book so much is because of its brevity. Each of these chapters can and should be be a separate book, and condensing them into chapters can’t have been an easy task. But not only has she managed it, she has managed to do so in a way that is lucid, thought-provoking and informative. Two out of these three is a good achievement, to achieve all three and that across ten chapters is a rare ol’ achievement.
If I’m allowed to be greedy, I would have liked a chapter on the world of data that the RBI collects, and to its credit does share with us via its website. But it does so in a way that is best described as unintuitive. In fact, a book on how data sharing practices with the citizenry need to improve out of sight where government portals across all verticals and at all levels are concerned would be a great sequel (hint, hint!).
I’d strongly recommend this book to you, and I hope you enjoy reading it as much as I did.
We will be hosting Rukmini on the Gokhale Institute campus this coming Friday, the 29th of April. The event will be from 5.30 pm to 7.00 pm at the Kale Hall. She and I will speak about the book for about an hour, followed by a Q&A session with the audience.
If you are in Pune, please do try and make it!
Timothy Taylor, author of the blog The Conversable Economist, has a nice post out on the case for doubling R&D spending. He speaks of doubling spending on R&D by the US government, but the point is equally applicable to all governments, including India’s.
The post is a reflection on a chapter in an e-book published by the Aspen Group. The chapter has been written by Benjamin F. Jones, and is titled “Science and Innovation: The Under-Fueled Engine of Prosperity.” (pp. 272 in the PDF that has been linked to above). Timothy Taylor shares an extract that ought to familiar to us in terms of the direction in which scientific progress has been headed, and perhaps even the magnitude – but every now and then, it helps to remind ourselves how far we’ve come:
Real income per-capita in the United States is 18 times larger today than it was in 1870 (Jones 2016). These gains follow from massive increases in productivity. For example, U.S. corn farmers produce 12 times the farm output per hour since just 1950 (Fuglie et al. 2007; USDA 2020). Better biology (seeds, genetic engineering), chemistry (fertilizers, pesticides), and machinery (tractors, combine harvesters) have revolutionized agricultural productivity (Alston and Pardey 2021), to the point that in 2018 a single combine harvester, operating on a farm in Illinois, harvested 3.5 million pounds of corn in just 12 hours (CLASS, n.d.). In 1850, it took five months in a covered wagon to travel west from Missouri to Oregon and California, but today it can be done in five hours—traveling seven miles up in the sky. Today, people carry smartphones that are computationally more powerful than a 1980s-era Cray II supercomputer, allowing an array of previously hard-to-imagine things—such as conducting a video call with distant family members while riding in the back of a car that was hailed using GPS satellites overhead.https://conversableeconomist.com/2022/04/19/the-case-for-doubling-us-rd-spending/
The latter part of the extract, which I’ve not quoted here, is about the increase in life expectancy, and is also worth reading. Post the extract, Timothy Taylor goes on to speak about how it is important to celebrate the fact that we were able to push out vaccines in the space of a little less than a year, which is a stellar achievement. And indeed it is! You might have differing opinions about the efficacy of these vaccines, and you might even be of the opinion that the firms doth profit too much from their creation, but I hope you agree that the fact that we were able to do this at all, and as rapidly as we did, is testimony to have far we have come as a civilization.
As an aside, read also this Washington Post editorial about the discovery of the virus, and how the message didn’t get out nearly quickly enough (duh.)
Both points are important to understand as students. Which two points, you ask? That progress as a civilization depends on two things: the rate of technological progress, and the underlying culture that enables it, embraces it and uses it properly. For reading the editorial, I came away with the opinion that China had the technology, but lacked the culture.
I would urge you to think about how this might resonate with each of us as individuals: we have the technology to be ever more productive, and the technology improves every year. But have we built for ourselves a culture of allowing ourselves to use this technology as efficiently as we should? What about the institutions that each of us work for or study in? What about the countries we stay in? Technological progress without an enabling culture doesn’t work, and as students of productivity (that’s one way to think about studying economics), you need to be students of both aspects.
Anyway, back to scientific progress. One of the points that Jones makes in his chapter is that the US has been lagging behind the current leaders on two different metrics: total R&D expenditure as a percentage of GDP, and public R&D expenditure as a share of GDP. China’s R&D expenditure has seen an annual increase of 16% since the year 2000, while the US is at 3% annual growth.
What about India, you ask? Here’s a chart from an Indian Express article about the topic:
As the article points out, let alone trying to compute the rate of increase, we actually seem to be on a downward trajectory for a metric called GERD, which stands for Gross Domestic Expenditure on Research and Development. Here’s the link to the data from the World Bank.
We clearly need to do better. That article in the Indian Express ends with this paragraph:
A commitment from the Centre to raise GERD to 1 per cent of the GDP in the next three years could be one of the most consequential decisions taken in the 75th year of India’s independence.https://indianexpress.com/article/opinion/columns/unesco-stats-on-global-expenditure-on-r-d-7775626/
And that is a nice segue back to the blog post that we started today’s post with. If you’re asking (and I hope you are!) questions along the lines of why it should be the government and not the private sector, I have two answers for you. One, the truth always lies somewhere in the middle, and so you need both private and government spending. And two, there is an economic argument for your consideration:
Jones’s essay reviews the argument, fairly standard among economists, that a pure free market will tend to underinvest in new technologies, because in a pure free market the innovator will not capture the full value of an innovation. Indeed, if firms face a situation where unsuccessful attempts at innovation just lose money, while successful innovations are readily copied by others, or the underlying ideas of the innovation just lead to related breakthroughs for others, then the incentives to innovate can become rather thin, indeed. This is the economic rationale for government policies to support research and development: direct support of basic research (where the commercial applications can be quite unclear), protection of intellectual property like patents and trade secrets, tax breaks for companies that spend money on R&D, and so on.https://conversableeconomist.com/2022/04/19/the-case-for-doubling-us-rd-spending/
Now, how much of the lifting should be done by government, and how much should be done by the private sector is a debate that will never end, but here is an EFE post that might help you start to think through the process.
Timothy Taylor and Benjamin F. Jones argue that the US needs to spend more on R&D, and that the U.S. government should do more in this regard.
My contention is two-fold: that this point applies with even more urgency in the Indian context, and that an enabling culture is an equally important concept, but an underrated one the world over.
Via Kevin Kelly, and the excellent Recomendo newsletter:
Shreevar Chhotaria asked a great question on Twitter recently:
As an aside, and before we begin, he’s got a podcast with a very cool name. I haven’t listened to it, I should be clear, but can’t help but grin at the name. Now, back to business:
If I was in the corporate world, my vote would have been for working from home, 95% of the time. If my choice is to be between sitting at home in shorts and a t-shirt and working, or battling traffic in whichever city I happen to be in to reach work and attend offline meetings – well, it’s not a choice.
But if I were to talk as a professor about I and students being in the same place – well, this is also not a choice, but the answer is the opposite.
Maybe ten percent of your learning as a student takes place in a classroom while you’re in college. And if that estimate is to be wrong, it is because I’m being a little too optimistic. Learning happens in arguments, discussions, debates over endless cups of chai on kattas outside classrooms. It happens by walking into a professor’s office for a chat. It happens by working with your batchmates on projects, not all of which need be academic. It happens by working together on plays, annual events, quizzes and sports fests. It happens through the inevitable arguments, scuffles and fights that ensue.
Learning how to get along with other people in a semi-professional context is a great way to learn how to pretend to get along with people in a professional context. And that learning can never come by “logging on” to a classroom. The shared ennui that you experience in a classroom is no substitute for keeping a Google Meet tab open in the background.
Peer networking in all of its myriad forms is an indispensable part of the student’s experience, and the pandemic has taken at least two years of these experiences away from students. For all the students who still have time left in their degrees, it is imperative that we in academia encourage as much of on campus activity as possible.
Not doing so, in my opinion, is a moral crime.
And on that note, a warm welcome to the FYMSc students from GIPE! I’m in Delhi right now, but will be back in office on Monday. I’ll reiterate my offer: please, drop in to my office to say hello, and have a cup of (black, no sugar) coffee if you like!