… or as the video puts it at one point, the correct way to think about it these days is that your camera has the ability to make and receive calls.
The video says it is about using only your iPhone’s camera, but almost all of the tips can be done on most Android phones (almost all).
… although perhaps the correct question is why is it down:
That’s the question that Amol Agrawal raises in his excellent column for Moneycontrol. This is actually the second part of a two part series, the first part is here.
Now, we live in a world where questioning government data is problematic for half of the Angry Online Horde, and not questioning it is likely to make the other half of the AOH angry. But if you take three deep breaths and remember that we’re all (this half and that one) students of economics, then this chart should make you pause and think:
This is not Amol (or me, or anyone else) hypothesizing about anything. This is fact (noun, meaning a thing that is known or proved to be true).
Now, given all of our political biases (and who doesn’t have ’em, myself included?), we can look at this data and say one of two things:
Have at it, and vent out your anger on Twitter. But once you’re done, regardless of whether you are Team Half Full or Team Half Empty, ask yourself what either hypothesis implies for the Indian economy.
Amol provides a way for you to start to think about the problem:
The difference between growth rates of GDP and consumption questions the growth rate of investments as well. Businesses look at growth rate in consumption data to make future investment plans. If growth rate in consumption is low, future investment growth is likely to be lower as well. Having said that, growth rate in investments in 2023-24 is expected to be 10 percent, higher than the 5.5 percent growth in 2022-23.
https://www.moneycontrol.com/news/opinion/the-macro-puzzle-ii-divergence-between-consumption-and-gdp-12493261.html
Macro can be quite an irritating so-and-so thataways. Regardless of whether you think the government is 0 or 1 on the Harishchandra scale, you need to think about the fact that lower consumption today will lead to lower investment tomorrow. And that is something we simply cannot afford.
Read whoever you like on this mystifying issue, misty eyed economists or otherwise. But begin by being clear about the theory that underpins macroeconomics, for you will surely not reach conclusions about economic data on the basis of political leanings. That’s what everybody else online does, not you!
Here’s a good book to help you begin your journey, if you’re interested in learning how to think about macroeconomic theory.
I try to answer why is it that the British love Bordeaux wines, and they call them claret. Red Bordeaux is called claret. It’s a very long tradition, and people have often said this is an example of British taste and culture. Well, of course, it isn’t. It’s an example of tariff policies for 400 years.
When Eleanor of Aquitaine married Henry II in France — for those of you who remember the movie The Lion in Winter with Katharine Hepburn and Peter O’Toole — everything that came out of Bordeaux was tax-free to Britain because of this marriage, because Eleanor of Aquitaine was French and came essentially from Bordeaux, and so all Bordeaux products went to Britain tax-free. As a result, the British developed an enormous liking for this wine.
https://conversationswithtyler.com/episodes/fareed-zakaria/
That’s from Fareed Zakaria’s lovely conversation with Tyler Cowen, and there is a lot else there to unpack and think about. But I hadn’t known this particular story, and reading about it took me down a lovely little rabbit hole of factoids and “huh!” moments.
First of course, is the fact that incentives matter! Claret is a word you will come across sooner or later if you read enough of British literature from a particular era – and it turns out that at least part of the reason for it’s popularity is simply the fact (as Fareed Zakaria points out) that this wine was cheaper to drink because there was no tax on it!
Although domestically popular, French wine was seldom exported, as the areas covered by vineyards and the volume of wine produced was low. In the 12th century however, the popularity of Bordeaux wines increased dramatically following the marriage of Henry Plantagenet and Aliénor d’Aquitaine. The marriage made the province of Aquitaine English territory, and thenceforth the majority of Bordeaux claret was exported in exchange for other goods. Upon the ascension of their son, Richard, to the English throne Bordeaux became the base for Richard’s French operations.
As the popularity of Bordeaux wine increased, the vineyards expanded to accommodate the demands from abroad. Henry and Aliénor’s youngest son, John, was in favor of promoting the wine industry, and to increase it further, abolished the Grande Coutume export tax to England from the Aquitaine region. In the 13th and 14th century, a code of business practices called the police des vins emerged to give Bordeaux wine a distinct trade advantage over its neighboring regions.
https://en.wikipedia.org/wiki/History_of_Bordeaux_wine
How to stop reading a completely random Wikipedia article? Or is the correct question to ask this one: why should one stop reading a completely random Wikipedia article? This particular article, about the history of Bordeaux wine, also contained this line:
“In 1855, a classification system was set up that ranked the top chateaus of the Médoc according to their market price.”
That inspired a random series of Google searches (random Google searches is what I was born to do), culminating in I discovering that there is (of course there is) a textbook called Wine Economics:
The third form of reputation originates from recognition by national or supranational authorities. The classification system of wines was started in France in 1855 by order of Napoleon III, who wanted the vineyards of the Bordeaux region to be classified in order of quality for the Exposition Universelle de Paris. In the same year the recognition of the cru classé was attributed to sixty wines (from the Premiers Crus to the Cinquièmes Crus).
The need to create a classification system of wines that clearly and simply identified the best products became even more pressing in the first two decades of the twentieth century when buyers were confused by frauds, phylloxera, and Algerian wine that was passed off as French. In 1935 the French government created the Appellation d’Origine Contrôllée (Controlled Designation of Origin, or AOC), and it established the Institut National des Appellations d’Origine (National Institute of Origin and Quality, or INAO) with the task of regulating the AOC.
Castriota, S. (2020). Wine economics. MIT Press.
How to not then go and read the Wikipedia article on the Appellation d’Origine Contrôllée?
…the INAO was created by a decree initiated by Joseph Capus and enacted on July 30, 1935. Under this law the Comité National des appellations d’origine (CNAO) was given the sole authority to rule on matters related to the quality of wine. The members of the committee included delegates of ministries of agriculture, finance and justice and presidents of viticulture syndicates. They consulted with the top wine producers in each region to define the boundaries of appellations and the rules for a wine to qualify. The CNAO was funded by a fee paid by the producers. Many small wine producers were eager to escape the state regulations imposed on bulk winemakers, and sought to join. However the CNAO enforced high standards and the percentage of French wine designated as AOC actually declined in the first years after the CNAO was formed. The first AOC laws were passed in 1936, and most of the classical wines from Bordeaux, Burgundy, Champagne and Rhône had their initial set of AOC regulations before the end of 1937.
https://en.wikipedia.org/wiki/Institut_national_de_l%27origine_et_de_la_qualit%C3%A9
And to think that all of this completely random “research” took place because I decided to traipse down an interesting little path that branched out from a little anecdote that Fareed Zakaria narrated to Tyler Cowen about writing an article for Slate.
Cheers!
P.S. One final point worth a ponder – one of my favorite songs is a song called “Done with Bonaparte”, by Mark Knopfler. It contains the lines:
“My one true love awaits me still,
The flower of the Aquitaine”.
Might this be a reference to Eleanor of Aquitaine? Maybe somebody could shed some light on this – which would be entirely appropriate, since the etymology of the word Eleanor may be related to the Arabic word”Noor”.
The policy was both cruel and a blunder. Family-planning officials assumed that birth rates would spring back once controls were abolished. Alas, they re-educated parents too well. One child became the norm, certainly in cities. Consider another figure that should haunt leaders: 1.7. That is the number of children that, on average, Chinese women of child-bearing age call ideal. China’s ideal is one of the world’s lowest, far below the number given in Japan or South Korea. Chinese women born after 1995 want the fewest of all: 48.3% of them told the Chinese General Social Survey of 2021 that they desire one or no children. There is growing evidence that such attitudes are powerfully shaped by how people, and those around them, experienced the one-child policy.
https://www.economist.com/china/2024/03/21/chinas-low-fertility-trap
“The policy” refers to , of course, the infamous one child policy. Please read the entire article (assuming you can, because The Economist articles are often behind a paywall) – it is an eye-opener in many ways.
But my primary takeaway is how difficult it becomes to change culture, once it has been imposed. The last sentence of that excerpt is the worrying one, and not just in the case of China and the one-child policy.
Attitudes are indeed shaped by how experiences one has while growing up. And in the case of China and her demographics, it looks as if attitudes about families and (the number of) children will not be changing in a hurry, if at all.
India is, at best, twenty years away from where China (and most, if not all, of East Asia) is today. All the more reason to worry about India’s growth rates over the next two decades – her current demographic dividend is not a gift that will keep giving forever.
I should have known better, especially given the fact that I have a PhD. But us acad types, we will never learn.
I wrote out a fun (remember, this is an economist talking, so the definition of fun is a very relative one!) post, and part of it I wrote out in LaTeX.
That faint sound of helpless giggling you can hear right now? That’s academicians doubling up in laughter, because they know what’s coming next.
So anyway, here is today’s blogpost in PDF format.
Please, do give it a read.
(And children, never write a post in GDocs, using LaTeX, and expect it to be pasted seamlessly onto WordPress!)
Spence’s pioneering essay from 1973 (based on his PhD thesis) deals with education as a signal of productivity on the labor market. A fundamental insight is that signaling cannot succeed unless the signaling cost differs sufficiently among the “senders”, i.e., job applicants. An employer cannot distinguish the more productive applicants from those who are less productive unless the former find it sufficiently less costly to acquire an education that the latter choose a lower level of education. Spence also pointed to the possibility of different “expectations-based” equilibria for education and wages, where e. g. men and white receive a higher wage than women and black with the same productivity.
Subsequent research contains numerous applications which extend this theory and confirm the importance of signaling on different markets. This covers phenomena such as costly advertising or far-reaching guarantees as signals of productivity, aggressive price cuts as signals of market strength, delaying tactics in wage offers as a signal of bargaining power, financing by debt rather than by issuing new shares as a signal of profitability, and recession-generating monetary policy as a signal of uncompromising commitment to reduce stubbornly high inflation.
https://www.nobelprize.org/prizes/economic-sciences/2001/popular-information/
Speaking of costly advertising…
So the next time you grit your teeth and wait out a long line of lal battis that pass you by at a busy traffic signal, understand that the security of the person involved isn’t the only point.
Making you (and everyone else) wait is the bigger point. That’s why chief guests like coming in late. That’s a feature for ’em, not a bug!
Consider this your periodic reminder to read The Elephant in the Brain:
The main thesis of the book is that we are very often not aware of our real reasons for most of our behaviors. Our behaviors are optimised for living in a social group and very often, from the point of view of natural selection, it is useful if we are not consciously aware of our real motivations.
The book is split into two sections. The first, entitled ‘Why We Hide Our Motives’ includes an introduction to the subjects of animal behaviour, signalling, social norms and self-deception.
https://en.wikipedia.org/wiki/The_Elephant_in_the_Brain
What a fun website for a Sunday morning!
Well, maybe the present. It is difficult to tell these days, except in the realm of politics, which is clearly headed back to the past the whole world over.
What am I talking about when I talk about the lawyer and the secretary, you ask? Here’s my new favorite assistant, Claude 3 (Opus) with an explanation:
In his famous example, economist Paul Samuelson describes a skilled lawyer who is also an exceptionally fast typist. Even though the lawyer can type faster than their secretary, it still makes sense for the lawyer to focus on legal work and let the secretary handle the typing. This is because the lawyer’s time is much more valuably spent on legal tasks, while the secretary’s time is most effectively used for typing. By each focusing on what they do best relative to their other abilities, they can achieve more together than if they each split their time between both tasks.
https://claude.ai/
This is, of course, the idea of comparative advantage, an idea that econ students meet quite frequently in their studies. I explain it to my students by telling them about my love for eating and cooking good food. Why then, I ask my students, should we have a cook at home?
The answer is obvious to an economist:
The reason we have a cook at home is because paying the cook her salary is what makes us rich.
As I explain in the post I have linked to above, having a cook at home frees up my time to write about the fact that I have a cook at home. And while it is true that I love to cook, I get paid for using my skills as an economist, not for sautéing french beans (butter, salt and garlic, that’s it, and maybe parboil the beans first, if you like. Heavenly, I tell you).
Underpinning the idea of comparative advantage is the idea of opportunity cost. Every hour that I spend sautéing french beans is an hour that I am unable to spend on writing blogposts. The more beans I saute, the less blog posts I write.
So even though I am very good (even if I do say so myself) at sautéing beans, I am better at writing blog posts. Or at any rate, society is willing to pay me more for blog posts about comparative advantage than it is willing to pay me for sautéing beans.
So, comparative advantage and opportunity costs – topics we have covered in the past here at EFE, and repeatedly. Why do I talk about them today?
Because I beseech you to go and read Noah Smith’s excellent take on AI and employment. He’s written out the entire post by using these simple (but surprisingly deep!) ideas, and has done a masterful job:
So anyway, because of comparative advantage, it’s possible that many of the jobs that humans do today will continue to be done by humans indefinitely, no matter how much better AIs are at those jobs. And it’s possible that humans will continue to be well-compensated for doing those same jobs.
In fact, if AI massively increases the total wealth of humankind, it’s possible that humans will be paid more and more for those jobs as time goes on. After all, if AI really does grow the economy by 10% or 20% a year, that’s going to lead to a fabulously wealthy society in a very short amount of time. If real per capita GDP goes to $10 million (in 2024 dollars), rich people aren’t going to think twice about shelling out $300 for a haircut or $2,000 for a doctor’s appointment. So wherever humans’ comparative advantage does happen to lie, it’s likely that in a society made super-rich by AI, it’ll be pretty well-paid.
https://www.noahpinion.blog/p/plentiful-high-paying-jobs-in-the
There’s thoughtful analysis, simple (but not simplistic!) explainers and there’s even a section towards the end that would have raised Truman’s hackles. This section talks about real and pressing concerns regarding inequality and adjustment shocks (a la Autor), and other reasons why even the techno-optimists should pause to ponder.
Please do go and read the whole thing, and as always, if you happen to disagree with Noah’s take, please do let me know why.
EconForEverybody 