RoW: Links for 23rd October, 2019

Five books that I have read about our neighboring countries that helped me understand them a little bit better. If you ‘re looking for books to read during the holidays, this list might help:

  1. From a while ago, and set many decades ago, but I loved reading The Glass Palace. Anything by Amitav Ghosh is worth your time, I’d say, but this helped me learn more about Myanmar.
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  2. Samanth Subramanian is a magnificent writer, and that is not hyperbole. In this book, This Divided Island, he brings us a raw, disturbing and depressing account of Sril Lanka today, and how it is divided, perhaps beyond repair, on grounds of ethnic and religious conflict. He doesn’t pull his punches, but more: he doesn’t take sides. If you are looking to understand Sri Lanka today, this is the book to read.
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  3. How did Bangladesh come to be Bangladesh? What was Pakistan’s role in it? What was India’s? What was – and this might come as a surprise to some – the USA’s? The Blood Telegram answers these questions, and more besides, in a always interesting read about the war of 1971.
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  4. And two recommendations about Pakistan. The first is a book by Stephen Cohen: The Idea of Pakistan. Is Pakistan an army with a country or the other way around? Why? Will this change in the future. What is (or what used to be) the political calculus of the United States of America when it came to Pakistan? This book answers these questions, and then some.
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  5. And finally, Pakistan: A Hard Country, by Anatol Leivin. A Ukraininan journalist who has spent some time in the country, and is equally horrified and fascinated by it. Somewhat sympathetic in its treatment, it still helped me understand the country a little bit better – without, of course and unfortunately, ever having been there.

EC101: Links for 12th September, 2019

Following on from my review of “Launching The Innovation Resistance”, here is a selection of five papers from its bibliography that I enjoyed going over.

  1. “Using a sample of engineered mice that are linked to specific scientific papers (some affected by the NIH agreements and some not), we implement a differences-in-differences estimator to evaluate how the level and type of follow-on research using these mice changes after the NIH-induced increase in openness. We find a significant increase in the level of follow-on research. Moreover, this increase is driven by a substantial increase in the rate of exploration of more diverse research paths. Overall, our findings highlight a neglected cost of IP: reductions in the diversity of experimentation that follows from a single idea.”
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    The title of the paper is much more entertaining: Of Mice and Academics(!)
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  2. Understanding patent thickets (Note: this is a JSTOR link, you may not be able to download the paper. If so, my apologies!)
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  3. The patent paradox revisited (Again, a JSTOR link)
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  4. On roses and patents (I really enjoyed reading about this in the book, and therefore this paper as well)
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  5. On the history of patent law.

Notes from Launching the Innovation Resistance by Alex Tabarrok

After Murali’s talk in Gokhale Institute the previous week, I got around to reading this book. What follows are some of the highlights from my reading of the book on Kindle, along with a quick review of the book.

Key takeaways (for me):

  1. Alex Tabarrok ends his own post on the book over on MR by saying “although we share a few common themes that perhaps due to differences in personality Tyler focuses on describing problems while I am more excited to promote solutions!”
    That comes through in both the title of the book as well as what I think is they key question for Tabarrok: “What combination of incentives and foundation will bring the greatest innovation to the modern world? How can we create a 21st-century Renaissance?”
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  2. “But there is also a more fundamental critique: After hundreds of years of experience, there is surprisingly little evidence that patents actually do promote the progress of science and the useful arts.”
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    This has been an eye-opener for me: both from Murali’s talk as well as this book. There just isn’t that much evidence that patents have worked.
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  3. “Firms innovate because they know that if they don’t, someone else will. In this kind of industry, instead of stimulating innovation strong patents may create a “resting on laurels” effect. A firm with strong patents may reduce innovation, secure in the knowledge that patents protect it.”
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    And it may actually be even worse! Patents may actually discourage innovation, let alone protect it.
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  4. “Overall, however, the ODA did create real innovation, and as the number of new drugs for rare diseases increased, the mortality rate for people with rare diseases fell.”
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    The Orphan Drug Act seems to have been one of the few things that can be used as an argument in favor of patenting.
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  5. “When asked to rate various sources of competitive advantage only 4 percent of corporate managers regarded patents as highly effective. Much more effective was getting a head start, learning by doing, and investing in complementary sales and service.”
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    “The aircraft patent-war slowed innovation in the American aircraft industry so much that just prior to World War I the government forced the industry to share its patents for reasons of national security.”
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    …were real eye-openers for me
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  6. So what might be the solution, if not patents?
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    “The major vice of a prize fund is that it replaces a decentralized process for rewarding innovation with a political process.” In this regard, you might want to read this book, by Peter Diamandis
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  7. “I see two views of humanity. In the first view, people are stomachs. More people mean more eaters and less for everyone else. In the second view, people are brains. More brains mean more ideas and more for everyone else.”
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    And patents, of course, are a way to restrict ideas.
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  8. “From Florence in the 14th century to Great Britain in the 19th and the United States in the 20th, the leading economic power has always been a leading educational power.”
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    Alex Tabarrok goes on to speak about the usual econometrician’s worries about a statement like that, but all that notwithstanding, this is exactly why India’s education standards (outcomes?) need to be way higher.

 

Overall, definitely recommended.

Launching the One Book a Month Club @GIPE

Calling it a club is a bit of a misnomer, since it’s mandatory for the undergrad students at the Gokhale Institute, but it just sounds cooler.

One thing that we wanted to fit in (but couldn’t) for the undergraduate degree at Gokhale Institute was a Great Books program. In retrospect, that was a blessing in disguise, because it has given me the chance to launch this instead.

The One Book a Month program involves inviting one person a month to nominate a book that they think young folks absolutely must read. Said young folks read the book,  and write a five hundred word report on the book. At the end of the month, all of us – person, young folks and I – sit down and talk about the book. Rinse and repeat. There’s a competition, with rules, carrots and sticks – more details here.

But stripped of all the razzmatazz, it really is just an effort to get people to read more – which is kind of the whole point, no?

Amit Paranjape has very kindly agreed to kickstart proceedings, and his book of choice for this month is Sapiens, by Yuval Noah Harari. I’ll share the date on which we’ll have the talk with Amit – if you happen to be in town, and are interested in attending the talk, you’re most welcome! We’ll also be putting up the discussion itself on YouTube and on a podcast based on this series – links to those will also be made available.

If you have book suggestions, guest suggestions, or other suggestions about how this series could be made better, I’m all ears! Drop me a mail at ashish at the rate econforeverybody dot com.

5 non-textbook books about international trade

A student asked me this question in class the other day – if I could recommend five books about international trade that aren’t textbooks. I found the question quite interesting, and what follows are five books that I recommended on the spot

  1. Vermeer’s Hat: One of my favorite books to read about globalization, and the fact that it also speaks about art and history just adds to the treat. Lovely book.
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  2. Shogun: An extremely long book, but also an extremely readable one. On the face of it, this is about internal politics in Japan – and that’s one way to read it. But another way to read it is to think about globalization before the era of globalization.
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  3. Tai-Pan: An equally long book, and this one explains why and how Hong Kong became Hong Kong. Again, explains the historical context and the start of globalization in Asia.
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  4. Monsoon: This was written a while ago, and it holds up reasonably well. Kaplan argues that it is time to take a look at the world with the Indian Ocean front and center, and examines who the key players in this part of the world are likely to be. Especially appropriate for a read today – and this book was written in the pre-Belt-and-Road era.
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  5. OK, I’m cheating a little. I can’t for the life of me remember what I actually said in class the other day, but even if I didn’t mention this book, I’ll go along with it. Easily the most academic book of the five (and easily the most boring, if I am going to be honest), but a good read nonetheless for gaining information about the development of international trade. Power and Plenty, by Findlay et al.

Books that almost made it, but didn’t

  1. The Economic Naturalist: A truly great read, and just go ahead and buy it anyway. Robert Frank spent years teaching undergraduates about how to think like an economist, and it shows. An engaging, thought-provoking book that manages to entertain and inform at the same time, it is a truly great read.
  2. The cartoon introduction to microeconomics: There are three books in this series, and all are worth reading. The cartoons are smart, funny and informative. Great way to start reading up on economics. If anything, not detailed enough – but it is a cartoon book, after all.
  3. Freakonomics: This book has almost become the “Summer of 69” of introductory books on economics, and the worst part is that it isn’t even meant to be an introductory book about economics. But it is a very good book to read, as is its successor.
  4. Reinventing the Bazaar: This is most assuredly not  a light read, but it is equally so a great read. I hesitate to recommend this to students new to economics because it might put people off, but if you have the perseverance, the payoffs are huge.

Book Review: Day to Day Economics

I’ve never met Professor Deodhar, but he is an alumni of my college, Gokhale Institute of Politics and Economics. That is not, of course, why I recommend the book, but maybe you should keep that in mind before reading this review!

I often recommend to students that they read at least one newspaper a day (and preferably more than one) along with a journal or a magazine of some sort that is related to the world of business, economics or finance.

The modal response to this suggestion is that it is too “hard” to read any of these, for the jargon is incomprehensible, and the topics don’t make sense. Reading this book before you embark on the habit of daily reading won’t solve every problem you have, but it will come mighty close.

Most of the topics that have the potential to confuse are dealt with over here in accessible fashion, and more importantly, are written in a way that should whet your appetite to read more about these topics. That is a particularly challenging thing to do, but this book manages it.

This includes government and it’s budgets, the stock market and money, trade and inflation along with a light discussion of business cycles. That sounds like a lot, but the book remains accessible throughout.

But equally, don’t just stop at this book! Please do get into that habit of reading those newspapers and magazines on a near daily basis. In fact, beginning Monday, I’ll begin a series of articles about how I read, in the hope that this may benefit some of you.

But in the meantime, I’ll end with links to five books that really should have been a part of this series, but couldn’t be. That’ll come up tomorrow.

Book Review: Discover Your Inner Economist

Forget everything else the book contains (and there really is a lot, some of which we shall get to in this review) – buy the book for the three principles for distinguishing good economics from bad.

One: the entire argument should fit on the back of a postcard (or a 280 character tweet, if you like). Two: the grandma test. What you’re saying, or trying to learn, should be understood by your grandma (assuming grandma is not a trained economist herself). Three: It should light up a bulb in your head – it should help you see the world in a way that you didn’t before.

The rest of the book is what fans of Professor Cowen might call classic Cowen. He discusses bribing your own daughter to do household chores (and explains, I should add, why this is a bad idea), how to visit a museum ( skip the explanatory text, and ask yourself which painting you would steal, if you could steal one) and why gifts don’t really work (in more ways than one).

The point, as with the other books in this series, isn’t to necessarily agree with everything the author says (I love giving gifts to near and dear one, and maybe I should write a post about this). Instead, it is to learn how to think like an economist, and this book is particularly good in that regard.

There is also a particularly good interview on the book that Tyler Cowen gave Russ Roberts over on the EconTalk podcast, which you might want to listen to before you buy the book. I particularly enjoyed (both in the book and in the interview) the discussionon sunk costs – where books and movies are concerned, I find myself to be more Robertian than Cowenian.

The book is also a great way to get introduced to other things that Professor Cowen does that are easily accessible online: his MRU courses or his podcast, for example.

But all in all, it’s a great book for a layperson to read, if you want to learn how you might benefit by discovering your inner economist.

Book Review: The Little Book of Economics

I should begin by noting that this book doesn’t, in my opinion, solve every problem that a beginner may have about understanding macroeconomics. That being said, this book probably comes the closest to answering most questions that you might have, if you’re looking to scale Mount Macro.

Macroeconomics is an inherently confusing unknowable subject. The Economist magazine recently wrote a very nice article on Nick Rowe, and how good he was at making a difficult subject slightly easier – but the larger point is that this is hard stuff.

The Little Book of Economics works in the sense that it doesn’t try to teach macro, it looks at the world and asks “why is this the way it is?”. For example, on globalization, Ip begins with Israel and asks why it flourishes as much as it does, given all of its geopolitical problem. Read the chapter to find out the answer (interdependencies, if you want it in a nutshell), but each chapter begins with a real world problem.

The book is also refreshingly free of jargon, which owes much to the fact that Greg Ip is a journalist, and has written a book with the layperson in mind. But the fact (and I can’t love this story enough) that his mother was an economist who indexed his pocket money to inflation also seems to have helped: it is clear that Greg Ip is a person who has thought deeply about the economy, and also possesses the ability to write clearly and concisely about it. A rare enough combination at the best of times, even rarer when it comes to macroeconomics.

If you read and like the book, you might want to also read another book by Ip, called Foolproof.

Here’s a useful list of podcasts over on the EconTalk website that might also prove to be useful with regard to Greg Ip’s work.

Book Review: Economics, A Very Short Introduction

I came across this book, as I mentioned, by regularly reading Brad DeLong’s blog (which is very rewarding in and of itself). He has mentioned this book frequently and always admiringly on his blog, and with good reason. It is one of the very best introductory books you could ever hope to read.

But, and this is an important but, it is not the most accessible book you will read about economics. Even after multiple readings, I find the going slow, and not just because of the technical concepts in the book but because of how much thought and (if you’ll forgive a particularly poor way to phrase this) thought-provoking thought is packed into only one hundred and fifty odd pages.

In fact, in the post in which I alluded to this book for the first time, I mentioned that the entire book should not be read at one seating, or at one go. Brad DeLong, based on his blogs, would probably criticize me for saying so, but I stand by that recommendation. The prologue is magnificent reading, and the rest of the book even more so – but the prologue is a nice meandering walk up a gentle hill. The rest of the book is a trek in the upper reaches of the Himalayas. To be clear, that is a good thing! You should trek up the upper reaches of the Himalayas, but a little training might be in order first.

The rest of this post is in praise of the prologue, which, as I have mentioned is worth many times the price of admission. Partha Dasgupta talks about Becky and Desta, two little girls who are of the same age (more or less) but are separated by a) geography and b) economic circumstances.

The author describes the lives of the two little girls and how very different they are: what they do during a day, what their parents’ lives are like, where they live, how they are being educated, and ultimately, what kind of lives they are likely to lead in the future. And then, Partha Dasgupta asks two very simple, but urgent questions.

Why? Why are their lives so different? Is it because of the geography they find themselves in? Is it because of historical factors? Might past and present governments have a role to play in how different their lives are? Might the choices made by their parents be a factor?All of these at the same time, perhaps? Who can say?

Second: given that their circumstances are different, can we do anything to make sure that Desta gets a leg up in life? How can her circumstances be made better, while leaving Becky’s either the same or better (but certainly not worse)? In other words, what needs to change in terms of markets, policies, institutions and indeed beliefs, for meaningful, long-lasting and sustainable change to visit Desta’s life?

I shall be deliberately provocative: if pondering these questions does not excite you about learning more about economics, then nothing ever will. Strong words, but I stand by them.

Read the whole book (eventually), but read the prologue right now.