Tag: India

The Conversation About Inheritance Taxes that I Would Like to Have

Are machines dystopian, or are humans dystopian? Asking for a blog post.

I am going to give this prompt to a very capable LLM. I would like you to critique this prompt, and let me know how it can be made better. Point out what is missing in terms of the comprehensiveness of my framework, as well as any details I may have missed out on. Optimize for the LLM giving an answer that holistically addresses the problem I am thinking about. We are not as interested in generating an answer to the problem as we are in generating a way to think about the problem. What the problem is will become clear upon reading my prompt. Also rate my prompt (for the parameters we’ve spoken about) on a scale of 1 to 10, where 1 is a poor prompt, and 10 is an excellent prompt. Please give me your reasons for the points I score, and reasons for points you have deducted.

“There has been a lot of controversy recently about whether India should, or should not have, an inheritance tax. I would like you to build out for me a framework to think through the issue. While doing so, I would like you to have a persona that has deep expertise in the global history of public finance, taxation laws, development economics, political economy and welfare economics. I would also like you to be well versed in the history of India’s taxation laws, and in India’s political economy. I would like you to assume that I am a very curious person, but with very little knowledge of economics, theoretical or applied. I like detailed explanations, but in simple English. I would like the framework to contain the following aspects, and please note that I plan to ask the LLM these questions sequentially, with plenty of scope for discussion, pushback and clarification after each question has been answered:

  1. Are there principles that underlie taxation for any economy? If yes, what are they? If not, what should a list of such principles look like?
  2. Within these principles, which will presumably be generic and applicable to all kinds of taxes, what principles might apply to inheritance taxes specifically?
  3. Should an inheritance tax be taxed while the money is still in the account(s) of the deceased individual, or the inheritor’s account? What would be better? For whom would it be better? The person being taxed or the entity doing the taxing?
  4. How should one think about the desirability of having an inheritance tax for an economy? Should it be a function of the number of people in an economy? Or their age? Or their inheritance laws?
  5. Should the state capacity of that economy have a bearing on the issue? That is, it might be all well and good to take from the rich, but does the state have the ability to spend that money effectively?
  6. Should inheritance taxes be a function of how thorough income tax laws are? For example, the higher the number of loopholes in the income tax act, the better the case for an inheritance tax is my line of thinking – is this justified?
  7. What is the history of the development of the theory surrounding inheritance taxes? What about the theory as applied to different geographies, different time periods, and countries with differing stages of development?
  8. Have countries enacted laws with sunset clauses? Why or why not?
  9. Have countries experienced Laffer Curve type problems upon implementation of inheritance taxes? How have these problems been detected, and how have they been dealt with?
  10. Based on our conversations so far, give me your top five “for” and top five “against” arguments for an inheritance tax in India today.”

Here’s Claude’s answer:

“Here’s my critique of your prompt:

Strengths:

  1. Comprehensive coverage: Your prompt covers a wide range of aspects related to inheritance taxes, including principles, implementation, history, and country-specific considerations.
  2. Persona specification: You provide clear guidelines for the LLM’s persona, which should help generate responses tailored to your needs.
  3. Sequential questioning: Breaking down the prompt into sequential questions allows for a structured and focused discussion.
  4. Encouraging discussion: You leave room for discussion, pushback, and clarification, which can lead to a more engaging and informative conversation.
  5. Specific to India: Focusing on India’s context helps narrow down the scope and generates more relevant insights.

Areas for improvement:

  1. Clarity on the target audience: While you mention that you have little knowledge of economics, it would be helpful to specify your background and the purpose of this framework (e.g., personal curiosity, policy-making, academic research).
  2. Prioritization of questions: Consider ranking the questions based on their importance or relevance to your understanding of the issue.
  3. Comparative analysis: You could include a question about comparing inheritance tax policies and their outcomes across different countries, especially those with similar characteristics to India.
  4. Societal impact: Consider adding a question about the potential social and distributional effects of inheritance taxes, such as wealth inequality and social mobility.
  5. Feasibility and alternatives: You could ask about the feasibility of implementing an inheritance tax in India given its current economic, political, and administrative context, and explore potential alternatives or complementary measures.

Missing aspects:

  1. Economic impact: Include a question about the potential economic consequences of an inheritance tax, such as its effects on savings, investment, and capital formation.
  2. Tax evasion and avoidance: Address the issue of tax evasion and avoidance strategies that may arise with inheritance taxes and how to mitigate them.
  3. Interaction with other taxes: Explore how inheritance taxes might interact with other forms of taxation, such as income, property, or gift taxes.
  4. Public opinion and political feasibility: Consider asking about public sentiment towards inheritance taxes and the political challenges in implementing such a policy.

Rating: 8/10

Reasons for the score:

  • Comprehensive coverage of key aspects
  • Clear persona specification and sequential questioning
  • Encourages discussion and focuses on India’s context

Points deducted:

  • Lack of clarity on target audience and purpose
  • Missing aspects related to economic impact, tax evasion, interaction with other taxes, and public opinion

By addressing these areas and incorporating the missing aspects, your prompt could be further strengthened to generate a more holistic and nuanced framework for thinking about inheritance taxes in India.”

Run with this framework, and please feel free to modify it and improve upon it. Please use this framework to have a discussion with an LLM about inheritance taxes. It’s the kind of discussion our ancestors were capable of having re: public policy issues.

Also, feel free to copy and improve upon the framework itself – run your prompts through an LLM to see how you can make your thinking about an issue better.

There is a discussion to be had about how the price, income and substitution effects are at play when it comes to spending time talking with folks online, or spending it talking to LLM’s, but I’d rather not go there for now.

I’ll say this much though: I’m usually quite favorably disposed to the substitution effect.

Harmunia Mode.

Is an inheritance tax a good idea or a bad idea?

Well, it depends.

What does it depend on?

It depends on whether you are a Congress supporter or a BJP supporter.

What else does it depend on?

It depends on whether you are answering this question in 2024, 2019 or 2014.

What does it not depend on?

Economic analysis.

I have read innumerable tweets/messsages today about the inheritance tax. Or death tax. Or estate tax. These are tweets and messages from economic analysts, politicians, think-tankers, journalists and policy makers.

Every single discussion has been about who has said what about inheritance taxes, and when.

Not a single discussion has been about an economic model that underpins the rationale for or against the inheritance tax.

  • What is it about India’s tax buoyancy that justifies (or doesn’t justify) an inheritance tax?
  • What about her demography? Does that have a role to play?
  • What about the loopholes in the Income Tax Act? Do they have a role to play?
  • What about her direct and indirect tax collections?
  • What about threshold limits for imposing such a tax?
  • How and why have other countries done it? Can we learn from their mistakes? Can we learn from their successes?
  • What are the alternatives?
  • If we do implement it, do we keep it in perpetuity?
  • How much money do we potentially raise if we implement it?
  • What might be the downsides?
  • How do we judge the quality of implementation if we implement it?

But no, let’s see who said what and when, call each other names, and prove that we are right and they are wrong. That’ll show them. Bloody losers. It’s because of folks like them that India is what it is today.

https://help.twitter.com/en/using-x/x-advanced-search

Do you want to play the game yourself, and show to members of your tribe how you were right and they were wrong? Click on that link, learn how to search on Twitter by date and by handle, and prove how Your Side Alone Speaks The Truth.

If, on the other hand, you are interested in, y’know, actual economic analysis, allow me to recommend Atkinson-Stiglitz and Diamond-Mirrlees, both from the 1970’s. It’s been a while since I’ve read them, and it’s not a topic I’ve ever particularly enjoyed, but I assure you that these are good places to begin.

But Twitter takedowns are faster and more fun, so there’s that.

As for me and what I think, I think that not only was Amit Varma right about the IPL, but if you ask me, he’s right about the harmunia too.

Economists Do It In Tribes

… or at least, economists employed by the governments. So says Amol Agrawal in a searing piece that is at once a lament as well as an indictment.

Why is the nature of discourse today so painfully zero-sum? Why do we have a take-no-prisoner approach to discussions, where disagreement is necessarily proof of the fact that the other person isn’t just wrong, but their motives are suspect? There are plenty of hypotheses for why this is so for all of us at large, but Amol shines a spotlight on my tribe, and my tribe is supposed to internalize for themselves and teach the rest of the world that the world is a non-zero sum game.

Except it isn’t. Not any more, and certainly not in the case of economists talking about the economy in India:

The current government economists discredit any critique of economic policy. Each time any analysis/report comes up critiquing the economic policy, the economists rush in to disagree and discard the criticism. The purpose of these articles is not to engage but rebut/attack the institution/writer of the critiques. Shoot both the message and the messenger seems to be the mantra.

It is also highly fashionable to draw comparisons with earlier eras and say how bad things were back then. They forget it has been ten years of the current government and people are asking questions on the current economic policy. They also forget how they themselves critiqued economic policy and built their own careers. One is also amazed how the media whose job is to critique economic policy, allow so many one-sided articles.

https://mostlyeconomics.wordpress.com/2024/04/11/economists-working-with-the-government-what-has-changed/

Disagreements are not just “fine”, they are the point. When you and I look at a slice of the world and come away with different conclusions, it is because we bring a different perspective, a different methodology, a different set of facts to emphasize and analyze,and a different ideology.

All of these things are true, not just the last one.

For all of us to sweep away the different conclusions, perspectives, methodologies and sets of facts under the carpet, and pin the differences on ideology alone is a tragedy with far reaching consequences.

There are people who will oppose the current government on ideological grounds alone (alone, in this case, is used in this sense: indicating that something is confined to the specified subject or recipient). And likewise, there are people who will defend the current government on ideological grounds alone. That is just the world we live in, and these messages will get amplified and shared more than they should.

But for all of us to behave in only this manner is a society that no longer talks to each other. It is a society that is divided along deeply tribal lines, and with every passing day, those lines get deeper and more permanent.

The hardliners on both sides – on one side are those who critique the government and and on the other those who defend it – will say that the other side started it first, and they had no choice to respond. They will also say that the other side is worthy of this kind of behavior and ostracization, because the other side is evil, and needs to be destroyed for our version of this country to flourish.

Bullshit.

Allow me to labor the point:

When you and I look at a slice of the world and come away with different conclusions, it is because we bring a different perspective, a different methodology, a different set of facts to emphasize and analyze and a different ideology.

We would do well to not ignore all of these points. Hanging the weight of the world on just the one word, regardless of which side does it (or did it first), does nobody any good.

No government in independent India’s history has been uniformly bad. Nor has any government been uniformly good. You and I will (and should!) have opinions about which government was the best, which was the worst, and which lay somewhere in the middle. You and I will try to convince the other of why we say what we do. And you and I will reach some sort of an agreement, or at least an appreciation of why the other person thinks what they do. Disagreements are food for thought, not excuses to launch personal attacks.

That this needs to be said is a matter of shame for everybody, but especially for social scientists, and doubly so for economists. (Yes, I hold my tribe to a higher standard).

Economics is about three things:

  1. What does the world look like?
  2. Why does the world look the way it does?
  3. What can we do to make the world a better place?

“Better” is tricky because better is subjective.

“We” is all of us, those who defend and those who critique the government.

So if I say (and I do) that the census not having been conducted is a problematic thing, I say it because I think it is a problematic thing. The truth value of that statement isn’t only a function of the fact that I am saying it, or that I am saying it in a publication that you don’t like, or what my political affiliations or economic ideology are.

I use the census thing as an example. Replace “census not having been conducted” with “improvements in our airports”, and replace “is a problematic thing” with “is a wonderful thing” for the same take, but from the other side.

If your Pavlovian response to the census thing is whataboutery, or if your Pavlovian response to the airports thing is whataboutery, then you have a problem. Sure, bring up the fact that the pandemic was a factor. And likewise, sure, bring up the fact that oligopolies are a problem. But don’t decide that the statement is wrong as a function who is saying it – decide the truth value on the basis of the statement, not the person behind the statement.

And one final point, to circle back to Amol’s post.

Criticizing the government is not just fine, it’s not just OK, it’s what economists will do. We will do it because we want the world to be a better place.

Economic policy should not be limited to criticizing the previous governments and praising the current government. The policy should lay a framework to improve the economic conditions of the people. It should not just agree to the government decisions but caution the government against missteps. That is how we saw things and admired all the economists who have served the governments all these years.

https://mostlyeconomics.wordpress.com/2024/04/11/economists-working-with-the-government-what-has-changed/

Kudos to Amol for saying what he did, and I look forward to reading more from him about what the government, and its economists, can do better. The fact that he (and I, and so many others) critique their work isn’t proof that the work of the government or its economists is bad. Nor is it proof that we are evil. It is our attempt to help make the world a better place.

Now, please tell me why you think I’m wrong, and let’s have a debate about it.

Very underrated thing to do in 2024!

Dinesh Thakur On The Wonderland That is Drug Pricing in India

What’s Up With Consumption?

… although perhaps the correct question is why is it down:

https://www.moneycontrol.com/news/opinion/the-macro-puzzle-ii-divergence-between-consumption-and-gdp-12493261.html

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:

https://www.moneycontrol.com/news/opinion/the-macro-puzzle-ii-divergence-between-consumption-and-gdp-12493261.html

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:

  1. Hah, see the gormint is lying!
  2. Hah, see we’re finally upping investment!

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.

Top Down Impositions of Cultural Norms and China’s Demography

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.

Does The EMH Apply To The Market For Votes?

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!)

An Article, A Chart, A Blogpost, A Book and Some Thoughts

The Article

I’ve just about gotten around to catching up on a lot of reading, and I finally got a chance to read this Scroll article:

“A few days later, Radha walked into a sprawling, glistening factory in Sriperumbudur, on the outskirts of Chennai. It had rows and rows of workers, most of them young women like Radha, bent over work tables on which were laid out tiny, metal parts. They were assembling iPhones – the most expensive and coveted mobile phones in the world – made by Apple, the second-richest tech company in the world.

The factory was run by Foxconn, a Taiwanese company that is the world’s largest contract manufacturer of electronics. For long, most of its phone production for Apple was done out of China. But in recent years, with the relationship between the United States and China coming under strain, Foxconn had been scouting for new locations for its manufacturing units. The town of Sriperumbudur, situated in Tamil Nadu, one of India’s most literate states, seemed like a natural choice. Home to over 500 companies, including manufacturers of electronics, auto components and chemicals, it has grown into an industrial hub in the past two decades.”

https://scroll.in/article/1064027/indias-iphone-factory-is-keeping-women-workers-isolated

As always, please read the whole thing. In fact, an especial plea this around – please take the time out, and go read the entire article, and then come back and read this. If you’ll allow me to be greedy, take even more time out and have a contemplative cup of coffee before coming back here.

The Chart

Hasan, R., & Jandoc, K. R. (2010). The distribution of firm size in India: What can survey data tell us?. Asian Development Bank Economics Working Paper Series, (213)

This is one of my favorite charts to stare at, and often endlessly. It’s outdated now, of course, because it is from well over a decade ago. But even so, this chart tells a powerful story. The story it tells us is that we have failed to generate manufacturing based employment in our country. That is a problem because without a significant increase in the share of manufacturing in our GDP, it is unlikely that we will be able to meaningfully reduce poverty in our country.

The Blogpost

I’ve written about it already in the previous week, but just in case you haven’t already, please do go and read the whole thing. I know I’m assigning a lot of homework today, but if you can spare the time, rinse and repeat the whole contemplative cup of coffee routine too, after you finish reading the whole thing. Here’s one of the key paragraphs (to me) from the blogpost:

“One of the things we often argue about on these pages is that growth is the single biggest moral imperative for India at its stage of development. We can try to optimise for many other ideals and virtues, but if they come to us at the cost of growth, we must learn to ignore them. Because lack of growth will make even those ideals worse than where they are today. To illustrate this point, somewhat provocatively, I have made the point that we shouldn’t get rich at the cost of our environment, but we must also consider that staying poor doesn’t do any good for the environment either in the medium to long run. At our stage of development, we should only ask if our today is better than our yesterday. It is possible that our today isn’t ideal or it may be far from what the developed world might have at this moment. But that should be of limited concern to us. Because in trying to aspire for that ideal state or in trying to make that quantum leap to what a developed economy already has, we will put at risk the gradual increment that we can make every day.”

https://publicpolicy.substack.com/p/248-the-budget-line-is-real

RSJ here is arguing for not making the perfect the enemy of the good. The good, in this case, is the fact that more women are getting employed than before, at least at the margin. The perfect, in this case, refers to the fact that working conditions at the Foxconn factory are, well, less than perfect:

“The activist said that often women would not use the toilets at the hostel and would instead wait until they reached the factory. “This obviously took a toll on their health,” he said.

The problem of health has boiled over into a crisis in the past. In 2021, hundreds of workers from the Foxconn factory went on protest and blocked traffic on the Chennai-Bengaluru highway after a food poisoning incident that resulted in 250 workers falling ill, of which 159 were admitted to a hospital. The workers also complained that their living conditions were unhygienic and demanded that their employers take immediate steps to improve them.

After the protests, the factory stayed closed for a few days, until the administration promised to make improvements in the hostels and ensure hygiene in food preparation.

Since then, the situation has improved, workers said. But some women still do not see the living conditions and the restrictions as satisfactory.”

https://scroll.in/article/1064027/indias-iphone-factory-is-keeping-women-workers-isolated

So what should we as a society choose? Should we choose the good and sacrifice the perfect, as RSJ and Pranay suggest? Or should we choose the perfect and give up on the good, as the Scroll article might imply to some? 

Leave aside for now the question of how society should choose, because figuring out effective preference aggregation mechanisms is, er,  impossible. What is your preference if you have to choose between the good and the perfect? What should be your preference, and why?

Far be it from me to tell you what your answer should be, of course, because as far as I’m concerned, you should read the Scroll article, RSJ and Pranay’s newsletter, this blogpost and a hajjar other sources and come to your own conclusion. I’m old fashioned that way.

My job today is to help you build out a framework for you to arrive at an answer, and to provide you with a lot of different perspectives. If you end up agreeing with my framework, end up using it, and end up with an answer different from mine, all is good with the world, for we can then debate our disagreements and arrive at some sort of a synthesis, and what could possibly be better, eh? Like I said, I’m old fashioned that way.

The Book

“The first time I met Wu Chunming, she was working for a foreign company, making a thousand dollars a month, and living in a three-bedroom apartment in downtown Dongguan. The last time I saw her, two and a half years later, she was working for a Chinese company, making $150 a month, and living in a single room in a part of the city known for small shoe factories with poor working conditions. By every calculus that mattered, she had fallen a long way. But she was more serene than I had ever seen her. In a city where a Mercedes was the measure of all things, Chunming had somehow broken free and developed her own personal morality.

“Before I was always hungry,” she told me. “If I saw a sweater I liked, I would have to get it immediately. Now if I don’t eat the best things or buy the nicest things, it doesn’t matter so much. If I see a friend or a family member happy, then that is meaningful.” She was no longer panicked about being single at the age of thirty-two, and she had stopped having affairs with men she met online. “I believe I’ll become more and more beautiful, and more and more healthy, and my economic circumstances will get better and better,” she said.

Chunming hoped to have children someday, and she often asked me about American attitudes toward child-raising. “I would like a child to grow up to have a happy life and make a contribution to society,” she said.

“A contribution to society?” I asked her, startled. “What do you mean?”

“I don’t mean to be a big scientist or something like that,” Chunming said. “How many people can do that? I think if you live a happy life and are a good person, that is a contribution to society.”

Chang, Leslie T.. Factory Girls: Voices from the Heart of Modern China . Pan Macmillan. Kindle Edition. 

TMKK?

Factory Girls is a book worth reading because it talks not about the industrial policy of China, but about the resultant sociology of China’s industrial policy. To the extent that you agree with the notion that the economic growth of a nation is the means to an end, it is a book worth reading. It is possible, of course, that you are of the opinion that economic growth is an end in itself. The book is still worth a read, because it is important to read books that offer perspectives which differ from your worldview. (My Twitter feed, for example, is absolute torture for me, but I force myself through it on a daily basis.)

Image Source: https://en.wikipedia.org/wiki/Snakes_and_ladders

Think of India (or any country, for that matter) as a player on a board of snakes and ladders. Industrial policy, when done well, acts as a ladder. But unintended outcomes of industrial policy act as snakes, pulling the country back  down to problematic parts. In this framework, it is hard for me to not think of China as having taken ladder after ladder over the last thirty years or so, only to fall a fair way back in the last two years or so.

And so yes, it becomes important for India to replicate the high growth eras that China and some of the East Asian countries accomplished. But it becomes as important, if not more important, for us to avoid the metaphorical snakes on the latter stages of the board. 

One should absolutely aspire to match (and inshallah, exceed!) China’s growth rates from twenty years ago. But one should also aspire to avoid India’s youth going all tang ping on us twenty years from now.

Easy to say, I hear you say, and I can guess what’s coming next. How exactly, you ask, do we go about doing this? 

Should our takeaway from the Scroll article be that we should ask Foxconn to four-letter-word-beginning-with-f off? Should our takeaway from Pranay and RSJ’s blog post be to ask Scroll to four-letter-word-beginning-with-f off?

Regular readers should be rolling their eyes round about now, for they know what’s coming. All together now…

  1. How about offering workers who have completed three years of work at Foxconn fully subsidized vocational training? Not three, but two instead, I hear the left liberals say? Not three but five, I hear the libertarians say? Well, have at it, ladies and gentlemen – figure out what the right time frame should be. Why, I might even go so far as to say that development economists should run RCTs to figure out the appropriate time frame.
  2. How about offering soft loans to folks who want to build hostels near Sriperumbudur? Or offer timely transport? Or other mechanisms to ensure a thriving housing market that allows women workers to make their own choices about freedom, perceived safety, food quality, and other parameters?
  3. How about offering additional tax breaks to companies like Foxconn contingent upon them (companies such as Foxconn) offering better working/living conditions to the workers? Or linking PLI payments to Foxconn’s customers to  incentivize such compliance? After all, Apple is one of the world’s best when it comes to sustainability, recycling, and other initiatives, and as we all know, can press its suppliers.

I’ll happily confess to not knowing if these suggestions make any sense, or go too far, or not far enough. I’m a beanbag economist, let alone the armchair variety. I’ve never worked in a factory, or regulated one, or designed regulations for labor policies in one. So if you are going to say that I don’t know what I’m talking about, I’ll be the first to agree with you.

But I will say, and defend vigorously, this much:

Asking Foxconn to eff off is a bad idea, because god knows we need more manufacturing, more employment and more women’s participation in our labor force. Asking Scroll to eff off is an equally bad idea, because we’re missing the point if we ignore those in our society who point out the excesses of our new industrialization.

This is an ongoing process that will never stop, but  updating and simplifying labor regulations to reflect the modern factory is crucial. We need to do this  to encourage larger-sized, better run firms that are globally competitive and can offer labor protections. We need reforms that will make India a competitive  manufacturing destination without, eventually, the twin crutches of PLI or treatment of labor that ignores globally hard-won rights. The working class women of Tamil Nadu featured in the Scroll article are shouldering enough of a burden in contributing to growth; it is time we step up too. And when I say we, I don’t mean just the government. I’d include economists, policy-makers, think-tanks, the media and yes, society at large.

What the bazaar cannot provide by itself, sarkaar and samaaj must.

Don’t dilute the dialectic, dial it up!

Let differing opinions and ground reportage be offered up in the media, let’s all of us read/listen/see ‘em, and let’s figure out a middle ground by participating in the market for ideas. 

India needs, like it or not, Foxconn to teach us how China did it. India also needs, like it or not, Scroll articles to help us realize that Foxconn may well be pushing the boundaries of what is acceptable working conditions for labor.

Personally, I’m on team RSJ/Pranay on this one, because what India needs right now is a lot of industrialization. But I also worry about where this path might end up, and I’d like to keep an eye on what might go wrong in the years to come. And so I’ll disagree with Scroll for now, but I’ll celebrate the fact that I live in a country where Scroll publishes articles such as these.

It’s fashionable these days to say that labels are out of fashion, but I’m going to call this the liberal position. 

And finally, if you disagree with either the label or what I think it stands for, let’s have a debate! That’s my job da, and I’m very much up for it.

On Making Teaching Interesting

It’s been a long couple of weeks, beginning with chilly Dharamshala, and culminating in sunny Goa.

Goa is, on the face of it, about work. I have a two day training to deliver, and coming at the fag end of a holiday, it might have seemed like a chore.

But it is anything but a chore, because the training is about a topic that is very, very close to my heart: I have to spend two days figuring out how to make the teaching of economics more interesting.

You might think it weird to say that the guy who is delivering the training is still “figuring” out how to make teaching economics more interesting. But it is the correct thing to say for at least two reasons. First, I’m yet to meet anybody who has it all figured out when it comes to making economics more interesting. There are always new challenges, new situations and new questions, and being on one’s toes is very much part of what makes programmes such as these so interesting.

Second, I’m working with teachers and professors from Goa, and one major reason to want to do this programme is to learn more about a) higher education in Goa and b) learn some tips and tricks myself about how to do a better job whenever I teach next.

I learnt, for example, that the number of students giving the 12th standard examinations has actually reduced in Goa this past year. I also learnt that the NEP is being implemented in a phased fashion, with it being applied to only first year undergraduate students this year. Both, as far as I’m concerned, are fascinating snippets, and I hope to learn more on the morrow.

But for now, a simple laundry list of all of what we discussed in today’s session:

  1. A brief discussion of the principles of economics
  2. Gapminder
  3. Kiviq.us
  4. Using LLM’s as a teaching tool
  5. Using LLM’s for mentoring
  6. Using LLM’s to design question papers

We’ll be doing more of LLM based training and exercises tomorrow, and that, in a sense, has been my biggest takeaway from the program. I didn’t have a fixed syllabus in mind when I started this program today, because I prefer to customize it on the fly, based upon what the participants would like to know. What I wasn’t expecting was the focus on AI, and the curiousity among the participants to learn more about it.

But if today has been any indication, AI in higher education is very much here to stay. Most of the questions, and almost all of the requests about topics to be covered were almost exclusively about AI, with at least tomorrow morning’s session being almost entirely about better prompt writing. Higher education is changing in front of our eyes, and in ways that are being figured out on the fly.

What a time to be alive.

Factory Girls, The Indian Edition

Pranay and RSJ’s excellent newsletter speaks about an aspect of Industrial Policy in India that is going to be quite tricky: our ability to adapt to increased participation by women in our labor workforce:

The article is here; you won’t miss much if you don’t read it. It follows the predictable style of beginning with the personal story of an anonymous woman who moves from her village to work at Foxconn and using her story as a springboard pans out to the wider issues it wants to highlight – restrictive working conditions, poor food, low pay, long hours, semi-skilled work, lack of unions – you get the gist. All of it is made somewhat more poignant because these are all young women from underprivileged backgrounds who, anyway, have had odds stacked against them in their relatively young lives. This is a particular strand of reporting that always has currency in India and, prima facie, very hard to counter.

https://publicpolicy.substack.com/p/248-the-budget-line-is-real

As usual, please read the whole thing. I find myself in broad agreement with the points being made in it, because as far as I’m concerned, it really boils down to two key questions:

  1. What are you optimizing for?
  2. Relative to what?

And what we should be optimizing for is (as their newsletter points out) growth of the Indian economy, and greater participation by women in our labor workforce. This will not happen smoothly, perfectly or instantaneously, and the process will often involve many teething issues of many different kinds.

Second, conditions in these factories (and in the residences that have been constructed for the workers) may not be great, sure, but relative to what?

“…farm productivity in India is among the lowest in the world, and we have made the point that it is necessary for us to shift our workforce away from agriculture. We have lamented that for us to avoid ‘jobless’ growth, we need low-skilled manufacturing jobs in plenty so that we get the flywheel started, which will eventually lead to higher-skill – higher-value jobs over time. If a Foxconn factory helps us solve these issues right away, we should ask ourselves what more we can do to help them set up more factories. And not write tired old articles whose central thesis has been disproved in our own lifetime.”

https://publicpolicy.substack.com/p/248-the-budget-line-is-real

I couldn’t agree more. We need to shift our workforce away from agriculture, and we need more women – many, many, many more women! – to join the workforce. We do not know which ways will work and which won’t, but we simply do not have the luxury of closing down some routes.

India needs a hefty plate of chuqu, and fast. Chuqu?

Chuqu:

The pay for hard labor is low—often lower than the official minimum wage, which ranges between fifty and eighty dollars a month. Work hours frequently stretch beyond the legal limit of forty-nine hours per week. Get hurt, sick, or pregnant, and you’re on your own. Local governments have little incentive to protect workers; their job is to keep the factory owners happy, which will bring in more investment and tax revenue. But suffering in silence is not how migrant workers see themselves. To come out from home and work in a factory is the hardest thing they have ever done. It is also an adventure. What keeps them in the city is not fear but pride: To return home early is to admit defeat. To go out and stay out—chuqu—is to change your fate.

Chang, L. T. (2009). Factory girls: From village to city in a changing China. Random House., Location 151, Kindle Edition