ChatGPT on Why It Is Bad to be Rich

What if we asked Navin’s question to ChatGPT?

This post is as much an attempt to think more about Navin’s question as it is an attempt to show you, concretely, how you might want to use ChatGPT.

Complements over substitutes, always remember. By which I mean that you should use ChatGPT as a tool (complement) to make your thinking better. You should not use it as a replacement (substitute) for your own thinking.

Say you’re at a dinner party, and somebody brings up this question: why is it bad to be rich?

How should you go about thinking about this question? Me, I would want to ask two extremely basic questions first:

  1. Bad for whom?
  2. Relative to what?

The first question is about asking whose perspective one is going to try and answer the question from. Is it bad to be rich if you are the person getting rich? Or is it bad to be rich from the perspective of somebody else? That somebody else – if that’s the answer – is who, exactly? Somebody who didn’t get rich as a consequence of you getting rich? Somebody who will also get rich as a consequence of you getting rich? A bit of both, maybe (by which we mean we are analyzing the question from the point of view of society)?

So rather than ask the question directly to ChatGPT (“Why is it bad to be rich?”), it might help if you thought about the question yourself, and then asked a better question to ChatGPT (“If a person were to be rich, is that good or bad for that person?”):

You and I might have a difference of opinion about which answer is better, and that’s fine. The point is that phrasing the question differently evokes different responses, and that phrasing the question the right way matters as much when you’re chatting with AI as it does when you’re chatting with human beings. If, at the first attempt, the answer isn’t along “expected” lines, don’t fall prey to confirmation bias, but rather ask yourself if ChatGPT has understood you well enough to be able to answer. Consider this version, for example:

All right, enough gyaan, you might say. Let’s see what the econ literature has to say about this last question:

I ran the first sentence of ChatGPT’s answer through elicit.org, and this is what turned up:

Not only does phrasing matter, but don’t end up depending on just one AI assistant – that’s the lesson from this exercise. Broaden your search (and this should go without saying, but please do also check if the papers cited by ChatGPT also exist!) If you’re as lazy as I am, you might want to meta-outsource – but even if you, do still verify the whole thing independently!


And now on to the second question (relative to what?). Is it bad being rich relative to other people/regions/countries being poor? We’re talking about inequality now, and the relationship between inequality and economic growth has a long and rich history.

This rabbit-hole can keep you occupied for hours. You can dig further by asking ChatGPT what it means when it says “structure of the economy”, for example. You could ask it to elaborate on ways in which the labor market might not function to full efficiency, and how that impacts the evolution of both poverty reduction and inequality. You could ask it what it means by “full efficiency”, if you want to go hyper-meta.

Depending on your research interests, you could ask for a literature review for any one of those questions, and drill further down still.


This, so far, has been a sojourn into the world of economic literature. But we would be remiss to stop there! What does the field of philosophy have to say about this question? What about sociology? What about psychology? Here’s the first of these:

Again, note that you will have to verify that each of these exist! The more you play around with ChatGPT, the more you should try and build a model in your own head about questions for which it is likely to ‘hallucinate’. It’s a little like conducting a viva voce for a student. Play the game often enough, and you develop a sense for when a student is winging it, and when a student isn’t. It is a much more difficult game – detecting bullshit on part of ChatGPT – but you can get better at it, and it is a useful skill to possess, no matter how rudimentary.


There is now, in all probability, nobody else left at the dinner table, and you’re not about to be invited back anytime soon. But on the other hand, you’re much richer in your knowledge about how to think about this issue and about how to work better with ChatGPT. Those who left that hypothetical dinner party are, along this dimension, poorer.

Is it bad to be rich?

Why is it bad to be rich?

Navin asked this question on Twitter recently:

(My thanks to Mihir Mahajan for pointing the tweet out to me, and for requesting for a post on this topic)

My current plan is to answer this question over three posts. In today’s post, I’ll try and answer this question using a first principles approach. That is, without using Google, or ChatGPT3, or my notes and references, I’ll answer this question using nothing more than what I think are the basic, foundational principles of economics.

In tomorrow’s post, I’ll trawl through the internet (and make use of ChatGPT3), and throw in articles/blog posts I’ve bookmarked over the years that speak to this point. And finally, in the post the day after tomorrow, I’ll speak about books you might want to read about this topic.

But even before having written down a single word re: my first principles argument, here is my answer in short: it is wonderful to be rich.


Six principles, if you ask me, that you absolutely must learn if you are a student of economics (and note that whether you like it or not, everybody is a student of economics):

  1. Incentives Matter
  2. TINSTAAFL
  3. Trade Matters
  4. Costs Matter
  5. Prices Matter
  6. Externalities Matter

As I was telling somebody the other day, most – if not all – problems in economics can be thought of using these six principles. If you truly understand these six principles and all of what they imply, you will be able to reduce every economic problem you meet down to the application of these six principles. The applications may be nuanced, there may be more than one principle applicable, and you may have to supply a lot of caveats. But you’ll go a very long way towards tackling your problem of choice by starting with these six principles.

And I’ll fire my first salvo at Navin’s question by deploying the third principle in the list: trade matters.

People get rich by trading with other people. Sure, people have gotten rich in the past (and in some cases, even today) by expropriating property, through loot and through dacoity. But I hope you don’t think I’m ducking the issue by saying that’s not the focus of today’s post. My focus in today’s post is about people who get rich through peaceful, voluntary trade. This particular process of getting rich focuses on offering you, through entirely peaceful, non-coercive means, a trade.

You are free to evaluate the terms of this trade, and if they seem agreeable to you, you enter into this trade. Note that the only reason you do is because you think that doing so is to your advantage. You are better off for having done this trade, relative to the option of not doing so. And the person who offered this trade to you is presumably better off for you taking the other end of it, for why else would she have offered you this trade instead?

That’s a non zero sum game, and the more we play such games with each other, the better off we are. That’s what the principle of “Trade Matters” means, and that is what it entails: peaceful, voluntary trade leaves both parties better off, and the world is therefore better off for this trade having gone through. If, as a consequence, both parties get richer, that’s A Very Good Thing, and it is therefore good to be rich.


But remember that for some problems, the applications of these principles may be nuanced, and that there may be more than one principle applicable.

First, opportunity costs. TINSTAAFL stands for There Is No Such Thing As A Free Lunch, and even to a non-zero sum game, opportunity costs are very much applicable. In the context of international trade, your level of analysis matters. Trade might make sense at the level of the parties involved in the trade, but that doesn’t necessarily mean that everybody else is better off as a consequence:

Because in the case of trade between countries, as opposed to trade between individuals, there are people who will lose out. If a university in the United States of America hires me to teach online classes to the students over there, there isn’t a hypothetical amateur cook who is losing out. There is an actual person in that country who could have taught this course, but is no longer able to because of me.
The university that hired me is better off, because it is able to hire the services of a teacher for less money. To the extent that I do about as good a job as the person I replaced, the students are (at least) indifferent. And given how strong the dollar is, I am certainly better off!
But it is not enough to say that both parties in this trade are better off (I and the university). A complete economic analysis should also include the person in the USA who is out of a job, and I would argue that one should also include what I find myself unable to do here in India as a consequence of teaching that course abroad. Both of these are the opportunity costs of this trade, and a complete economic analysis should include these aspects as well

.https://econforeverybody.com/2023/01/10/so-no-one-loses-when-it-comes-to-trade-rightright-part-ii/

Trade might then, at the margin, cause an increase in inequality. You’d be surprised at how old (but still somewhat underrated) an idea this is, but the opportunity cost of more trade might well imply an increase in inequality. So you might well say that it is bad to be rich because the opportunity cost of you being rich is that somebody else is (comparatively) poor.

But be careful with how you proceed with this! It cuts both ways, this analysis. Is the opportunity cost of reducing inequality a reduction in the creation of wealth? When you attempt to reduce inequality by taxing the rich, you reduce their incentive to trade. And remember, they get rich by voluntarily trading with you, and if that trade leaves you better off, you’ve made yourself poorer in the bargain.

If you tax Amazon so much that Amazon decides it is better for them to shutter up altogether, have you made the world better off or worse off? I’d urge you to ignore your first, visceral take, and take a look at your Amazon app to find out how often you’ve ordered from Amazon in the past month before answering this question.

So I’d argue that it still is good to be rich – but it ain’t for free. But in my opinion, the price is worth it. One can, and one should, argue about what the appropriate level of taxation should be. One can, and one should, worry about tactics used by Amazon to make sure that they remain a monopoly provider of certain goods and services. One can, and one should, worry about whether Amazon pushes its employees a little bit too much. I’m not defending Amazon as a perfect company without flaws. But I very much am saying that the world is a better place because Amazon exists. There are costs that we bear for having Amazon in our midst, but those costs are worth it.

And I picked Amazon as a stereotypical example here, but the argument is about the underlying idea, not about the specific organization. Trade matters, even after acknowledging that there are opportunity costs involved with trade.


We’re trading right now, you and I. You’re paying me with that most precious of all commodities in the year 2023: attention. And I can’t begin to thank you enough for having given me your attention so far, because I know that reading this ain’t easy. Pleasurable, hopefully, and worth your while – but not easy. And you’ve chosen to continue to pay me with your attention because what you’re getting in return – the pleasure you feel in tackling my arguments – is worth your while.

But how do you know that it is worth your while? You could have been doing something else with this time. You could have been learning how to code. You could have finished at least part of some project or an assignment. You could have picked strawberries. You could have milked a cow.

The point is that you could have been doing something that actually earns you cold hard cash, instead of reading this article. And it is your assessment of your own opportunity costs that allow you to continue reading this article. You know that you can ‘afford’ to spare the time required to read this article.

But how do you know this? You know it because you are part of a national (and global) economic system that depends upon the principle that ‘prices matter’.You have at least an implicit valuation of how much a minute of your time is worth, and you have made the rational decision to ‘spend’ this time reading this blog.

What is my point? My point is that we know how much it costs to enter into a trade only if we know how much that trade is worth to us, and we only know how much a trade is worth to us by having a sense of what we’re worth to society. Trade matters is a principle that works only if we know the price of a good or a service, and we know the price of a good or a service best in a free market economy. Deciding how much to produce something, and deciding at what price to sell it is a truly difficult problem to solve in an economy that is not based on markets.

So yes, trade matters, but so do prices.


But speaking of prices, it gets trickier still.

  1. What if you set prices to not just lure the buyer into buying your product, but at a price which is so attractive to buyers that your competitors cannot afford to match it? What if they go out of business as a consequence, leaving you as the only game in town? What if you then raise prices?
  2. What if you use patents to make sure that others cannot sell the same goods that you are selling? What if you abuse the patenting process to stymie the competition? What if you then become the only game in town, and raise prices to eye-watering levels?
  3. What if the price at which you sell the product you are selling does not take into account the damage done to the environment?
  4. What if the buyer isn’t aware of further purchases she might need to make for having bought your goods? What if she realizes later that the true price of the good in question is much higher?
  5. What if the buyer is tempted into buying the product because of shady marketing techniques?
  6. What if you lobby with the government to make sure that nobody else but you can sell the product that you’re selling? Will you then be able to charge a higher price?

Each of these questions merits a much deeper exploration than is possible in this blogpost (for those who are interested, or wondering, here are the topics you want to think about in the case of those six questions: monopoly | propoerty rights and patents | externalities | asymmetry of information | microeconomics/ behavioral economics | public economics). These topics would just be the start, there are many nuances to consider in each of the six questions. But for having raised these six questions, and the two separate arguments I’ve made in the last two sections above, here is my answer to Navin’s question about why it is bad to be rich:

It is bad to be rich if you live in a world without a fully operative price system, and/or a world in which non-voluntary trades can take place.

Interpret that sentence however you like, but begin to worry if you are convinced that there is only one interpretation, or if you are convinced that your interpretation is the only correct one!


I write on this blog for many reasons, but chief among them is a very personal reason. I would like my thinking, and my writing, to be become clearer and better over time. I’ll be the first to put my hand up and say that there are days on which I think I succeed in this endeavor, and there are days on which I don’t. But taken as a whole, I am convinced that I am a better thinker and writer than I was in 2016, which is when I started this blog.

Far from perfect, in case it needs to be said, but the benchmark isn’t perfection, the benchmark is Ashish of 2016. And on any given day, it is the Ashish of the previous day. One day at a time, as it were.

And one thing that has happened over these past six years is that I have become better at distilling in my own head what economics ultimately comes down to. Six microeconomic principles, and three big picture questions. I have outlined the six principles above, and I have written about the three big picture questions before, but here they are once again:

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

Students who have learnt from me these past six years will be familiar with this list. But there is a crucial component that is missing in this list of six principles and three big picture questions: time. On my blog, I have attempted to get around this problem by speaking of an alternative framework, which I have shortened in my head to the CHIC acronym: Choices, Horizons, Incentives and Costs:

The trouble is, our brain isn’t always the best at interpreting incentives correctly, which brings us to the third key concept in economics: horizons. Or, if you have had enough nerd talk for one day, we could also call it the instant gratification monkey problem. Call it what you will, the problem is that we tend to prioritize choices that payoff in the short run, but create problems in the long run. If you’ve ever had that last “one for the road” drink, or ended up actually eating that second dessert (and who hasn’t?), you don’t really need an explanation for this. We tend to choose those options that payoff over the short horizon, and ignore the long term consequences.

https://econforeverybody.com/2018/05/03/choices-costs-horizons-and-incentives/

I have also written about time, and how it is ever-so-confusing to think about it in the context of economics. In my classes, I show students the circular flow of income diagram, and once they’ve understood it, I ask them to think of it as a video, rather than a still picture. That is to say, time matters.

Time matters.

Go and read the responses that Navin got on his original question on Twitter. I sent this essay that you are reading right not to some people, and they highlighted this same problem – they thought of intergenerational problems about being rich. Inheritance and the perpetuation of inequality across time, for example. Almost the entirety of my blogpost tomorrow, where I will share many articles that answer Navin’s question, focusses on this issue.

So here’s a question I have been grappling with for a while: should I update my list of six principles (Incentives matter | TINSTAAFL | Trade Matters | Costs Matter | Prices Matter | Externalities Matter) to also include Time Matters? And if yes, how do I expound upon this principle?

Here’s another way of thinking about this issue – one of my objectives on this blog is to teach economics to anybody and everybody. So ask yourself this question – what do we need to do to simplify economics down to its absolute bare minimum? Will somebody who has learnt about economics by attending my classes, or reading my blog, be able to answer Navin’s question? And the short answer to this question is yes, they will. But in an incomplete fashion, because in the context of this question (and many others besides), time matters.

Time, as it turns out, really and truly matters. And for me to teach this principles, I need to try and understand it better myself.

Onwards!

Signal, Noise and Glenn McGrath

Don’t miss Tony Greig’s explanation at the end.

Accuracy is awesome – accuracy with minor variations is terrifying!

Michael Nielsen Asks About Principles

… and I hope you can spend some time on the lovely answers that his followers shared with him:

JASP as a Way to Teach Statistics

I’ve long been in search of a statistical tool that, well, does statistical analysis, but does so in a way that doesn’t require much by way of coding and whose output is intuitive. Above all, the idea behind distributions, and the ability to play around with distributions should become clearer for having used the software, and not the other way around.

If, as a bonus, it could give a visual representation of the solutions to your typical ‘normal distribution’ type problems from undergrad level textbooks – well, that would be awesome.

And it is early days yet, but JASP seems to be just that software. I learnt about it because of the magic of Twitter:

And much as I dislike the circus around the social media company these days, I still remain hopelessly addicted to the app. The benefits that I get by being a part of it still make it entirely worthwhile.

And well, I downloaded it (it’s free, do go ahead and give it a try), kicked the wheels for a bit, and it seems to be very good as a teaching tool for undergrad students. Not just undergrad students, I suppose – anybody who is relatively new to statistics will enjoy this software more than the alternatives when it comes to developing an intuitive feel for the subject.

This was one of the first videos that I saw, and it is reassuring to note that the learning curve is not steep.

I will be trying more things on this in the days to come, but in the meantime, if any of you have tried JASP in the past, and have resources to share, please do send them my way – I’ll update this blogpost.

Thank you!

It is the process that matters

Regarding yesterday’s post, which you might want to read before tackling this one, a follow-up point that should have struck me much earlier – the answer lies as much in that ChatGPT query that I ended with as much as it does in a post written a while ago by Navin Kabra:

One of the most influential modern theories espoused by many successful people is known as “Process-Oriented Thinking” or “Systems-Mindset.” The main point is that focusing on your process, or your system, instead of focusing on the goals, or the outcomes is the key to success.

https://futureiq.substack.com/p/karmanyevaadhikaraste-in-modern-life

I have linked to this post before, and I doubtless will again. But please, if you have not read this post yet, do so in its entirety. It is well worth your time. And please note the title of Navin’s post!

Whether it is a NAAC visit or a G20 visit, why should that act as the catalyst to Get Things Done? Why should, in other words, Senapati Bapat Road look awesome only when foreign dignitaries come a-visitin’? Why should a campus look fantastic only when the NAAC committee comes a-visitin’?

Because we’re focussing on the outcomes, but ignoring the process (note that targeting outcomes is important, but without having a process-mindset, the targeting is next to useless). The PMC is not following the karmanyevaadhikaraste philosophy if the Senapati Bapat Road relapses to its old state once the summit is over. A college is not following the karmanyevaadhikaraste philosophy if the bathrooms are back to being dirty the week after the NAAC committee has vacated the building. By the way, in the defense of both the PMC and the college/university, it is hard to follow the karmanyevaadhikaraste philosophy. I rarely succeed in it myself across all of the things I try to do (this blog included) – and so while I have enjoyed trolling both the PMC and colleges, I do have some sympathy for ’em.

But regardless of whether it is hard or not, if you are looking for an answer to the question of how do we get Senepati Bapat Road to always be spic-and-span, the answer lies as much in ChatGPT’s answers as it does in ancient wisdom. And it is, as Navin says, worth following this advice in one’s own life, to the maximum extent possible.

On a related note, one my of my resolutions for the year was to listen to more podcasts, and I’m happy to recommend to you a conversation about what we’ve been talking about between Tim Ferriss and James Clear. Lots of excellent takeaways, including the quote that they’ve chosen to lead with:

Every action you take is a vote for the kind of person you wish to become

And if you’re wondering, yes, that is a very large chunk of the reasons behind I trying to write everyday. It really is all about the process!

NAAC Visits and the G20

There is much angst in Pune, about how little time it took for Senapati Bapat Road to look really, really nice.

The G20 summit in Pune concluded recently, and the transformation of the surroundings near where the summit was held was a sight to behold. Neat red markings for a bicycle lane on either side of the road, immaculately painted dividers, spruced up lamp-poles, jazzed up signals, pretty little lights dangling from the many trees that line this road, lovely flowers planted along the median, and a thorough Potemkin-ization of anything deemed even remotely non-presentable – everything was achieved with a speed and efficiency that is scarcely believable.

Although as a true-blue Puneri, it gladdens my heart ever so much to realize that some things will never, ever change:

But this unbelievable improvement in efficency, I’d argue, is very familiar to students who have been in college/University when the NAAC committee has come a-visitin’. It’s the same kind of transformation, and it is equally unbelievable. Flower-pots will appear near entrances, walls will be given a fresh coat of paint, friendly signages will pop up all over campus, washrooms will positively gleam with cleanliness, and the entire campus will look brand new.

Incentives matter.

What happens if you as a citizen complain about, say, a lack of footpaths? You are issued a token, not a footpath. What happens if you as a citizen ask the PMC to repair some broken down traffic signals? You know the answer by now. What happens if those broken down signals are on a road that will be noticed by the G20 dignitaries?

It’s not so much the priority that is missing, which is the only thing I’d correct in Amit’s tweet. What’s missing is the incentive to do the best job possible – when it is the citizens that are doing the belly-aching. When it is the people holding the purse-strings, or the people who call the shots that send along gentle reminders – well, the incentive is clearly present, no?

And that’s why campuses will look their resplendent best during NAAC visits, and that’s why Senapati Bapat Road looks as pretty as it does right now.

Because, alas, incentives matter.

Old timers who have been staying in Sus village for years will regale you with stories of how roads become as smooth as silk literally overnight come the month of December, year after year. It’s the same ol’ story, with the same ol’ underlying reason: incentives matter.

Which begs the question: how can we get the incentives of the PMC to be aligned with our interests? Answering the question is easy. Implementing it? Ah, that is beyond the scope of this blog, for now.

Also, note that this has nothing to do with the BJP, or the Congress, or AAP, or indeed with any Indian political party. We aren’t unique as a nation in this regard, and no political party in our country is uniquely good (or bad) in this regard. All political parties in all nations are staffed with members of the same species that you and I belong to, and we all respond in much the same way to incentives. So please, don’t attack or defend whichever political party you have in mind.

One good thing about the principles of economics is that they work the same way on everybody, everywhere. The sooner we realize this, the better it will be for all of us.

Hedging, FDI, Poland and Malaysia

Noah Smith has a typically excellent explainer on the role of industrialization in Poland and Malaysia, itself only a single post in a long running series on the same theme. As one might expect if one is a fan of How Asia Works by Joe Studwell, the post begins by talking about industrial policy in South Korea. From that point of reference, he delves deeper into what made Malaysia and Poland grow so very vigorously over the past three decades or so. He also speaks about the limits of the strategies adopted by these two nations towards the end of this post, but more about that later on. For the moment, I would encourage you to read this post, and to subscribe to his Substack, as I have. Phull paisa vasool, guaranteed.

Also, because I simply cannot resist, a request to all of you to ponder this chart. How can one not want to learn macro after thinking about this chart?


But before we get back to Noah’s post, a brief segue into a post I wrote a while ago:

Here is how the placement process works in almost all colleges in India. If you sit for an interview, and you’re made an offer, you’re “out” of the placement process. There are variations to this rule, but in essence, the logic is that once you and the company have struck a deal, you can’t sit for any other firm that comes on campus later.
So here’s a conundrum for you: what if the company in October is a firm called HDFC, and it is offering you a package worth 8 lakh rupees (INR 800,000). The conundrum is that there is a very strong rumor (but it is, unfortunately, a rumor) that Google will be on campus next month, and they’ll be offering 20 lakh rupees (INR 2,000,000).
HDFC will pick up 20 students, but Google will pick up only 5.
Do you sit for the HDFC process or not?

https://econforeverybody.com/2021/02/01/so-what-are-forward-markets-what-is-speculation/

What is your answer to this question? If you were that hypothetical student, would you sit for the HDFC process, or not? I’d argue it comes down to whether you are looking ot maximize your ‘profits’ or minimize your ‘risks’. If you’re the sort of person who would like to play it safe – if having a job, any job, is more important to you than having the high paying job of your dreams – then you’re likely to sit for the HDFC job process.

Note that there is no right or wrong answer here. It simply is a question of your preferences.

All right, now back to Noah’s post.


Poland and Malaysia may not be as rich as Germany or Korea, but they’ve definitely escaped poverty. Countries like Bangladesh or Vietnam or Ghana or even Mexico would kill to have a per capita GDP of $30,000. That’s about the GDP of the U.S. in the early 1980s. Is it really fair to call that level of development a “middle income trap”? If you’re a poor country, and you have a reliable, dependable way of getting as rich as the U.S. was in the early 1980s, dammit, you take it. You don’t worry about whether that strategy will eventually make it harder to get as rich as the U.S. of 2023.

https://noahpinion.substack.com/p/the-polandmalaysia-model

The issue that Noah is speaking about here is about whether option A is better or option B is better. Option A is the South Korean way, as he mentions in the next paragraph after the one I have excerpted here. This is done by ‘building a bunch of world-beating high-tech manufacturing companies from scratch’ and it is, as he says, incredibly hard. The good news is that if you get it right, you can get seriously rich as a country. The bad news is that very few countries have managed to get it right.

What is option B?

An FDI-centric strategy, on the other hand, is simple and straightforward, almost cookie-cutter — you give all your people a high school education, you build some roads and electric power lines and sewage lines, you designate some Special Economic Zones, and you give foreign companies big tax incentives and investment incentives and regulatory incentives to come in and hire your plentiful low-wage workers to make electronics and automotive goods and other complex products for export. Voila! No need to build the next Samsung or the next Hyundai; the existing Samsung and Hyundai will do nicely.

https://noahpinion.substack.com/p/the-polandmalaysia-model

The analogy that I am trying to develop here is a fairly obvious one. Option A is like Google coming to your campus. Only a few jobs on offer, and we don’t yet know for sure whether Google will actually come on campus or not. In other words, a high risk strategy. If it pays off, well, whoopee. But on the other hand, if it doens’t pay off, you’re in deep doo-doo.

Option B is like HDFC coming on campus. Relatively speaking, you’re much more likely to succeed in this endeavor. The downside? If you succeed, it won’t payoff as much as succeeding with Option A. But just as there will be students who will prefer Option B, Noah says that some countries also ought to choose the Malaysia-Poland route. Sure the success here isn’t quite as ‘sexy’, but it also does come with lower risk. And this ought to be, for some countries, therefore a very attractive proposition.

So if Poland and Malaysia haven’t found the secret to getting rich quick, perhaps they’ve found the secret to getting upper-middle-class quick. That wouldn’t be a full general solution to the problem of industrialization, but it would represent an amazing advance over what we know now. If I were a poor country, this is what I’d be looking at.

https://noahpinion.substack.com/p/the-polandmalaysia-model

Risk-rturn trade-offs, industrial policy, opportunity costs and an introduction to finance, all rolled into one smorgasbord of a blogpost. I enjoyed writing this one!

In Praise of Missing in Action, by Pranay Kotasthane and Raghu S. Jaitley

Some books are entertaining, and some books are erudite. Rarely do we get to read a book that is both.

Why do I write this blog? There are many reasons, but one of the most important one is that this is my attempt at making learning fun for everybody. And the most important factor behind me liking this book is just this – they make learning about public policy fun.

The subtitle of the book is “Why You Should Care About Public Policy”, but something that us academicians often forget is that supply does not, in the case of learning, create its own demand. You can write the most impressive (not to mention comprehensive) tome on public policy, but that’s no guarantee that people will read it. But with this book, the two authors have pulled off an amazing feat: not only will you most likely finish this book if you pick it up, but you will learn a lot from it. And more, you will be entertained for having done so.

Pranay and Raghu’s book is a delightful romp, but not through the subject of public policy, and the distinction matters. It is, instead, a romp through different aspects of life, to which the tools of public policy are applied. My biggest complaint with textbooks is that they teach you the subject, and include “boxes” in which you are allowed to think of the world outside the textbook. This book belongs to that all too rare (and therefore even more delightful) category of books that does the opposite. You are asked to only think of the world, and they attempt to make the world a more understandable place by supplying ways of thinking about it.

In order to do this, they divide the world into three different aspects: the state, the market and society. Or, to use their terminlogy: sarkaar, bazaar and samaaj. Think of the individual, and the individual’s life, as being impacted by her interactions with these three ‘pillars’ of society. How do these pillars impact her? How do these pillars interact with each other? What happens when the interactions between the individual and these pillars do not go along expected or ‘ideal’ lines? What are the potential remedies for these problems, and what are the costs of implementing these solutions? That is the focus of this book, and the answer to the subtitle of the book is, well, the book itself.

These three aspects – the state, the market and society – make up the three sections of this book. Each section is divided into bite-sized chapters, each dealing with a separate, specific issue. Three things bring each of these chapters to chirpy life – the breezy tone that they adopt, their obvious mastery over the concepts that they are explaining, and their obvious love of Bollywood. One chapter may be titled on the basis of a famous line from a Bollywood movie (Aap party hai ya broker, for example), while another may explain how to think about atmanirbharta by talking about Manoj Kumar and his movies.

But my favorite usage of this lovely party trick is when you encounter a line like this one: “The foundational premise of modern India is that the state is ontologically prior to society.” This is just the kind of line that is likely to make your eyes glaze over, no? Those of us who have struggled with weighty tomes on dreary afternoons in musty college libraries have learnt to resign ourselves to hours of tedium while tackling with what follows prose such as this. But this is what I meant when I wrote that first sentence of this post – they choose to explain what this sentence really means by asking you to think about Shakti, a movie starring Dlip Kumar and Amitabh Bachchan.

Even better, they first speak about Shakti, and then foist that sentence upon you. A little bit like putting healthy veggies in a chicken pizza one might make for the young ‘un at home, if you see what I mean.


The authors mention in the book that it isn’t ‘an economic reasoning textbook’, but I’d beg to disagree. It absolutely is an economic reasoning textbook, and of the very best kind. It tells you how to get the most out of life, and better, tells you how and why one is unlikely to succeed in getting the most out of life if one gets basic tenets of public policy wrong.

Think of this book as the public policy companion to a book like The Economic Naturalist, by Robert Frank. Look at the world, and ask how the world becomes a more understandable place for having learnt public policy.

As an economist, I particularly enjoyed the sections on sarkaar and samaaj. Not, I hasten to add, because the section on the bazaar is in any way inferior, of course. It is simply because I am somewhat more familiar with the material in that section. But that’s all the more reason to buy the book, especially as a student of economics – becaue this book makes you more familiar with how the state and society also influence economic outcomes. Within the economic sections, the sandalwood story and the airline pricing story are my personal favorites. But practically every chapter brings along a delightful little nugget of information that is surprising, or a delicious twist of phrase that will likely make you chuckle, or sly titles to some of the chapters that will elicit both raised eyebrows and raised tempers.

The one complaint I have with the book is that I find myself wishing for an index and a bibliography at the end of the book, both of which are missing. It is understandable, for more than one reason, but as a fundamentally lazy person who also hopes to use this book as a teaching aid, both of these things would have gone a very long way. An online resource, perhaps, if one is permitted to be a little greedy?

But that minor quibble apart, there is nothing that prevents me from heartily recommending this book to you. Younger people might miss some of the references (“Vinod Kambli? Who he?” I can hear ’em go already), and they may also not have seen more than half the movies that have been referenced in the book – but that actually brings me to my final point.

A great way to read this book together would be to start a film club, and watch the movie in question in each chapter, before reading that chapter. Before the next movie screening, have a discussion about both the movie and the chapter, and all of the many “that reminds me” that might emerge from said discussions. Rinse and repeat for twenty-eight glorious chapters, give or take. I hope students in colleges and universities take up this suggestion, and spend some time in learning about movies, life in India, the role of the state, the market and society in the our own day-to-day lives, and a whole host of books, reports and papers as well. A positive externality that will result as a consequence of this will be the fact that you will have acquired a degree of expertise in public policy.

But as the authors themselves (and that wise old sage Crime Master Gogo) tell you, aa hi gaye ho, to kuchh lekar jao.

In all seriousness though, please do make sure that you read this book, if you are in any way interested in India. Recommended wholeheartedly.

What’s a Tensor, By Dan Fleisch

Not just because it is worth your while understanding what tensors are, but also because this (to me) is a great example of how to teach well on YouTube – a topic that I want to get better at this year: