Steady As She Goes

Gulzar Natarajan has a typically excellent post (part of a two-part series) on India’s economic growth trajectory. And they key point in the post is a counter-intuitive one.

India cannot, and should not, grow too rapidly.

In Can India Grow, we had argued that India does not possess the capital foundations to sustain high rates of growth for long periods. It does not have the physical infrastructure, human resources, financial capital, and institutional capabilities to grow in the 7-9% ranges without engendering serious distortions and overheating. The last such episode of high growth in the 2003-11 period required nearly a decade for companies to deleverage and for banks to overcome their bad assets. While some commentators have since come forth with similar views citing aggregate demand etc, I think we were the earliest to put forth a clear case for lowering expectations and targeting a 5-6% economic growth rate.

https://gulzar05.blogspot.com/2022/11/indian-economy-thoughts-on-growth.html

Our household owns two cars, a Tata Zest and Tata Nano, and the best analogy I can come up with for 2003-2011 is that it was like racing the Nano along the expressway to Bombay at a 110 kilometers per hour. It might (perhaps) have made it to Bombay at those speeds, but the little blue car would then have needed a long time at the mechanic before being road-worthy again. India, similarly, did grow rapidly in that period, but as Gulzar Natarajan puts it, it did not have the “physical infrastructure, human resources, financial capital, and institutional capabilities to grow in the 7-9% ranges without engendering serious distortions and overheating.”

Or put another way, if we want India to grow rapidy in the next two decades or so (and who wouldn’t?), it is very much a question of whether we’re driving a Nano or a Zest over the course of the next two decades. Or, god willing, an even better car. But a Nano will simply not cut it, and in terms of our infrastructure, human resources, financial capital and institutional capablities, we’re more like Tata’s cheapest car than we are like the Tata’s most expensive car.

But our country needs those upgradations if we want to achieve (and sustain) those aspirational growth rates. And here’s another counter-intuitive bit: even a 6% growth rate would be a challenge when we are talking about sustaining it over the course of twenty long years. That’s not the pessimist in me talking, that’s empirics:

A 6% baseline growth for the next three decades would be extraordinary. Underlining this point, as Ruchir Sharma has written, there are only six countries which have grown at 5% for four decades – Taiwan, Japan, South Korea, Singapore, Malaysia, and China. As the data shows, India has become the seventh. But just two have done it for five decades in a row – South Korea and Taiwan. Given that China looks certain to fall short, India could become just the third. It could go one better and strive to become the only country to grow at 5% for seven decades in a row. This would be exceptional at a time when developed countries will struggle to grow at even 2%.

https://gulzar05.blogspot.com/2022/11/indian-economy-thoughts-on-growth.html

But for that to happen – for us to embark on this journey, we would do well to first take the Nano to the garage, and bring out the Zest instead. We could do with a bigger engine, better suspension, better safety features – why, better everything:

We should simultaneously use the growth to build the capital foundations – increase domestic savings, deepen financial inclusion, develop robust financial intermediation systems, expand physical infrastructure, prioritise human capacity development, and develop and strengthen state capabilities.

https://gulzar05.blogspot.com/2022/11/indian-economy-thoughts-on-growth.html

All of which is easier said than done, as many a “growth star” state of the 20th century will tell you. This stuff is hard, unglamorous, politically risky, and with payoffs that manifest themselves only in the long run. But also, this stuff is unavoidable. Here’s one way to think about it as a student of economics: studying macroeconomics without a deep study of development economics is dangerous.

For as a nation to our north and east is hell bent on showing us in recent times, attemptig rapid growth without getting the basics right isn’t a good idea:

A too rapid growth will invariably drive up signatures of overheating – high inflation, property bubbles and land valuations, spike in wages, environmental damage, clogged infrastructure like traffic congestions and water scarcity etc.

https://gulzar05.blogspot.com/2022/11/indian-economy-thoughts-on-growth.html

Institutions matter. Education matters. Physical infrastructure matters. State capacity matters.

And attempting to engineer rapid growth without getting all (not some, all) of these right is a bad idea.

P.S. If you are a student of the Indian economy, the first chart in this blogpost is worth deep contemplation and reflection. What is your best guess for what comes next, and why is your guess whatever it is? That’s be an excellent essay to assign at the end of a macro semester that focuses on the Indian economy.

Truth as a Virtue

It is troubling to see how quickly an appreciation that each of us can attain only a partial grasp of the truth degrades into a view that there really isn’t any truth out there to be grasped.

https://www.chronicle.com/article/what-learning-how-to-think-really-means/
https://www.google.com/search?q=post+truth+meaning

The word post-truth was Oxford Dictionary’s word of the year in 2016, and Barry Schwartz’s article was written in 2015, which makes Schwartz’s essay all the more prescient. But anybody who has taught an even remotely contentious issue in class will empathize with both the definition and the implication of the term.

Truth is up for debate. To malign a phrase that I was in love with in college (as were most of us, or am I wrong about that?), maybe A isn’t really A?

As Schwartz mentions in his essay, there is nuance to this discussion. He says that the shift to relativism has helped intellectual inquiry, by helping all of us realize that what people have thought of as the truth has been shaped by a limited understanding of different perspectives. And the introduction of these different perspectives has enriched our understanding of the truth.

But, he hastens to add, the key word in that last sentence is the word “the”. As he puts it: “Not their truth, but the truth”. But if you accept, no matter how weakly, the notion that there are different truths out there, well then, we live in a world defined by relativism.

To take just one example: is violence bad? There’s no ambiguity in the framing of that question, and there should be none in the answer. You either think that violence is bad, or you think it is good. But in a world defined by relativism, “it depends” becomes an acceptable answer. And the minute you say “it depends”, the next natural question to ask is, “Well, on what does it depend?”. And if your version of the truth is different from mine, we will have different answers to this question, and we find ourselves in Well-What-About Territory.

Relativism chips away at our fundamental respect for one another as human beings. When people have respect for the truth, they seek it out and speak it in dialogue. Once truth becomes suspect, debates become little more than efforts at manipulation. Instead of trying to enlighten or persuade people by giving them reasons to see things as we do, we can use any form of influence we think will work.

https://www.chronicle.com/article/what-learning-how-to-think-really-means/

Or as I tell students in class these days, truth is no longer a function of “what has been said”, it has become instead a function of “who said it”. Tweets by the handle of your favored political organization are The Truth and tweets by a political personality you love to hate are by definition Fake News. One’s yardstick for determining the truth is one’s degree of affiliation with the person making the statement, rather than the actual content of the statement.

I’m not trying to adopt a holier-than-thou attitude here. I’m guilty of this myself, and I struggle everyday to read about the world as objectively as possible. And I’ll be the first to admit that I do not always succeed. But I try and console myself with the fact that I try to get worried if I feel sure about knowing something for sure.

But to come back to the theme in this series, education ought to be about helping students realize the importance of acknowledging the existence of the truth. To be clear, one may never grasp it in it’s entirety, and the implications of the truth may forever remain up for debate.

For example, the raising of minimum wages in a particular jurisdiction in the United States of America is a fact. If such a legislation were to be passed, then it happened. That’s a fact. Us economists will debate forever about whether employment went down, or up, or stayed the same as a consequence (try us. I dare you. I double dare you.), but that’s us debating the implication, not the fact.

And it is very much my job as an educator to help my students understand that an appreciation of, and love for, the truth is a non-negotiable part of being a student. And a student is a student, whether in class, or for the rest of their life. As Schwartz says at the start of this section in his essay, a good student should be in love with the truth.

I’ve moved on, as most of us do, from being besotted with the philosophy we all fall in love with in college. But on this bit I still remain in complete agreement.

Boss, A is A.

Hearts As Well As Minds

Tim Harford comes up with a blogpost about a topic that is very close to my heart:

Writing a few years ago in The Chronicle of Higher Education, Schwartz argued that one of the goals of a university education, especially a liberal arts education, is to teach students how to think. The trouble is, said Schwartz, “nobody really knows what that means”.
Schwartz proposes his own ideas. He is less interested in cognitive skills than in intellectual virtues.
“All the traits I will discuss have a fundamental moral dimension,” he says, before setting out the case for nine virtues: love of truth; honesty about one’s own failings; fair-mindedness; humility and a willingness to seek help; perseverance; courage; good listening; perspective-taking and empathy; and, finally, wisdom — the word Schwartz uses to describe not taking any of these other virtues to excess.

https://timharford.com/2022/07/learning-to-think-well-involves-hearts-as-well-as-minds/

And from the original essay, this excerpt:

Knowing how to think demands a set of cognitive skills — quantitative ability, conceptual flexibility, analytical acumen, expressive clarity. But beyond those skills, learning how to think requires the development of a set of intellectual virtues that make good students, good professionals, and good citizens. I use the word “virtues,” as opposed to “skills,” deliberately. As Aristotle knew, all of the traits I will discuss have a fundamental moral dimension. I won’t provide an exhaustive list of intellectual virtues, but I will provide a list, just to get the conversation started.

https://www.chronicle.com/article/what-learning-how-to-think-really-means/

There is so much to unpack in both essays that I’m not even going to bother trying to condense this down to one blogpost, and consider yourselves warned, there will be many posts in this series. Because if you are as passionate about teaching as I am (the only thing I may be more passionate about is food), this topic is always front and center in your mind.

I’d distill the implicit topic in both these posts/essays down to this question:

Should education make you a good person, or do you have to be a good person in order to be educated?

It seems like a simple question, but when you begin to think about it, you can end up spending hours on it.

Learning how to think, Barry Schwartz says, “requires the development of a set of intellectual virtues.” Which begs the question: what is virtue?

Here are two of Google’s answers (I’ve selected the two here that I think to be the most appropriate, but you can see all other answers by clicking here):

behaviour showing high moral standards | a good or useful quality of a thing (emphasis added)

Which, if you know your Pirsig, ought to remind you of a passage or two:

The one thing that doesn’t fit what he says and what Plato said about the Sophists is their profession of teaching virtue. All accounts indicate this was absolutely central to their teaching, but how are you going to teach virtue if you teach the relativity of all ethical ideas? Virtue, if it implies anything at all, implies an ethical absolute. A person whose idea of what is proper varies from day to day can be admired for his broadmindedness, but not for his virtue.

Pirsig, Robert M.. Zen and the Art of Motorcycle Maintenance (p. 338). HarperCollins e-books. Kindle Edition.

And:

Kitto had more to say about this aretê of the ancient Greeks. “When we meet aretê in Plato,” he said, “we translate it ‘virtue’ and consequently miss all the flavour of it. ‘Virtue,’ at least in modern English, is almost entirely a moral word; aretê, on the other hand, is used indifferently in all the categories, and simply means excellence.” Thus the hero of the Odyssey is a great fighter, a wily schemer, a ready speaker, a man of stout heart and broad wisdom who knows that he must endure without too much complaining what the gods send; and he can both build and sail a boat, drive a furrow as straight as anyone, beat a young braggart at throwing the discus, challenge the Pheacian youth at boxing, wrestling or running; flay, skin, cut up and cook an ox, and be moved to tears by a song. He is in fact an excellent all-rounder; he has surpassing aretê.
Aretê implies a respect for the wholeness or oneness of life, and a consequent dislike of specialization. It implies a contempt for efficiency—or rather a much higher idea of efficiency, an efficiency which exists not in one department of life but in life itself.

Pirsig, Robert M.. Zen and the Art of Motorcycle Maintenance (p. 341). HarperCollins e-books. Kindle Edition.

Or put another way, if Robert Pirsig were to edit Barry Schwartz’ essay, he would probably have edited his sentence about virtue to “requires the development of excellence”.

That is, education is very much about developing excellence (or virtue, if you insist), and in a sense, that is all it is about. Words matter, so I’d argue that you might want to think about what the word education means to you, and rather than link to Google’s results, allow me to post a screenshot instead:

https://www.google.com/search?q=define+education

Note how the first definition comes with synonyms galore: teaching, schooling, tuition, tutoring and so on. But the second definition? Just an example of the usage of the term. When, during random questions, students ask me why I enjoy teaching so much, I say that the highlight of my teaching experience are the “Aha!” moments – when you, as a teacher, can actually see a lightbulb switch on above a students face. Not, I should hasten to add, literally so, but I’m sure you know what I mean. Education is very much, to me, an enlightening experience.

And that, to me, is not the imparting of skillsets. That is a part, without a doubt, of education, but it is only a part. I do not mean to denigrate the imparting of knowledge, or skillsets. This is not about saying that giving systematic instructions about, say, the put-call parity theorem is trivial, unimportant or irrelevant. This is about saying that education is about so much more than that: it is about helping students be good.

So my own answer to my own question would be that education is very much about making a student a good person.

Ah, but then what does being good mean? As it turns out, Robert Pirsig wrote an entire book about this question, called Lila, and ended the book by saying that good is a noun. Which is a whole different story, and will take much more than a blogpost. So what we’ll do instead is focus, in future blogposts, on this topic, on the list of nine virtues that Schwartz speaks about in his essay, and tackle them one at a time.

We’ll begin with a nice easy (sarcasm alert) component of virtue: love of truth.

Professors Koyama and Rubin Explain How the World Became Rich

To be honest, you really should read the entire book. But then again, it is freakishly expensive by Indian standards, and the interview we’re about to discuss serves as a very good introduction to thinking and reading more about this subject, so let’s get started.

If you play the animation in that chart (and make sure you have tick-marked the “Relative change” box), you should be struck by two questions. Well, I am, at any rate.

  1. Why the hell did it take so long?
  2. What the hell happened about two hundred years ago?

And the interview is about precisely these questions, but before we get there, a slight digression.


My way of getting students interested in the topic of macroeconomics is by showing them Gapminder, and then asking them a seemingly simple question: why does the world look the way it does?. That is, why did the countries that are rich today (on a per capita basis) get that way?

Some students say it is because those countries have a smaller number of people, and I say that by logic China ought to be poorer than us. Some say it is because those countries were never colonialized, and I say that by that logic Singapore ought to be a very poor country, and so also South Korea. This goes on for a while, but I eventually get the discussion around to two central questions/conclusions.

First, is it likely that we will ever know for certain, and if so how? Or are we doomed to just faffing around for ever?

And second, if we do find out, can we apply some of those lessons in India’s case today? That is, if at all there is a recipe for growth, does it remain applicable across time and space?

And as Robert Lucas put it (in a different but very related context), it is very hard to stop thinking about these questions once you start thinking about them!


The book in question, How The World Became Rich, with its subtitle ‘The Historical Origins of Economic Growth’ aims to answer these very questions. And as anybody who has attempted to study a subject such as this know, this is A Very Hard Thing to do. Here is the description from the Amazon page:

Most humans are significantly richer than their ancestors. Humanity gained nearly all of its wealth in the last two centuries. How did this come to pass? How did the world become rich?
Mark Koyama and Jared Rubin dive into the many theories of why modern economic growth happened when and where it did. They discuss recently advanced theories rooted in geography, politics, culture, demography, and colonialism. Pieces of each of these theories help explain key events on the path to modern riches. Why did the Industrial Revolution begin in 18th-century Britain? Why did some European countries, the US, and Japan catch up in the 19th century? Why did it take until the late 20th and 21st centuries for other countries? Why have some still not caught up?
Koyama and Rubin show that the past can provide a guide for how countries can escape poverty. There are certain prerequisites that all successful economies seem to have. But there is also no panacea. A society’s past and its institutions and culture play a key role in shaping how it may – or may not – develop.

https://www.amazon.in/How-World-Became-Rich-Historical-ebook/dp/B09VNRJZ31

As the excerpt says, there are many, many theories about why some countries got a headstart on the others. And while we can’t ever be sure of what the exact mixture of theories is, and whether this mixture remains the same for all countries across all periods, we can be sure that any recipe must contain at least some of these ingredients. And that’s better than knowing nothing, eh?

But which ingredients? In the next section, my notes from having read the article


  1. The Fate of Rome, by Kyle Harper, is now added to the list.
  2. Life slowly got better across the centuries from the time of the Roman Empire until the Middle Ages, but many of these changes could be explained by major demographic changes (such as, say, the Black Death and the resultant decrease in the population.)
  3. Sustained economic progress necessarily needs sustained technological progress. And sustained technological progress needs to be high enough to be able to beat the inevitable downward pressure imposed by population growth. They also add property rights as an important component, but it is, in essence, enough technological progress to be able to beat the inevitable Malthusian Trap.
    “Ultimately (and this matters for the acceleration in growth we observe from the late 19th to the 20th centuries), it also helps if families limit the number of children they have. This does not necessarily contribute to innovation, but it does mean that innovation will more quickly translate into growth.”
    Of course, the next logical question to ask is why would families limit the number of children they have, and to me, the answer is that they will only do so if they are convinced that their children have a more than reasonable chance of surviving into adulthood. Health comes first, both for individuals, but also for economic growth.
  4. This is an article I will need to read carefully, on the debate between historians and economic historians. The topic? What role did slavery have to play in the economic development of Europe.
  5. Remember the ‘ingredients in the recipe’ analogy that I used in the previous section? Institutions (such as property rights, labor unions), the demographic transition and education are three things that Professors Koyama and Rubin completely agree upon.
  6. “I think one thing the history of technology has taught us is that as long as the incentives are there for innovators to innovate, we will continue to be surprised.”
    I think this to be a key sentence, and I wonder if we think hard and often enough about whether the world is incentivizing innovators enough.
  7. Capitalism without Capital is also added to the list. Sigh.

Catch ’em Young!

I spent the last week of 2021 teaching young kids economics, and what a time I had.


This academic year (2021-22) has been the best ever at the Gokhale Institute where placements at the Master’s level are concerned. More students have been placed than ever before, and at higher average CTC’s (Cost to the Company) than ever before. If you’re looking for quasi-anecdotal data about how tight this particular segment of the labour market is in India, I’ve got a story to tell you.

But this ought to worry us, as educators. If you believe that the physical, classroom-based education is indispensable when it comes to making people productive in workplaces, then we have a nice little natural experiment coming up. Folks who have graduated this past year, or will graduate this year, will join workplaces without having seen a physical classroom for the better part of the last two years.

If there is no noticeable dent in their productivity, ability to come up to speed, or in the pay they receive over time (relative to folks older by a couple of years or so) then, well, we have problems, no? The Emperor’s New Clothes saga in higher education is upon us, and interesting times lie ahead.

One of the implications of this evolution, I think, will be making explicit something that everybody in higher education has known for years, but have been loathe to admit in public. An MBA degree, or a Master’s degree in econ/stats is a stepping stone to either a job or to further studies. For the most part – not exclusively so – sure, and sure there are students and educators who don’t subscribe to the college-as-a-conveyor-belt philosophy. But they are a fast dwindling breed. The vast majority of higher education isn’t about learning.

And classes, examinations and results have therefore become a sham that we must all pretend to take part in. In private, students will happily tell you how aware they are that this is a sham, as will professors. But one is not supposed to say these things in public – or at least, one wasn’t supposed to say this in public until the pandemic hit.


One of the first things I taught these young kids was the concept of incentive compatibility. And if you think about it, the whole course was an example of this concept, because there were (praise be the lord) no examinations. No marks to be scored, no grades to be obtained, and therefore no comparisons to be made. They were there to learn, which worked out just fine, because I was there to teach.

And I taught ’em! Across the space of five exhausting but exhilarating days, I took them through the principles of economics, introduced to them the headache that is macroeconomics, told them about externalities and other causes of potential market failure, introduced to them the wonder that is the prisoner’s dilemma, and so much more. It was a whistle-stop tour through the kingdom of economic theory, and I had an absolute blast.

The students, if anything, seemed to enjoy the experience even more than I did. Our classes would begin at nine in the morning and get over by four in the afternoon, but the questions would continue beyond, and spill over onto dinner time. And as an econ-nerd who loves introducing new topics to people, I can’t tell you how it gladdened my heart so to be talking about the iron law of diminishing returns at eight in the evening, after a full day’s worth of classes.


Did the students “get” everything, one might quite reasonably ask. And I’ll be honest and say probably not. It was a lot to pack in to just five days, and not all will have been retained. And of what has been retained, not all will be fully understood.

But they left class every day wanting to learn more about the topics that they had learnt. They remained curious and inquisitive, they were willing to push back on topics and concepts they didn’t understand or instinctively disagreed with.

And the feedback session at the end of the fifth day was my favorite bit, for the consensus seemed to be that economics was such a fascinating subject precisely because there were no fixed, definite answers to many big picture problems. For better or for worse, this is exactly what makes the study of economics appealing to me, and that is why this assessment of the subject gladdened my heart so.


I have often wondered what a classroom bereft of both the carrot of marks and the stick of attendance might look like. I have suspected that the only incentive left, then, is the curiosity to learn more about the subject at hand. And my hunch, for a long time, has been that this will make teaching, and learning, a much more pleasant experience.

And while one five-day session is perhaps too little data on the basis of which to make sweeping generalizations, I will say this much: my thesis about learning isn’t quite as hypo as it was before those five days.


There are problems to be solved, of course. Scale was and remains a challenge, the logistics aren’t easy, this isn’t a cost effective way to teach, and the there is no guarantee that the learning will persist over time. And I’m sure you, the reader, can come up with a hundred other things that could be better.

But hey, I have learnt that is possible to teach economics to students between the ages of 13-16. Not just possible, but thoroughly enjoyable.

And I look forward to doing more of it, with many more kids, in the years to come!

Is Online Education Transitory?

Students are finally making their way back into colleges across the country. Omicron, and whatever variant follows next will make the road bumpy, and there remains a significant chance that there will be some U-turns along the way. But we’re finally limping back towards something approaching normalcy. Or so one hopes.

But the transition isn’t smooth, and cultural adjustments are going to be tricky. What sort of cultural adjustments? Here goes:

  • Lockdowns and restrictions have been in place long enough for a culture of online learning to have emerged. In the context of this blog post, I define the word culture to mean social behaviors and norms that have emerged among students during the past eighteen (or so) months. There is more to culture than that, I am well aware, but it is this specific aspect of the word that I am focusing on.
  • Students across India have gotten used to the following aspects of this culture:
    • Listening to a lecture that is being delivered need not be a community based event. You can listen to a lecture alone, anywhere, as opposed to along with your classmates in a classroom.
    • Listening to a lecture need not by a synchronous event. That is, you don’t need to listen when the professor is speaking. One can listen later, as per one’s own convenience.
    • Listening to a lecture need not be a 1x event. Amit Varma’s point about being able to listen to somebody else speaking at even 3x applies to lectures as much as it does to podcasts. Students who find a particular professor boring may even argue that the point applies with even greater force to lectures than it does to podcasts!
    • Students feel much more comfortable calling out online examinations for the farce that they are. And let me be clear about this: online examinations are a farce. If you are a part of any university’s administration in this country, I urge you to speak to students, their parents, and recruiters about this issue. I repeat, online examinations are a farce. This is important, and it needs to be called out. We’re very much in Emperor’s New Clothes territory in this regard, and that is where the cultural aspect comes in.
  • At the moment, most colleges (if not all) are not making classroom attendance mandatory, at least for the students. Students may be on campus, but not necessarily in the classroom. Most students I have spoken to (in a completely unscientific fashion, I should add, so this is strictly anecdotal) think this to be the best of all worlds. They are not at home, they are with friends, and they are not in a classroom. It doesn’t get better than this, as far as they are concerned.

So now, assuming you find yourself in even limited agreement with what I have written above, think about the scenario I am about to outline. Imagine that you are a university administrator with the power to mandate offline attendance in classrooms and offline examinations for your students. And at some date in the foreseeable future, you decree that this must happen.

And some students come along and ask an entirely reasonable (to them, at any rate) question: why?

Why are offline attendance and offline examinations better than what we have right now?

What would your answers be?

How to Escape Education’s Death Valley by the Great Sir Ken Robinson

I’m not one for celebrating “days”, but I’ll happily admit being thankful that this video is scheduled for the 5th of September!

Cory Doctrow on Byju’s

This Twitter thread, and its implications deserve deep reflection about Twitter, Cory Doctrow, India, and education in India. And not in that order.

A very short, but also a very painful post

Seth Godin wrote a post that was painful to read for me, and if you’ve been reading my posts recently you’ll know why. The title of the post was “What does it mean to do well in school?“:

Is it the same as “doing well on some tests”?
Because that’s what we report–that perhaps 240 times in a college career, you sat down for a test and did well on it.
That’s hardly the same as doing well in school.
Where do we look up insight on your resilience, enthusiasm, cooperation, curiosity, collaboration, honesty, generosity and leadership?
Because it seems like that’s far more important than whether or not you remembered something long enough to repeat it back on a test.

https://seths.blog/2021/02/what-does-it-mean-to-do-well-in-school/

Yes, so much yes. But of course, those of us involved in running academia excel at designing tests. The other things, not so much.

And then, to add injury to insult (not a typo), this Twitter thread:

Education as we know it is changing in front of our eyes, and for the better, but it is happening in spite of colleges, not because of them.

And nobody seems to care.

Where else could this be applicable?

A great question to ask as a student of economics – well, really, a student of anything – is “where else is this applicable?”

Because learning the definition is one thing, understanding its application is another. Understanding the applications, its costs and its benefits, and being able to transfer the idea over on to other domains and sectors – well, that is something else altogether.

Consider MPN, for example. That’s mobile number portability. Something that we take for granted these days. Although Indian readers might be interested to know that we are one of only two countries to use the donor-led system, rather than the recipient led system.

Now, students of microeconomics will (should) know that this encourages competition, because substitutability goes up. I don’t need to be locked up with one service provider for my entire life, in fear of having to update my number among my contacts every time I change service providers. It also therefore ensures that operators will provide better service, because customers have the ability to “vote with their feet”.

So far, so obvious.

But as I said up top, the real challenge as a student is to ask yourself, where else can I use this idea?

Can, say, education be made more competitive? Can and should students be allowed to switch colleges midway through acquiring a degree? Or can we have unbundling of colleges where you can buy courses from a variety of different colleges to make your own degree of choice?

Sucheta Dalal asks the same question in an excellent article on Moneylife – but with the focus being on account portability in banks.

What is the most effective solution to poor service, mis-selling and harassment by banks which are entrusted with your hard-earned savings? Simple. Bank account portability; or the ability to vote with your feet and switch to a better bank. The idea of bank account portability, which will truly force banks to compete for their customers, has been on the cards since 2012, when the Reserve Bank of India (RBI) initiated the process of creating unique customer identification code (UCIC). Since then, almost every hurdle to implementation—technology issues, high costs, absence of unique codes, etc—having been substantially addressed; but account portability is nowhere on the cards.

https://www.moneylife.in/article/bank-account-portability-what-is-preventing-this-game-changing-move-for-customers/62915.html

The rest of the article speaks about why it is an excellent idea (duh!), how most of the groundwork has already been done (awesome!) and how the incumbents think it is a really bad idea (double duh!).

Incumbents will always – always! – find reasons for why “it just can’t be done”. But anything that makes a sector more competitive, and more responsive to its consumers, is by definition A Good Thing.

Or so we teach in micro, at any rate.