Tag: opportunity cost

Principles of Economics, Chinese Education Edition

Two of my favorite things to talk about on this blog come together very nicely in this lovely blogpost from Andrew Batson.

I love to talk about whether people have asked, and thought clearly, about the answer to the question “What are you optimizing for?”. And second, opportunity costs are everywhere.

The blogpost is about “The Education of Li Keqiang”, China’s former premier who passed away recently:

The general temptation to see Li as representing an alternative school of thought and the potential for a different political trajectory is as strong as it is unsupported by real evidence.

https://andrewbatson.com/2023/10/29/the-education-of-li-keqiang/

Reading this blog post is a good way to learn a little bit about China’ modern history (and then, of course, to use these learnings to want to learn even more about China’s modern history!).

For example, did you know that college entrance examinations only came to be in China in 1977 (after 1966)? You may want to ask how students got selected in universities before that:

The makeup of the student body was curious as well. None of them had to take an entrance test to gain admission—a surprising development given that China was the historic originator of the concept of qualifying public service examinations. Many of the students we met had spent two to three years working in farms and factories; most of them, they said, got into Beida on the recommendation of the farmers and laborers they had worked with. Other students had previously served in the army and were similarly recommended.
The prerequisites for admission were simple: good health, work experience, and high “political consciousness.” Academic prowess was much less important than a student’s commitment to the ideals of the Chinese revolution and to the belief that working with one’s hands was better than book learning. As part of what Beida officials called the concept of “open-door schooling,” students were expected to extend their education beyond the classroom and to engage in street cleaning, farming, and assisting factory laborers with compiling “revolutionary histories” of their workplaces. These would help develop their moral, physical, ideological and intellectual character, we were told.
The guiding principle for all the subjects was a rigid Maoist perspective, including the doctrines of “combining theory with practice,” of “learning by doing,” and of “being socially relevant.” Students said that high grades were unimportant. Academic performance was rated as excellent, good, or fair but no one failed. Each class automatically moved from one level to another every year. Individual achievement was downplayed. Assignments were completed collectively, including the writing of essays and even sitting for examinations. In another break with tradition, where it once used to take four or six years to complete a degree like physics, the requirement had been reduced to two or three years.

https://www.amazon.in/Class-77-Classmates-Changed-China-ebook/dp/B09ZVB947W/

I haven’t read the book I’ve linked to above, and that excerpt is from Andrew Batson’s blog. But what I note is that China was not optimizing for selecting students on merit, nor was it identifying the best students on merit. You may want to quibble with me about whether judging students on merit is fair or not – but surely we can agree that this was not a good way to decide who your best students were.

Regardless of our opinions about whether this was a good system or otherwise, the Chinese themselves were quite clear that it was very far from being a good system. Soon after Mao’s death, the Chinese decided to optimize for merit. 1977 was the first time (after 1966) that students would be selected in universities on the basis of an entrance examination. Demand, to put it mildly, was high:

According to the memoirs of former vice-premier Li Lanqing, the demand for the college entrance examination was so high that the government ran out of paper on which to print the exams; the problem was solved by using paper that had been allocated for printing Mao’s Selected Works. FlorCruz’s account makes it clear how the return to exam-based meritocracy was very much a form of “class struggle” in reverse, an explicit decision to valorize the groups that had been targets during the Cultural Revolution and downgrade those (the workers, peasants, soldiers) who had been valorized.

https://andrewbatson.com/2023/10/29/the-education-of-li-keqiang/

The post goes on to tell us that Xi was a part of the 1975 batch, while Li Keqiang was a part of the 1977 batch. But in the end, it seems to not have made that much of a difference – Xi and Li were both optimizing for rising up in the CCP, and the liberalism that people “expected” from Li Keqiang therefore never materialized.

The opportunity cost of being liberal was too high, more’s the pity.

On T20 and Reading

I was completely, gloriously wrong about the IPL, and about T20 in general.

Test cricket is where it’s at was (and remains) my stance, and that led me to disparage everything about that version of cricket. But the impact that T20 has had on the sport is undeniable – the quality of fielding, the level of fitness being just two examples.

But Aakash Chopra, in a recent column over on ESPNCricinfo, wonders if the pendulum has swung too far over to the other side.

Changes reflect the times, and that’s the case with batting techniques too. Anyone brought up on a steady diet of white-ball cricket will invariably develop their game to suit its demands. The shorter formats are played on identical (read flat) surfaces across the world and no longer require different skill sets to succeed in all conditions. One size does fit all now.

https://www.espncricinfo.com/story/aakash-chopra-modern-batsmen-do-not-focus-on-their-feet-and-that-is-mostly-okay-1246221

Now, before you think that I am using this quote as a way to show how I was right all along, that is not the point I am making. As Aakash Chopra goes on to say, batsmen are behaving perfectly rationally.

Across the three formats, Test cricket is played the least, and even in the few Tests played, you come across challenging conditions only on occasion. The returns on the time invested to develop different skill sets don’t justify the effort.

The parallel I wish to draw is between the sport of cricket and reading habits. The emergence of shorter reading formats: tweets, book summaries, blogposts (ahem) are easier to read, quicker to digest and most importantly for the era we live in, save us a lot of time.

And that, unfortunately, means that most readers today (myself included) are akin to T20 batsmen. It turns out that we are very, very good at consuming very large amounts of snippets of information – in fact, we positively excel at it.

But the opportunity cost (and it is always there, isn’t it?) is that we struggle to sit and consume a full length book. I can’t remember the last time I sat down and read a classic, for example, and struggle to read in one sitting an entire book. We’re today a generation of T20 readers, as it were. To borrow from another Aakash Chopra column from way back in the day, we’re all Murali Vijay now.

There’s useful advice in that column for readers today:

We need to realise that openers and spinners need to radically change their techniques to suit the demands of the various formats of the game. While the more experienced players know how to make that switch, the younger lot aren’t equipped to strike that balance. Which is why there aren’t enough openers and spinners on the domestic circuit who can make it to Test level.

https://www.espncricinfo.com/story/aakash-chopra-where-are-india-s-next-test-openers-598370

Training ourselves to add in the odd difficult, lengthy, thought-provoking book to our diet, in other words, may not be the worst idea ever.

If you’re curious, by the way, this post is 500 words.

Tech: Links for 23rd July 2019

  1. “Cichon’s find shows us that when thinking about their overall impact on the planet, it’s not helpful to think in isolation about producing 2 billion iPhones. Instead, we should think about a counterfactual: What would have been produced over the past 12 years in a smartphone-free world? The answer, clearly, is a lot more: a lot more gear, and a lot more media.”
    ..
    ..
    You might think that this piece is about technology. But it is at least as much about opportunity costs.
    ..
    ..
  2. “Comparably high pricing has long been seen as a roadblock to success for Netflix in India, where competitors charge significantly less for their paid video services. For instance, Disney’s Hotstar service only charges consumers INR 365 for a full year of paid access.”
    ..
    ..
    Will Netflix lower its prices in India? What do competitive markets have to say about this?
    ..
    ..
  3. “China has been stealing our intellectual property and conducting cyber-warfare, and China is an unusually dirty country dirtying up the planet. Trump’s 25% tariffs on China should be reframed as a carbon tax.
    You don’t want people negotiating trade treaties who are dogmatic about free trade. The worse job they do, the better job they think they are doing. You need people who are skeptical to be negotiating trade treaties, in order to get a better deal for the U.S. You don’t want them to be playing John Lennon’s “Imagine” in the background.”
    ..
    ..
    Notes from a Peter Thiel speech. If you want to learn how to do contrarian thinking, there probably isn’t a better person around.
    ..
    ..
  4. “Of all the fables that have grown up around the moon landing, my favorite is the one about Stanley Kubrick, because it demonstrates the use of a good counternarrative. It seemingly came from nowhere, or gave birth to itself simply because it made sense. (Finding the source of such a story is like finding the source of a joke you’ve been hearing your entire life.) It started with a simple question: Who, in 1969, would have been capable of staging a believable moon landing?”
    ..
    ..
    I am (emphatically!) not saying that the moon landing was a conspiracy. I just enjoyed reading this article because it is a good exercise in the following exercise: I don’t believe it – not for a second. But if it were to be true, how might it have been done?
    ..
    ..
  5. Not the most well written article you’ll find, and the advertisements aren’t fun to switch off – but a useful list of startups in the education space. As you might imagine, a topic I find very interesting indeed.

Links for 9th May, 2019

  1. “Matters came to a head in the summer of 1745. Nanasaheb Peshwa was in Satara and his grandmother, Radhabai, lived in Pune. Seeing the water crisis, she ordered that no water be drawn from the river for the gardens. However, her order was challenged and a letter of complaint was written to the Peshwa in Satara.”
    ..
    ..
    A very nice article in the Pune Mirror about the cities water supply, and how it originated and was developed over time. Also, if you haven’t heard it already, you might want to listen to this short introduction to Visvesvarya.
    ..
    ..
  2. “This isn’t to say we don’t learn from these exercises. We do. In both India and Tanzania, we learn that citizens value public services. In Tanzania, the researchers then led deliberative discussions about cash transfers, and some respondents highlighted that “social services encourage a collective voice that helps increase accountability, while cash transfers would focus people on private interests and leave room for corruption.”Listen to the voices of citizens. But before throwing the cash transfer baby out with the bathwater, let’s make sure those citizens have clear information about their trade-offs.”
    ..
    ..
    Beware well-intentioned surveys – read this article to find out why. Questions in surveys – and the framing of these questions – should give you a headache. If they don’t, you haven’t thought enough about ’em!
    ..
    ..
  3. “Someone reading a book is a sign of order in the world,” wrote the poet Mary Ruefle. Four centuries earlier, while ushering in a new world order, Galileo contemplated how books give us superhuman powers — a sentiment his twentieth-century counterpart, Carl Sagan (November 9, 1934–December 20, 1996), echoed in his shimmering assertion that “a book is proof that humans are capable of working magic.”
    Do you subscribe to BrainPickings? You really should – and clicking through to this link is a good enough reason to start. Amit Varma had a column in the Times of India about much the same thing the other day, which is also worth reading for a rather more, um, practical example of the benefits of reading.
    ..
    ..
  4. The lungi is more than just a South Indian sartorial choice. But what are the origins of this popular garment? It is difficult to state this with certainty. The lungi’s well regarded cousin, the dhoti, seems to have, on the whole, cornered much of the attention, in terms of research into its history on account of its elevated social standing.”
    ..
    ..
    The Madras Courier on the lungi – its origins, how to wear it, and its apparent near universality.
    ..
    ..
  5. “The new regulations have been harder on some of the smaller developers who lack the wherewithal to navigate the labyrinth that is getting construction permits on time causing many to exit the market. The Authority has no jurisdiction to hold different government departments to account for withholding or delaying approvals without a valid cause. Without accompanying reforms that ease the complex permissions process and bring about transparency and predictability in rule implementation, the objective of easing housing supply bottlenecks to lower house prices and benefit homebuyers is going to meet with limited success. ”
    ..
    ..
    A short take on what ails the real estate sector in India. And the answer that this paper gives is that there may be too much regulation of the sector, not too little. A classic example of unintended consequences. This paper, from that article, is also worth reading.

Links for 28th March, 2019

  1. “While nightlife and entertainment are certainly drivers of the night-time economy, they need not be the only ones. According to a report released by the London mayor’s office, 1.6 million people in London—constituting more than a third of the workforce—worked at night in 2017. Of these, 191,000 worked in health and 178,000 in professional services, with nightlife coming in third at 168,000. These were closely followed by transport, automotive, IT and education.In other words, the city’s nighttime economy is not merely bars and restaurants, but an extension of its day-time economic activities as well. It is estimated that the night component comprises 6-8% of the city’s economy and contributes £18-23 billion in gross value added to the British economy. The figures are approximations but significant enough for Mayor Sadiq Khan to champion the night-time economy and appoint a “Night Czar” to manage it.”
    In which Nitin Pai makes the argument for having more shops, establishments and services operate at night as well, in India. A useful read for students of urbanization, microeconomics and life in India.
  2. “I think that our economic system reflects our understanding of humankind, and that understanding has been developing, with especial rapidity lately. You have to understand people first before you can understand how to devise an economic system for them. And I think our understanding of people has been accelerating over the last century, or even half-century.”
    Robert Shiller chooses five books to help us understand capitalism better. I haven’t read all of them, and read one a very long time ago (Theory of Moral Sentiments) – but this has tempted me to go and read at least A.O. Hirschman’s book, if not all of them!
  3. “The problem with cricket in most cricket-playing countries, certainly in India, is that the cricket market is what economists call a monopsony. A monopsony is a market in which there is only one buyer for a particular class of goods and services. Until now, a young Indian cricketer who wanted to play at the highest level could only sell his services to the BCCI. If it treated him badly and did not give him his due rewards, he had no other options open to him.”
    I am happy to admit that I got the IPL gloriously wrong – I approached the IPL while wearing my cricketing purist hat, but I really should have approached it wearing my economist’s hat. Which is exactly what Amit Varma did, ten years ago. Monopsony, the power of markets, incentive mechanisms, it’s all here.
  4. “The 737 assembly line in Renton, Wash. is a marvel of lean manufacturing. The line inches forward little-by-little as assembly proceeds. Born from Toyota’s production methods, the process is one of continual improvement. It’s what made the 737 the lifeblood of Boeing in the first place and why this crisis, taken to its most extreme, could threaten the company’s very existence. But the assembly line also comes with a tool called an Andon cord. The cord empowers all employees to pull it and stop the line if something is amiss or requires investigation and needs fixing. The rest of the world has already pulled it.”
    A mostly understandable explanation of the possible reasons behind the crash – but when I say possible reasons, I do not mean the technical ones. Why compromises had to be made, and the impact of those compromises.
  5. “I’m happy for the descriptive part of economics to stay as it is. The prescriptive part, when we tell people what to do – that one should be much more broad. In fact, we should stop using just economics and take all kinds of ideas from psychology, sociology, anthropology, philosophy and economics, and test which ones work, which ones don’t work and under what conditions. There is no question that behaviour is the ultimate goal – to try to understand behaviour, and how to change or modify it. I hope we can create a discipline that is much more empirically based and data driven. Maybe we can call it “applied social sciences”. It will draw from all the social sciences equivalently as we approach problems in the real world, and try to find solutions for them.”
    Dan Ariely on five books that he’d recommend when it comes to understanding behavioral economics better. If you are interested in this topic, as I am, the interview is great reading – and the books too! I have not read Mindless Eating, and will begin it soon.

Links for 11th February, 2019

  1. “We probably would not have planes, trains, or automobiles if we had insisted on today’s safety levels during the early days of those technologies’ development—likewise, we should have laxer safety standards for new emerging technologies.”
    Worth reading this for many reasons. Don’t miss the bit about the need to change ideological commitments on the basis of rationally-arrived-at conclusions, for example. But that excerpt above is a great way to understand the concept of, and the importance of, opportunity cost.
  2. “I want to make it clear that although enriched environment dominated the 20th century, IQ gains are not destined to persist like the law of gravity. Factors that were immediate triggers of IQ gains included more adults per child in the home, more and better schooling, more people at university, more cognitively demanding jobs, and better health and conditions of the aged. There are signs that these are beginning to show diminishing returns.”
    The Flynn effect is one of the more interesting things you can learn about – and having learnt about it, it might interest you to know that the Flynn Effect may now be reversing.
  3. “They’re having a fight about the wall except the wall is the English Channel: half of these people want to turn the English Channel into a wall to keep out their version of the Mexicans.”
    An interview with Anand Giridharadas about the perils of philanthropy. Worth reading, not necessarily to agree with everything he has to say, but to think about was in which he may be right.
  4. “So, for example, if people don’t take into account the macro consequences of their borrowing, then they could borrow collectively at the same time, which might be rational from an individual perspective but that collective borrowing leads to future problems such as a foreclosure problem that has spillovers for everyone in the economy. When people borrow individually, they may not take into account those spillovers. And so, again, from a macro perspective, people might over-borrow.For all of these reasons, a possible result conceptually is that if and when credit expands, it is possible for households to over-borrow, to overstretch from a macro kind of social perspective. And that over-borrowing, that overstretching during the boom phase of the credit cycle, can then come back to hurt on the downside and lead to a deeper recession than it would otherwise have been.”
    This much is straightforward for a student of macroeconomics – but the rest of the interview with Atif Mian is worth reading for how he teases out the mechanisms of thinking about the follow-up questions in the context of today’s economy. If you want to learn how to think like a macro-economist, this interview will help.