Links for 6th June, 2019

  1. “That night, after singing in the Rose Garden, Nelson went to sleep with his wife, Connie, in the Lincoln Bedroom. Then one of the president’s sons knocked on his door.“Chip Carter took me down into the bottom of the White House, where the bowling alley is,” Nelson says. Then they went up to the roof and smoked a joint. Nelson remembers Carter explaining the surrounding view — the Washington Monument, the string of lights on Pennsylvania Avenue. “It’s really pretty nice up there,” Nelson says.”
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    I found it hard to extract an excerpt from this article, because it is (all of it) entirely readable, multiple times. There’s information about music, weed, economics, sustainability, mortality, longevity and so much more!
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  2. “Graham Fagg, the British miner who punched through to the French side and became the face of continental connection, on Friday told French news agency AFP that he was now a Brexit supporter. “I worked on the Channel Tunnel and did the breakthrough, but I actually voted for Brexit,” the 70-year-old said. “I don’t see that as incompatible.”Fagg said he supported joining the European Economic Community — the forerunner to the EU — in a 1975 referendum, but did not realize it would become a political union.”We voted for a trade deal,” he explained. “I can’t remember anybody ever saying to me, ‘we’re going to turn it into a federal Europe. We’re going to set all the rules and you’ve got to obey them’.””
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    A short, but very readable article about the Chunnel – I didn’t know the history was as long as all that. I also found the Thomas The Train picture quite poignant.
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  3. “The consistent critic of anarchism must, however, attack with equal force all of those who suppose that large groups will whenever the need arises voluntarily organize a pressure group to deal with the state, or a labor union to deal with an employer. Bentley, Truman, Commons, Latham, and many of the pluralist and corporatist thinkers are fully as guilty of the “anarchistic fallacy” as the anarchists themselves. The anarchists supposed that the need or incentive for organized or coordinated cooperation after the state was overthrown would ensure that the necessary organization and group action would be forthcoming. Is the view that workers will voluntarily support a trade union, and that any large group will organize a pressure-group lobby to ensure that its interests are protected by the government, any more plausible?”
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    Aadisht Khanna reviews “A Theory of Collective Action”. This, I should confess, is a book I started but have (at least for now) given up on. It is not an easy read. But reading Aadisht’s review, this excerpt caught my eye – it is the strongest argument I have seen to make me want to vote.
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  4. “And so Thibaw wasted away in Ratnagiri, “a very unpleasant place to live in”, he wrote, full of “snakes and scorpions”. His expenses—much of it religious—led to endless debt, even as he petitioned the British for the return of valuables he had entrusted to them when surrendering his former capital (including a celebrated ruby, never seen since). His wife was initially resolute: She smelt conspiracy everywhere, Shah notes, and taught her daughters to cook, certain that they would be poisoned otherwise. But, by 1900, bogged down by their fall, she was in the grip of depression. Denied regular social contact, and policed and watched, their daughters too grew up lonely—the princess who in 1944 gave mangoes to her visitor began an affair with their Maharashtrian gatekeeper, her love child later marrying the family’s dog-walker. This granddaughter of the last king of Burma would one day transform herself from TuTu to Baisubai, selling paper decorations in the local market.”
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    Do you follow Manu Pillai on Twitter? Do you read his columns in Livemint? Have you read his books? Get started right away!
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  5. “The results of this survey have not been officially released. However, the leaked reports of an historically high unemployment rate and the subsequent resignation of two members of the National Statistical Commission (NSC), who were involved with the PLFS, created a furore and heightened the politicisation of unemployment. The Opposition used this as an opportunity to malign the government, while the government representatives at NITI Aayog resorted to the view that the survey results have not been reviewed by experts, and therefore the report was not deemed reliable enough to be released. The truth of the matter, however, is that there is neither credible evidence of a job crisis in India, nor credible evidence of the absence of it.”
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    There is a problem pertaining to data measurement in India, and it is a big one. This article doesn’t necessarily tell you how to solve that problem (no article can, in the length that articles usually comprise of), but it does help you be aware of what the problem is.
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Links for 21st March, 2019

  1. “In a 2011 paper, trade-policy researchers Anwarul Hoda and Shravani Prakash analyzed the impact of “the proclivity of the U.S. administration to leverage the GSP program to achieve its economic and political objectives.” They found that with major developing-country trading partners “the reciprocity requirement has proved to be ineffectual.” In 1992, the U.S. stopped India’s preferential access for chemicals and pharmaceuticals in an effort to improve intellectual-property protection. New Delhi shrugged off the pain, and waited for a World Trade Organization agreement before amending its patent law, the researchers noted.”
    Andy Mukherjee doesn’t think the removal of the GSP support by the USA will have any meaningful impact on India’s exports to that country. He also cites an interesting paper (which I haven’t read yet), which seems to say essentially the same thing.
  2. “The opportunity is simple to describe but requires real effort to achieve: the community must enforce systems that build the external costs into the way that the industrialist does business. Faced with an incentive to decrease bycatch, waste or illness, the industrialist will do what industrialists always seek to do–make it work a little better, a little faster, a little more profitably.Industrialism can’t solve every problem, but it can go a very long way in solving the problems that it created in the first place.”
    Seth Godin (whose blog is a remarkable thing, by the way) gives his take on externalities, and makes the case that economists take a far too restrictive, anti-septic view of the problem. I’m putting words into his mouth, but that’s how I interpret it – and I’d agree. Certain problems can be identified best by economists, but perhaps the solutions lie outside the textbook. A useful article to read for starting discussions around externalities, the Coase theorem, Elinor Ostrom’s work, the role of culture in economics.
  3. “When it comes to the institutional framework, there are obviously massive differences between India and China. Any leader in India must contend with parliament, the courts and state governments. Also known as democracy. That limits how quickly stuff can get done. It can also save politicians from serious mistakes. China has competing interests and constituencies as well, but it’s not the same sport, let alone ballpark.”
    The article is about India’s less than stellar economic growth in the previous quarter, but that paragraph above was important to me. India is a functioning democracy, China anything but. That has it’s advantages, and its disadvantages – to both. A point worth remembering in many ways – one of which part of the focus of this article.
  4. “In the process, Netflix has discovered something startling: Despite a supposed surge in nationalism across the globe, many people like to watch movies and TV shows from other countries. “What we’re learning is that people have very diverse and eclectic tastes, and if you provide them with the world’s stories, they will be really adventurous, and they will find something unexpected,” Cindy Holland, Netflix’s vice president for original content, told me.”
    Farhad Majoo in the NYT about why Netflix is such a good thing. It’s a useful article to understand the impact Netflix is having the world over – but also a good article to learn about pricing, the implications of pricing, content discovery on Netflix.
  5. “For several years, India’s banks have been in the spotlight over their problematic lending to prominent industrialists. Now the mutual funds and non-bank lenders — who have taken increasingly important roles in the credit system amid the banks’ woes — are coming under similar scrutiny. That is good for the development of the Indian financial sector. But it is yet another headache for some hard-pressed members of the promoter class.”
    Simon Mundy in the FT on how the IBC has provided teeth to creditors in India – which is genuinely good news. But the transition is unlikely to be smooth, and there may well be some unexpected skeletons waiting to tumble out of the closet. A good read for finance, bankruptcy and non-bank lending in India.

Why is economics important?

Or put another way, what is economics all about, and why should we be studying it?

I’ve been teaching economics for a number of years now, and the stock answer I get when I pose this question is generally a paraphrased version of the definition bequeathed us by Lionel Robbins. And that’s probably because some blessed cog in the Indian education system decided that that was the definition to go with in a textbook.

But no, scarce means and unlimited wants (or whichever remixed version of that song you have listened to) is not  the definition of economics.

Or shouldn’t be, at any rate.

Economics is about getting rich.

Most people recoil instinctively when they hear this, because we have a bit of a cultural stigma associated with getting rich. Rich in India is the big bad industrialist from Bollywood, or the cunning conniving politician, or the sly, evil hoarder.

Not always nowadays, thank god. The word rich also summons up images of start-ups these days, which is wonderful – but still, rich is not necessarily a “good” adjective.

And the reason  it isn’t a “good” adjective is because we view getting rich as a zero sum game. For every big bad industrialist, there is the poor struggling worker. For every cunning, conniving politician, there is the struggling-to-make-ends-meet-common-man. For every hoarder, there is the poor farmer. Which is what the phrase “zero sum game” means: for me to get rich, somebody somewhere must get (and stay) poor.

There existed a long time ago in England a man who would have shaken his head rather vigorously at the last sentence in the paragraph above. Trade, that man would have said, is anything but zero sum. I trade with you because I get rich. The magic is this: you trade with me because you get rich as well. Trade, slightly puzzlingly, leaves both of us better off.

Think about the last time you ordered a meal online. Maybe it was because you were in office and couldn’t cook a meal yourself right then, or maybe it was because you were at home but too tired to cook. In either case, it was too expensive in terms of time and/or money to cook a meal yourself. And so ordering a meal left you better off.

But did the restaurant suffer because you ordered that meal? Nope! It  too was better off because you ordered that meal. As, by the way, was Zomato or Swiggy that arranged for you to get that meal from that restaurant. And the guy from Delhivery who actually delivered the food. Nobody lost out on this trade. And nobody loses out on millions of these kinds of trades that take place every minute on every corner of the globe.

In fact, the more there are of these trades, the richer we are. And since both you and I are getting rich, both of us think its a good thing. And so allow me to amend that definition I put above by adding just one word to it:

Economics is about us getting rich.

And that’s a damn good thing.