Links for 2nd May, 2019

  1. “I think that most capitalists don’t know how to divide the economic pie well and most socialists don’t know how to grow it well, yet we are now at a juncture in which either a) people of different ideological inclinations will work together to skillfully re-engineer the system so that the pie is both divided and grown well or b) we will have great conflict and some form of revolution that will hurt most everyone and will shrink the pie.”
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    Written from an America centric viewpoint, but the article is worth reading for the wealth of data it shares, as also for the viewpoint about the need to reform capitalism.
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  2. “The solution, Wishnatzki believes, is to make a robot that can pick strawberries. He and a business partner, Bob Pitzer, have been developing one for the past six years. With the latest iteration of their invention—known around the farm as Berry 5.1—they are getting close.”
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    Strawberry fields forever. The article is worth reading because it speaks about robots, unemployment, demographics, immigration and the inevitability of agriculture becoming ever more mechanized.
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  3. “He also had a warning to anyone who assumes it will be “business as usual” once America’s Trump fever breaks. The idea that the Trump presidency is some sort of accident, he says, is a fantasy.”
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    An interview with the outgoing French ambassador to America. Worth reading on trade, Israel, Iran and much else besides.
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  4. “The Scrabble career of Nigel Richards went from great to astounding this week, after he won the French-language Scrabble World Championships. A New Zealand native, Richards has won several English-language titles; his new victory follows weeks of studying a French dictionary.”He doesn’t speak French at all, he just learnt the words,” his friend (and former president of the New Zealand Scrabble Association) Liz Fagerlund tells the New Zealand Herald. “He won’t know what they mean, wouldn’t be able to carry out a conversation in French I wouldn’t think.”
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    Oddly depressing, for multiple reasons. Takes the romance out of Scrabble, for one, but also points to the inevitability of automation.
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  5. “What’s woefully underexplored by economists is what the prevalence of caste implies to the Indian economy. A basic premise of the free market model is the absence of entry barriers—not just for firms keen to enter markets for goods and services, but also for people pursuing career options. In theory, companies that are under the pressure of competition to perform would want to hire workers in a way that maximizes the productivity of their workforce; a caste bias would probably stymie the cause of corporate efficiency. None of it may be overtly or even consciously done, but the effects of such a tendency could add up. Caste, thus, would result in an inefficient allocation of human resources across the economy. ”
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    Worth reading if you are starting to learn economics, and aren’t quite sure what competition and barriers to entry mean – but also if you are a student of India today.
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Links for 1st May, 2019

  1. “As McKinsey points out, governments, businesses and individuals will all have to embrace change and figure out the best ways to move towards digitisation — including on such basics as land records and business transparency (which could improve access to bank credit). There are also many aspects of this wave of digitisation that are not to the good—including the impact of toxic social media, the loss of privacy, and so on. The rules for this new world will have to be framed carefully to prevent business capture as well as political misuse, and to protect citizens from predatory action. What is required is to minimise the costs as much as to maximise the benefits. Still, the over-riding message is clear: The prospects of digitisation are so overwhelmingly advantageous, if not also inevitable, that those who become laggards in adapting to the new reality are the ones that will be left behind.”
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    T N Ninan (author of the excellent The Turn of the Tortoise) writes about the potential of “digital” India while reviewing a McKinsey report about the same topic. The scope, details and aspects of such a topic simply cannot be dealt with in a single post – but with that in mind, this is worth reading.
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  2. “The Right to Education Act in 2009 guaranteed access to free primary education for all children in India ages 6-14. This paper investigates whether national trends in educational data changed around the time of this law using household surveys and administrative data. We document four trends: (1) School-going increases after the passage of RTE, (2) Test scores decline dramatically after 2010, (3) School infrastructure appears to be improving both before and after RTE, and (4) The number of students who have to repeat a grade falls precipitously after RTE is enacted, in line with the official provisions of the law.”
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    That is the abstract of this paper. Also, have you read this book? Also, have you listened to this podcast? Also, keep an eye out for this Sunday’s video.
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  3. “China’s TFP surged in the 1980s following the agricultural and ownership reforms, in the 1990s following the state enterprise reforms and the creation of a modern housing market, and in the 2000s as China prepared for and was then able to exploit WTO membership.The key takeaway is that China’s one-party system deservedly has won plaudits when it has been most ambitious with regard to economic reforms and experimentation with market mechanisms. But this is not the case, for example, before the 1980s and again since 2012, when reforms were suppressed or stifled and inputs were boosted, but without any improvements.”
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    An interview that remains interesting throughout if you are a student of economics, or China and especially the intersection set. Troubling times ahead for the Chinese economy, it would seem – and on account of a variety of short term reasons, and one very important long term one – TFP.
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  4. “That was when he saw the light. Two small, black, rectangular boxes were stacked next to an outlet on the far side of the guest room, both facing the bed. From afar, they looked like phone chargers. But when Vest got closer, he realized they were cameras, and they were recording.”
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    Airbnb, technology, privacy and customer relations. A great way to learn that There Is No Such Thing As A Free Lunch.
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  5. “In 1960, 13.4% of the population age 20-74 was obese (as measured by having a Body Mass Index above 30). In 2016, 40% of the population was obese.
    In 1970, 37.1% of those age 18 and older were cigarette smokers. By 2017, this has fallen to 14.1%.”
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    Just two out of many, many interesting tidbits about America today, and America back then.

Links for 26th April, 2019

  1. “The world economy desperately needs a plan for “peaceful coexistence” between the United States and China. Both sides need to accept the other’s right to develop under its own terms. The US must not try to reshape the Chinese economy in its image of a capitalist market economy, and China must recognize America’s concerns regarding employment and technology leakages, and accept the occasional limits on access to US markets implied by these concerns.”
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    Dani Rodrik explains the need for, as he puts it, peaceful coexistence – between China and the USA. My money is on this not happening: history, current affairs and game theory are my reasons for being less than optimistic.
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  2. “Yes, there was arsenic in Bangladesh’s wells, and it may have posed a health threat. But in areas where people were encouraged to switch away from the wells, child mortality jumped by a horrifying 45 percent — and adult mortality increased too. It turns out that the alternatives to the wells, for most people in Bangladesh, were all worse — surface water contaminated with waterborne diseases, or extended storage of water in the home, which is also a major disease risk.”
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    Unintended consequences is one of the most underrated phrases in economics.
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  3. “Only one of Murdoch’s adult children would win the ultimate prize of running the world’s most powerful media empire, but all four of them would ultimately have an equal say in the direction of its future: Murdoch had structured both of his companies, 21st Century Fox and News Corp, so that the Murdoch Family Trust held a controlling interest in them. He held four of the trust’s eight votes, while each of his adult children had only one. He could never be outvoted. But he had also stipulated that once he was gone, his votes would disappear and all the decision-making power would revert to the children. This meant that his death could set off a power struggle that would dwarf anything the family had seen while he was alive and very possibly reorder the political landscape across the English-speaking world.”
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    A very long, but very entertaining and informative read about the Murdoch family – its rise, its stumbles and its influence on the world today. Be warned, this is only the first part – but the entire thing is a great read.
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  4. “There has been a lot of churn in the Sensex over the decades. Corporate power in India seems to be more fragile than usually understood. Only a handful of companies such as Tata Motors, Hindustan Unilever, Mahindra & Mahindra, ITC, and Larsen & Toubro have managed to hold their place in the index. Many of the older industrial houses such as the Thapar group, the Walchand group and the Kirloskar group have slipped out of the benchmark index. Even the real estate and infrastructure giants who had a strong presence in the Sensex a decade ago — Jaiprakash Associates, Reliance Infrastructure and DLF, for example — are no longer in the index.”
    Niranjan Rajadhakshya writes in Livemint about the churn in the Sensex. Worth reading for the chart alone that appears midway through the article.
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  5. “The government has tried to change ideas about death through directives and incentives. In 2016, officials issued guidelines for encouraging more burials within nature, rather than delineating plots for tombs and memorials. In a revised law on funeral management in September, the central government called on local governments to provide financial support for public cemeteries, which would be cheaper for residents.”
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    An interesting read about the burial problem in China, and what they’re doing about it.

Links for 18th April, 2019

  1. “According to the Wall Street Journal, Mickey Mouse and his gang (including Minnie, Goofy, Pluto, and Donald Duck) sold $3 billion in merchandise in 2018, a figure that includes both adult and children’s products. Shockingly, that is only about half of what Mickey made in 2004, when Disney heavily pushed out products in celebration of his 75th birthday.”
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    The Fast Company on the gift that (literally) keeps on giving for Disney. But you should also read Ben Thompson to understand that this is planned – way back when.
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  2. “American involvement in military and economic capacity building could facilitate or overlap with India’s interests in its neighbourhood – to some extent. Delhi has traditionally been skeptical, if not suspicious, of extra-regional actors’ activities and influence in its neighbourhood. Its resistance to such activity on the part of the U.S. has historically only been tempered when Delhi has had even greater concern about a Chinese presence. Now, with increasing Chinese activity in the region and limited Indian capacity to compete alone, Delhi once again seems more willing to work with – and perhaps begrudgingly accept or welcome greater interest from – partners like Japan and the U.S.”
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    A useful article to read to understand Indo-American relations today, and also how to think about these two countries and the Indo-Pacific region in light of the gorilla (or is it the panda) in the room.
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  3. “The world loves meat, but that love puts pressure on the world. The United Nations has estimated that livestock are responsible for 14.5 percent of the greenhouse gas emissions that are trapping heat in the atmosphere. Project Drawdown, a group of scientists pursuing climate solutions, puts the figure at 18 to 20 percent, and some studies have suggested even that’s way too low. In any case, meat is a significant contributor to the climate crisis, and as millions of families in India and China join the meat-eating middle class, its contributions could soar.”
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    An interesting article that helps you understand the players (politicians, firms and individuals) involved in the race to produce plant based meat.
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  4. “The report finds 54.4% of girls had access to menstrual hygienic management tools. However, in terms of wealth quintiles, we see massive variation. While 71.6% of the surveyed girls in the upper wealth quintile report access to MHM tools only 42.6% of girls in the lower wealth quintile report similar access. When inquired about reasons for not using MHM tools, about three-fifths of the surveyed girls reported that they couldn’t afford them and since the government does not provide them, they choose to stick to traditional methods.”
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    A useful, and interesting survey about the aspirations of teenaged girls in India.
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  5. “Readers today are unlikely to confuse an adolescent with an armload of brushwood used for fences and hedges. Still, the magazine’s copy editors dutifully hyphenate “teen-ager” even as we half-heartedly enforce the ban on “balding”—the editor William Shawn preferred “partly or partially bald”—without knowing exactly what is wrong with it.”
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    Grammar nerds and readers or this blog: rejoice.

Links for 9th April, 2019

  1. “What is not useful is the sense that measuring GDP is the problem, and measuring gross national happiness is the solution. Few societies have ever really focused on either. We should all be happy about that.”
    Tim Harford reminds us that the truth lies somewhere in the middle. In this case, the article is worth reading for understanding how GDP can’t really be measured, and how that may not be a bad thing. In addition, please read the article to understand that Bhutan probably isn’t all that “happy” a country in the first place!
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  2. “Given the pressure on all unions to negotiate higher-than-average wage increases, using monetary policy to reduce inflation would inevitably aggregate spending to fall short of the level needed to secure full employment, but without substantially moderating the rate of increase in wages and prices. As long as the unions were driven to negotiate increasing rates of wage increase for their members, increasing rates of wage inflation could be accommodated only by ever-increasing growth rates in the economy or by progressive declines in the profit share of business. But without accelerating real economic growth or a declining profit share, union demands for accelerating wage increases could be accommodated only by accelerating inflation and corresponding increases in total spending.”
    Monetary nerds only, it should go without saying! David Glasner runs a blog called Uneasy Money, which is well worth reading, but only if you want to find yourself steeped in all things monetary. This post takes a slightly critical view of Arthur Burns tenure as Fed Chairman.
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  3. “Amazon’s economists game out real estate decisions, set the lowest prices that will deliver a profit, precisely determine what customers care about and whether advertisements are working — all using machine-learning algorithms that automate decision making on a massive scale. It’s the kind of asset that smaller companies can’t always pay for, allowing Amazon to pull further and further away from the competition.”
    Amazon has, in case you didn’t know, probably the world’s largest collection of PhD’s in economics. This article helps you understand what it is that they do once they’re in Amazon. A helpful read if you are considering building a career in economics.
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  4. “The White House explains why it’s predicting such big growth: the TCJA will cause a surge in business investment by “substantially raising the target capital stock and attracting increased net capital inflows.” And this rise in the capital stock will cause a surge in productivity. Except that there’s no sign of a surge in business investment: the report cherry-picks a few numbers, but overall orders for capital goods, probably the best real-time indicator, are showing nothing much (that 2015-6 slump, by the way, was about fracking, which fell off for a while when world oil prices plunged)”
    Paul Krugman is less than impressed with the 2019 Economic Report of the President, and provides data to show why he is less than impressed. The chart that follows the excerpt is worth looking at too.
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  5. “There’s one biosignature that Seager, Guyon, and just about everyone else agree would be as near a slam dunk for life as scientific caution allows. We already have a planet to prove it. On Earth, plants and certain bacteria produce oxygen as a by-product of photosynthesis. Oxygen is a flagrantly promiscuous molecule—it’ll react and bond with just about everything on a planet’s surface. So if we can find evidence of it accumulating in an atmosphere, it will raise some eyebrows. Even more telling would be a biosignature composed of oxygen and other compounds related to life on Earth. Most convincing of all would be to find oxygen along with methane, because those two gases from living organisms destroy each other. Finding them both would mean there must be constant replenishment.”
    That’s just one of many, many excerpt-able pieces from a very long, but also very rewarding article about the search for ET. Take your time with this one – about an hour or so, and pay particular attention to the infographics.

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.

Links for 13th March, 2019

  1. “For most projects I’ll never look at anything in ARCHIVES again. But of course it’s easy to do so if I want to. And the fact that it’s easy is important, because it means I don’t have nagging concerns about saying “this is finished with; let’s put it in ARCHIVES”, even if I think there’s some chance it might become active again.As it happens, this approach is somewhat inspired by something I saw done with physical documents. When I was consulting at Bell Labs in the early 1980s I saw that a friend of mine had two garbage cans in his office. When I asked him why, he explained that one was for genuine garbage and the other was a buffer into which he would throw documents that he thought he’d probably never want again. He’d let the buffer garbage can fill up, and once it was full, he’d throw away the lower documents in it, since from the fact that he hadn’t fished them out, he figured he’d probably never miss them if they were thrown away permanently.”
    It is exhausting just reading it, but a very long article from Stephen Wolfram o how he organizes his life. You don’t have to go quite as all out – but you might learn a trick or two about organizing your life better by reading this article. God knows I need all the help I can get.
  2. “Nonetheless, this work suggests a potentially serious problem. Many situations in economics are complicated and competitive. This raises the possibility that many important theories in economics may be wrong: If the key behavioral assumption of equilibrium is wrong, then the predictions of the model are likely wrong too. In this case new approaches are required that explicitly simulate the behavior of the players and take into account the fact that real people are not good at solving complicated problems.”
    If I was to be (excessively?) cynical, I’d say this would mean that economists know nothing. But that isn’t necessarily true – Herbert Simon’s work on bounded rationality come to mind here. But the article is interesting about how to think about excessively complicated stuff – such as life.
  3. “In a low-saving, low-investment economy like the US, it’s a little hard to conceive that its possible for savings and investment rates to be too high for a country’s economic health. But that’s where China has been, and shifting away from established patterns is rarely simple.”
    To range across domains, there is this line from dietary studies that goes something like this: “It is the dose that makes the poison”. But if the USA suffers from too low a savings rate (maybe), China has the opposite problem. And this article does a great job of explaining the how and the why.
  4. “Historically, interim budgets in India have consistently overestimated revenue growth and underestimated expenditure growth. An analysis of the projected, revised, and actual budget figures since 1991 by Deepa Vaidya and K. Kangasabapathy of the EPW Research Foundation showed that deviations from budget estimates tend to be extraordinarily high for budget estimates presented in interim budgets ”
    This should surprise nobody, but budgets shouldn’t be trusted. Households budgets tend to have the same biases and errors that government budgets do, and for mostly the same reason – they’re drawn up by humans, who will be tempted to gloss over inconveniences. This article is full of interesting infographics that help you understand this point better – and also makes the point that an independent fiscal council is both necessary and overdue. I wouldn’t hold my breath.
  5. “But as the global giants arrive, they have been driving up salaries, rents, and reputations. Now some fear that the multinationals that once nurtured this fledgling technology powerhouse are unwittingly damaging the potent but fragile mix of entrepreneurship, military training, and chutzpah that drew them to it in the first place. That, they worry, could prevent it from developing into a mature digital economy.”
    Can you guess, before you click on the link, which country we’re talking about? Reading this article should make you want to read more about industrial organization, low interest rate environments, and urbanization – three of the biggest issues in economics today.