India: Links for 13th August, 2019

Five links about India from the past couple of weeks:

  1. Nitin Pai explains why the banana thingie was a mere storm in a teacup.
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  2. A rather uninspiring review of the GST impementation, by reading the CAG review of the… well, GST implementation.
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  3. Vivek Kaul in the Livemint analyzes credit growth in the economy, and asks who exactly is borrowing. To me, this article raises more questions than answers.
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  4. “At the Centre, the privatisation of state enterprises during the Vajpayee era is an aberration which validates the norm. The government is the largest business house and owns 339 enterprises in 2019. Leave alone the disinvestment of Air India or 23 other enterprises. In 2018, the ownership of private carrier Jet Airways is parked on the balance sheet of public sector banks. The debate is not just about government ownership but about political management. ”
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    To me, a deeply depressing issue is the fact that no government in India, bar none, has taken divestment seriously, with the notable exception of the Vajpayee government. It’s been more of the same before, and more of the same after. Deep sigh.
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  5. Is democracy an end in and of itself, or is it the means to an end?
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India: Links for 22nd July, 2019

Now that the dust has settled, and it isn’t “news” anymore, let’s take a look at the budget.

  1. Rather than reading the budget, a much better use of your time would be to read the economic survey. Still, if you insist, here’s the budget at a glance.
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  2. “Nirmala Sitharaman, India’s first full-time female finance minister, presented the first Budget of Modi government 2.0 yesterday. Unlike, other finance ministers before her, Sitharaman in her speech talked about everything but the Budget—which basically refers to the government’s expenditures on various things during this financial year, and where the earnings to finance those expenditures are likely to come from. But just because she did not discuss the numbers, doesn’t mean we shouldn’t either.”
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    Vivek Kaul explains, in a very readable article in NewsLaundry, what this particular budget is about.
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  3. Another useful article by the same author, that explains some (non)peculiarities in this year’s budget.
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  4. “Desperation is creeping into India’s economic policy-making. Having lost the fiscal plot, bureaucrats are trying to marshal resources by squeezing taxpayers, foreign investors, firms planning buybacks and even the central bank. Such overreach never ends well.”
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    Andy Mukherjee is less than impressed with this year’s budget.
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  5. “The third respect in which it differed from all previous Budgets — and not just Jaitley’s — was that macroeconomics was simply missing from her speech. As I said, the primary function of a Budget is to control government expenditure and limit it to what the representatives of the people approve. But as governments grew in size, both their Budget balance and their tax and expenditure policies had serious effects on the national economy. Parliaments are supposed to watch and control these effects. . This function was entirely forgotten by Sitharaman. She did not err. Simply, it is her experience that Parliament does not care.”
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    Ashok Desai is exasperated with the budget, plain and simple.

Links for 24th May, 2019

  1. “A few months ago, as I was reading Constance Reid’s excellent biography of Hilbert, I figured out if not the answer to this question, at least something that made me feel better about it. She writes:
    Hilbert had no patience with mathematical lectures which filled the students with facts but did not teach them how to frame a problem and solve it. He often used to tell them that “a perfect formulation of a problem is already half its solution.”
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    A very short, but oh-so-readable essay from Paul Graham. Please read it for a variety of reasons, but mostly to understand that reading is a long term activity with a lot (a lot!) of positive payoffs in the long run.
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  2. “When the Bureau of Economic Analysis (BEA) measures economic output, it categorizes spending with the National Income and Product Accounts (NIPA). Some of this spending, which is counted as C, I, and G, is spent on imported goods.1 As such, the value of imports must be subtracted to ensure that only spending on domestic goods is measured in GDP. For example, $30,000 spent on an imported car is counted as a personal consumption expenditure (C), but then the $30,000 is subtracted as an import (M) to ensure that only the value of domestic production is counted (Table 3). As such, the imports variable (M) functions as an accounting variable rather than an expenditure variable. To be clear, the purchase of domestic goods and services increases GDP because it increases domestic production, but the purchase of imported goods and services has no direct impact on GDP.”
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    From within the link to the Noah Smith article yesterday, a good, short explainer of GDP, and why imports don’t “reduce” from GDP.
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  3. “In economics, there is no free lunch. While TV channels feel that they are saving money by not paying the experts, what they get in return is a total mess and not some meaningful, coherent programming, in which people can take away some learning at the end.”
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    Vivek Kaul explains why people on the news shout so much. Incentives – it’s all, always, about incentives!
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  4. “In a 2009 summary paper of their respective decision-making sub-fields, psychologists Daniel Kahneman and Gary Klein spell out the conditions required for expertise to exist. They discover that in order for expert intuition to work, the practitioner needs to inhabit a domain where:The environment is regular. That is, the situation must be sufficiently predictable, with observable causal cues.
    There must be ample opportunities to learn causal cues from the environment.”
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    An interesting article about whether ideas from one domain should be used in another, and under what circumstances.
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  5. “Whether the East Asian Model will take hold in East Africa and beyond is not a given. But it also isn’t a stretch to see how the African “Lion economies” could accelerate their transformation by embracing the formula that successively produced the Asian Tigers and China.In his seminal Development as Freedom, Amartya Sen equated personal freedom with economic development. But to reach that objective requires traversing through the phase of “development as imitation” of successful models that came before.”
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    Can Africa achieve in this century what Asia did in the previous one, following the same playbook? This is going to be the most important question for this century, and this article helps you understand how to think about it. One useful way to start thinking about it, at any rate.

Links for 19th March, 2019

  1. “Why do two people need a scrap of paper except to reassure them there’s concrete proof of their relationship?”
    … is a question worth asking in many respects, not just relationships. But some articles don’t really need to be subjected to analysis. A truly beautiful read, by Priya Ramani.
  2. “The episode is symptomatic of a fundamental European problem: unlike in China, macroeconomic policy, industrial policy and foreign and security policy are run independently of each other. The Huawei 5G bid shows that the EU is not well prepared to deal with a connection between security and industrial policy. Nor have the Europeans paid much attention to the impact of their fiscal rules — not least on defence and security policies. China, by contrast, has an integrated approach to economic and foreign policy.”
    Wolfgang Manchau on China and Germany, and who will have the upper hand going forward. Also an interesting way to think about what works better – top down approaches, or decentralized decision making. I usually find myself in favor of decentralization, but this article made me think about that a bit.
  3. “Second, growth in India has been unequalising because the top 10 per cent have benefitted disproportionally more from it than the bottom 90. In addition, growth has been unequalising across regions and ethnicities. In these circumstances, arguments for direct transfers are in vogue to compensate for this failure, not to address it.”
    Rathin Roy in an excellent article explains why we spend far too little on far too many things (and when I say we, I mean the government). Two things: this, theory suggests, is inevitable. Two, the column doesn’t mention – probably because of lack of space – the political compulsions that make this all but inevitable. But it is a great read!
  4. “Economists and commentators who have written on UBI for India have made the case for doing away with many subsidies and exemptions. The problem is that doing so may not be politically feasible. How does any politician sell the taking away of food subsidies to the masses of the country? Or how does any politician justify the introduction of tax on agricultural income or the introduction of estate duty or doing away of subsidies on urea and other fertilizers?”
    And while on that topic, Vivek Kaul in ThinkPragati reviews a book about Universal Basic Income by Guy Standing. I have not read the book, but the quote above jumped out at me. In my opinion, the problem with implementing UBI in India is not an economic one, but a political one.
  5. “Olive trees follow a pattern known as alternate bearing, with bad years routinely followed by good. This year, the EU expects Europe’s overall olive basket to be saved by a surge from its biggest producer, Spain.A trend there towards super intensive plantations may partly mitigate climate change impacts, according to Valentini – but at a cost to traditional farming and biodiversity. Fast-growing, high-density olive plantations might be more drought-resistant but water resources could also be limited by these plantations, he said”
    Will future generations understand the phrase “like taking coals to Newcastle”? Italy – and I cannot believe I am typing this out – will import olives this year. Whatever will the next Mario Puzo do?

Links for 5th March, 2019

  1. “Using a neural network trained on widely available weather forecasts and historical turbine data, we configured the DeepMind system to predict wind power output 36 hours ahead of actual generation. Based on these predictions, our model recommends how to make optimal hourly delivery commitments to the power grid a full day in advance. This is important, because energy sources that can be scheduled (i.e. can deliver a set amount of electricity at a set time) are often more valuable to the grid.”
    The big problem with renewable energy is its utter unpredictability – which is why we will always struggle to move to a world that uses renewable energy as a primary source. Unless, of course, we figure out how to make great batteries. But in the meantime, anything that helps us predict the pattern of availability of wind and solar power is great news.
  2. “Still, people do break Google’s protection. CAPTCHAs are an ongoing arms race that neither side will ever win. The AI technology which makes Google’s approach so hard to fool is the same technology that is adapted to fool it.Just wait until that AI is convincing enough to fool you.
    Sweet dreams, human.”
    Ever clicked on the “I’m a human” button and wondered why it seemed like such a stupid idea. Well, uh, not stupid. Not stupid at all.
  3. “This further tells us that people are buying and selling homes. It’s just that the builders are not a part of this transaction.”
    This is a very short excerpt, but especially for Indians, this article is well worth reading (and Vivek Kaul is well worth following!). Home loans are going up every year, but unsold inventory is also going up every year? What gives?
  4. “All of economics is meant to be about people’s behavior. So, what is behavioral economics, and how does it differ from the rest of economics?”
    An essay about behavioral economics and its many applications, written by two people who are more familiar with the field than almost anybody else. There isn’t much here for people who are already familiar with the field – but if you are new to behavioral economics, this is an excellent introduction.
  5. “Two landmark events helped pushed along the proliferation of Sichuan cuisine in New York. In 2005, the peppercorn ban was lifted, though imported peppercorns still had to be heat treated and were thus less potent than they might have been. (This restriction was finally lifted in 2018.) ”
    I was in New York in 2007, and knew nothing of how to try new food, and it is a major source of regret. Especially when I read articles like these.