Saturday, May 30, 2009

No Dr Joshi, no Arjun Singh, no fake ideology, no Left- the UGC a three-letter word from hell!

Mr Shekhar Gupta has an excellent article in today’s Indian Express. The following are some of exciting paragraphs. But all I think is the distorting all economics of education. 

  • “young India will be a qualified, productive, creative and joyful pride of the global community. 
  • the licence-quota raj created self-inflicted scarcities of telephones, scooters and cooking gas, our utterly authoritarian, cynical and intellectually bankrupt………….. policy has created humongous shortages.  
  • Fulbright scholars, are given hell by our Orwellian (or you could coin an Indian equivalent, Arjunian, Murlimanoharian) HRD establishment. 
  • do advertise for a security guard on and see how many applications you get from MAs, MScs, even PhDs
  • What brand name can Indian social sciences and the liberal arts boast of?  
  • lack of intellectual freedom, diversity of thought and opinion. The few social science centres that we have, therefore, produce clones. Usually these are clones of professors steeped in the heady ideologies of the ’70s incapable or unwilling to notice that the “revolution” has passed them by. JNU is a perfect example. 
  • This shortage, this criminal undersupply of quality education, is the most cruel atrocity on a society blessed with so much intellect, and such respect and longing for education. 
  • This undersupply of quality education at all levels is entirely self-inflicted, and unnecessary. Every year we see a scramble for private and even central schools admissions, court cases, madness of 90 percenters failing to get into even economics and English honours in our better colleges (actually just about 10 all over India). And the definition of “better” college here is where at least classes are held regularly since the UGC, a three-letter word from hell or Kim Il-Sung’s North Korea, won’t even let a college charge its pupils more if they were willing to pay, or pay its teachers more than the salaries it mandates. The result then is the phenomenon you see on your TV screen all day. The advertisement telling you that India’s largest private university is Lovely Professional University in Punjab, of course with UGC certification. Now, why pick on a name, you might ask? The Americans have business schools named after Kellogg and, who knows, perhaps Mickey Mouse. But comparisons should stop about here.

The rascal government

Rascal is the word that we used among our friends during college life even without minding the meaning of the word. Years after if remember that word all I remember now is the kind of our government officials behaves and the stupid rules that they have. 

See a person writes in today’s ET

  • “When a loved one dies, the distressed family, having to deal with the trauma of the loss and a hundred different details to take care of, can hardly be expected to be in a state of mind to deal with the combined bureaucracies, and often corrupt ones, of police, municipality and municipal hospitals in a single day or night. All of this becomes even more of a challenge if the family is financially less well off. 
  • The idea is not to point a finger at a particular municipality. Many of our systems suffer with similar lack of grace in receiving.  
  • A corporate house, in response to an appeal after a major national disaster, decides to make a substantial contribution to the PM’s relief fund. The CEO goes to Delhi to hand over the cheque personally. Since the PM is indisposed, the cheque is to be given to a senior Cabinet colleague. 
  • The CEO camps in Delhi for over two days (once you have sought an appointment, it is difficult to disengage) when at last he is given an appointment late in the night. The CEO is finally ushered in while the good minister is busy reading some piece of paper and barely looks at the CEO. 
  • He accepts the cheque without so much as a look upwards and shoves the cheque among the papers in front of him. A week later the CAO gets a call from the PMO telling him the cheque has been misplaced. Could he please send a replacement? 

Friday, May 29, 2009

Jacob Viner's estate has rights to this document until 2040, and there is at present no way for me to get permission to legally distribute it. So I th

Brad DeLong writes "As I understand things, Jacob Viner's estate has rights to this document until 2040, and there is at present no way for me to get permission to legally distribute it. So I think it is time to hoist the jolly roger..."

"Nothing, however, can be more absurd than this whole doctrine of the balance of trade."

"Nothing, however, can be more absurd than this whole doctrine of the balance of trade."

Schumpeter's Moment

Schumpeter's Moment

Missing Milton: Who Will Speak For Free Markets?

Stephen Moore has a article which revisit the great economic freedom fighter and economist Milton Friedman ideas.

Mr Moore says: 

“So the Bernie Sanders crowd has things exactly backward: Milton's ideas on capitalism and freedom did more to liberate humankind from poverty than the New Deal, Great Society and Obama economic stimulus plans stacked on top of each other. 

Milton knew how to create real wealth-producing jobs. Once, when he visited India in the early 1960s, John Kenneth Galbraith, the U.S. ambassador, welcomed him by only half-joking, "I can think of no place where your free-market ideas can do less harm than in India." Talk about irony. India has adopted much of the Friedman free-market model and has moved nearly 200 million people out of destitution and despair.

Uncommon nations and uncommon people…

Abraham Lincoln said, “God must love the common man, he made so many of them.” Herbert Hoover said, “When we are sick, we want an uncommon doctor; when we have a construction job to do, we want an uncommon engineer, and when we are at war, we want an uncommon general. It is only when we get into politics that we are satisfied with the common man.”

The advantage in comparison

Liberal economist and friend Sauvik Chakraverti urges Indian community to change the way they look at The State: 

  • “We Indians have placed the State at the “commanding heights of the economy”. This is an invitation to the misuse of coercion—the foundation of tyranny. Under an unlimited government, Society invariably collapses. The socialist confuses State with Society because he is blind to the law of human association. 
  • Finally, it must be realized that a great deal of mischief is being wrought in the minds of our youth by the State’s education system. We Indians are compounding our errors by also placing the State at the commanding heights of education.”

Thursday, May 28, 2009

Inside the Mind of Gary Becker

Inside the Mind of Gary Becker

The English learned TWO dogs were foregone with scooter, rickshaws, bicycles and bullock carts…………….

Professor Arvind Panagariya article published in The Economic Times (23 April 2009) was a beam beat which came after the Samajwadi Party supremo Mulayam Singh Yadav who announced if his party voted he will ban the English in Uttar Pradesh “ this is brilliant idea” said Prof Panagairya but ‘worse yet’ the article begun by quoting the below lines: 

They said Ned Ludd was an idiot boy

That all he could do was wreck and destroy 

He turned to his workmates and said:’ Death to Machines’

They tread on our future and they stamp on our dreams. 

(Poet and performer Robert Calvert from his 1985 album Freq) 

Why I am taking note of this article meant this article was not posted in online before the election. 

There is quite interesting lines in his article: 

  • In the early 19th century, great Luddites, so named after the fictive Ned Ludd, fought against the Industrial Revolution that introduced wide-framed automated looms. Protesting the job losses, the Luddites destroyed many of these looms and even clashed with the British Army. 
  • But unappreciative, British government subjected them to a mass trial, eventually executing some of them. With the IT revolution unleashing the computer, history may now be poised to repeat itself. The Mulayamites have declared war against the computer. Will the electorate reward them? Or will it give them the same treatment the British government gave the Luddites in the early 19th century? ” 

And he has written another article in today’s The Economic Times in which he says: 

  • “…a dog that did not bark but for a reason, just as in the famous Sherlock Holmes tale Silver Blaze by Arthur Canon Doyle, and the other of a dog that did bark but no one noticed.  
  • It needs reminding that in social sciences, usually no single theory explains everything. Especially when three or more candidates contest for the same seat, even minor alternative factors can tip the balance. Therefore, counter-examples showing the victory of non-performers and defeat of performers can scarcely invalidate the anti-incumbency hypothesis.  
  • So meticulous was the Election Commission that in Banej village of Junagarh constituency in Gujarat, it established a polling station for a lone voter! With some exceptions, polling stations carried voter lists that included photos of voters to prevent impersonation. On top, voters were required to bring their photo identifications. Polling was spread over four weeks and carried out in five phases. 
  • Finally, thanks to electronic voting machines, counting of the results was completed within a day. Even recounting in closely fought elections was completed amicably within the same day and, unlike in the United States, actual votes rather than judiciary decided the outcome! 

Wednesday, May 27, 2009

Better understanding of theory helps to build better world than a mixed gimmick….

When the world entered into twenty-first century, there were talks about the emergence of new economies-China and India. This talk become further triggered now. In fact there is a slogan of “The future belongs to India, not China”. Recently the Infosys Chief Mentor N R Narayana Murthy compiled some of his lectures/speeches in a book form as A Better India A Better World. 

The book has 10 Part. The first five chapters are nothing but quite interesting, energizing and encouraging for reader- address to students, values, important national issues, education and leadership challenges. The last five chapters are more focused on corporate governances-corporate and public governance, corporate social responsibility and philanthropy, entrepreneurship, globalization and Infosys. 

In many ways the growth and process of Mr Murthy’s thinking is mixed gems which is quite visible when he says that “no reforms can bring about inclusive growth unless our population growth is contained” (p.xxi). Remember after all these are his lectures/speeches only! 

For Murthy the government is the solution to do everything for the poor except the employment which will be provided through private sector. His understanding of theory is not at all clear and singles wrong path, but for many it may not be. He also advocates some theory to others and believes something else. Like our first Prime Minister and his daughter did everything right for this country and we should salute for that!  

More interestingly he writes “Dr Y Venugopal Reddy….best free market champions” (p. 87). Further, he believes that “the global software industry would not have been possible without Nehru’s vision”. What are those visions according to him the IITs and IIMs nothing more, but all these institutions trains the students who are already skilled in many ways than the other students. 

In other words he preaches some sort of statism for people and he wanted to enjoy the fruits of freed market economics. 

Unless his co-chairman Mr Nandan Murthy has no clarity of thought and quotes which are dangerous to people. Albeit he recognises that it is “anathema to most Indian politicians who were brought up with the belief that poverty was virtue, businessmen were crooks, making profit was a sin, and government was the solution to every problem”. 

In sum, Mr Murthy forgives the whole Nehru’s misguided, socialist control policy which is still a dominant among our policy makers.  

If the reader has open mind like me and out of box thinking will be disappointed. Though I had no specific expectation before reading this book, some years back I only read two  of (In Praise of Secularism and what can we learn from the west?) his of lectures which are also covered in this book.

Nonsense theory of ‘Rigidity’

Dynamics changes in politics matter more than long term economic growth theory says EMPTYstum economic journalist T. C. A. Srinivasa-Raghavan.

Which state has produced the most crorepati MPs?

“There isn’t much correlation between poverty of a state and the number of crorepati MPs it sends to Parliament. There is better correlation between poverty of a state and average assets of MPs.” Says economists Bibek Debroy

Tuesday, May 26, 2009

Shallow sophistries of Roosevelt Socialism

"Shallow sophistries of Roosevelt Socialism."

Naïve economists.....

If anyone talks about the nuts and bolds of “socialist policies of India's first three decades following independence” my mind simply goes to those days people’s standard of living and the kind of choice they had in that time is ringing like anything. This is ironic when Professor Arvind Panagariya writes in WSJ that “The socialist policies of India's first three decades following independence brought little relief to the poor, while the ad hoc liberalization of the 1980s followed by more systematic reforms subsequently have led to a significant cut in poverty rates.” 

By doing this he insult himself, the honest people, the analyst, the economy and everybody else as fool because the notorious notion of socialism has ruined our nation. 

I have no idea how Prof Arvind Panagariya says that “The socialist policies of India's first three decades following independence brought little relief to the poor..” 

Kyauk Phyu, Hambantota and Gwadar

Deepak Lal on “The future belongs to India, not China 

Economists still debate.................

We are in deep rooted crisis in the world economy. It is more of structural issue than cyclical one. We need to be very careful in learning and addressing the problems. Unfortunately, Indian economists and Chacha PM misunderstand. It is grave danger to economy. 

Monday, May 25, 2009

Garibi hatao is a vote-winning proposition …

Devesh Kapur & Arvind Subramanian was writing a Garibi hatao song to Rahul Gandhi asking he “should end the costly and inefficient subsidies to the poor with a cash transfer scheme.” (

You know what our new Finance Minister has to say on it. In an interview to The Economic Times he said: 

How will you address the burgeoning subsidy bill? 

No developing economy can afford to say no to subsidies. They are essential. If crudeprices go up to $ 140, you cannot pass it on to the consumer. But this issue will have to addressed and I will address it adequately. I repeat, my response will be adequate. 

The mega show of “uncivil” will kick start now….

So Indian Primer Political League is over. We all ready to watch a great drama of political gambles from Indian polity. 

Today’s parliamentary democracy in countries like India is more of “uncivil. In fact it is not at all surprise to see such behaviour from our elected representatives in Lok Sabha and Rajya Sabha as like others they consider we are in developing country. If any survey to find out how many members of parliament have really gone through the Peoples Representative Act will show you a dismal picture. 

Time and again this very “uncivil” behaviour and irresponsibility shown towards public is often interpreted as ‘norm’ than as a waste of public tax, time to useful debate etc. 

Even there is no serious debate on it to reform or dismantle such “uncivil” attitude in Indian polity. This very topic brings me attention to a writer who says the “..lack of interest in the speeches of others and the urge to put forward one's own views at any cost have become the staple of parliamentary procedure. It is difficult to say exactly when and how all this began. The aftermath of the Emergency was a kind of watershed. The general public has become inured to such incivility, and now it is by no means confined to Parliament or state legislatures. I have rarely witnessed a group discussion on television where at least three persons are not speaking, if not shouting at each other, at the same time.

Friday, May 22, 2009

The doomed independents

The doomed independents 

The Housing Boom and Bust -“Most of the world the public understanding of economics is abysmal”

So, Sowell’s new book is out and there is a excellent interview which he gave to Reason, recently. He briefly talks about the folly of Federal policy and politician advocate of “affordable housing” which is absurd, he says. 

I re-produce the full interview below. 

The Housing Boom and Bust

Thomas Sowell on how government policies made the housing crisis possible

Brian Doherty | May 20, 2009 

Thomas Sowell, prolific public intellectual and the Rose and Milton Friedman Senior Fellow at the Hoover Institution, is one of America's greatest economic thinkers and educators. He's taught the fundamentals through such books as Economic Facts and Fallacies and Basic Economics and chronicled economic history through such scholarly works as Marxism: Philosophy and Economics and On Classical Economics. In his classic work Knowledge and Decisions, he espoused a sophisticated, largely Hayekian approach, revealing how the efficient spread of relevant knowledge is shaped by our social institutions, and often warped and misshapen by government. 

Now, in The Housing Boom and Bust (Basic Books), Sowell contemplates the greatest expansion of government power in a generation, which was itself occasioned by the greatest economic crisis in as long. A quick but thorough guide to the causes of the crises, Sowell's book shows how government policies led to a huge increase in highly risky housing loans. As he notes, the immense local variability in housing prices and failed loans reveals that the government mistook a set of local problems for a national one, and then imposed a single troublesome national solution. Sowell argues that while foolish decisions to indulge in complicated investment vehicles affected the specifics of how the financial contagion spread, at its root the housing problem is one of bad mortgages. And those came from bad decisions by government and by borrowers themselves.

Senior Editor Brian Doherty interviewed Sowell earlier this week about the book, the crisis, and the government’s unfortunate response. 

reason: Is the economic downturn caused by the housing boom and bust the worst economic circumstance of your lifetime? 

Thomas Sowell: Since I was born in 1930 the economic crisis with the most impact of my lifetime was the Great Depression. As to whether this will match that, it’s too early to tell. Right now it certainly is nothing comparable to the Great Depression, but the Great Depression began as nothing comparable to the Great Depression. For the first 12 months after the stock market crash [of 1929], unemployment never reached double digits but the solution turned out to create more disasters than the problem they were trying to solve.

Whether that will happen again depends on how far and how long the current administration will push policies to solve the present crisis and what their repercussions will be. As mentioned in the book, parallel to the 1929 crash was the stock market crash of 1987. That had the potential to create another Great Depression had Reagan followed similar policies as Hoover and FDR did. He didn’t, so we just about forgot about the stock market crash of ’87. 

reason: Do you see or anticipate Obama’s reactions being sufficient to turn this downturn into another lengthy depression? 

Sowell: I hope not, but what we’ve seen in these past few months is an exercise in unprecedented powers. I mean, to fire the chairman of General Motors, to tell credit card companies how they should run their business, tell GM what kind of cars it should be making, and there’s no sign of an end in sight yet. Obama’s policies are a work in progress. So a lot depends on how far he will push, but I see no signs of him turning back. I see no substantial resistance in Congress. But you never know, as things start to unfold voices of sanity may prevail. 

reason: What is the most dangerous sign you’ve seen so far in terms of policy reaction to the housing bust? 

Sowell: The presumption that Obama knows how all these industries ought to be operating better than people who have spent lives in those industries, and a general cockiness going back till before he was president, and the fact that he has no experience whatever in managing anything. Only someone who has never had the responsibility for managing anything could believe he could manage just about everything. 

reason: You parcel out some share of responsibility for the specific way the housing bust broke down to borrowers, lenders, financial markets, and the government. What was the borrowers' share? 

Sowell: There are those who borrowed to buy a place to live and speculators who borrowed to speculate, and did enormously well for a number of years. Then there were people who simply don’t understand complex mortgages, particularly people who never owned a home before and whose educations were limited. But the people I would blame the most in the sense that without their interference other problems would have been within manageable means are the politicians—people in Congress and the president and regulators—who pushed the lenders and the banks and Fannie Mae and Freddie Mac into lending and buying mortgages based on people who didn’t meet standards that evolved in the marketplace and which had worked. Those politicians, in addition to that initial mistake, ignored all sorts of warnings from all sorts of sources. As I list in the book, theEconomist in London, Fortune, Barron’s, people at the American Enterprise Institute, all over the map, saw that this policy of encouraging homeownership at all costs was leading to trouble. 

But the politicians clearly had as their political goal homeownership as “a good thing” and persisted—and for that matter persist to this moment in pushing it. The Federal Housing Administration last I checked was promoting supporting mortgages that have less than 4 percent down payment. We all make mistakes, but politicians have persisted in their mistakes, and in the pointing of fingers in other directions. 

“Affordable housing” covers a number of things. There was this sense in Washington that the cost of buying a house had become a nationwide major problem which would require a federal answer as opposed to a local answer. All the data say that was not true. People weren’t paying a higher percent of their income nationwide for housing than they had a decade earlier. In fact, it was a somewhat lower percentage in some areas. Now in some areas, including California—coastal California—people were paying half their family income to put a roof over their head. That in turn was a result of local political people putting all sorts of restrictions on building. 

Implicit in the idea of “affordable housing” is the notion that third parties know what people can afford better than those people know themselves. If you spell it out it sounds so absurd you wonder how anyone could have believed it. But for politicians the question is not, is it absurd? The question is whether or not the public will buy it. 

reason: How much weight do you place on the notion that Federal Reserve expansionary money and credit policies primed the bubble, and bust, in housing? 

Sowell: I find it hard to accept. I’m sure if the interest rates had been at 8 percent the boom would not have gone as far and the bust would not have been as big. I’m not saying monetary policy had no effect. But I am struck by the fact that Federal Reserve policy is nationwide, and in places like Dallas the increase in housing prices was in single digits and the decrease has been in single digits. So while Fed policy undoubtedly aggravated circumstances, it can’t be the fundamental cause because the defaults were so heavily concentrated. 60 percent of all defaults nationwide were in five states, and I suspect if you broke down the data even more you’d find specific regions in those five states very heavily implicated in defaults. 

reason: What do crisis like this, and public reaction, say about general public understanding of economics? 

Sowell: I think in the U.S. and in most of the world the public understanding of economics is abysmal. But it’s one thing not to understand something. I don’t understand brain surgery. It’s another to want to form policies on things on which you are ignorant. I hear the wonderful phrase “I want to make a difference” when it comes to policy. I would be horrified if I wanted to make a difference in brain surgery. The only difference is more people would die on the operating table. 

The only encouraging thing about public reaction to the crisis is that going by polls citizens seem to have more misgivings about some of these policies than politicians or the media. Still, though there have been studies that indicate the New Deal prolonged the Great Depression by years, what is also clear is it was enormously popular. FDR was elected four straight times, and more than once without ever having brought unemployment down to single digits. An economic disaster does not necessarily mean a political disaster. If we could raise the average level of understanding of economics to what Alfred Marshall had in 1890, the vast majority of politicians would be voted out of office. 

reason: Do you think the policies we’ve seen Obama pursue so far threaten another Great Depression-level downturn? 

Sowell: I would hope not, but I certainly do think very serious consequences are likely to follow from all this, and they aren’t really discussed much. The ease with which we are now throwing the word “trillion”—I remember when billion was a shock word. To talk about trillions as though they are nickels and dimes, it’s a classic example of doing something that sounds good at the moment whose repercussions are beyond the horizon. When bad effects of his policies come, will people connect the dots? Or will Obama be able to get away with it like FDR did, blaming it all on his predecessor? 

reason: What sort of reactions should the federal government have to the current situation? 

Sowell: First, the government should not try to artificially keep up housing prices. The tremendous irony is that the very politicians who for years talked of affordable housing are fighting to keep housing prices from falling. How does housing become more affordable except by keeping prices down? They really have no interest in having housing become affordable by means other than their largesse. 

reason: Do you think they need to be doing anything to ease the woes of people in foreclosure?

Sowell: Not at all. Foreclosure is not something that happens to you like being struck by lightning. Foreclosure is the end result of things people have done that they need to stop doing in the future. And the market can take care of that. California is one of those states where we’ve seen a drastic reduction in fancy no-money-down mortgages and all kinds of creative financing; we’ve seen those things drop sharply within just a couple of years as housing prices fell and foreclosures rose, as long as the government isn’t there to prop them up. 

But though the market's reaction in California shows that borrowers and lenders can learn with market discipline, one group has not learned: politicians. Or rather they have learned a lesson, that they can get away scot free simply pointing fingers at others and making pious statements. I have no doubt Barney Frank will get reelected. But if people had any idea of the damage he’s done [by promoting the “affordable housing at all costs” policies] he’d be out of there. This stuff has happened before, though not on this scale. 

Republicans in the 1920s were pushing homeownership which led to increased foreclosures, and in the 1930s the Democrats did and that led to increased foreclosures. This is all a cycle, though we’re in the worst of the cycles. But politicians don’t stop doing this because they never pay any price. 

And I think we see politicians today repeating one of the features of New Deal policies in that the policies seem not geared toward getting us out of our current problem as quickly as possible, but to use the problem to create enduring institutional changes to the very nature of the American economy.


Benefit of Dalal Street...........

Vir Sanghvi on “be run for the benefit of Dalal Street or the CII.”

The re-elected UPA government

Is that all we need to ponder, of course the reelected UPA government on what Mr Swaminathan S. Anklesaria Aiyar says

“………its policy emphasis will be on continuity rather than radical change. A party re-elected after five years of almost 9% annual gross domestic product growth has no pressing reason to change its model.”

Tuesday, May 19, 2009

NREG and electoral triumph………

Recently I was in my village briefly I went around my village and neighboring. I was told that the actual agricultural cultivators are facing labour shortages during various stages (mainly due to NREG). In one sense they thank that there is machine is available for harvesting especially for the paddy. 

A friend my mine was complaining about the “The National Rural Employment Guarantee scheme”. Because those who have got opportunity to work in the scheme did not work but they earned pay. Secondly the actual poor were not given work under this scheme. All are non-poor and party workers are given priority. 

My friend was also warning these people will ask now to increase the number of working days under the scheme and will ask to make permanent job even they move away from poverty. 

The works done under the scheme is unsustainable. It may hardly stay upto next monsoon. 

In sum, nine out of ten expects money from government without works. This is also a kind of socialism which the Nehru has created in Independent India.   

P Raghavan has a piece in FE according to which the UPA got reelected. He writes “There were 2.12 crore households demanding employment in 2006-07. The numbers rose to 3.43 crore in 2007-08 and to 4.52 crore in 2008-09. The government, in response, was forced to increase the number of households provided employment from 2.1 crore to 3.39 crore and further to 4.46 crore during this period.

Likewise English mania

Likewise English mania 

God had decided to place under a terrible rain shadow

Shekhar Gupta has two quite interesting article on new India and old election. In the first article he writes: 

Chandrababu Naidu was once the darling of reformers, of free-market economists, the Indian and foreign media and of course the larger, liberal intellectual class. All of which, he now tells us over a multi-course and fiery coastal Andhra meal, were the reasons why he lost power. “I got so obsessed with praise from all of you, that I lost contact with people,” he says. And then goes on to explain with the sort of candour and articulateness you wouldn’t expect from an Indian politician, particularly a regional, third-front type: “I became a nationalist, a statesman, and got obsessed with that image. I forgot my villages, the voters, and I will never make that mistake again. Five years out of power have been terrible. I have really suffered and struggled.” He then unveils his modified “reform” thinking. Pro-market reforms, he says, must continue, but you can’t wait for trickle-down as “I did the last time.” Reform will create wealth, he says, but the state must distribute it immediately. His solution, however, is more immediate than you would have imagined: he carries an ATM machine with him and tells voters how he will give cards to all the poor so, once a month, all they need to do is push the card into the machine, and Rs 2,000 will come out, and this is how. At a fairly energetic campaign meeting in the heart of Nellore that has at least a dozen OB vans (all from local, Telugu channels; most of them owned by politicians) in attendance, he gets a response when he explains his cash transfer scheme. As he would, at least initially, from reform economists who have been asking for just this in place of the usual government schemes for years. Except he wants this to be in addition to all the rest, including NREGA. And from where will he get the money to finance these? Naidu has some ideas that come straight from hell. 

Chiranjeevi, whom we catch up with in Palakollu, his parents-in-law’s town, not far from coastal Rajahmundhry and one of the two constituencies he is contesting from. He invites us to dinner at one of his friends’ (a film producer) plush home but turns up himself only well past midnight, fresh and on-the-go as if another day’s work was just about to begin. He is too simple and uncomplicated to be a politician yet. Born Konidela Shiva Shankara Vara Prasad to a police constable, he says he changed his name to Chiranjeevi after a dream. Then, having spent more than two decades thrashing the baddies and inevitably destroying all evil, he has now jumped into politics, with pretty much the same intention. But he acknowledges real politics is not like the movies and the victory of “good” over “evil” is not pre-ordained. He admits he has not been able to build a real organisation, is not sure if his politics is anything like the Robin Hood socialism that many of his movies portrayed, but between Chandrababu Naidu and Rajasekhar Reddy he seems to know who is the greater “evil”, even if he won’t say so in so many words.”  

The second part is here.

Hayek on Courage and Corruption: Hayek knew why India is poor………

Why India is poverty stricken? I simple would like borrow a excellent narrative from Professor F A Hayek who said “……..The economist knows that a single error in his field may do more harm than almost all the sciences taken together can do good – even more, that a mistake in the choice of a social order, quite apart from the immediate effect, may profoundly affect the prospects for generations.” 

Jeffrey A. Tucker has new essay on Professor F A Hayek I am re producing the full essay below for a record.

“F.A. Hayek's legacy has been a victim of Hayek's own success, in a way that one would hardly guess. He achieved a great deal of prominence after World War II and many of his works became ensnared in a thorny copyright thicket that has yet to be addressed by the estate, which seems completely unaware of the problem it has created for Hayek's intellectual influence in the digital age.

You see, most of the copyrights ran out for Mises's works, the overwhelming majority of which were never renewed. So when the technology became available to provide universal availability of infinitely reproducible editions of books – this is that hinge of history called the web – Mises benefitted from it to a massive extent. The same was true of Rothbard. Most of his copyrights ran out and thus could he be the world's teacher.

On Hayek, there has been massive confusion. There is no question that The Road to Serfdom, The Constitution of Liberty, Law, Legislation, and Liberty are still all tethered under the chains of that state grant of intellectual monopoly called copyright, even though Hayek himself was an opponent of all "intellectual property." It has taken the Mises Institute more than ten years to sort out precisely what texts are free of restriction and what texts are open.

So you can see that we've published a large amount just in the last year or so, and put massive amounts on line for free. Progress! Special credit here goes to the Institute of Economic Affairs for cooperating with the Mises Institute to generate beautiful new editions of Hayek's work on monetary reform.

In any case, among the tethered texts, there was the additional problem that the publisher of his collected works – the University of Chicago Press – pumped out its edition in very expensive hardbacks that were designed to sell to tax-funded libraries making purchases on an inelastic demand curve. This is not exactly a great plan for getting the word out!

Well, in time, the Liberty Fund managed to strike a deal with Chicago. Liberty Fund has been putting out uniform editions of the collected works of Hayek in a form that is actually affordable by you and me. This means an opening up of Hayek – not a complete opening but very good steps in this direction. (They are not yet online, and thus available to students, scholars, and libertarians the whole world over.)

The latest book in this series is The Trend of Economic Thinking. Of all the volumes in the collected works, this one contains material that is most rare, essays that have been published for the first time, translated for the first time, or appeared in places that were so obscure that it would have taken years of dedicated searching to snag a copy.

Here we find a Hayek that will completely dazzle you – an old world intellectual of high principle, broad reading, and rock-solid scholarly discipline. He writes essays on giants like Bastiat, Hume, Smith, Cantillon, Mandeville, and Thornton, among many others.

One essay at the beginning of the book intrigues me very much. It is a lecture that he gave students in Britain in 1944. They were studying economics. He effectively preached a sermon to them. He urged them not to look for success in their careers but rather to look at the task of an economist as a vocation. He warned that progress in economics is not like progress in the natural sciences. In the hard sciences, progress in praxis follows progress in research. In economics, however, truth is trampled by political trends, and has been for centuries.

He especially warned against seeking popularity, since that nearly always means seeking favor with political establishments – which, he says, necessarily compromises science. He is not urging that political establishments be more favorable to economics. In fact, he says that would be even worse. Economics is and must remain a monastic-style vocation in which research and advocacy be completely separated from the vicissitudes of public opinion. An economist who seeks popularity is dooming himself as an intellectual with integrity.

Now, this is an especially interesting essay coming from Hayek, who American libertarians tend to regard as being rather weak in some areas of policy. Countless radicals have picked up The Road to Serfdom to find themselves disappointed that Hayek seems to tolerate interventions that are actually very terrible for the cause of liberty. He was not Mises. He was Hayek. Having thought about why he went this direction for years – though I'm in no position to say – I would speculate that it had something to do with trying to draw on lessons he learned in Vienna from watching the career of Mises be so seriously hindered by Mises's own radicalism. Hayek must have though many times that had Mises not been so darn dogmatic and intransigent, he might have had more influence. Hayek himself decided not to go this path, and he made this choice not because he was willing to sell out but because he was desperate to find some way to heighten to the prospects for the ideas of liberty.

At the same time, he must have been somewhat conflicted because Hayek himself was no softie. He paid a high price for his views. He was the lone capitalist in English intellectual circles in the 1940s, and he was surrounded on all sides by opponents. His writings are radical and far out of the mainstream by any standard then or now. One only needs to watch his interviews in the 1960s and 1970s to see that he never compromised an inch on the subject of macroeconomic planning, for example. His views on central banking are hard core: he wanted the complete denationalization of money and said so again and again. Even when he was given the Nobel Prize, he used the occasion to blast the corruption of science and to level a devastating indictment of the path that the economics establishment had then embraced.

There is a sense in which this book will cause you to have all new respect and love for this great thinker. Here I excerpt about as much of his lecture to students that "fair use" will permit:

  • There is at least one kind of happiness which the pursuit of most sciences promises but which is almost wholly denied to the economist. The progress of the natural sciences often leads to unbounded confidence in the future prospects of the human race, and provides the natural scientist with the certainly that any important contribution to knowledge which he makes will be used to improve the lot of men. The economist's lot, however, is to study a field in which, almost more than any other, human folly displays itself.
  • The scientist has no doubt that the world is moving on to better and finer things, that the progress he makes today will tomorrow be recognised and used. There is a glamour about the natural sciences which express itself in the spirit and the atmosphere in which it is pursued and received, in the prizes that wait for the successful as in the satisfaction it can offer to most. What I want to say to you tonight is a warning that, if you want any of this, if to sustain you in the toil which the prolonged pursuit of any subject requires, you want these clear signs of success, you had better leave economics now and turn to one of the more fortunate other sciences.
  • Not only are there no glittering prizes, no Nobel prizes [1944], and – I should have said till recently – no fortunes and no peerages [Keynes was first], for the economist. But even to look for them, to aim at praise or public recognition, is almost certain to spoil your intellectual honesty in this field. The danger to the economist from any too strong desire to win public approval, and the reasons why I think it indeed fortunate that there are only few marks of distinction to corrupt him, I shall discuss later.
  • But before that I want to consider the more serious cause for sorrow to the economist, the fact that he cannot trust that the progress of his knowledge will necessarily be followed by a more intelligent handling of social affairs, or even that we shall advance in this field at all and there will not be retrograde movements. The economist knows that a single error in his field may do more harm than almost all the sciences taken together can do good – even more, that a mistake in the choice of a social order, quite apart from the immediate effect, may profoundly affect the prospects for generations. Even if he believes that he is himself in possession of the full truth – which he believes less the older he grows – he cannot be sure that it will be used. And he cannot even be sure that his own activities will not produce, because they are mishandled by others, the opposite of what he was aiming at.
  • …The reason why I think that too deliberate striving for immediate usefulness is so likely to corrupt the intellectual integrity of the economist is that immediate usefulness depends almost entirely on influence, and influence is gained most easily by concessions to popular prejudice and adherence to existing political grounds. I seriously believe that any such striving for popularity – at least till you have very definitely settled your own convictions, is fatal to the economist and that above anything he must have the courage to be unpopular.
  • …I think as economists we should at least always suspect ourselves if we find that we are on the popular side. It is so much easier to believe pleasant conclusions, or to trace doctrines which others like to believe, to concur in the views which are held by most people of good will, and not to disillusion enthusiasts, that the temptation to accept which would not stand cold examination is sometimes almost irresistible.
  • It is the desire to gain influence in order to be able to do good which is one of the main sources of intellectual concessions by the economist. …
  • …There are now, and probably always will be, any number of attractive jobs, such as various sorts of research or adult education, in which you will be welcome if you hold the right kind of 'progressive' views, and will have a better chance of getting on various committees or commissions if you represent any known political programme than if you are known to go your own way. … I don't think that the work of the politician and the true student of society are compatible. Indeed it seems to me that in order to be successful as a politician, to become a political leader, it is almost essential that you have no original ideas on social matters but just express what the majority feel.
  • …I have never really regretted that I became an economist or really wish no change with anybody else.”

May 19, 2009

Jeffrey Tucker [send him mail] is editorial vice president of

Copyright © 2009 by Permission to reprint in whole or in part is gladly granted, provided full credit is given.


It is impossible to fool the people for long

"it is impossible to fool the people for long. In a democracy, a party often tends to forget the might of the popular verdict".

Ultimately India……

Jim Rogers says:

India is a land of contradictions. The country produces some of the world's brightest minds and the single most successful immigrant community in the United States. Yet roughly 50 percent of its own population is illiterate. It's a country recognized by global leaders as a high-tech superpower. Still, I often couldn't make a local phone call. There's a lot of talk among those in power in India about how the Internet super-highway will speed them to prosperity. Meanwhile, endless traffic jams and a deteriorating national highway system kept us creeping along at a snail's pace as my wife and I traveled through countryside. Goods-carrying trucks can only average about 10 miles an hour crossing the country and often can be held up for days by the bureaucracy just trying to cross state lines.

Yes, India is changing and growing. There will certainly be more opportunities and excitement of every kind as the middle class continues to develop. India will be fascinating over the next couple of decades, but be careful of the longer term. India really is not a rational country. The English mushed India together in the panic of independence in 1947, but little heed was given to ethnic, religious, linguistic, historic, national, or geographic considerations which is one reason India has had problems with every one of its neighbors since. India as we know it will not survive another 30 or 40 years. This of course does not have to end in disaster, but it probably will given the chauvinism of its government and the way history has always worked.”

Monday, May 18, 2009

Organized labour mobs………

The Financial Express

It was not surprising to me when I saw a group of mob was selling the “unreserved” seats in a train while I was boarding from Delhi. Apparently all the security men were simply watching the mobs. The mobs sold upper seat for Rs 100 and the lower seats (where at least four people can only sit) were sold for Rs 50 each. 

Only one railway police came inside the train and was begging the mob to move out but they could not. I was told that these mobs were having a deal with railway police. 

This bring me what Manish Sabharwal writes in the FE “…our train trips from our boarding school in Ajmer to Delhi when we travelled in the unreserved train compartment and the only fight bigger than the fight to get inside was the fight to keep other people outside once we were inside. Today’s labour markets are not very different from that unreserved train compartment where only a few aspirants get in and those in do everything they can to keep others out.” 

If any one read Mr Nandan Nilekani’s book Imagining India would know that Mr Manish has been facing more than 1000 lawsuits!

'I'll be able to deal with bad reviews'

'I'll be able to deal with bad reviews'

Socialism: The beast won't die

 Socialism: The beast won't die

India's newspaper reading culture

India's newspaper reading culture

Bali Hai, Dr Reddy

Bali Hai, Dr Reddy

End the University as We Know It

End the University as We Know It

Hayek delivered ………..

Friedrich Hayek as a Teacher by David Gordon 

Swaminathan S Anklesaria Aiyar writing on reviving Indian economy saysThe immediate challenges include riding out the global recession and building on the rural development success. We are not in a cyclical Keynesian recession that can be ended by a stimulus or two. We are in a structural Hayekian recession, which requires painful elimination of global imbalances, especially excess spending in the US and excess saving in China.” 

Monday, May 11, 2009

The Indian elections-reform vs attribution

Writing in the WSJ Professor Jagdish Bhagwati says “Now that the heavy hand of the Communists has been lifted at the Center, and one can only hope that it does not return after this election, the new government at the center must return to intensified reforms, not merely for its survival, but also to ensure that poverty keeps declining.


Friday, May 8, 2009

Re-birth of Hayek Order!

After reading a few Indian blogs like India Uncut, Deeshaa etc I was interested in writing a blog of my own. When I thought of writing this blog, Hayek Order was the first name I thought of…….. But for some reason I shifted to PORUL which means WEALTH in Tamil.

Today is 110th birthday of F A Hayek. I was decided to bring back the Hayek Order name. The other reason is that a friend of mine is also famous Tamil libertarian Blogger who is more interested in Hayek’s ideas (several of them already translated) and he always refers my blog as Hayek Order even after I changed my blog title.

It may not be interesting for first time reader of Hayek or this blog but the below lines that energized me to bring back this blog. I hope you will also enjoy the coming posts. But don’t forget to stop and think about the Hayek’s idea such as the below one!

F A Hayek said “Differences in wealth, education, tradition, religion, language or race may today become the cause of differential treatment on the pretext of a pretended principle of social justice or of public necessity. Once such discrimination is recognised as legitimate, all the safeguards of individual freedom of the liberal tradition are gone”

Friday, May 1, 2009

Shankar Acharya trap

The Business Line

Shankar Acharya trap