Tuesday, July 31, 2012

Milton Friedman@100

Today, the late versatile economics freedom loving professor Milton Friedman turns 100 year old. World over, celebrations have began, some write a piece of article, some put video contest, some write few blog posts, some organize lecture, some organize debate/discussion, some organize a freedom walk (India, Pune!!), some organize sweet talk among friends and some do it some or all the above for disagreement with whatever Professor Milton Friedman said in his life time.  

To me. Friedman was a kind of window through him and his works I saw the world of argument for and against on economics, of course the free market economics. Regarding his monetary economics stand, I differed to agree with Prof F A Hayek.

Simply, I often tell my peer group to remind and to students by way of introduction that Friedman means the following:
Here is a list of some others:
  1. Prof Donald J. Boudreaux's article on "Milton Friedman, a centennial appreciation"
  2.  Friedman on India
  3. Happy 100th birthday Milton Friedman
  4. Milton Friedman’s Century
  5. Time's Milton Friedman, Freedom Fighter

Monday, July 30, 2012

Great divide between Delhi and Bombay

"I’ve said sometimes that there is a great divide between Delhi and Bombay. In Bombay people think you can make money and they make money through enterprise and with that you can buy some power. In Delhi we think we have the power because we live in Delhi. We have politics, we have the joint secretaries, we have the levers of power. So through that power we can make money by taking bribes, by taking gifts or just by harassing and blackmailing people who make money through enterprise." 

From Shekhar Gupta's speech. See here for full speech.

Its, Hayek's Time

From Desai's article:
  • "All this is so old-fashioned that it has been forgotten. On the eve of the Keynesian Revolution, Hayek was warning of mal-investments induced by the market rate of interest being below the natural rate for any length of time. This was the Wicksell model, tweaked by Ludwig von Mises and Hayek to accommodate bank credit in the Walrasian framework. It flopped spectacularly in the 1930s and was forgotten. But good ideas never die in economics. They only wait till their time comes. This is Hayek’s time.
  • Sadly, in Hayek as in Marx, economics is not a policy science and there are no tool kits to fix the problem. Time will restore the equilibrium perhaps not at the old trend but a new one. When that will happen is not within economists power to predict. Just wait and see."
But it clearly shows that Mr Desai is confusing what Wicksell or for that matter Walrasian argued with that of Hayek and Mises views on regulating rate of interest at particular level in an economy. The underlying truth is that Mr Desai never got it right the original arguments of Hayek and Mises. Rather he always looks at them through the wild eyes of Keynes!

Loot by vote

From A G Noorani's article in The Hindu:

"We have moved far from the early days of independence when Rajaji described the tribe as gentlemen without any ostensible means of livelihood who can be rounded up by any magistrate on a charge of vagrancy."

Sunday, July 29, 2012

" It is time to liberate India from Nehru’s flights of whimsy"

Swapan Dasgupta says "Time to take off Nehru’s ceremonial straitjacket?"

  • The first two occupants of the palace on Raisina Hill after Independence had, after all, assumed charge in markedly different clothes: Lord Mountbatten in the ceremonial uniform of an admiral of the fleet, and C Rajagopalachari in a white khadi jacket and dhoti. 

Saturday, July 28, 2012

London life

From Ramachandra Guha's article "A London Year":
  • "Living as I do in Bangalore, a placid, even-tempered city not known for the vigour of its intellectual life, I took full advantage of my temporary good fortune. I heard more good talks in a year than I would in my home town in a decade, perhaps several decades. I listened to (and was educated by) several superb lectures on the Arab Spring, attended an excellent panel on Latin American politics, and heard a learned (and witty) disquisition on the relative merits of the economic theories of Friedrich Hayek and John Maynard Keynes.
  • London is an international city which has also long been an Indian city. The first desis who passed through or lived in London — in the 17th and 18th centuries — were sailors, sepoys and domestic servants. They were followed by maharajas and nawabsand, from the 19th century, by students and professionals.
  • To the historian of modern India, London carries a special significance, for it bears the imprint of the remarkable Indians who passed through its streets and houses. Rammohan Roy and Rabindranath Tagore spent extended periods in the city. The Grand Old Man of Indian nationalism, Dadabhai Naoroji, lived here for several decades, in which time he served a term as the member of parliament from the London locality of Finsbury.
  • The LSE, where I taught, is the alma mater of, among other people, V.K. Krishna Menon, K.R. Narayanan, and B.R. Ambedkar. Just north of the LSE is Holborn, which once had a vegetarian restaurant that a young M.K. Gandhi regularly patronized. Just south-east of the LSE is the Inner Temple, where Gandhi articled to become a lawyer. Gandhi returned to the city he had known as a student in 1906, 1909, and 1914, travelling each time from South Africa. He came back one last time in 1931, to plead the case for Indian independence."
Professor B R Shenoy also studied in LSE.

Thursday, July 26, 2012

Economics is truth

"Later in life, when speaking before a group of economics students, Hayek bared his soul about this problem of the moral choices economists must make. He said that it is very dangerous for an economist to seek fame and fortune and to work closely with political establishments, simply because, in his experience, the most important trait of a good economist is the courage to say the unpopular thing. If you value your position and privileges more than truth, you will say what people want to hear rather than what needs to be said." More here.

Economist Deena Khatkhate's LKMK!

A bearded man, aged, dressed in nineteenth-century western style, a broad, lapelled jacket with a crumpled necktie of faded colours, with narrow-bottomed trousers reaching up to the knees, landed at Santa Cruz airport one chilly morning in December 1989.” This is Karl Marx. From Mumbai he is sent off by immigration to Kolkata and a mutually unsatisfactory dialogue ensues with CPM leaders." See for more here.

Wednesday, July 25, 2012

Cash IN PDS Out

India: F/L

"In the pre-Independence era, viceroys, the inhabitants of the presidential palace, were Lords and their wives Ladies. C. Rajagopalachari, who took over as India’s governor-general, was a widower and he did not bother about the role of a hostess. The viceroys used to throw frequent parties and celebrate every occasion in the breathtaking, beautiful and elegant Rashtrapati Bhavan; Rajagopalachari never entertained such extravaganza. He is said to have refused to live inside the palace as he found it too fancy. He even went to the extent of ploughing a part of the Mughal Gardens to grow wheat when the country faced a foodgrain shortage." More here.

Monday, July 23, 2012

Ruining the drive from sitting backseat

Mr.Manish  writes:

  • "Today, policymaking in Delhi has seven backseat drivers — the judiciary, the Comptroller and Auditor General (CAG), the Central Vigilance Commissioner (CVC), the CBI, the National Advisory Council (NAC), non-government activists, and the media. Each of them is trying to outdo — and out-scream — the other in second-guessing every policy decision of the past with the benefit of knowing what finally happened. However, fraud, incompetence and plans not working to plan are three different scenarios."

Sunday, July 22, 2012

"Cognitive limitations" of new age socialists

Here is an article by a friend of mine on the argument of poor people and their cognitive limitation to choose things from more choices in the market. Socialists think more choices is bad for poor while all those wild choices have been enjoyed by the very socialist in India and outside but they deny for others whom they choose to call it poor!!

Disorder polity

Mr.J. Narayan of Lok Satta writes:

  • "We can discern three phases of politics since 1947. The first phase (1947-67) saw nation-building and Congress monopoly. The second (1967-89) saw a challenge to Congress monopoly and the emergence of alternatives. The third phase (1989-2000) witnessed fierce competition for power in each state and at the national level. We are now entering a fourth phase—characterised by anger and ennui, delegitimisation of politics, cynicism, rejection of established parties, fragmentation, invoking primordial loyalties, zero-sum-game politics, rampant corruption, and increasing incapacity to address challenges or have an honest conversation with people, a failure of nerve, and intense, reckless populism.

  • Where do we go now? Is Indian politics bound to degenerate and lead to anarchy? Is our economy doomed because of failed politics? Will India be an also-ran, instead of being a major world economy? Will the next generation continue to suffer unnecessary poverty, pain and anguish? Is there a way out of the political morass? These are the inevitable questions today."

India's cult unionism

From Manish's article in today's ET: 

  • "There are three possible explanations. The first one comes from Joseph Stalin who recognised that anecdotal evidence makes better storytelling than logic and said “When one person dies it is a tragedy but when millions dies it is a statistic”. The second comes from the work of economist Mancur Olson who researched interest groups. He described how a small minority in a democracy that is vocal and organised can hijack the agenda in democracy. His work on “distributional coalitions” is a tight explanation of what we see in a shortage economy like India where dividing the pie in your favour is the only option when the pie is not expanding." 

Indian economics

  • Dealing with dying Indian rupee Prof Roy writes "Yet some 65 years later, sovereign India has failed to develop a currency universally acceptable as a freely convertible world money. Nor do trade, monetary, fiscal or political conditions appear such that the rupee can become a hard currency of the world economy easily or very soon."
  • This article author seems to be trying government and so he try to push utterly confused economist like Jean Dreze. For the sake he says "However, views are still expressed across domains. Expecting a convergence of opinion is as challenging as getting John Maynard Keynes to agree with Milton  Friedman or Robert Lucas or Friedrich Hayek. But, still they do generally talk the same language as all these arms function as a whole."

Saturday, July 21, 2012

Perceptive Indians

The current debate on "Indians great, greater, greatest" is very symbolic one. I say symbolic because the present set up of politico-economics is such that the media is able to figure out clearly where they can reap maximum masses trap in to it. All for that shame sake, Nothing else.

However, what attracted me in the long article by Ramachandra Guha in today's The Hindu is the following line. Perhaps a happy line.

"Nehru, on the other hand, is a figure of disinterest and derision in India today," 

Tuesday, July 17, 2012

Liberals by caste!!

Mr Ramachandra Guha has a very interesting book review article in The New Republic titled "The Other Liberal Light". He reviews two different book: one on pre-Independent India and second one on post Independent India. First is by an historian and the second is by a sociologist. 

At least to me, he disappoints in the first part of the review. In the second part I somehow enjoyed a bit more.

Probably in the first part he could added few things from his work which he recently published. I am talking about his book on Makers of Modern India.

Nevertheless, the review piece provokes few strong questions on achievement of different matter in post Independent India. Largely he Mr.Guha focuses on social and political freedom aspects. And he leave out the entire economic freedom part. May be one has to read the books to find out whether authors themselves have left out that part or not because that will be biggest failure in both these books.

Wednesday, July 11, 2012

Weak-leak in every corner

The prospects of Indian economy is punchered continuously.

The industry top-cons are rounding few policy makers to get their share of a cake and try to eat it alone.

The media of varied types tunes with the porn words of infamous politicians who wanted to be in the minds of public because otherwise nobody cares them, who the hell are they.

The NGOs (including the liberal one) are doing the business of multiplying the unaccounted evils and ills in the name of improving the poor people's lives.

Elaborated articles here for your consideration.

For a smarter mind by Dr Ashok V Desai

Why Are the Suits Crying? by Manu Joseph

India Singhs the Blues by Sadanand Dhume

Monday, July 9, 2012

Merchants of Policy

That the post of this title is a long way walk.

I buddy of mine landed in city. After works, I had a long walk today. Probably we might have walked for not less than 12-15 km. All in a single park! The conversation between the steps in walk was pleasant and so the walk was so long then expected.

The conversation was not about politics or economics or who gets elected as next president. But it is all about the good writer versus bad writers in the world and at home in India.

This buddy of mine had a experiences which is of different sort in a developing society like India.

Here is a piece wherein he describes his journalism career. The case in point is compelling to read and ponder how bold is the buddy.

  • "I saw one charlatan after another coming to my apartment on various pretexts. The accountant who believed that siphoning off funds is an acceptable norm begged that he should be spared. The chairman and funding organisations refused to look into the evidence, despite my persistence. But there was not one person who was willing to give me a written disagreement. The German foundation funding the think-tank thanked me for the information, but hiked the funding generously the next session. Though few think-tanks are above swindling their donors, this is rarely necessary. In many cases, the ‘illicit relationship’ is mutually beneficial as the funds are often the hapless taxpayer’s.
  • There was an underlying rationality to all this irrationality. When a young anarchist friend pointed his finger at the tax amount on the bill at a coffee shop in South Delhi and said, “I really hate this, but my salary cheque comes from here,” I felt it perfectly illustrated a fundamental problem associated with the think-tank industry. He had just joined a government think-tank that did empirical research. But he did not believe in empirical research or mathematical modelling. He loathed the tax collector. I gathered that he was slightly embarrassed about the whole affair. Wasteful spending in the name of noble intentions is bad enough, but what if the intentions were not noble in the first place?
  • There are many who do not share the embarrassment, and lean on the cowardly excuse that it is hard to be honest while working on policy matters. A think-tank president had once confided to this young man and another intern that his innermost convictions contradicted his organisation’s open agenda. Not long back, I read the experience of an author who lectured at this organisation’s seminars. The think-tank long owed him some money, but the president was not willing to reply to his mails. What differentiates many of them from outright criminals is the respectability in the perception of simple-minded men."

Friday, July 6, 2012

Poverty-wallas, toilet-wallas to LPG cylinder-wallas

Prof Bibek Debory writes quite interestingly on LPGGasnomics in India:

"But not long ago, every time we ran out of a cylinder, there would be a problem. We were told there was a norm of no refills for 21 days, which works out to something like 17 cylinders a year.

I understand this quantitative cap no longer exists. However, it is some kind of norm to indicate how many subsidised cylinders you should be entitled to every year, and there is also a proposal floating around that each household should get no more than five subsidised cylinders a year.

If you now milk data on that portal, there should be a tear in every eye. In the year ended May 31, 2012, these are the kinds of numbers we have: Naveen Jindal (369), Hamid Ansari (171), Preneet Kaur (161), Vijay Bahuguna (83), Rajnath Singh (80), M S Gill (79), Maneka Gandhi (63), Suresh Kalmadi (63), Mulayam Singh Yadav (58), Ram Vilas Paswan (49), Sharad Yadav (49), Ashok Gehlot (45), Lalu Prasad Yadav (43), A Raja (47), Sharad Pawar (31) and Jaipal Reddy (26).

You can mess around with the portal for other nuggets. Why did A Raja need LPG cylinders if he was in jail? Is the late Prime Minister Chandra Shekhar dead or alive? How come he still receives 48 cylinders? Isn't there a norm that there can be only one connection per household?
How did Salman Khurshid get two connections and consume 62 cylinders? Isn't there a norm that the same individual cannot get two connections under two names? How did Mayawati get two connections and consume 91 cylinders? Naveen Jindal at the head of the league is symptomatic."

More you can track your own house and your enemies house how many cylinder they get in a year from the website

After committing significant reporting error on Indian economist Montek, the Tehelka apologises now!! What is the use?

"An earlier version of this story stated, incorrectly, that Pavan Ahluwalia worked for Price Waterhouse Coopers, in London, and that he was appointed by them to work on a project to privatize the Delhi Jal Board. Mr. Ahluwalia has never worked for Price Waterhouse or lived in London. He worked as a consultant to the Government of Delhi on a project to undertake institutional reform of the Delhi Jal Board, and was not involved in any discussions or decisions to related to its proposed privatization. The story also quoted Arvind Kejriwal as saying that the Delhi Jal Board project was initiated by the Department of Economic Affairs, when Mr. Montek Ahluwalia was Secretary (Economic Affairs). Online records of the correspondence between the World Bank, the Government of the National Capital Territory of Delhi (GNCTD), and the DEA, however, show that Mr. Ahluwalia was not involved in initiating this project, which was put forward by the Chief Secretary of the GNCTD The DEA was simply playing its nodal role, as the agency responsible for forwarding state requests for World Bank assistance, and this involvement was at the level of Additional Secretary V Govindrajan.

Tehelka regrets these errors, which have unfortunately been carried in the print edition. We apologise to Mr. Ahluwalia for the inconvenience this has caused. The error will be corrected in the next print edition as well. http://www.delhijalboard.nic.in/djbdocs/reform_project/docs/docs/doc_project_prep_docs/pdf/correspondence/27_04_1998.pdf

Wednesday, July 4, 2012

Of that fault lines

Finally, I read the book "Fault Lines: How Hidden Fractures Still Threaten the World Economy" by Professor Raghuram Rajan. Its a wonderful book. All those interested in understanding the global economic issues and challenges should read it at least once. He gives great narrative in each chapter in the beginning and good summary at end.

The chapters I enjoyed reading are chapter 2 and chapter 9.

The full introduction chapter is freely available here.

Some of the interesting book reviews:

WSA piece here, here is another piece by Rajan's friend highlighting the essentials, here is must read piece and the last one I would like to cite is here

Monday, July 2, 2012

PM & FM folly

Furious Shankkar Aiyar remarks: 
  • "It is fortuitous that the Prime Minister has introduced the concept of animal spirits and Keynes into the discourse. The illusionists need to appreciate that the economy cannot grow in a political vacuum. Keynes did believe that “a large proportion of our positive activities depend on spontaneous optimism rather than on a mathematical expectation, whether moral, hedonistic or economic” and that “the decision to do something positive can only be taken as a result of animal spirits”. But he also said that “economic prosperity is excessively dependent on a political and social atmosphere which is congenial to the average businessman”.
  • "IG Patel, the well-known economist and former governor of the RBI, once described Manmohan Singh as "under-rated as a politician and over-rated as an economist". Given the dire state of the economy, we must hope the PM proves Patel wrong and lives up to his rating as a first-class economist." more is here.