Monday, August 27, 2012

Of that interesting reading

In this worst of the best Session of parliamentary mess in India what can one expect to respect the ruler whom we elected knowingly or unknowingly. The answer is nothing. Stop reading the political economics columns for a while to really kind of ponder about what is happening behind the door. There is no many harsh statement on many things. It become a sort of habits that many people just say what they would not have said if they really thought through it with commonsense.

I am not the one who recommends every time when Narayan Ramachandran writes about anything that he think is good to tell others about it. But this article is really worth spending your time perhaps I strongly recommend any one who is interested in the subject of invisible hand or the markets in society. The piece is absolutely excellent.

Thursday, August 23, 2012

A hurdle race for dalits too

Here is my piece in the August of Pragati-The Indian National Interest Review. Some excerpt:

  • The Quick Results of 4th All India Census of MSMEs 2006-07, released in 2009, provides the most recent available data for MSMEs. According to this, the total MSME units are 261.02 lakhs comprising 15.53 lakh registered units (5.9 percent) and 245.49 lakh unregistered units (94.1 percent). Out of this, dalits (SCs) account for a total of 20.58 lakhs comprising 1.20 lakhs registered units (5.7 percent) and 19.38 lakhs unregistered units (94.3 percent). Similarly, MSMEs owned by STs account for a total of 8.29 lakhs comprising 0.47 lakhs registered units (5.7 percent) and 7.82 lakhs unregistered units (94.3 percent). Together, SCs and STs own a total of 28.87 lakhs MSME units (11.06 percent) (registered: 1.67 lakh and unregistered: 27.20 lakh).
  • Out of the total units, only 70 percent are estimated to be working and others are either closed or not identifiable. It clearly seems that the prevailing rules and procedures are so hostile to any entrepreneurial activity as witness 90 percent of MSMEs remains unregistered.
  • The Economic Census for 2005 (latest available) throws up some more interesting facts that seem to belie the economic backwardness of certain communities. For example, OBCs (Other Backward Classes) have a 27 percent quota in government jobs and educational institutions, yet they own 15.92 million units (out of a total of 41.82 million). The SCs with 15 percent reservation in government jobs and colleges, own 3.69 million units and STs run 1.52 million units. Out of a total of 6.08 million establishments in the farming sector, the share of OBCs was 2.81 million (46.24 percent), SCs was 0.61 million (10.08 percent) and STs was 0.38 million (6.32 percent). More than 93 percent of these units owned by OBCs, SCs and STs were in rural areas.
  • Two vital issues emerge out of these statistics relating to dalits MSMEs. One, majority of MSMEs are unregistered. Two, more importantly most of the dalits owned MSMEs are in rural area. Therefore, the government decision to reserve MSME units for procurement has no relevance and thus decision taken clearly shows a political motive.

Why Amartya Sen likes Prof James Buchanan's theory of public reasoning?

Meeting different people is not all that bad even if some one is really thinking differently about them. I had brief opportunity to meet Prof Sen early this month. He had mentioned about one of his new article and that is the one I am citing here. It is worth to read the entire article for the below para alone.
  • "Public reasoning is not only crucial for democratic legitimacy, it is essential for a better public epistemology that would allow the consideration of divergent perspectives. It is also required for more effective practical reasoning. It can bring out what particular demands and protests can be restrained in interactive public reasoning, in line with scrutinized priorities between a cluster of quite distinct demands. This involves a process of “give and take” which many political analysts, from Adam Smith and the Marquis de Condorcet in the eighteenth century to Frank Knight and James Buchanan in our time, have made us appreciate better."

Not a bad idea

"The major problem with many micro issues is that these are under the jurisdiction of states. Each state has its own peculiarities and contours that vary according to the leader in charge. One way forward is to establish a non-partisan Chief Ministers' Governance Forum, as advocated by former Prime Minister Atal Bihari Vajpayeein 2002, which can offer a structured platform for exchange of experiences of successes and failures. In our own experience comparativeness exchanges help hugely." More here.

Prime time ahead for F A Hayek

"To an Austrian, the economy is incomprehensibly complex and constantly changing; and technocrats and politicians who claim to have figured out how to use government are deluded or self-interested or worse. According to Hayek, government intervention in the free market, like targeted tax cuts, can only make things worse." More here.

Wednesday, August 22, 2012

Of that Freedom Day

Ramachandra Guha concludes in his article on India's 65th Independence Day that:

  • Sixty-five years after the British departed, the Republic of India remains a work in progress. The experiment has clearly not failed; nor has it emphatically succeeded. Home to the most elevating as well as the most depressing aspects of the human experience, it inspires — in this citizen at any rate —pride and embarrassment in equal measure.

Swaminathan Aiyar on Independence Day: Why Partition was a good thing for India

Tuesday, August 21, 2012

Capitalism in India

Madly rushing political analysts writes:
  • The spirit of Jawaharlal Nehru, to some extent, endures. He wrote nearly seven decades ago: “It would be absurd to say that the profit motive does not appeal to the average Indian, but it is nevertheless true that there is no such admiration for it in India as there is in the west. The possessor of money may be envied but he is not particularly respected or admired. Respect and admiration still go ... to those who sacrifice themselves ... for the public good.” Doubts about the profit motive are lower today, but they have not vanished. India is embracing capitalism by stealth.

Interesting reading

Manish on rightly asks why there is no narrative for youth in India in the contemporary political setups. The following para is really suburb:

  • The garibi hatao card does not work because voters are jaded by the lack of execution of promises since that slogan was coined 40 years ago. The free electricity card does not work because it leads to no power, which infuriates the people further. The reservation card does not work because we have reached the limits of confiscating capacity in hiring, education and promotions. The big state that is financed with deficits is discredited because the economic mayhem of the past few years shows that there is no magical “multiplier effect”, and deficit financing leads to inflation with no boost in output. The freebies card is less effective because it has to be given to everybody, since fixing the plumbing to target its distribution is so difficult to achieve. The majboori card is less potent because of prosperity; it is much harder to get people to migrate to big cities than it should be. The foreign enemy card does not work because Pakistan is imploding and we are hardly surrounded, like Israel is. The mystique of the incumbent does not work because the 24-hour news cycle encourages breathless breaking news over reflection. The “young blood” card does not work because the only pathways in politics are geriatric. The corruption card does not work because, um, if everybody lives in glass houses, everybody needs to answer the bell. 

Wednesday, August 8, 2012

At least a generation gap the ATM revolution took place in India compared to America.

Atalji's wise words: "Tragically, morality and ethics are at a discount in politics today, not only in India but countries across the world." 

New Finance Minister's new mantra: "I would like to make it clear that the burden of fiscal correction must be shared, fairly and equitably, by different classes of stakeholders. The poor must be protected and others must bear their fair share of the burden. Obviously, adjustments must be made both on the revenue side and on the expenditure side.

Niranjan of The MINT wonders whether Finance Minister is musing to increase the tax bases?

Instead of making useful sense of argument, they start fighting among themselves (1, 2) from the day one. The case in point is the review committee constituted for revisiting cartoons in school textbooks. Don't forget, all in the name of poor 'dalits'!!

Sunday, August 5, 2012

RSS: Shah, Singh and Rangeela

Aakar has narrated a wonderful story about the fall Indian one party power rule. His conclusion is not entirely new discovery but is extremely sum's up the present state of society and governments at State and Central level in India. 

  • "The position of Manmohan Singh is almost the same as that of Muhammad Shah, who called himself Rangeela—the colourful.
  • Not all of Rangeela’s rule was bad, and this was the positive aspect I referred to earlier. His patronage gave us Sadarang, composer of many popular Hindustani bandishes (Bhimsen Joshi said when he forgot theantara’s lyric in a song, he would wail “Sadarang!” to fill space).
  • Ending his four-volume Fall of the Mughal Empire, Sarkar stepped back to assess what he had studied for six decades.
  • “Corruption, inefficiency and treachery disgraced all branches of the public service. In the midst of this decay and confusion, our literature, art and even true religion had perished.”
  • The 86-year-old scholar concluded that our condition is the result of “the rottenness at the core of the Indian society”.

It is worth to spend your time to ready the full article from here.

Some Links

Thursday, August 2, 2012

Feeding POWER and Friedman on India

Interesting reading:

There is a interesting lines in one of Prof Milton Friedman's article which blinks the current political situation of Indian polity. Here is the lines from his 1999 article "No Third way to the market":

  • Today, the "market" is said to be either utterly triumphant or a grave threat. Politicians everywhere quest for a "third way" around its rigors, yearning for "national champions" in industries like telecoms capable of holding off globalization. The market, however, is simply a mechanism that can be mobilized for any number of purposes. Depending on the way it is used, the market may contribute to social and economic development or inhibit it.
In the same article Friedman explains the bicycle industry's in Punjab in India:
  • In India's Punjab there was a plant producing bicycles. Government rationed steel to users rather than selling it at a market price. The bicycle producer could not get the amount of steel needed at the official price. However, there was a private market in finished or unfinished steel products. So the bicycle manufacturer supplemented his rations through buying semifinished steel products and melting them down - hardly an efficient way to convert iron ore and coal into bicycles.
Read from a Focal Point for Friedman @ 100 a list of very interesting articles by Friedman. 

Wednesday, August 1, 2012

Friedman's "Tyranny of the Status Quo"

One of the living legend of liberal economists is Prof Sowell. Some excerpts from his article on Friedman:

  • "No one converted Milton Friedman, either in economics or in his views on social policy. His own research, analysis and experience converted him.
  • As a professor, he did not attempt to convert students to his political views. I made no secret of the fact that I was a Marxist when I was a student in Professor Friedman's course, but he made no effort to change my views. He once said that anybody who was easily converted was not worth converting.
  • I was still a Marxist after taking Professor Friedman's class. Working as an economist in the government converted me."

India: Friedman and Galbraith

"Once in the early 1960s, Friedman wrote the then-U.S. ambassador to New Delhi, John Kenneth Galbraith, that he would be lecturing in India. By all means come, the witty but often wrong Galbraith replied: "I can think of nowhere your free-market ideas can do less harm than in India." As fate would have it, India did begin to embrace Friedmanism in the 1990s, and the economy began to soar. China finally caught on too." Full article is here.