Tuesday, November 27, 2012

"The source of confusion here is that there was a Good Hayek and a Bad Hayek"

Prof Solo has very interesting book review article in NTR on Professor F A Hayek: A bit from it:

  • "The source of confusion here is that there was a Good Hayek and a Bad Hayek. The Good Hayek was a serious scholar who was particularly interested in the role of knowledge in the economy (and in the rest of society). Since knowledge—about technological possibilities, about citizens’ preferences, about the interconnections of these, about still more—is inevitably and thoroughly decentralized, the centralization of decisions is bound to generate errors and then fail to correct them. The consequences for society can be calamitous, as the history of central planning confirms. That is where markets come in. All economists know that a system of competitive markets is a remarkably efficient way to aggregate all that knowledge while preserving decentralization.
  • But the Good Hayek also knew that unrestricted laissez-faire is unworkable. It has serious defects: successful actors reach for monopoly power, and some of them succeed in grasping it; better-informed actors can exploit the relatively ignorant, creating an inefficiency in the process; the resulting distribution of income may be grossly unequal and widely perceived as intolerably unfair; industrial market economies have been vulnerable to excessively long episodes of unemployment and underutilized capacity, not accidentally but intrinsically; environmental damage is encouraged as a way of reducing private costs—the list is long. Half of Angus Burgin’s book is about the Good Hayek’s attempts to formulate and to propagate a modified version of laissez-faire that would work better and meet his standards for a liberal society. (Hayek and his friends were never able to settle on a name for this kind of society: “liberal” in the European tradition was associated with bad old Manchester liberalism, and neither “neo-liberal” nor “libertarian” seemed to be satisfactory.)"

Random reading

Sunday, November 18, 2012

Of that food kill Bill

Friend Vipin and Atanu Dey has very interesting article in the Pragati magazine. His way looking at the various issues which is being debated in India on Food Security Bill is very relevant. Below are the concluding paras:

  • Some say that the PDS works in Chattisgarh and in Tamil Nadu. Such statements must be looked upon with caution. What they really mean is that wastage in these states is less than that in other parts of India; failure becomes a benchmark for success. The real judge – and indeed the only economic judge – is how the PDS fares compared to alternate methods of delivering food, namely the market mechanism. History has it that no other mechanism of employing scarce resources holds a candle to market mechanism when it comes to the question of efficiency. The inevitable conclusion is that even in Chattisgarh and Tamil Nadu people would be made better off if the PDS were shut down and citizens provided with food coupons instead.
  • Three months after the UPA government, tabled the Food Security Bill in the parliament a group of thirty-six Indian economists (from MIT, Harvard, Delhi School of Economics, JNU, et al.) wrote an open letter to the Prime Minister (The Hindu, 12 March 2012) greeting the bill as an “important step towards the elimination of hunger and under-nutrition in India” and asking for a few modifications. One is reminded of the years of Nehruvian planning when the great debates were about “how government ought to plan” not “whether government ought to plan”; and nearly all Indian economists toed the government line. Back then B R Shenoy penned the only note of dissent to the Nehru-Mahalanobis second five year plan. India needs the likes of Dr Shenoy today.

Friday, November 16, 2012

Media folly of all kinds

Prof Kishwar has done a great job in profoundly analyzing the facts about Gujarat's Chief Minister Modi's recent speech in the State of Himachal Pradesh. It is worth to ponder over the below paras.

  • "If Modi’s concern for reducing women’s drudgery is genuine, if he has actually delivered piped gas to seven lakh rural households and intends to cover all the rest, if every household in rural Gujarat is getting round the clock power supply, his frivolous remark against Sunanda Tharoor is not enough to damn him for being anti-women. Mere lip sympathy for women won’t do. I prefer politicians who care for women’s well-being in concrete ways.
  • No politician dare marginalise the life concerns of the mass of our women as systematically as large sections of our media do, with their disproportionate attention to glamour dolls, film stars and the doings of the fashionable elite. It is easier to call monstrous politicians to account than media monsters."

Meaning that 'public policy'

Prof Ila has a very interesting piece on the ultimate impact and true use of Aadhaar in India. Read NIPFP study finds large returns from Aadhaar project

The FTI Team has also announced huge prize for public policy competition

Back to Marx and banking in 21st century. Read "Marx would have been proud of bankers".

Thursday, November 15, 2012

Of that "New Liberal Centre"

Here are some interesting readings. Though, a new set of debate is seems to be underway, yet, from Ramchandra Guha.

By the way, do not forget to read the comments on the first two pieces by Guha. It is very entertaining.

Friday, November 9, 2012

True to M K Gandhi

"India’s history books in the past sixty years have been written by Marxists, and Gandhi’s views have been distorted to fit in with the Marxist agenda. These books suppress Gandhi’s views on Marxism and socialism and instead present a sanitized version of history with Gandhi merely as a hero to be worshiped before invoking the doctrine of socialism. Instead of deifying Gandhi as a Mahatma and blindly worshiping him, Indians would do well to objectively examine his works and understand his political views." More here.

Wednesday, November 7, 2012

Capitalism = Insights

From A N Shroff memorial lecture delivered by Arun Maira on 9th October, 2012.

"Revisiting the role of India’s Planning Commission

When I joined the Planning Commission as a Member in 2009, one of the tasks the Prime Minister assigned to me was to determine what role the Planning Commission should play in 21st century India. I asked Montek Ahluwalia, the Deputy Chairman of the Planning Commission to give me a list of 20 persons to whom I should ask this question. He gave me a list of 20 respected citizens of the country. Some of them had worked in Government in very senior positions, in the Reserve Bank, in Parliament, some even in the Planning Commission in the past. And several others were respected industrialists of the country.

I asked each of these 20 leaders the following questions:
  • Is the Planning Commission playing a useful role for the country?
  • If not, is there another role that the Planning Commission could play in India’s progress?

The answer to the first question was unanimous. The Planning Commission was no longer making a significant contribution to the progress of the country. The country had changed. It was more decentralized politically and administratively. The private sector was playing an increasingly large role. The Indian economy was more connected with the international economy. For all these reasons, five year plans and budgets made by some experts in Delhi, which had then to be implemented by people all over the country, was an outmoded idea. 

However everyone, including the industrialists, said that the dynamic nature of changes in India and outside required a strategic group that, like a radar, could sense the forces that were causing change to happen and that could provide governments in the center and in the states, and private industry too, with insights into the forces shaping the future.

A More than Perfect Storm

I will now give you a picture of the forces shaping our future. I will also explain their effects on institutions of democracy, capitalism and government. I will use two images for you to visualize these forces and their implications. One, an image of a storm. The other, an image of a globe in stress.

First the image of the storm. Many of you may recollect the ‘Perfect Storm’ that Sebastian Junger described in his book. Not two, but three storm systems converged in the North Atlantic. This was unprecedented. No ship had been designed for such conditions. And no captain had the skills to steer a ship in such a ‘perfect’ storm.

As the 21st century unfolds, there are four strong winds blowing across the world and converging to create a more than perfect storm which is challenging captains of business and government institutions that are not designed for these conditions.

Free Markets and Capitalism
The first strong wind is the idea of free markets and capitalism. This is not a new idea. Often attributed to Adam Smith, it has been around for at least 200 years."

Friday, November 2, 2012

Back to Normal!!

Friends thanks for bearing with me! I got married on 18th of last month. Hence, no post for long period. Not many things happening in India in terms of new good economic policy making. Anti-corruption movement wallas taking up self-stage for granted partly believing that the voters are their side or for that matter the funding parties.

Though, there were many interesting readings in the past two weeks. Here some of them.

IAC should go beyond corruption by Prof P V Indiresan