2019-Year End Reading - Books and Good Works

Every new year has several new things to note and look back. But certain aspects are more important to remember for near future. Here are some odd things that I would like share as first post of year end things.

Few basic economics books for making work our commonsense works better for understanding the world better.

This book on Indian Economy gives a beautiful narratives "draws parallels between China, Europe, East Asia, United States, Independent India" 

A collection of year-end reads to give you food for thought

The era of right’s might

Best Non-Fiction books of the decade

This piece of work is really gloomy than the real Indian Economy upon it paint so easily with pains without truths!

This piece on CAA is something i would have liked to stress upon it with more elucidating facts of literacy of democracy

Odd reading

At times in the dynamic world of human interaction it is good to follow a odd reading habit. I say odd with blinking  muse of three different worlds, yes three worlds within us-the society, the economy, and the politics.

I also find more useful and also peaceful to simply read things at lea-nth rather to co-opt to write and argue the same stuffs with different slang in languages.

Here are the recent odd reading:

Most of my last decade was spent working with nuts in govts.....At no point I can bear with good B.............ts as saying there are exceptions.

"eliminating good candidates and enlisting ‘educated’ idiots. If you want proof, please remember that Indian bureaucrats are world famous for being obdurate, arrogant and obsolete."

... there are too many people and too much paper money around.

Politics over new head of ICHR- I tend to agree more with S.Dasgupta than R.Guha.

From Guha's piece: "Contrary to what is sometimes claimed in the press, there are many fine historians in India. From my own generation of scholars, I can strongly recommend — to student and lay reader alike — the work of Upinder Singh on ancient India, of Nayanjot Lahiri on the history of archaeology, of Vijaya Ramaswamy on the bhakti movement, of Sanjay Subrahmanyam on the early history of European expansion, of Chetan Singh on the decline of the Mughal State, of Sumit Guha on the social history of Western India, of Seema Alavi on the social history of medicine, of Niraja Gopal Jayal on the history of citizenship, of Tirthankar Roy on the economic consequences of colonialism, of Mahesh Rangarajan on the history of forests and wildlife, and of A.R. Venkatachalapathy on South Indian cultural history."

From Dasgupta's piece: "as repeated controversies have indicated, history is too serious a business to be left to the “eminent historians”. For the past few decades, India’s awareness of its own past has shrunk on account of the growing insularity of its historians. Judging by the dense and jargon-infested prose, India’s historians are no longer communicating with the wider world but engaging in closed-door conversations. This has to change." 

Rajaji said to the governors: “You should not imagine that you are just figureheads and can do nothing… Our prime minister and deputy prime minister do not hold that view. They want you to develop your influence for good and they expect you to find means for achieving it without friction and without prejudice to the march of democracy.”

NDA's First Budget 2014

First Thought: Given the conditions of prevailing Indian political economy, the Union Budget for 2014-2015 is a good start for many new thinking of the new government. In many ways, the government has clarified the official focuses and intentions in many sectors particularly in small entrepreneurs development, infrastructure development, energy sector, and so on. The income tax and other tax saving exemptions are very important positive development for millions of people.

Sensible good people agree on all the right directions of the Budget and expose the wrong intentions. On that line here are some good points from the random experts. I do not agree with everyone on all the matters of budgeted issues/challenges.

To start with. Dr Bhalla says the "Budget 2014-15 (but not the long “everything and don’t forget the kitchen sink” speech) is one of the best content budgets of the last two decades." 

PBM says "This budget is a cross between bad elements of UPA 2 and NDA 1; there is no new Modi 1 in sight yet. The budget has no poetry and uncertain plumbing."

Dr.Desai on "the gigantic statue of Sardar Vallabhbhai Patel. I am a great admirer of him; I met him for the last time just two months before his death. But a statue of him is of the same order as the elephants erected by Mayavati, only a hundred times more wasteful."

Other useful links:

If you care about global warming, blame Keynes and follow Hayek.

What does socialism do to ethics

Primer in Economics Prospersity

Income inequality of the world is falling in last two decades

Read, well

Whether you like it or not, I strongly believe that one has to read between the lines to do things different in musings of once own. I simply follow as a matter of fact that unless you have something different to say or argue its better to keep mum and watch what's going around you. There are very good articles in today's newspaper/blogs etc. Here are some list:

Access to loos: Amartya Sen’s views fail the smell test

Let’s Shake Up the Social Sciences

Narendra Modi may end up making the Congress scion look less ineffective

Can China change course?

Barking up the wrong tree

The untold farm rebound story

"I said I too loved Hindi, which is my mother tongue, but that did not mean I should behave like a fool."

Basic Indian economics

"the ‘Bombay Plan’ for India’s economic development. The industrialists said, “no development... will be feasible except on the basis of a central directing authority”. This meant directing investment to desired areas."

"overnments want economic growth. Statisticians measure it, and economists define it for them: it is growth in the gross domestic or national product (the difference is income from abroad, which for India is substantial thanks to the Indians working abroad and sending money to their waiting wives)."

Food Security Bill is proof that PM is happy to go along with Sonia Gandhi's senseless welfarism

Technoeconomics

Sachin Tendulkar: A Ricardian analysis

Economics, science fiction and the inequality debate

The Left has always been more committed to its ideology than the demands of the economy.

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.

Matters, of that trips reading and

Back from a visit to Dehradun, the city of pleasantness. I had good time visiting the place where our country's bureaucrats are get trained. The Lal Bahadur Shastri National Academy of Administration in Mussoorie! The climate in Mussorie was absolutely pleasant.


Meeting people and talking to them was more interesting then simply talking with bunch of people in the conference!


The following are some of interesting readings:


Economics by and for human beings by Jeff


Contemporary Indian literature by Shivaprakash


The Power of one by Ninan (its old article on Parth and the CCS achievements in India)


Restrictions on radio violation of free speech by Arvind


NY Fed: Leaving the Building by Wenzel

Economics in the Next Ten Years?

From Economic Principles:

• A young economist, or an economics journalist interested in what the young are working on, could do a lot worse than reading through, as I did the other day, 55 very short papers written by distinguished economists describing the large questions they think are likely to dominate the next generation of research in their respective fields.
• They are among 252 papers by experts in various disciplines who responded to an invitation by the National Science Foundation’s Directorate for the Social, Behavioral and Economic Sciences  to describe “grand challenge questions” that transcend near-term funding cycles, questions which therefore might benefit from investment in infrastructure.

Blinking links

school talk is often just an oblique way of hinting at pedigree

Basic knowledge of economics has become a prerequisite to enter any sector of the economy

"Last year I wrote, “... the seas east of Singapore hold the key to the lands west of the Indus.” I should have added that the rules made on the banks of the Yamuna hold the keys to those seas."

"Between them Pranab Mukherjee, Manmohan Singh and P Chidambaram have presented 18 of the past 30 budgets. The UPA also has in its Cabinet nine former chief ministers of whom four are two-time chief ministers. This Government has set up over 90 committees, so there is no dearth of ideas either. Which begs the question why the UPA cannot get its act together on fixing inflation that has dogged voters and the economy since 2004?"

Rapping Economics: Keynes vs Hayek

From Financial Express editorial: 

• It’s unsurprising that What’s the Difference, a classic from legend of rap Dr Dre’s The Chronic 2001, has well over 2 million YouTube hits. Rap is big, and Dr Dre’s is the sort of rap we all expect. But 2.3 million hits for EconStories.tv, with its rap battle between JM Keynes and FA Hayek! No, the biggest economic influences of the 20th century haven’t come back to life to test themselves against Eminem. 

• Despite the videos’ Hayekian bias, given the creators’ Austrian views, the videos portray the work of both theorists accurately. Whilst the first looks at their analysis of what causes the boom and bust cycle (Hayek: blame low interest rates; Keynes: Nahhh, it’s the animal spirits), the second examines their purported philosophical underpinnings in the context of continued global economic sluggishness. A testament to the power of creativity in spreading understanding, it is a shame that the Aadhaar enrolment drive in Punjab, as reported in Indian Express recently, wasn’t able to use its creative plans to spread word of the enrolment drive, as EconStories could with economic theory. It is a valuable lesson for us all to learn: capturing imagination is the key to learning and understanding.

Raghuram Rajan on Economics crisis

 He writes in his blog: 

• these expectations could have been distorted by ideology – it is hard to get into the past minds of economists. But there is a better reason to be skeptical of explanations relying on ideology. As a group, neither behavioral economists, who think that market efficiency is a joke, nor progressive economists, who distrust free markets, predicted the crisis. 

• Like medicine, economics has become highly compartmentalized – macroeconomists typically do not pay attention to what financial economists or real-estate economists study, and vice versa. Yet, in order to see the crisis coming, you had to know something about each of these areas, just like it takes a good general practitioner to recognize an exotic disease. Because the profession rewards only careful, well-supported, but necessarily narrow analysis, few economists try to span sub-fields.

Being an economist is worth like anything, but GOLD!!

In my friends group everybody has studied management or science related subject. I am the only one who has studied economics. So, most of the time, when we start debating this or that in social developmental issues and when it comes the functions of economic systems all them will say everything but not the truth. And that is where they all realize that they have wasted their time in their subject. Because the particular country’s economic system affects all spheres of economy. So what is the point here? Nothing directly, read It’s Better Being an Economist (But Don’t Tell Anyone) 

Ben S. Bernanke and F A Hayek: Paul Walker has point

From Paul Walker Post:

Ben S. Bernanke gave a speech on the "Implications of the Financial Crisis for Economics" at Princeton. In it he said:

• Although economists have much to learn from this crisis, as I will discuss, I think that calls for a radical reworking of the field go too far. In particular, it seems to me that current critiques of economics sometimes conflate three overlapping yet separate enterprises, which, for the purposes of my remarks today, I will call economic science, economic engineering, and economic management. Economic science concerns itself primarily with theoretical and empirical generalizations about the behavior of individuals, institutions, markets, and national economies. Most academic research falls in this category. Economic engineering is about the design and analysis of frameworks for achieving specific economic objectives. Examples of such frameworks are the risk-management systems of financial institutions and the financial regulatory systems of the United States and other countries. Economic management involves the operation of economic frameworks in real time--for example, in the private sector, the management of complex financial institutions or, in the public sector, the day-to-day supervision of those institutions.

For me I think someone should point out to Ben that the public sector cannot carryout the real time, day-to-day supervision of financial institutions and in trying may well cause more problems than they solve. Did Hayek not point out the important of knowledge of time and place, knowledge that central planners and regulators just can get. Without it regulators cannot regulate.

Leaps and bounds in Indian Economics

Those who have not read the chapter 2 of latest economic survey should at least read the following paragraphs which are something like a basic economics textbooks should teach students in a holistic way!

• "For achieving inclusive growth there is critical need to rethink the role of the state. The early debate among economists about the size of the Government can be misleading. The need of the hour is to have an enabling Government. India is too large and complex a nation for the state to be able to deliver all that is needed. Asking the Government to produce all the essential goods, create all the necessary jobs, and keep a curb on the prices of all goods is to, at best, court failure, and, in greater likelihood, lead to a large, cumbersome bureaucracy and widespread corruption.

• The aim must be to stay with the objective of inclusive growth that was laid down by the founding fathers of the nation, but to take a more modern view of what the state can realistically deliver. This is what leads to the idea of an enabling state, that is, a Government that does not try to directly deliver to the citizens everything that they need. Instead, it (1) creates an enabling ethos for the market so that individual enterprise can flourish and citizens can, for the most part, provide for the needs of one another, and (2) steps in to help those who do not manage to do well for themselves, for there will always be individuals, no matter what the system, who need support and help. Hence we need a Government that, when it comes to the market, sets effective, incentivecompatible rules and remains on the sidelines with minimal interference, and, at the same time, plays an important role in directly helping the poor by ensuring that they get basic education and health services and receive adequate nutrition and food. This rollback of the Government in the former will enable it to devote more energy and resources to and be more effective in the latter. This changing view of the state will briefly be elaborated upon and then some detailed policy suggestions taken up.

• In many poor nations the Government takes the stance that, when in doubt about the goodness or badness of two or more adults voluntarily conducting an exchange, stop them. An enabling state, on the contrary, takes the view that, when in doubt, do not interfere. There are, of course, many actions of individuals and groups that will need to be stopped for the welfare of society at large. But the default option of an enabling state is to allow rather than stop, to permit instead of prevent. This altered conception of the state can have dramatic effect on the functioning of an economy, in general by promoting greater efficiency and higher productivity.

• The main challenge is to direct the money already allocated to help eradicate poverty. The inability to do so has more to do with ideas than vested interests. Some propositions are obvious as soon as one gives them some thought; but not obvious when one gives them a lot of thought. These are the ones prone to policy mistakes. And once a policy is put into effect and kept in place for a while, vested interests gather in its favour and those interests resist change. But beyond that it is a question of having a road map of where we can go and demonstrating to the larger public that it is a potential beneficiary of the proposed change. Fortunately such a road map is feasible. There are systems of delivery of subsidies to the poor that can be vastly more effective, entail substantial savings and involve no extra organizational cost. In discussing these, it is useful to keep a few principles in mind. For goods that are important for the poor, it is only correct that the state should intervene to cushion the poor. The standard way to do this is by using some kind of a subsidy. However, a common mistake is to suppose that a subsidy scheme has to be coupled with price control.

• This is typically a slippery slope. In a large and complex economy, it is difficult for the state to gauge what the right price of a good is. Moreover, once the Government becomes involved in setting the price of a commodity, this becomes a matter of politics and lobbying, which cumulatively adds to the distortion. Hence prices are best left to the market. If we want to ensure that poor consumers are not exposed to the vagaries of the market, the best way to intervene is to help the poor directly instead of trying to control prices, which almost invariably does more harm than good in the long run, and often even not so long a run. On agriculturesector policy and price control there is need to go the way India did with industry in 1991. Keeping this in mind, it is possible to outline systems of supporting the poor which are more efficient and better targeted than the present ones.

• Through a vast network of public distribution system (PDS) outlets across the nation, we try to deliver some minimal supplies of heavily subsidized grain to our below poverty line (BPL) households and also some to our above poverty line (APL) households. The PDS stores are first given this subsidized grain and then instructed to deliver it at below market price to these specified households. It is believed many of these storekeepers (i) sell off this subsidized grain on the open market, and (ii) then adulterate the remaining grain and sell the diluted product to the BPL and APL households, who have no choice in the matter. We may harangue about the dishonesty of PDS store-keepers and all those entrusted with delivering the subsidies. It is indeed true that personal integrity, honesty and trustworthiness in the citizenry are vital ingredients for a nation’s economic progress—there is enough crosscountry evidence of this. But when crafting policy, there is need to be realistic about the system within which we work. To assume that all those entrusted with the task of administering the programme will do so flawlessly and then to blame them when the system fails, is not the mark of a good policy strategist. For effective policy, what is needed is to take people to be the way they are and then craft incentive-compatible interventions.

• This paragraph outlines an altered system that, once in place, will be no more costly to run than the existing one and is likely to be much more effective. The plan suggested here is not novel and has been suggested on occasion by Indian policymakers and even in Budget documents. However, it has never been fully spelled out. The two planks of this system are (i) the subsidy should be handed over directly to the households, instead of giving it to the PDS store-keeper in the form of cheap grain and then have him deliver it to the needy households and (ii) the household should be given the freedom to choose which store it buys the food from. Suppose the BPL household gets a net subsidy of Rs x for wheat each month. Instead of giving this by charging the household less than the market price for wheat, it should be given coupons worth Rs x, which can be used at PDS stores in lieu of money when buying wheat. Under this new system no grain will be given at a subsidized rate to the PDS stores and they will be free to charge the market price when selling grain irrespective of who the customer is. The only change is that the PDS stores are now allowed to accept these coupons which they can then take to the local bank and change to money, and the banks, in turn, can go to the government and have them changed to money. Further, households that get these coupons should be allowed to go to any PDS store of their choice.

• (ii) the household should be given the freedom to choose which store it buys the food from. Suppose the BPL household gets a net subsidy of Rs x for wheat each month. Instead of giving this by charging the household less than the market price for wheat, it should be given coupons worth Rs x, which can be used at PDS stores in lieu of money when buying wheat. Under this new system no grain will be given at a subsidized rate to the PDS stores and they will be free to charge the market price when selling grain irrespective of who the customer is. The only change is that the PDS stores are now allowed to accept these coupons which they can then take to the local bank and change to money, and the banks, in turn, can go to the government and have them changed to money. Further, households that get these coupons should be allowed to go to any PDS store of their choice.

• Such a system will be more impervious to corruption. Since the store owner will get the same price for grain from all buyers, poor and rich, he will have no incentive, to turn the poor buyers away, as happens currently, and cater to those buying at market price. (If it is felt that changing coupons to money is a bother, we can have a provision for paying store owners an extra 2 per cent when they change coupons to money.) Second, since BPL buyers can go to any store with their coupons, they will be able to boycott stores that try to sell them poor-quality grain or mix gravel with the grain.

• Moreover, it may be desirable to not impose any restrictions on farmers selling off the coupons. If the recipient of a coupon decides that she does not want to buy fertilizers but would rather spend the money on buying a television set instead, we have every right to have misgivings about this preference, but it is not a good idea to use the state’s enforcement machinery to correct this. Modern behavioural economics reminds us that there are situations where individuals act against their own interests because of lack of self-control or inconsistencies in their inter-temporal preferences, and so some paternalistic interventions can be good for them. While this is true, Government action to redirect individual choice ought to be measured and minimal. To try to meddle excessively in individuals’ preferences is a mistake because it encourages Government to reach out to doing more than it realistically can, creating unnecessary bureaucratic hurdles and breeding corruption.
• India has one advantage over most emerging economies and even some industrialized ones–its vibrant democratic institutions and independent judiciary. This has greatly helped India gradually take its place among the leading global economies of the world. While this has helped the nation, there is another feature that has been a hindrance–India's high bureaucratic delays. Thanks to recent data collection from around the world on bureaucratic transactions costs, there are now hard statistics on where India stands.
• If one were to look at this from a brighter angle, India’s unpardonably large bureaucratic costs are like a valuable resource buried under the ground, waiting to be excavated and used. Cutting down these costs is like unearthing a free, valuable resource that was lying idle. It can release large energies in the nation and boost productivity and growth. Ironically, this can be India’s gold rush.
• This problem is at times put down to the size of India’s bureaucracy. But that is not right. A complex economy such as that of India’s does need substantial numbers to regulate and run it. By comparison with even some vibrant market economies, the actual number of people running the Indian Government is not large (see Box 2.3 for illustration in the context of India’s tax administration). Further, there is a lot of talent in the Indian bureaucracy, since the selection process is highly competitive. The problem lies elsewhere, in our conception of the state, to wit that it has to directly deliver on every front and not be content with an enabling role; and also in the rules, regulations and procedures inherited from our colonial times, and made more cumbersome with layers of further procedures and regulations added like on a palimpsest. The situation is like a traffic jam–asking each person to move is useless advice. The need is to reform the system. If the current system of subsidies can be reformed, this itself will release a lot of human resource that is presently tied up in the pointless complexities of running an inefficient system. Also the changes in the tax system—the Goods and Services Tax and the Direct Tax Code— that are being contemplated can have substantial impact on not just improving the efficiency of the taxes but on simplifying the procedures for paying taxes."

Economics education in Indian Schools

Like in US, there are also few attempts undergoing at present in Economics education in Indian Schools. But there is a long way to go.

Read:

Hayek Propped Up by Government Intervention

Defending My Homeboy Hayek from Freakonomics

No magic’s in economics

Recently economist Sowell wrote:

• “Back in the days of the Soviet Union, two Russian economists who had never lived in a country with a free market economy understood something about market economies that many others who have lived in such economies all their lives have never understood. Nikolai Shmelev and Vladimir Popov said: "Everything is interconnected in the world of prices, so that the smallest change in one element is passed along the chain to millions of others."
• If everything is connected to everything else in a market economy, then it makes no sense to have laws and policies that declare some given goal to be a "good thing," without regard to the repercussions, which spread out in all directions, like waves that spread across a pond when you drop a rock in the water.”

Mainstream Economists Fads in a narrow groove!

Pranab Bardhan on Economics to blame?

• “Economics has a thriving micro part, which while lacking the immediacy and stridency of business headlines, goes on studying how millions of individual decisions are made and what impact they have on the daily lives of people from America to Zambia; in recent years microeconomics, while not giving up any of its theoretical rigour, has turned more and more to empirical data and new ways of testing hypotheses. In macroeconomics, in the last quarter century or so there has been a healthy turn towards establishing micro-foundations of macroeconomics, basing it ultimately on decisions by individuals rather than on vaguely derived aggregates. But in taking this turn some economists resorted to a kind of hyper-rationality in individual decision-making and ignored informational traps and financial frictions. A whole host of other economists (particularly those specialising in the economics of imperfect information and behavioural finance—fields by now well-established in Economics, and recognised by their own Nobel prizes) have been convincingly criticising this trend, pointing to human frailties (systematic departures from rationality) as well as asymmetries of information among the market participants. In this kind of critique, as in the received theories, economic analysis has sometimes involved complex models that have required mathematical abstractions.”

Knowledge problem or dismal science- while claiming wait and look back for a moment

Mind you, a movement may last for years!

In the latest issue of Economist there is an article on ‘What went wrong with economics'.

What we need to note is here at least to my mind:

• “Paul Krugman, winner of the Nobel prize in economics in 2008, argued that much of the past 30 years of macroeconomics was “spectacularly useless at best, and positively harmful at worst.” Barry Eichengreen, a prominent American economic historian, says the crisis has “cast into doubt much of what we thought we knew about economics.”
• The charge that most economists failed to see the crisis coming also has merit. To be sure, some warned of trouble. The likes of Robert Shiller of Yale, Nouriel Roubini of New York University and the team at the Bank for International Settlements are now famous for their prescience. But most were blindsided. And even worrywarts who felt something was amiss had no idea of how bad the consequences would be.”
• Macroeconomists also had a blindspot: their standard models assumed that capital markets work perfectly. Their framework reflected an uneasy truce between the intellectual heirs of Keynes, who accept that economies can fall short of their potential, and purists who hold that supply must always equal demand. The models that epitomise this synthesis—the sort used in many central banks—incorporate imperfections in labour markets (“sticky” wages, for instance, which allow unemployment to rise), but make no room for such blemishes in finance. By assuming that capital markets worked perfectly, macroeconomists were largely able to ignore the economy’s financial plumbing. But models that ignored finance had little chance of spotting a calamity that stemmed from it.
• And if economics as a broad discipline deserves a robust defence, so does the free-market paradigm. Too many people, especially in Europe, equate mistakes made by economists with a failure of economic liberalism. Their logic seems to be that if economists got things wrong, then politicians will do better. That is a false—and dangerous—conclusion.”

Is Behavioral Economics Doomed?

Is Behavioral Economics Doomed? The ordinary versus the extraordinary

Monetarism Defiant