Archive for August 14th, 2014

Why Do Macroeconomists Disagree?

August 14, 2014

I thought the post should have been much broader as why do economists disagree? The disagreement is across micro too.

Mark Thoma argues that macro has actually become an ideology war:


The Business of Behavioral Economics..

August 14, 2014

Leslie John and Michael Norton of HBS explore how behavioral economics can help people overcome bad habits and change for the better.

This bog has covered a few of the examples earlier as well like and other variants around


Should PM’s Independence Day speech be turned like a Budget/ Monetary Policy Statement?

August 14, 2014

There is enormous hype over what PM’s Independence Day speech should be like. It is kind of ironical and sad how narrow our agendas in life have become.

What once stood for PM’s conversation and connect with the citizens has actually boiled down to whether it will be a bold big bang economic reform statement. Some are hoping that otherwise a quite PM will finally speak over their favorite chosen topic – economic reforms.

All this being done to please a certain section of people(so called market guys). Though, there is one positive in this. What was usually ignored by most people (most sleeping late or celebrating a holiday) is likely to be heard keenly by the market guys and corporates. If it is indeed a bold one, media (largely owned by corporates) shall be all over citing big change otherwise it will be simply highlighted as another disappointment. Just like Budgets and monetary policy, will we now have all these business channels analysing every word of independence speech as well?

And one does not really understand why all this is being done? Markets are at all time highs and rising without any issue. It is funny to read these newspapers still saying things like “five reasons why markets are not rising!” Really?

The country is seeing serious social unrest and political problems but no one is mentioning any of this. The whole agenda has been cornered and this has been the case for some months now.

So should the speech be just about pleasing a certain section of people? In this light, it is important that governments be more like Swiss (or other such examples) which just do their work without hype. What else are they voted for? And yes Swiss has pretty well developed financial markets as well..

Let some wisdom and patience prevail…


Why Swiss should also export their limited and decentralized governance model..

August 14, 2014

Richard Rahn of Cato Institute says Switzerland is one country that often works. He often recommends countries to follow the Swiss model.

More importantly without much publicity and hype (really important for India):

Switzerland is not perfect, but as countries go, it is hard to find one that is much better. The more people know about Switzerland, the higher regard they tend to have for it. By almost any measure of human accomplishment, and particularly in creating a most successful country governance model, the Swiss are clearly No. 1 in the world. Switzerland is a small, landlocked nation without much in the way of natural resources. It has managed to stay out of wars for two centuries and developed a long-term multilingual and multireligious democracy without strife. There is a rule of law with competent and unbiased judges and strong protections for private property.

Among the countries of the world, Switzerland ranks No. 1 in “life satisfaction” (Organization for Economic Co-operation and Development’s Better Life Index); No. 1 in “global competitiveness” (World Economic Forum’s Global Competitiveness Index); No. 2 in “labor -force participation rate” (OECD Labor Force Statistics); No. 3 in “happiness” (United Nations World Happiness Report); No. 4 in “economic freedom” (Fraser Institute and Cato Institute Economic Freedom of the World Report); No. 7 in “per-capita income” on a purchasing-power parity basis (International Monetary Fund World Economic Outlook); No. 2 in “overall prosperity” (Legatum Institute’s Prosperity Index); and No. 1 in “life expectancy at birth” (OECD Better Life Index).

Switzerland also ranks higher than average among the OECD countries (the 35 most-developed economies in the world) in levels of education and student test scores, and has lower levels of air and water pollution. Civil liberties are strongly protected, including freedom of speech, religion, press, assembly and even the right to own guns. It does not get much better than this.

The Swiss have also avoided creating the “cult of personality” around their elected leadership. The elected rulers of Switzerland are not well known by their own countrymen and are almost invisible to the rest of the world. History is replete with leaders who had too much power and visibility. Perhaps the reason the Swiss have made fewer economic and foreign-policy mistakes than other countries is, in part, because they do not have very powerful leaders who can push through bad policies.

Though there is negative press over its secretive banking but that is a case of grapes gone sour:

The world is an envious place (envy being one of the seven deadly sins), and hence, there is much Swiss-bashing by the jealous and the ignorant. Having been an adviser to senior officials in several different governments over the past few decades, I often encouraged them to look at Switzerland as a model that works. The Swiss model is particularly relevant for countries with rival religious and ethnic groups, but, alas, too few other countries have adopted it. Back in July 2003, when there was considerable debate about what kind of governance structure Iraq should have, I wrote an article published in The Washington Times that argued for the Swiss model.

Hmm..No model is perfect and there shall be some limitations. As long as there is development for people, it is fine. I am not too sure about Swiss model but has always been fascinating.

There are a few countries which have developed without the noise and expectations. You often wonder as if economic development is some kind of favor doled by authorities. The kind of noise certain section of society generates over economic development actually goes on to spoil and derail the whole effort.

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