Archive for May 19th, 2015

Kinnaur’s curse? Environmental threat from Hydroelectric projects

May 19, 2015

Interesting article which takes you to the perennial debate between environment and development.

This article is on Kinnaur in Himachal Pradesh:

Kinnaur, one of Himachal Pradesh’s most ecologically fragile regions, is under threat from widespread construction activity for hydroelectric power projects. Landslides have become a common occurrence putting lives of villagers to severe environmental risk.

Are lessons being learnt from several environment disasters?

Averting Financial Crises: Advice from Classical Economists (Thornton and Bagehot)

May 19, 2015

Superb article on financial history by Thomas Humphrey of Richmond Fed.

He reviews the basic ideas of Thornton and Bagehot on lender of last resort (LOLR) and then sees how Fed policy fits within those ideas:

(more…)

Where does Modinomics fit amidst various econ schools?

May 19, 2015

Brilliant post by Prof Mahesh Kulkarni.

He looks at various policies started by the new govt and tries to fit them into the economics schools:

What is Modinomics? Classical, neo-classical, monetarist, supply sider, demand sider, Austrian? An analysis based on different economic theories.

The 2014 verdict was understandably an endorsement of both the Hindu political right and the economic right as much as rejection of rampant crony socialism under the UPA. Expectedly, there was anticipation that Prime Minister Modi would summarily put in place the reform measures to stimulate the mired economic growth. Barring perhaps P.V. Narasimha Rao (circumstance-motivated) and A.B. Vajpayee (in part ideologically driven), no other Indian Prime Minister has been identified with the economic right as much as Modi.

Intriguingly, the bequest of past governments is defined by the scale of State involvement in the economy rather than the measure of State withdrawal. Implied in the verdict of 2014 was an increasing space for supply siders in the policy machinery. However, economic gestures originating from the government in the last 12 months perplex and mystify both friends and critics alike. Incontestably, the direction of reforms is unambiguous, yet the relatively leisurely tempo seems annoying. What is unanswered is this question: Can “Modinomics” be slotted in any particular economic school of thought?

There is a nice table which lists policies against the school of thought. As expected, it is really difficult to sum them as one majors school:

Any attempt to situate Modinomics reveals it to be in differing shades of grey. To paraphrase the late Singapore supremo Lee Kuan Yew, economic policies cannot be a prisoner to theory. Pragmatism aligns economic policy to favourable political outcomes. Past experiences do not assure electorally favourable outcomes in many instances, be it 1996 or 2004. It would therefore be pointless in trying to pigeonhole Modinomics into a single stream of economic thought.

Our table is an attempt to locate the economic policy measures under different ideological schools.

Narendra Modi has started a process of shifting Indian political economic thought towards the right. Nonetheless, there may not be a Thatcher’s Hayek moment in the House of Commons or Nehruvian declaration on socialism in the Avadi session of the Congress in 1955. In a long arduous journey, it would be unfair to expect early outcomes. What is likely, however, is that the journey might culminate perhaps at a near-distant horizon, and an Indian Prime Minister might generate sufficient political consensus to remove “socialist” from the preamble of Indian constitution. That moment would finally disenthrall India from the Nehru-Gandhi brand of crony socialism.

Superb stuff. Much better than all the noisy articles on completion of one year..

Is neoclassical economics teaching making students unethical? Atleast some think so..

May 19, 2015

So far the economics academia has ignored all calls to make changes in the economics discipline. The mainstream thinking continues to create barriers and prevent the discipline to become more pluralistic.

But articles like these should make them sit up and note:

The spate of financial scandals that are rocking Chile have stirred a wholesome debate in the country on the importance of ethics in the teaching of economics. 

The Pontifical Catholic University of Chile’s economics and administration faculty has been under the spotlight since three of its former students, previously hailed as ‘star students’, were prosecuted and jailed for a week in March pending trial for tax fraud and other financial crimes.

In the past few years, other well-known Catholic University economics graduates were also charged for collusion, market manipulation and cheating on clients’ credit lines. The faculty of economics and administration at the Catholic University “rejects this sort of behaviour… that muddies the reputation of several thousands of economists”, stated José Miguel Sánchez, dean of that faculty, in a letter to the daily El Mercurio.

The deans of economics of five main universities interviewed by the financial daily Diario Financiero also condemned the wrong-doings and lay the blame on the persons under prosecution, not on the institutions.

The deans also have explained in a series of press reports how their faculties have reacted to the situation and reflected on whether the way economics is taught in Chile may have a bearing on the financial crimes under investigation. “Though we cannot be held responsible for the things our graduates do, we do have the responsibility to give them tools to sort out the good from the bad and to make ethical choices in their professional future,” Sánchez told University World News.  “Once they graduate they will make their own decisions but at least we should get them into the habit of asking themselves about the ethical implications of their actions, the sense and purpose of their decisions, who may be affected and how.”

Ethics to be made compulsory in economics teaching:

At the Catholic University, the faculty of economics offers elective courses on business ethics. A curriculum reform, now under way, will include an obligatory course on applied ethics. Teachers will be prompted to include ethical considerations in all the subjects they teach. In contrast, deans of other leading universities such as the University of Chile, Adolfo Ibáñez, Los Andes and Diego Portales, say that they do not need to make reforms, claiming that ethics in business permeates their economics curriculum.

Some think the neoclassical school is part of the reason:

Neo-classical economics, the prevailing economic theory in Chile and in most countries, is cited by some Chilean economists as a factor behind the financial crimes that have unleashed a political crisis in Chile. President of Chile Michelle Bachelet hopes to address the turbulence by taking stiff measures against conflicts of interest, influence peddling and corruption.

“All schools teach [the same] matrix, which centres on maximising profits and reducing costs. In this logic, tax avoidance through illegal means may be regarded by some as a valid tool,” Gonzalo Durán, an economist from the NGO Fundación SOL and a former Catholic University student, told the online news service El Dínamo.

Nicolás Grau, assistant professor of economics at the University of Chile, elaborates: “Telling students of economics that the aim of enterprises and individuals is to make money for themselves excludes cooperation and social wellbeing and has a bearing on what students may consider right or wrong.”

Gonzalo Polanco, director of the Tax Studies Centre of the University of Chile, adds that “the prevailing extremely competitive environment leads companies to hire professionals who are ready to reduce their tax burden or make money in any way, not those who shy away from ethically questionable practices”.

The unending series of financial scandals have worried students of economics. They are discussing them openly on their campuses while teachers are using them as examples of the need to reinforce professional and business ethics.

At the University of Chile, vocal groups are pressing for changes in the way economics is taught. Among other things, they are canvassing for more diverse perspectives and for more attention to be paid to the interaction between economics, society and politics.

What does one even say to all these developments? How far will all this go?

Do internship at Niti Aayog..

May 19, 2015

The website of Niti Aayog was launched yesterday.  How the Aayog evolves will be watched keenly over the years. It will also nbe interesting whether it will remain an institution whenever the govt changes. Anyways, that is it for laters.

Meanwhile interested students can apply for an internship at the Aayog. Deadline is 31st May 2015:

NITI (National Institution for Transforming India) has initiated the Internship Scheme from 2015. The NITI (erstwhile Planning Commission) Internship Scheme, seeks to engage Indian Nationals, as “Interns”, who are undergraduate/ Graduate /Post Graduate or Research Students enrolled in reputed University/ Institution within India or abroad. These “interns” shall be attached with various Divisions within NITI Aayog and would be expected to supplement the process of analysis within NITI through empirical collection and collation of in-house and other information. For the “Interns” the exposure to the functioning of the Indian Government may be an add-on in furthering their future interests and a valuable exposure to the Government functioning and Developmental Policy issues in Government of India.

The interested applicants may apply online till 31st May, 2015. The applicants may read the instructions before filling the online application.
Forms, guidelines are there on the website. Pass on the message to the interested. Those who get a chance to intern, please share your experiences with this blog..

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