Archive for August, 2015

Are fast/greentop pitches in India the reason for poor spin show?

August 19, 2015

India’s recent losses in test matches has led to two stark revelations. One – our batters seem to be struggling big time against spin. Two – our spin cupboard is almost empty barring Ashwin whose performance outside sub-continent is still to be seen. Not too long ago, India seemed to be in surplus on both these factors and has suddenly become a deficit. I mean this is much like an economy which appears a tiger till the crisis exposes leads to all kinds of issues.

The recent loss to SL was outright shocking. SL which despite producing smashing cricketers hardly gets the attention. If Indian cricketers had done such a daylight heist, there would have been huge media coverage. It was all so shocking. The problem was not as much the second factor (as Ashwin bowled well) but the first one where we just could not chase a paltry 170 odd runs.

There are two articles which suggest it is the recent convert from spin pitches to fast pitches which is leading to the problem. First by the always briiliant Sharda Ugra and second by Karthik Krishnswamy.

India was losing regularly and badly to swinging and grassy pitches outside sub-continent. This led BCCI to make a rule in 2011 to leave 4 inch grass on the pitches which after an inning was always rolled. The result was spinners did not have a say in the game at all. As a result, even batters lost the patience etc needed to play spin.

First Ugra:



Indradhanush: Same seven colours on a new skyline

August 18, 2015

Just at the eve of India’s 69th independence day, government announced a series of measures to correct the malaise in Indian Public sector banks. Immediately, talks of big bang reforms followed creating another round of hype and noise. But much was old wine in a new bottle or same colors painted on a new skyline given the name to the reforms.

This govt and its officials have an amazing knack of naming/terming such measures. This one they called it Indradhanush. The Finance Services secretary Hasmukh Adhia explained the logic:


How a secret meeting at a secluded resort led to creation of Federal Reserve

August 18, 2015

A nice article by Jessie Romero of Richmond Fed.

The biggest irony of Fed is how it rose from being really an unwanted organisation to the most powerful central bank in the world. Econs/experts ridicule when some politician makes a case for ending the Fed. But the bigger point is this is the history of central banking in the country. A country which was built by states uniting together has always been sceptical of centralised finance. They had two editions of central banks (1791-1911 and 1916-36) but allowed the 20 year charters of both to expire. Whereas in UK, BoE was also on a charter but it kept getting renewed. So from 1836 onwards there was no central bank in the country and hardly any talk of having one was entertained.

Given the scepticism, any such effort to form a central bank in US is likely to be a highly secretive clubby affair. This was indeed the case as the central bank was given shape in Jekyll Island in 1910. A group of financial elite got together and planned a central bank for US in a meeting so secretive that its list of members is not fully known. Also, the members actually addressed each other by first names to ensure no one notices/overhears them.

The name of Jekyll Island is also ironical given the setting as one immediately connects to the story of Dr Jekyll and Mr Hyde. Most econs present the Fed as Dr Jekyll which has done a lot of good to US economy. But then there are people from Austrian school and some politicos who feel Fed is just Mr. Hyde which has caused far more harm than is visible.

Even the name suggested for Fed was given to hide the fact that it was a central bank. The first proposed name was Reserve Association of America which was later changed to National Reserve Association and finally to Federal Reserve.

So this piece by Romero gives a broad account of how things piled up at the famous island.


Economists and the Real World..

August 17, 2015

Tim Sablik of Richmond Fed says ivy tower econs are trying to get accustomed to the real world.

This is noting new actually. Most econs actually worked before giving gyan:


The World’s Oldest Public Policy Puzzle…

August 17, 2015

Aryeh Neier writes on the oldest Public Policy puzzle PPP – whether to prohibit or legalise prostitution?

Prohibition has proved harmful when applied to consenting adults’ use of liquor or drugs. Bringing such practices out of the shadows encourages the development of measures that mitigate its associated evils. The same is true of transactional sex.

The focus of public policy regarding prostitution should be to prevent violence and coercion, as well as to stop the spread of infectious diseases – which is exactly what Amnesty is recommending. There is little doubt that Shaw, who was convinced that women and men alike should be free to engage in commercial transactions that do not harm others, would have approved.

Oldest yet still remains unresolved…

How humans cause mass extinctions?

August 17, 2015


Back to Fundamentals in Emerging Markets..

August 14, 2015

Prof Dani Rodrik says that hype around emerging markets is now tapering off.  Much of the past growth was around foreign capital and buzz.


India’s capital is Patna… … that’s what teachers are telling students in many Indian schools

August 14, 2015

Many a politicians do believe that politics in Bihar sets the tone for the country. In a way, what happens in Patna is the focal point for many an activities. Sharad Pawar said in a recent interview:

Lets come to Bihar, who has the upper hand?

Bihar has always been a game changer state. Gandhi started his agitations from Champaran. The first protests against the Emergency took place in Bihar under JP. The concept of social change started in Bihar with the Mandal Commission. Everything starts from Bihar. Bihar shows the direction to the nation. In this election I am looking at it from that angle.

However, it seems some of our teachers are taking this Patna bit as a fact. Shyamal Majumdar points to this sordid tale of teaching in Indian schools:


Book Review: Railways In Modern India

August 13, 2015

There is a lot of discussion going on the subject of Indian railways. As always, much of discussions on India are just about some reform/efficiency and all that. Much of the ideas have been known for a long time. You can’t run any enterprise where expenses are more than revenues. Period. This has been the case with Railways for a long time. Some committee is formed, some decisions are taken. The engine starts chugging again only to lose steam again.

This book by Ian Kerr has a couple of essays on historical impact of Indian railways from different perspectives. So there is an essay on how railways helped more people go to pilgrimage places, how the various rail lines were built given the adversity and so on. India was one country which had one of the largest railway system in the world but industrial development remained negligible. This itself is a paradox of sorts thanks to the policies of British who made railways just to serve themselves. Then there is the classic debating question – Whether railways integrated India as a nation or it actually impoverished India as the resources began to be shipped to Britain in much quicker time and speed. This also is debated by scholars in the book.

It also has a brief interview of Mahatma Gandhi on why he thought railways to be more of a problem than a gain. He belonged to the second came and just thought railways  was mainly built for British interests.  There is Karl Marx too debating role of railways in India.

A useful book to learn a thing or two about Indian railways.


Using Anacondas, Crocodiles to nudge maintenance of Bangalore roads

August 11, 2015

Interesting article on how an NGO is using clever ideas to make its points on road maintenance in Bangalore:


Milton Friedman and monetary freedom….

August 11, 2015

George Selgin has a food for (economic) thought piece on Prof. Friedman.

Free markets people esp those in Austrian school camp usually crticise and side from the Chicago School on issues of mon economics. Whereas the A school believes in free banking without a central bank, the stance of ‘C’ school is not as clear. Friedman always favored the central bank using his money supply rule preferably by a computer. So, he was more in favor of central banks which was surprising given his free market thinking on everything else.

Prof. Selgin does not think so. He says Friedman did move towards free banking overtime as well:


Indian education system continues to be dominated by a colonial mindset..

August 11, 2015

Prof. Ramnath Narayanswamy of IIMB  makes an important point as we approach 68th year of India’s independence.

He says why Sanskrit continues to be ignored? Why is our Indian education system still dominated by vision of Macaulay:


What can economists learn from literature?

August 11, 2015

Lots. I mean most of us will atleast learn to write better. What mattered for earlier generation of economists was how well and widely they read. Now it is just about showing whose model/equation is more sophisticated (read confusing ) than the other.

Sara Thornton, Professor of English at the Université Paris Diderot, tells us what econs can learn from literature. There is a video with a brief intro:


With rising crime, banks emerge as biggest buyers of civilian guns..

August 10, 2015

Interesting article in ET on the subject.

With rising bank-related crimes in cities, Banks have emerged as the biggest buyers of guns.


Microfinance industry is better at monetary transmission??

August 10, 2015

This is an interesting piece of news. Banks have not lowered policy rates following rate cuts by Indian central bank. This has hindered further rate cuts leading to this evergreen friction between government, central bank, banks and companies.

However, one part of banking industry is transmitting rate cuts faster  – MFIs:


London’s infrastructure problems hold lessons for India’s big cities as well…

August 10, 2015

M Ramachandran, once a secretary in the Union urban development ministry writes on the city:


There are some key issues of concern to the city of London, where I was recently. Let me consider their similarity in nature to problems Indian cities face – but also the differences in approach in dealing with them between the two countries. The strike in the city’s metro system, or the Underground, which disrupted public transport to a huge extent; ongoing discussions about the desirability of having a third runway at the city’s main airport, Heathrow; the concerns of cyclists who face danger from lorries on the roads; whether metro rail fares are to be increased or brought down; rents becoming high and not all residents being able to afford houses – these are the issues that figure uppermost in discussions about cities.

Since people using the London Underground late at night have almost doubled over a decade, it is now proposed to run the trains overnight on Fridays and Saturdays from later this year. A general pay hike issue has been raised by drivers, and this got linked with the additional payment to be made for running trains extra hours. The Underground’s management says the leadership of the unions refused to respond to the proposals it made. The proposed late-night service is projected to create 2,000 new jobs, give a 360-million-pound boost to the economy, and facilitate faster night-time journeys. But the one-day strike was total – no services operated, and those who commute to work using the Underground had to try using buses or just stay at home. Those two days showed how central the regular functioning of the Underground system is to the city.

Saying that Londoners cannot continue to pay through the nose for the most expensive metro rail system in the world, one of the potential candidates for the mayor’s post – the present deputy mayor who oversees transport – promises a three per cent cut a year in fares. His claim is based on his performance of cutting council tax year on year. The outgoing chief of Transport for London (TfL) warns that such a move could put services at risk.

Mumbai metro is facing the same fare war now. People forget how pricing infra is as critical as building the infra. Should it be based on Marginal costing or Average costing ? The first choice leads to higher prices and lesser commuters. The second one is lower prices and hopefully more commuters. The conventional economic theory supports the first route but in infra setting there is a case for the second route as well.


Cycling gets encouraged in a big city like London. Work commencing on construction of a new cycling super highway could lead to delays, says an ad from TfL, which is responsible for overseeing all transport issues in the city. But cycling is not easy. A thousand cyclists were injured in hit-and-run accidents last year. Eight cyclists died on London roads this year. Of these, seven were hit by lorries. The London Cycling Campaign is concerned. They called on the mayor urging him to save lives by ending the lorry danger. The demand is that adding mirrors is not enough – there should be mandatory cameras, glass doors and sensors on the lorries.

Rent in every part of London is reported to be unaffordable for low-wage workers. Experts say the city is on the brink of a crisis and the only solution suggested is building thousands of new homes. To fix the housing crisis, which is considered the greatest threat to the capital, it has been suggested that the politicians will have to take a bi-partisan approach – or more powers need to be devolved to London city. There are lessons in all this for our big cities as well, because if affordable housing is nobody’s baby, then we will fail to address the issue properly and in time.

Well, India was once a cycling nation not out of choice but mostly out of poverty. Most people cycled not just to work but even long distance towns. Now, it is all over and leave highways, even city roads don’t have any space for either walker or cyclist. It is all about vehicles and more vehicles now. It is amazing how just at this time, west is rediscovering cycles and atleast talking about it. Being a Cyclist is back in fashion.

On housing prices and rent, well what to say? This blog is sick of saying that most of Indian  cities are just too unaffordable to live. All we are doing is encouraging speculation in real estate and huge gains for property owners over the non-owners. One just spends most of his salary on the rent and it is always going up. Most rental agreements have a clause that if extended next year, there will be an inbuilt inflation of 10-15%. So much so for lower inflation expectations in cities here. There is a reason most people just laugh off the inflation numbers in India which are just understated.

London’s problems are just a microcosm of those in Indian cities.

If Bangalore is 7th cleanest city in Inda, we indeed need to wake up..

August 10, 2015

It was interesting to wake up to this news on the weekend that just whizzed by.

There has been ranking of cities under the Swaccha Bharat Abhiyaan. Mysore tops the  list and Bangalore is on seventh:


What Does an MA Know? Postgraduate Learning Deficits and the Diploma Disease in Social Sciences

August 7, 2015

A must read paper which makes Indian education scene more depressing. There is some talk on quality of primary education via the Pratham surveys. But then it would be difficult to imagine things are going to be any better in higher education.

Here is a scene the paper reflects from a MA class in economics:

In a classroom of second-year MA (Economics) students, an introductory lecture on international economics was under way. The topic being discussed was the growth of post-war international trade and the following is a brief account of how it unfolded. “World exports grew from … billion dollars odd in 1960 to … billion in 2010,” said the teacher. Some of the students promptly noted down the numbers. “Don’t you think the numbers are mind-boggling?” the teacher a dded, trying to make them appreciate their magnitude. “Try comparing them with India’s GDP … roughly speaking, what do you think is India’s GDP?”

The class remained silent. “7%,” said one of the students taking the initiative, mistaking it for gross domestic product (GDP) growth rate. “1,000 million,” shouted another boy immediately, steering the response in the right direction. The answer paved way to every student voicing a number. “250 billion,” said one. “No, 250 billion is very high. It could be around 250 million,” shouted another.

Some of the students tried to be more exact. “I think it is 3,800 crore.” “19,000 crore.” “870 million.” “92 billion.” “Not 92 billion, it is 92 trillion.” “Are these in dollars or rupees?” enquired the teacher.

The class appeared divided with the rupee ayes outshouting the dollar ones in patriotic fervour. What happened further in the class need not be taken up here. But at the end of the lecture, one of the girls walked up to the teacher. She had an honest query that she felt embarrassed to ask openly. “Madam, what is a million?”

Phew..This bad huh?


In this paper, we present the results of a survey conducted among postgraduate students of economics in a reputed, state-run Indian university. The objective was to assess their understanding of basic arithmetic operations and some primary economic principles/indicators. The results were very Pratham-like. But, as we suspect, neither the discipline nor the university concerned are unique in this. When a Class VII student cannot solve arithmetic operations meant for Class IV, it reveals the poor state of schooling.

But when a postgraduate cannot solve an arithmetic problem meant for Class VII, what is to be inferred? The answer is not so straightforward. In higher education in the social sciences, there are channels/ pathways—perhaps even deliberately created—that do not require knowing any arithmetic. In a subject such as economics that has acquired a mathematical orientation globally, a lack of numerical familiarity among students has serious implications on how the subject is being shaped domestically—how syllabi are framed, classes conducted, and examinations evaluated. At the risk of generalisation, it leads to introspection on what a typical MA (Economics) student really knows. At the same time, the survey results become a point of departure for a larger enquiry.

How does a longer continuum of ignorance/mediocrity form, stretching beyond schools into higher education? What are the institutional mechanisms in place to sustain it? Dore (1976) in his seminal work on the “ diploma disease” fi rst diagnosed the disturbing trend of education getting reduced to a “ritualised process of qualifi cationearning.” As summarised by James (1998: 356), the disease was not as much about “individuals pursuing qualifi cations … rather it was about how pedagogy became pathologically infected by the pressure to ensure good examination results … it was not individuals who caught the disease, it was school systems.”

On one hand there is a surge to be educated (take diplomas) and on the other there is such wide learning deficit. India is all about dilemmas most of the time:

How do these seemingly contradictory tendencies co-exist, chronic learning deficits on the one hand and the quest for better examination results on the other? Are these two processes functioning independently and in separate pools of students? Or alternatively, is it possible to not know much and still be able to score high? As we reckon, the diploma disease manifests itself in strong faculty-wise segregation in India. We remain concerned about its social sciences mutations, particularly where the disease combines with learning defi cits.

The social sciences are not only witnessing an escalation/inflation of qualifications, a typical symptom of the diploma disease, but also, worryingly, qualifi cations being acquired at very low thresholds of quality, undermining both the degree and the person acquiring it. How else does one explain an elementary algebraic question “5y = 100. Solve for y,” first found in textbooks of Class VI, resurfacing at a much senior level in a third-year Bachelor of Arts (BA) (Economics) university-level paper under the title “Quantitative Techniques”? While the question may appear to be an “easy” one, it hints at a systemic awareness of the low academic attainments of students who are going to attempt it.1 With the understanding that a majority are going to fi nd it difficult, a mathematical question comes with a generic, nonmathematical option, “Explain the importance of research methodology (in 100 words),” for which an equally generic, standardised answer is available in guides, or printed notes. Examples such as these are illustrative of deep-rooted learning deficits being systemically carried forward.

Does not read well at all. Leave math skills, even basic economic reasoning is missing in most students.

Finding the silver bullet for Japan’s train dilemma

August 7, 2015

Interesting article on Japanese train industry. It also helps in understanding the overall structure of train/railways.

The problem with Japanese billet trains is that they are single lines between two key stations. Such lines are closed systems as in they cannot be used by other train lines. This makes the system expensive but still is much safer than the open system alternative:


How many can pass this Prof. Milton Friedman’s exam on money and banking (1932)?

August 7, 2015

This blog had earlier pointed about a Harvard economics exam in 1953. Most reacted to the post wondering how many economics students and today’s economics pros can pass this exam today?

Similarly, Rear view mirror blog points through this post Prof Friedman’s exam on money and banking in 1932:

Write on any four questions.

  1. “The banks could either keep the demand for real capital within the limits set by the supply of savings or keep the price level steady; but they cannot perform both functions at once.” (Hayek) Discuss this statement critically
  2. “Only the purely static quantity theory needs no index number, for its comparisons assume relative prices to be unchanged inter se. The objections to Professor Fisher’s Equation of Exchange arise mainly from the faults of the price index implied in it.” (Hawtrey) Explain and evaluate this statement.
  3. The criticism is sometimes made of the quantity theory that it assumes other things to be equal, whereas in fact they are not. Discuss this criticism. What “other things” are referred to?
  4. Discuss the relation between the k of Keynes’ earlier equation and the velocity of circulation.
    b. Discuss the statement that changes in the velocity of circulation of goods cannot bring about changes in the price level because of the fact that they necessarily bring about compensating changes in the velocity of circulation of money.
  5.  According to Keynes’ analysis what would it be necessary to do in order to eliminate the business cycle? State and support your opinion of Keynes’ conclusion.

How many can pass this either? How many have even heard of these statements? Where is the equation/model here? It ain’t economics man!!

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