Archive for February, 2016

Karnataka Govt is again out to collect life time road tax…

February 19, 2016

One just does not understanding the way things work in India. The central govt and some state govts are busy telling us about virtues of Make in India/Digitial India etc. The mango man is being asked to give up all kinds of subsidies and pay all its taxes. Big talks are on regarding GST and how it will streamline things. There are talks of service tax being further raised to 16% in the upcoming budget to bring the tax rate in line with future GST rate.

However, on the other hand State governments like Karnataka are completely undoing all these ideas. After being quiet on collection of life time road tax from Non-Karnataka registered cars, the State government is again whipping those who have not paid. The cars and driving licences are being impounded. RTO (Road Transport officers) officers have become demi-gods telling people they should know the rules.Really?



The Origins of the Superrich: The Billionaire Characteristics Database

February 19, 2016

Caroline Freund and Sarah Oliver have this interesting paper on superrich across world regions:

This working paper presents a new dataset on the sources of billionaire wealth and uses it to describe changes in extreme wealth in the United States, Europe, and other advanced countries. The data classify wealth as either self-made or inherited and identify the company and industry from which it comes. Among self-made billionaires, individuals are further classifi ed as company founders, executives, politically-connected, or in finance.

Data analysis shows that the superrich in the United States are more dynamic than in Europe. Just over half of European billionaires inherited their fortunes, as compared with one-third in the United States. The median age of a company of a European billionaire is nearly 20 years older than that of an American billionaire. Traditional sectors explain more than half of the rise in wealth in Europe; the financial sector and technology-related sectors together are largely responsible for the rise in US wealth.

There is some evidence that rents are higher in the United States than Europe, as not only is the number of US billionaires expanding rapidly, but US billionaires are also getting richer on average over time, especially when wealth is connected to resources, nontradables, or finance.


Pink tax: Why women pay higher prices for the “same” products

February 19, 2016

One has always wondered why women pay many times more for things like haircuts, shoes etc compared to men. Most women laugh off hearing the price of men haircuts saying it is too low to be true.

This higher pricing has been dubbed as pink tax. It is not really a tax imposed by govt but nevertheless a case of discriminatory pricing. See this list for the price differences between the two categories. It is startling indeed..

John Dotson discusses the issues and says there is nothing wrong with it. Let women figure and decide why they choose to pay more for their products.


History and future of financial centres..

February 18, 2016

Financial centres is perhaps the least studied but one of the most fascinating areas of finance. We ignore the locational aspects of finance/banking which combine so much of scholarship – history, economics, politics and finance..

There are two recent speeches – first by Clara Furse of Bank of England and another by Mr Tharman Shanmugaratnam, Chairman of MAS Singapore. Both obviously look at their own financial centres.

Clara Furse takes you to history of fin centres:


How Indian Railways offers instant help on Twitter?

February 18, 2016

Meet the team that blends the new technology brilliantly with the old.

Reports about how the Indian Railways’ authorities are helping passengers via Twitter, are very common these days. Be it dirty toilets in the waiting room, or an infant onboard a train who needs medical assistance – all a passenger has to do is tweet to the handle of Ministry of Railways, write about the issue, and wait for a reply. In most cases the reply comes in just five minutes, and the concerned people follow up till required assistance reaches the passenger.

Ever wondered who is behind this quick assistance? It is a team of three people who sit in room number 454 on the fourth floor of the Ministry of Railways building. It is called the Twitter Control Room and these are the people who work there…

Nice bit..

Why is there no world day for the bicycle?

February 18, 2016
Prof. Leszek J. Sibilski asks this question:


How Facebook lost face in India..

February 18, 2016

A decent summary of the debate and issues around Facebook’s Free Basics offering and how TRAI just snubbed it.

When Facebook founder and CEO Mark Zuckerberg visited India late last year, he made the mandatory trip to the Taj Mahal in Agra. Almost every foreign visitor to the subcontinent does so; the late Princess Diana had posed alone before the mausoleum when the British royal couple came to India in 1992. A few months later, she and Prince Charles separated. Zuckerberg also had himself photographed alone at the Taj. He posted the photograph on his Facebook page, accompanied by the comment: “It is even more stunning than I expected.”

Today, a few months later, Zuckerberg finds himself estranged from his Indian constituency. His Free Basics initiative has been banned by the Telecom Regulatory Authority of India (TRAI). Zuckerberg’s dream of being a pivotal part of Prime Minister Narendra Modi’s Digital India program has received a severe setback. And his target of “the next one billion” Facebook users – the first one billion was reached on August 24, 2015 – may have been postponed by months, if not years. (The first one billion is the number of people who logged on to Facebook on that day. It is different from the usually quoted monthly active users, which stood at 1.59 billion on December 31, 2015.)

Considering the outpouring of support for the TRAI ruling in the Indian media and among opinion leaders, it may appear that the decision was inevitable. But it hasn’t always been so. There were some protests from technology experts when was unveiled in 2013 as a program that would provide limited access to the Internet for free via the Facebook platform. There was more criticism when it was rebranded Free Basics in September 2015. But issues such as net neutrality were barely understood by the man on the street.


Capitalism: competition, conflict and crisis

February 18, 2016

Prof ANwar Sheikh of New School for Social Research has written a book by this title. THe book attempts to provide a way to figure economics without any of those neoclassical assumptions and ideas.

He discusses the book in this short interview:


The birth of Sri Lanka as a test playing nation..

February 17, 2016

This piece was written by Martin Williamson in March 2012.

It still makes for a good read for cricket (and history) buffs:


The case for growth-indexed bonds in advanced economies today

February 17, 2016

Times are changing. The growth indexed bonds were advised by advanced world econs to the developing economies. Now they advise the same for the advanced economies as well. The idea is simple – you get paid as per the growth rate of an economy. If growth goes up, payments to investors rise and vice-versa. Given the volatile and uncertain growth pattern in advanced world, one could look at growth bonds for them as well.

Olivier Blanchard and others have a piece on the same:


A refresher on statistical significance

February 17, 2016

No matter how much you ace these ideas of statistics there is always room to simplify things further.

Amy Gallo of HBR tries to simplify the key idea of statistical significance:

When you run an experiment or analyze data, you want to know if your findings are “significant.” But business relevance (i.e., practical significance) isn’t always the same thing as confidence that a result isn’t due purely to chance (i.e., statistical significance). This is an important distinction; unfortunately, statistical significance is often misunderstood and misused in organizations today. And yet because more and more companies are relying on data to make critical business decisions, it’s an essential concept for managers to understand.

To better understand what statistical significance really means, I talked with Tom Redman, author of Data Driven: Profiting from Your Most Important Business Asset. He also advises organizations on their data and data quality programs.

“Statistical significance helps quantify whether a result is likely due to chance or to some factor of interest,” says Redman. When a finding is significant, it simply means you can feel confident that’s it real, not that you just got lucky (or unlucky) in choosing the sample.

Useful read early in the morning…

Evolution of world trade: 1800-2015

February 16, 2016

Giovanni Federico and Antonio Tena-Junguito update the historic trade data  of more than 2 centuries using a new database:

25 years of India’s liberalisation and what life was like in 1991

February 16, 2016

Luis Miranda has this post and also tells us about this website –  He recalls his experiences in India before 1991 and post 1991. The same is the case with the website which has other people reflecting on their experiences.

Miranda moved to India as a forex dealer just before July 1991 and most people called it great foresight. He thinks it was just plain luck:


5 myths many economists believe..

February 16, 2016

Donald Boudreaux lists the five myths:


This crazy 100-year-old US law that makes almost everything more expensive

February 15, 2016

Know-how of law is so integral to understanding economics. It is nothing short of blasphemy that law is hardly taught in economic teaching. Most economic policy is a combination of economics and law, with some saying mostly law. How poor/good laws shape economic activity is just amazing to see.

George Leef has this article on a 100 year old law (called Jones Act) which shapes whatever is shipped within US and makes all activities more costly. He begins by saying that Presidential debates on economic issues should focus on scrapping old laws. This Jones Act should be one of the first to be scrapped:


Blame the British for continued extensive state intervention in land and credit markets

February 15, 2016

Prof. Anand Swamy  of Williams College has a nice piece on knowing history.

We often lament that there is too much govt intervention in land and finance/credit markets. This is of course blamed on the government policies post independence. However, the intervention dates back to British:

It is usually thought that extensive State intervention in market transactions is a post-independence phenomenon in India. Such intervention is closely identified with import-substitution, which was a strategy to promote industrialisation. But as liberalisation has proceeded we are increasingly aware that the State also heavily intervenes in markets in land, and, relatedly, private (non-bank) credit. What are the roots of these interventions? Should these also be traced back to the days of Jawaharlal Nehru and Indira Gandhi? After all, wasn’t the British Raj largely laissez-faire 1? The short answer is No. Despite lip-service to laissez-faire, the British Raj intervened extensively in land markets, and particularly in the relationship between land and credit transactions. This goes back to the 19th century. Independence marked a break in policies pertaining to trade and industry, but on land and non-bank credit this is a story of continuity.
If we consider the land market in 1850 in (say) Bengal or the Bombay Deccan, there was little State intervention. The colonial State wanted its taxes and would seize the land if the owner did not pay. Barring this, owners were free to sell or mortgage their land. But this state of affairs did not last. When land is freely transferable, people will borrow against it. Some will default, and lose their land. Even when land has not been explicitly pledged as collateral, it may have to be sold to repay debt. This process is inevitable at least to some extent, and will occur in any market economy. But its social impact depends on the identities of borrowers and lenders. In a relatively rich region (say, much of Bengal), there was enough capital, so the lenders were local and long-standing members of agrarian society. If land went into their hands, this did not necessarily increase social tensions. However, in poor region (say, Bombay Deccan, or numerous tribal areas), many lenders were immigrants. They were often professional trader-lenders, with no connection to agriculture. When land was transferred to them on a significant scale, this led to social tension. In some instances violence broke out, as in the (tribal) Santhal areas in eastern India in 1855 or the Bombay Deccan in 1875. The colonial State then chose to intervene. They chose two main types of policies: regulating the moneylender; and directly banning land transfers.  
I would imagine this even predates British. A reading of political/economic history of most Indian kingdoms shows you that kings intervened excessively in both markets. Land was the real asset people had and finance/credit the pipeline to control the flows of money to people. SO keeping a tab on these two, and virtually all is managed and controlled by the empire..

Why Lehman Brothers are making headlines ?

February 15, 2016

Well, some entrepreneur has taken out three whiskey blends and calling it Lehman Brothers.

Barclays which bought part of the firm tried to block the usage of the name but failed. More importantly, the alcohol firm has got plenty of orders. As the article says – Cheers to the Lehman spirit..

Trickle-Down vs Middle-Out Economics..The real history of economic growth

February 15, 2016

Eric Beinhocker of the Institute for New Economic Thinking has a piece on American economic dream gone wrong.

He first sums up how America moved from being what you know to who you know economy. Then he says US needs to go back to its core factor – rooting for middle class: The usual cited business of trickle down economics doesn’t work. What matters is middle out economics where middle class rules the roost:


Is it time for franchise-based Test cricket? Well this is how cricket was actually started..

February 12, 2016

Michael Jeh has a food for thought piece on reviving/continuing interest in test match cricket.

He says as there is little interest in test matches but interest has picked up hugely in club/franchise based T-20s. So, should we move test matches to the club format as well? He reflects on this while watching this movie – Death of a Gentleman (test match) – which should be a great watch.


However tempting it is to lampoon the ruthless chieftains who often treat the sport as if it were their private property, I’d like instead to put forth a bizarre idea that emerged from thinking about the future of Test cricket in the shadow of the T20 beast – the Franchise Frankenstein monster. Can Test cricket find salvation in the franchise model? Do acronyms like the IPL, BBL and CPL offer some hope of CPR for this elderly gentleman?

Think about it: if we can move so far from the traditions of cricket as to have third umpires, pink balls, day-night Tests, free hits and miked-up players in an international match, can Test cricket be saved by adopting a franchise model, even if it means “selling” the national flag? A controversial thought, I know, but is Test cricket ready to move from patriotism to pragmatism? Are we ready for the long-form game where teams are made up of players from different nations, perhaps each based in a particular country, with x number of international players per franchise, like in the IPL or Big Bash? With clever selection and marketing, some sense of national identity can be retained, but with international flavour. The ODI and T20 World Cups can still satisfy our need for patriotism and the sheer poetic genius of chants like “Aussie, Aussie, Aussie, Oi, Oi, Oi.”

The film charts the rise and rise of the franchise model, where the IPL is the benchmark. Chris Gayle, not usually someone whose words I pay much attention to, was surprisingly eloquent when explaining why it was a no-brainer to choose the life of a T20 mercenary over being a relatively poorly paid Test cricketer. So it raises the question: if we are to save Test cricket, do we need to think outside the square and create a competition where there is enough money, for administrators and cricketers, to woo them to the long-form game? It is undeniable that for most stakeholders money remains the ultimate motivator, despite anything they might say in public about the pride of representing your country, Test cricket being the supreme challenge, and so on.

He talks about WI cricket:

I suppose the question is: do we value the format more than we value the notion of country v country? If you look at the case of West Indies, it isn’t even strictly country v country, comprised as they are of a band of disparate nations. That they have been able to play with pride for so long is a miracle in itself. So, is Test cricket only of interest because it pits countries against each other or is the actual format of the game worth saving?

International schedules are now planned around the IPL. Domestic cricket is being played overseas, Pakistan have home games in the Middle East, the IPL was played in South Africa and the UAE, Irishmen have played for England and then gone back to Ireland, umpires wear helmets. Australia hand out international caps to fringe players because the first team are on the plane to New Zealand. Players are rested because they might get injured (that worked!). Australia has always prided itself on how hard it is to get an international cap but it has now got to the stage where if you are a regular on the domestic circuit and don’t have a Test, ODI or T20 cap by the end of your career, you’ve almost underachieved.

All cricket boards still wax lyrical about the primacy of Test cricket but it is clearly now a hollow truth. If our love of the format and the unique skill sets that it brings to the game can transcend blind patriotism, perhaps, just perhaps, we can save the gentleman from death by neglect.

Interesting bit.

But then this is nothing new really. AS far as I have read, this is how cricket was originally played. For many years England Cricket team was actually the Marylebone Cricket Club team. Before we had IPL, BPL and so on we had BCCI, ACB and so on. These were nothing but private clubs/boards. Just that players were picked from within the country but even this was not strictly true. How these boards etc were eventually made to represent national teams is something worth knowing about. Infact, experts say one reason for lack of regulation and eventual problems in Indian cricket is the way BCCI has been organised.

I don’t know much about the topic though. But it is fascinating really.  Will people watch test matches if we go back to the franchise model?

What matters more the form or the substance?

One can immediately connect this to economics of organisations. We often debate in economics over which is a better model to provide a good/service? Should one make the product or just outsource the same?

From emerging to submerging markets..

February 12, 2016

Anders Aslund gives a nice name/tag to the once emerging markets – the submerging markets..

It is time to put the rise of the emerging economies in perspective. The rapid economic growth in much of the developing world since the beginning of the century was fueled by a commodity boom and an overextension of credit. But, because the emerging-market boom was not accompanied by sufficient structural reforms, it was not sustainable.

Today, most of the major emerging economies have experienced a severe reversal of fortune. Russia and Brazil have plunged into severe crises, with double-digit inflation accompanying a 4% contraction in GDP last year. South Africa is barely growing. China’s phenomenal rate of expansion has slowed to below 7%. Unsurprisingly, Goldman Sachs has closed its money-losing BRIC fund for investment in Brazil, Russia, India, and China.

Most parts of the article are of course well known and hugely written about..

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