Archive for July 18th, 2016

Make regional airlines a viable business case instead of giving them just cheaper loans…

July 18, 2016

The easiest solution to start or address woes of an industry is to make loans/debt cheaper.

So, it is hardly a news that in order to kickstart regional airline scheme, govt is thinking of providing cheaper loans:

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Privatize the Police?

July 18, 2016

A piece from Murray Rothbard’s book – For a New Liberty: The Libertarian Manifesto – written in 1973.

I am not saying we should privatise the police. There mere thought is shocking for someone who has been brought up with the idea that it is govt’s role t provide us with security and it appoints police to d the job.

But why not discuss and think through the issues? Why should one be discovering all these supposed libertarian and market  supporting works outside of economic teaching? These are the kind of debates which widen the scope of economic thinking:

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Case of estimating impact of doing business ranking on GDP/capita – which regression to use?

July 18, 2016

Dhananjay Ghei and Nikita Singh on Ajay Shah’s Blog show the predicament for any researcher. Which estimation model should one use which represents the analysis in best way?

They look at the recent debate between two economists on impact of doing business rankings:

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Turkey’s Baffling Coup and why India never had a military dictatorship..

July 18, 2016

Last week saw yet another attempt to dethrone democracy in Turkey (it was more a case of demagoguery than democracy). There have been a quite a few already in its recent history. TYe government even tried to make Turkey coup-proof in 2006 which obviously did not work! But this recent one was baffling and amateurish at its best.

Dani Rodrik explains his bafflement:

Military coups – successful or otherwise – follow a predictable pattern in Turkey. Political groups – typically Islamists – deemed by soldiers to be antagonistic to Kemal Atatürk’s vision of a secular Turkey gain increasing power. Tensions rise, often accompanied by violence on the streets. Then the military steps in, exercising what the soldiers claim is their constitutional power to restore order and secular principles.

This time, it was very different. Thanks to a series of sham trials targeting secularist officers, President Recep Tayyip Erdoğan had managed to reconfigure the military hierarchy and place his own people at the top. While the country has been rocked by a series of terrorist attacks and faces a souring economy, there was no inkling of unrest in the military or opposition to Erdoğan. On the contrary, Erdoğan’s recent reconciliation with Russia and Israel, together with his apparent desire to pull back from an active role in the Syrian civil war, must have been a relief to Turkey’s top brass.

No less baffling was the almost amateurish behavior of the putschists, who managed to capture the chief of the general staff but apparently made no meaningful attempt to detain Erdoğan or any senior politicians. Major television channels were allowed to continue to operate for hours, and when soldiers showed up in the studios, their incompetence was almost comical.

Planes strafed civilians and attacked the parliament – very uncharacteristic behavior for the Turkish military outside areas of Kurdish insurgency. Social media were full of pictures of hapless (and apparently clueless) soldiers being pulled out of tanks and disarmed (and sometimes much worse) by civilian crowds – scenes I never thought I would see in a country that has come to hate military coups but still loves its soldiers.

🙂 Events were like those seen in comedy movies..

Thus obviously bring to minds why Pakistan has had coups and India none. Here is an article looking at reasons based on Steven Wilkinson’s work:

The question why the Indian army never attempted to seize power has sometimes been attributed to the fact that it is a disciplined, highly professional army, steeped in proud 250-year old traditions inherited from the British. But this theory doesn’t work, because the Pakistani army was born out of the same traditions and that didn’t seem to stop it from assuming power.

Indeed, one could argue that it was precisely because the Pakistan army was such a highly professional force that there came a time when it felt it could no longer stand by and watch the country slide into chaos, and felt it was its duty to step in. So clearly this is a question one needs to look at more closely. Which is what political scientist Steven Wilkinson has done with his excellent new book, Army and Nation.

In order to understand what didn’t happen in India, it is perhaps useful to first look at what did happen in Pakistan. The military dictatorship in Pakistan has had an interesting pre-history. It begins in undivided India, where the largest single component of the army was drawn from the undivided Punjab. Hence at the time of Partition, of all the institutions that Pakistan inherited, the most substantive was its army.

Moreover, while in India the Congress Party was a highly evolved, durable organisation, in Pakistan the Muslim League was not much more than “Jinnah and his Private Secretary”. Hence, there was a dangerous structural imbalance in Pakistan, especially after Jinnah’s death in 1948.

Unlike Turkey, India did make progress on coup proofing the economy:

The Indian Army was born out of the same tradition as Pakistan’s. In British India, the army enjoyed a prominent position in Indian life, and even played a role in policy matters. The Commander-in-Chief, was also the de facto Defence Minister, and was the second most powerful person in the hierarchy after the Viceroy himself. But after Independence things began to change.

Prime Minister Nehru believed that the new India needed to re-think the role of the army, and initiated a policy that would firmly subordinate it to the civilian authority. One of the first things that happened after Independence, for example, was that Teen Murti House, traditionally the grand residence of the army chief, was assigned instead to the Prime Minister: a small matter by itself, perhaps, but a clear indicator of the way the wind was blowing.

Next came a series of budget cuts (resulting, among other things, in hefty cuts in army officers’ generous Raj-era salaries). And when India’s first army chief, Field Marshal Cariappa, publicly criticised the government’s economic performance, he was immediately rapped on the knuckles, and told not to meddle in matters that did not concern him.

Over the years a systematic programme was pursued to ring-fence the armed forces, and their influence in Indian society – a program that was given fresh urgency in 1958 by the military coup in next-door Pakistan (an occurrence that was worryingly praised by Field Marshal Cariappa, who had recently retired as Army chief). A highlight – or, rather, lowlight – of that ring-fencing programme was the appointment of Krishna Menon, a powerful, abrasive, leftist intellectual, as Defence Minister. It was an attempt to put the armed forces unambiguously in their place. Unfortunately, it also had the unintended side effect of leading to the stinging defeat of 1962, but that is a different story.

By the 1970s, the Indian armed forces had finally been rendered ‘coup-proof’ by a comprehensive system of checks and balances that had been put in place. And that might be considered to be one of the major achievements of the Nehru era: ensuring the durability of Indian democracy. It’s an achievement that is not sufficiently recognized; an achievement underscored by the fact that all our South Asian neighbours – Pakistan, Bangladesh, Burma and Sri Lanka– have experienced military coups, actual or attempted.

Wilkinson explains how this ‘coup proofing’ was implemented, through a package of carefully thought-out measures, ranging from diversifying the ethnic composition of the armed forces to setting up rugged command and control structures, re-casting the order of precedence between civil and military authorities, paying close attention to promotions, disallowing army officers from making public statements, creating a counter-balancing para-military force, and topping off this entire effort with little touches like ensuring that retired chiefs of staff are usually sent off as ambassadors to faraway countries.

At some level it is all about politics and political institutions. Whether they see the role of the army in a democracy as a threat or as a welcome, goes onto shape things for foreseeable future.

Gold standard in Daesh (Islamic State of Iraq and the Levant)

July 18, 2016

This news came somewhere in early July but forgot to blog about it:

Daesh have began recently the use of a gold dinar as their currency standard for commercial trade, denouncing the usage of paper currency printed by US’ ‘crusader Federal Reserve institution’.
According to Al-Masdar News, oil merchants in Deir Ez-Zor, Syria, were instructed to use the gold dinar if they were to conduct oil purchases from Daesh-held oil plants. The Daesh gold dinar is proclaimed to have a value that equals 190 US dollars.
Hmm… No other details are there on the mechanics of the currency regime. What is Daesh? It is Arabic name of dreaded organisation ISIS.
This blogpost argues how the idea shaped earlier in 2015:
From an historical perspective, the picture that Daesh paints about the gold standard is rosy and oversimplified. I must give them credit, however, for presenting a much better description of the prevailing balance of US dollars outside of US borders acting as the global reserve currency, and how these things are tied to rates of American borrowing that are unsustainable. Daesh is certainly not the only group making this argument- their hatred for the US Federal Reserve is most notably shared by libertarians in the USA, an interesting overlap the video never explicitly addresses. Daesh then offers its own solution- a return to real gold and silver coinage and not fiat notes- which it claims will bring down the American financial empire. Let’s look at the  history to understand the problems of gold coinage and see what Daesh offers, if anything, as solutions.
Interesting bit..

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