Archive for August 22nd, 2016

How did EPW start? One of the promoters was disillusioned with a hyped LSE graduate!!

August 22, 2016

EPW celebrates its 50 years and guess what? There is hardly any mention of it in the media as the people seem to be busy obsessing with new Indian central bank chief and write one flowery piece after the other (here is another rebuke). #EPWat50 hardly has any comments. So much so for Indian economy soothsayers that no acknowledgement is even made of the journal which has carried the burden all these years. One could disagree with EPW for its content (too left wing for the market oriented media) but one should atleast make some mention of it.

Anyways, here is a superb piece from Ashok Mitra (former editor who is 88 now!) who details the story behind the journal. Before EPW, there was Economic Weekly which started 17 years earlier in 1949. To cut the story short there was a person named Sachindra Narayan who was really good at economics and based in Dacca. Sachin was quite a character who got really well with people. He moved from Dacca to Mumbai and his brothers joined him.  One of his brother Hiten who once went on a trip with a LSE trained economist to UK:



How Friedman’s helicopter drop is different from today’s helicopter drop? Step by step approach..

August 22, 2016

The authors call it a primer on helicopter money which will be missed by most as another of those primers which are hardly a primer. But this one is and needs to be read.

The authors take the balance sheet approach and explain how helicopter money actually works.

First, why Friedman version does not work today?


The case of appointment at Indian central bank: When will our media/experts call spade a spade?

August 22, 2016

It is one thing to congratulate someone over his/her promotion but completely another to make such noise of the matter. Indian media has mastered the art of making a mountain of a molehill.The whole media looks for a common story and everyone talks in the same language. Currently the main big theme is not to give financial markets any bad signals. So all news is presented accordingly.

This was seen in recent appointment of Indian central bank chief. All news suggest government bats for continuity and projected the appointee as this great economist which will continue to propel the Indian economy. Really? Earlier people appointed for this job were economists and bureaucrats working with finance ministry and shuttling to RBI (most were such cases) and very few with plain academic experience. This appointment hardly falls into any of these categories with most experiences in private/corporate sector. So the media calls it as  ‘inflation warrior’ with corporate background!! Some call the appointment as globally respected. I mean how?

I mean it is not even laughable as since when did any corporate have an inflation objective? Adjectives like warrior, laser like focus, lakshmanrekha etc are being used to define qualities which suit a military general than a central bank chief.

The usual things like IMF/ivy league connections are being highlighted without looking at any details. This piece even links 1991 crisis to the appointee’s CV! Neither topic of thesis nor past work is being analysed. And then what about the overall work experience and choice of firms? Do we associate them with expertise required for central banking? How come none of these attributes were even mentioned earlier?

Infact, a close look tells you the expertise was much to do with energy and infrastructure and less to do with monetary matters. There are a few papers on monetary matters but hardly of much importance. They are usual bit on inflation and fiscal deficit which are written across the globe by several economists.

In India, all it takes is a committee to become an expert on any matter. One could have easily identified better experts on inflation targeting.  And then implementing inflation targeting itself is a big issue. We are trying to chase something which other central banks are trying to give up. It was just a case of bad copy and paste as highlighted here.

Interestingly, we made similar mistakes with monetary targeting as well which was implemented much later in 1980s when much of the developed world was giving it up. In 1982, Gerald Bouey, then governor of the Bank of Canada, described the situation by saying, “We didn’t abandon monetary aggregates, they abandoned us.” This is a case which requires a detailed post and don’t want to get into several issues here.

Even nationality issues are raised each time. I still don’t understand why our esteemed economic advisers hide their nationality. Just disclose it and live with it. Now we learn that the appointee became an Indian national only in 2013 before taking the deputy position. And guess what media spins it as? It is a case of inclusive governance!!! As if anyone objected to nationality previous assignments in IDFC (which had major backing of the govt), Reliance and so on…

All this smacks at plain elitism and clanish in these matters. Just have the required ticks and all is well and the entire clan comes to celebrate and create hype.  Other countries are closely contesting all this elitism. See the case of French central bank for instance.

It is just too easy here. Just keep creating hype. Just spin the story whatever it is. Like a friend told me even if the government appointed a bank robber for the job, the media will say “the govt appointed someone who knows the true value of money”!

Again to reiterate, happy for the appointee. He would truly be laughing all the way to the bank knowing about so many qualities from the media.

But our media keeps stumping to new lows which barely does its job these days. Why not just call a spade a spade? It is time that the media gets more intelligent in evaluating the body of work which goes beyond the mention of IVY league names. The talent in India is poorly recognised. There are enough researchers here in India who continue to be ignored.

Infact why stop at media alone. Take our bankers and ex-experts. Read statements of any bankers and experts who fear taking on Indian central bank. All of them in one tone say the same thing be it any policy or appointment. How is it that not one says anything different?

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