Archive for October, 2017

The evolution of the promises on India’s banknotes (1770 onwards)

October 31, 2017

JP Koning has another fascinating post on how the promises on the banknotes have changed over the years.

Taking a cue, I looked at India side of the story as well (Source: The Paper and the Promise written by Bazil Sheikh and Sandya Srinivasan). This is how it goes:



Studying the history and rich traditions of India’s religious institutions…

October 31, 2017

India’s Prime Minister recently asked Universities to study the history and rich traditions of India’s religious institutions:


Economics of prison in Australia…

October 31, 2017

This blog has written about economic of prison in US.

Here is a discussion and interview (mp3 format) on the economics of prison in Australia:

There are more than 41,000 daily full-time prisoners in Australia, according to the latest ABS data. Many of them are in private prisons – almost 20% of the prison population according to a 2014 Productivity Commission report.

But we don’t really know whether private prisons are more cost effective or produce better results. Private prison contracts are often “commercial in confidence”, and it’s hard to know what exactly we’ve paid for. All this means we have to rely on watchdogs to ensure taxpayers are getting value for money, and it’s tough for companies to really compete.

Prison job programs are often touted as a way to reduce prisoner recidivism, but again there is little evidence showing a positive impact. Joanne Wodak was a research assistant on a study in the Northern Territory. Despite positive feedback from both prisoners and employers, Wodak says these programs don’t address other, important factors affecting recidivism such as alcoholism and homelessness.

Technology could drastically change what a prison is and who is in them – through the use of algorithms that decide who gets bail, for instance. But as the University of Sydney’s Sandra Peter and Kai Riemer discuss, it’s unlikely to have an impact on the jobs prisoners themselves do. Low wages mean that prisoners provide an incredibly cheap source of labour, and the economics of this is unlikely to be drastically changed by technology.

So many different organisations and how economics differs across them…

How badly does India need banking? (bank based financial system vs market based financial system?)

October 31, 2017

Ajay Shah writes on recent Bank recapitalisation (history here and current specifics here).

He asks several questions related to this policy and much of which has already been discussed.

But this first question caught my attention:


History of Burma’s 3 demonetisations: 1964, 1985 and 1987…

October 30, 2017

Superb piece by Ananth Karthikeyan in Mint.

He analyses the three demon episodes in Burma:

The demonetization of 1964

The economy, unsurprisingly, plumbed and black markets grew exponentially. The Junta, however, did not pause to reflect. They could not slow down their drive to nationalization everything without losing face and revealing their administrative naiveté. Since they jealously guarded power, they could not delegate responsibilities, install a proper financial system or curtail policies that drove galloping inflation.

Something had to give. The dictator’s mind, moulded by years in the military, now seized upon a blitz-like move. In what was meant to be a masterstroke, large denomination notes, with which the “evil capitalists and deviants” obviously hoarded their money, would be swept away.

The reasoning was as follows: the Indians and the Chinese would be the first casualties and inflation would be halted. Therefore, the people would welcome the move. All deviants who had the gall to live outside the control of the state would be broken. The coterie around Ne Win concurred.

The Demonetisation Act of 1964 declared that all Burmese kyat notes of denominations of 50 and 100 ceased to be legal tender overnight. These notes were to be surrendered to receiving centres established all over Burma.

Reimbursement would be provided if notes were surrendered within a week. For small amounts, spot reimbursement was promised. For amounts between 500 and 4,200 kyats, “timely” reimbursement was guaranteed. Any amount over K4,200 would warrant further scrutiny and the application of an escalating tax.

The Junta’s narrative was wrapped in conflicting themes of divisiveness and social justice. The official declaration of the central bank proclaimed that this revolutionary move was designed to remove social evils: “The purchasing power of the vast sums of hidden money which could be used to embarrass the Government and the economy, by unsocial acts of hoarding and speculation of essential commodities (by foreigners and evil capitalists).”

Drawing upon popular perceptions and memories of Indian moneylenders and financiers, the Junta claimed that foreign capitalists (meaning ethnic minorities who were never given full citizenship) had historically accumulated money that belonged to the real people, thus hindering the Burmese Way to Socialism.

Ethnic Indians and Chinese, already reeling under nationalization, suddenly found themselves destitute. Most of them decided to leave Burma for good. An overwhelming majority of Burmese Indians were small financiers and businessmen—a far cry from the rich and powerful community of pre-war Burma—and now they were even more wretched.

It would take the concerted effort of a number of Indian ministries to bring them to India. The Junta, on its part, did everything to hasten the emigration.

However, the demonetization did not impact just the “evil capitalists” targeted by the government. In a predominantly cash economy, demonetization ruined many ordinary people and small businesses.

78% of notes were returned but it just shook the system:

In the end, the 1964 Burmese demonetization was a dismal failure. The state’s endless hunger for funds resulted in a huge quantum of new denomination notes soon matching the demonetized money. Inflation continued unabated.

The greatest consequence was the loss of confidence in the kyat. People returned to holding wealth in the form of precious metals and stones. Coins were hoarded and there was soon an endemic shortage of small change.

The atmosphere was rife with rumours of further demonetizations.

None of these lessons were learnt and the country saw 2 more demons in 1985 and 1987. In 1985, the purpose was also to widen the tax net which obviously failed as well..

Lessons of monetary history should be learnt well


Ireland Central Bank boss Philip Lane to channel his inner Elvis for in-house opera…

October 30, 2017

Central bankers also do things which could be of wider interest!

Ireland Central Bank top brass is staging an Opera to collect funds for its charity work:

Oh yeah, Central Banking goes on, Long after the Troika’s been and gone, bank on.” The IMF might have something to say about this sort of triumphalism.

We long suspected this might be what the regulator is carolling in the midst of the much vaunted recovery – and it turns out we were right.

Releasing money on the sly to fuel another Celtic Tiger recovery to an Ireland awash with post-Brexit funds and talk of the housing supply banned on the grounds of being ‘fake news’, – this is the rather longingly dystopian view of the economy which has come out of the mouths of babes – or rather the Central Bank itself – in a startling fact or fiction scenario. Oh what larks.

We should be somewhat reassured that it is merely an ‘opera’ written by one of its own top brass – due to be staged shortly as a private event for staff only in order to raise funds for the Central Bank’s nominated charities.

The opera, rather dryly named ‘A Guided Tour of the Central Bank of Ireland’ is a bit of a skit against the regulator itself and opens by admitting that prior to the recent financial crisis, “very few people knew or cared about the Central Bank”.

Governor Philip Lane will launch into a catchy tune, set to the air of ‘Blue Suede Shoes’ by Elvis Presley in which he vents, saying: “We protect consumers, regulate the banks, Do it all for very little thanks.” Another staffer launches into an ode to the UK funds industry, urging them to come to Ireland in in the wake of the Brexit vote.

More alarmingly, another one set to Adele’s ‘Hello’ goes: “We worry because what banks done, You will never own your own home, Hello from the inside, At least we can say that we tried, To tell you the economy’s falling apart, But it don’t matter as clearly you just continue to borrow some more.”

There’s a little dig about the regulator pulling forecasts out of the thin air, a thinly disguised plea from the staff for their own pay to be restored, with the verse: “You talk about your EVP, Blame Fempi and austerity, But you’re just playing the game, Governor.”


The specifics of Bank recapitalisation 2017…

October 30, 2017

Post my post on history of bank recapitalisation bonds, there is a nice article by Avinash Tripathi on the specifics of the recent scheme taking cues from the previous scheme.

Via Avinash, I also learnt where these outstanding bonds from previous recapitalisation worth Rs 20808.75  crore are shown in the budget. These bonds are classified here on receipts budget.

Infact, you see this Receipts Budget and there are several such special securities converted into marketable securities. The governments have always been great at all kinds of financial engineering and there are several such cases in the Receipts Budget…

PSUs devote over Rs121 crore of CSR funds towards ‘Statue of Unity’

October 27, 2017

Interesting news:

India’s leading public sector oil companies contributed over Rs121 crore towards the construction of the ‘Statue of Unity’ (SOU)—a gigantic statue of Sardar Vallabhbhai Patel in Gujarat—as part of their corporate social responsibility (CSR) spend during the fiscal year 2017.

According to their annual reports, the country’s four public sector oil companies – Oil and Natural Gas Corp. (ONGC), Hindustan Petroleum Corp. Ltd (HPCL), Indian Oil Corp. Ltd (IOCL) and Oil India Ltd (OIL)—recorded contributions towards the SOU project as part of their CSR activity in FY17.

ONGC reported a contribution of Rs 50 crore; OIL and HPCL of Rs 25 crore each; and IOCL donated Rs21.83 crore.

These contributions resulted in three-fold jump in CSR spends by the top 100 National Stock Exchange-listed firms by market capitalization in FY17 under National Heritage initiatives as compared to the previous fiscal year.

As per data analysed Goodera (previously NextGen), a CSR and sustainability management platform, the reports of 92 companies were available until 18 September. The data shows a total of Rs 155.78 crore was spent on national heritage initiatives in FY17, compared to Rs 46.51 crore in FY16.

“The reason for a spike is increased investment by PSUs, which have spent 70% of the Rs 156 crore. Government policies have created an enabling environment for this sector, as in the case of Statue of Unity project. PSUs happened to be the first movers, wherein three organizations – Indian Oil Corporation, ONGC and Hindustan Petroleum, have together contributed over Rs 98 crore for the Statue of Unity project, which is two thirds the total spend in the heritage sector,” said Richa Bajpai, Founder and Co-CEO, Goodera.

This was opposed earlier but then contribution towards National Heritage was included in CSR:

The CSR spends on SOU was criticised as a “violation of the intention” of the CSR law & Companies Act of 2013 by Amita Joseph, Director Business Community Foundation (BCF), a civil society organization working on promoting responsible business practice

“This is taxpayer money, and both public sectors (companies) and governments need to be accountable,” she said, describing the case as one of “misplaced priorities” in a country that is in desperate need of better education, healthcare, basic amenities, safety and public infrastructure.

Bhaskar Chatterjee, former Director General and CEO of the think tank Indian Institute of Corporate Affairs (IICA) said the national heritage category was introduced into the CSR rules in order to bring businesses within the development ambit, and allow them to work for national development programmes.

“It is one of the few items which do not relate to the poorest of the poor, but the idea was to see how the corporate sector could contribute to the preservation of our cultural heritage.”

It is so important to read the fine print of such rules here. The Governments continues to find innovative ways to get funds from PSUs….



How to and not to nudge in organisations…

October 27, 2017

Prf Francesco Gino of HBS has two pieces. One on how to nudge and  other on how not to nudge using example from Uber. She also links to this older NYT piece which shows how Uber messed up while nudging.

Peering into Korean society with sociological imagination

October 27, 2017

There is an interesting book on understanding Korean (South of course!) society. There is a discussion of the book here:


Internal capital markets in times of crisis: the benefit of group affiliation in Italy

October 27, 2017

First research says raising capital frm internal sources like parent firms. group firms etc is bad and  firms should raise capital only from external sources. Then comes a crisis and it says internal capital markets are fine.

Raffaele Santioni, Fabio Schiantarelli and Philip E. Strahan look at Italian case:

Italy’s economic and banking systems have been under stress in the wake of the global financial crisis and the euro crisis. Our results suggest that firms in business groups have been more likely to survive in this challenging environment than unaffiliated firms. Better performance stems from access to an internal capital market, and the survival value of groups increases, inter alia, with group-wide cash flow.

We show that actual internal capital transfers increase during the crisis, and these transfers move funds from cash-rich to cash-poor firms and also to those with more favourable investment opportunities. The ability to borrow externally provides the internal capital market with additional funds, but sharing external capital becomes less important during a crisis. Our overall results highlight the benefits of internal capital markets when external capital markets are tight or distressed.


After Axis Bank, comes Yes Bank woes…(The hype that only Public Sector Banks are villains is so wrong…)

October 27, 2017

Amidst Nationalised Banks recapitalisation, the so called efficient and well run private banks show they are no different. This reminds me of a conversation I had with friends a year back that how all this image of private banks is just a mirage. They said in public sector banks one knows the true picture  but private sector banks just hide most stuff amidst the glamour. I was told wait & watch and be prepared to be shocked!

Indeed that is happening.

Andy Mukherjee after ripping Axis Bank, writes another one on Yes Bank:

Oh no, Yes Bank. You don’t get to spin a yarn about the wonderful quarter you’ve had.

You don’t get to fill page after page of your earnings presentation with arrows pointing up, up and up. The bragging about how you are the world’s second-most-social brand (whatever that means) can also wait.

There’s only one question for you to answer. Actually, make that two.

First, how does Yes Bank Ltd. even begin to justify that the regulator, the Reserve Bank of India, found nonperforming assets to have been four times as large on March 31 than was then acknowledged in audited results?

 Second, how did the management credit committee, packed with such stalwarts as the managing director, the chief risk officer, the risk heads, business heads and product heads (and tasked to review among other things stressed accounts) allow an extra $1 billion of them to masquerade as standard assets? The last full year of profit was inflated as much as 44 percent by that means.
Where Yes deserves full marks is for confidence. Managing Director Rana Kapoor is willing to let the provision coverage ratio at Yes drop to 43 percent, from 60 percent a quarter ago. Evidently, he’s expecting recoveries.
Governance or lack of it has become such an important issue…

Why is Austria not influenced by the Austrian School of Economics?

October 27, 2017

I am forgetting the name but someone did tell me this: That the famous Austrian school is perhaps least famous in Austria itself.

In this piece,  Mohammad J. Malayeri and Bill Wirtz look at recent evidence. They wonder why is Austria so un-Austrian?


Here’s what Sweden’s banknotes looked like 100 years ago

October 26, 2017

Nice post full of pictures of old Swedish banknotes. Those were times when banks could design their own notes along with that of Riskbank:

The ten-kronor note hasn’t existed in Sweden for more than 20 years, but at one point there were dozens of different designs for the note, with the country’s different banks each designing their own.

Sweden’s Royal Coin Cabinet museum has shared images of late 19th-century ten-kronor notes as part of an initiative to raise awareness of its collection.

At the time, there were 31 private banks across the country, each of which had the power to issue its own banknotes, so in 1901, for example, there were 28 examples of the ten-kronor note. Banks would display images of all the valid notes, as seen in the picture above, so staff could carry out their jobs and spot forgeries.

“This was a special period in Sweden’s economic history, where we had a standard currency but different banknotes,” Åsa Hallemar from the museum told The Local.

“You can see that the motifs on the banknotes were there to promote the regions, for example people and buildings which were important to the city in some way.”


Nudging for safe driving/ improving road safety….

October 26, 2017

Nice post by UK’s Nudge unit team: Simon Ruda, Monica Wills Silva and Handan Wieshmann.

They point how a simple nudge (an award winning one as well) led to safer driving:

Key to improving road safety is understanding what causes serious and fatal collisions. In work with East Sussex County Council, using cutting edge data science techniques to analyse more than a decade’s worth of data, we found that 10 per cent of all collisions, and 7 per cent of those that result in a death or serious injury, are caused by people who have at least one speeding conviction.

Despite the death toll, and despite previous brushes with the criminal justice system, it seems people continue to drive dangerously; disregarding road safety rules and failing to comply with speed limits. In the West Midlands area alone, there were more than 60,000 traffic offences in 2015.

As well as posing a risk to life, these offences create costs for criminal justice agencies, especially when drivers have to be prosecuted for non-payment of fines.

In 2015, we partnered with West Midlands Police to tackle the problem of dangerous driving.

We focused on adapting an existing point of contact with speeding drivers – the Notice of Intended Prosecution received after being caught speeding. We identified two areas for improvement:

  • making it easier for drivers to comply with the sanction: simplifying the communication in the letter
  • convincing drivers of the legitimacy of speeding limits so they are less likely to reoffend: explaining why speed limits exist and the dangerous consequences of breaking them

Following a clustered randomised control trial over 19 weeks, with a cohort of 15,346 drivers, we found that the intervention reduced reoffending by 20 per cent within six months of an individual’s offence in the West Midlands alone.

These results are in addition to the increased payment rate and speed previously reported, which reduced eligibility for prosecution by 41.3 per cent. Using police and Home Office data, we estimated the intervention will save the criminal justice system £1.5 million per year in the West Midlands alone – as well as reducing the numbers hurt or killed on our roads.

This trial, which won first place at Nudge Awards’ Nudge for Good category this summer, demonstrates the impact of small, low cost, changes to existing process and communications. It is a classic nudge, applied to a hard to shift behaviour. We think this approach – making the rationale behind laws more salient – is a useful tool for law enforcement, which we hope to test in other domains.

Back in 1896, witnesses to Bridget Driscoll’s death said that Arthur Edsel, the driver of the vehicle that killed her, was travelling at a reckless pace. And in present day East Sussex, our findings were very similar: that a driver being careless, reckless or in a hurry was the most common recorded factor of collisions resulting in deaths or serious injuries. A century has passed and some things have changed little.

Fortunately, now, we have new tools and techniques at our disposal to make our roads safer for the next century.

Always interesting to read about such stuff…

He died as he lived: David Hume, philosopher and infidel

October 26, 2017

Prof. Dennis Rasmussen (political science at Tufts University) has a nice piece:

As the Scottish philosopher David Hume lay on his deathbed in the summer of 1776, his passing became a highly anticipated event. Few people in 18th-century Britain were as forthright in their lack of religious faith as Hume was, and his skepticism had earned him a lifetime of abuse and reproach from the pious, including a concerted effort to excommunicate him from the Church of Scotland. Now everyone wanted to know how the notorious infidel would face his end. Would he show remorse or perhaps even recant his skepticism? Would he die in a state of distress, having none of the usual consolations afforded by belief in an afterlife? In the event, Hume died as he had lived, with remarkable good humour and without religion.

In particular, how Adam Smith’s essay celebrating Hume’s life brought the former so much reproach:


President of India’s interesting speech on 60th anniversary of Karnataka’s Vidhan Souda…

October 26, 2017

In this environment of chaotic and acerbic political mudslinging across political parties, this speech is a welcome change (HT: qfint).

The President of India speaks on the occassion of the controversial 60th anniversary of Karnataka’s Vidhan Souda (seat of legislative assembly of the State). He talks about the 4 Ds that make the 5th D – Democracy (hope all political party members read it):

It is not just the 60th birthday of this building that we are marking. This is also the diamond jubilee of the debates and discussions in the two Houses, of legislations that have been passed and policies that have been shaped for the betterment of the lives of the people of Karnataka.

We are aware of the three D’s of the legislature, that it is a place to debate, dissent and finally decide. And if we add the fourth D, decency, only then does the fifth D, namely democracy, become a reality.The legislature is an embodiment of the will, aspirations and hopes of the people of Karnataka, irrespective of political belief, caste and religion, gender or language. It needs the collective wisdom of both Houses of the Legislature to fulfil the dreams of our people.

This spirit of debate and discussion, of inquiry and of service, is not limited to simply the Vidhan Soudha or to political life. It has existed in the soil of this great state. Karnataka has been known through history for spiritualism as much as science, for its farmers as much as its technologists. Its contribution to the intellectual and cultural – and ultimately democratic – heritage of our country has been enormous.

This is a land with ancient Jain and Buddhist traditions. Adi Shankaracharya founded the math in Sringeri in this very state. Gulbarga is a centre of Sufi culture. The reformist Lingayat movement under spiritual leaders such as Basavacharya was also located in Karnataka. In their own way, each of these currents has contributed to nation building.

Karnataka is a land of formidable soldiers. Krishnadeva Raya was the greatest ruler of the Vijayanagara Empire, and remains an inspiration for all Indians. Kempe Gowda was the founder of Bengaluru. Rani Chennamma of Kittur and Rani Abbakka led among the earliest battles against colonial powers.

Tipu Sultan died a heroic death fighting the British. He was also a pioneer in the development and use of Mysore rockets in warfare. This technology was later adopted by the Europeans. More recently, two of our finest army chiefs – Field Marshal K.M. Cariappa and General K.S. Thimayya – were sons of Karnataka.

This is also the seat of education, technology and science. The engineer-statesman M. Visvesvaraya was a builder of modern Karnataka and of modern India. He was responsible for major irrigation projects that continue to help farmers to this day. The Indian Institution of Science and the Indian Space Research Organisation are among so many of our crown jewel institutions that are based in Bengaluru. The dynamism of its entrepreneurs has made Bengaluru India’s IT capital. It is known the world over as the Silicon City.

As expected, people have only looked at his comments on Tipu Sultan whose role has been under a lot of scrutiny in recent times.

He goes on to explain who is a nation builder:

The opening of this building in 1956 coincided with the reorganisation of states and the creation of the boundaries of Karnataka state. In a sense, both these momentous happenings represented the sovereign will, the cultural and linguistic pride and the identity of the Kannadiga people. As such the people of this state are always the focal point of all our endeavours – and of all that is undertaken in this legislative building.

Having said that, Karnataka’s dreams are not for Karnataka alone; they are dreams for all of India. Karnataka is an engine of the Indian economy. It is a mini-India that draws – without losing its cultural and linguistic distinctiveness – youth from all over the country. They come here for knowledge and for jobs, and they give their labour and intellect. Everybody gains.

There was a time when Hampi, here in Karnataka, was one of the richest and greatest cities in the world. Today, as our country strives to regain its importance in the global economy and international system, once again we look to Karnataka to provide India with the enlightenment, the technology and unity of purpose to take us forward. And as representatives of the people of Karnataka, the members of the two Houses here have a special responsibility.

Legislators are both public servants as well as nation builders.

Indeed, anybody who performs his or her duties with honesty and dedication is a nation builder. Those who maintain this building are also nation builders. Those who provide it security are nation builders too. It is by the efforts of ordinary citizens, who diligently carry out everyday tasks, that nations are built. As you sit and work in this Vidhan Soudha, I am confident you will never forget this and will continue to draw inspiration from it.

Let us then make this diamond jubilee not just the celebration of a proud past – but a commitment to an even greater future. A great future for Karnataka and a great future for India!

There is a lot of talk on who is patriotic and who is not. President of India just sums it for us…

Lessons from History of bank recapitalisation bonds issued in 1993-94…

October 26, 2017

Talk about political ironies really. One one hand the current government continues to hold previous government for all India ills and on the other keeps picking policy solutions from the same government.

On this Tuesday, Government announced a public sector bank bailout sorry recapitalisation plan worth Rs 2.11 lakh crore. The plan will have two components:

Out of the total commitment, Rs1.35 trillion will come from the sale of so-called recapitalisation bonds. The remaining Rs76,000 crore will be through budgetary allocation and fundraising from the markets.

The bank recapitalisation package marks a sharp increase over the current budgetary allocation. Under the Indradhanush plan, the government has allocated Rs20,000 crore towards bank recapitalisation over the current and next fiscal years.

Interestingly, the same plan was approved by the Indian government in 1993. The then Finance Minister Dr Manmohan Singh in Budget speech of 1993-94 said:


Central banks: Evolution and innovation in historical perspective

October 25, 2017

Michael Bordo and Pierre Siklos have a shorter piece based on their longer research paper

I was particularly interested in the results reported of Canada. There is this research which suggests how Canada had a stable financial system even before it had a central bank unlike other countries like US. Canada is also seen as a good example of free banking by its proponents.
What is interesting is how Canada without a central bank does well in things like inflation etc.:


Is the so called new economic thinking, same old stale stuff?

October 25, 2017

Frances Coppola writes a scathing critique of recently held Festival for New Economic Thinking in Edinburgh by Institute for New Economic Thinking.

I’m sitting in a coffee shop opposite Haymarket Station in Edinburgh. Just up the road, the Institute for New Economic Thinking (INET) is holding its conference. I’m supposed to be there, as I was yesterday and the day before. But I am not at all sure I want to go. The last two days have left a very bitter taste.

This conference, grandly entitled “Reawakening”, is supposed to be a showcase for the “new economic thinking” of INET’s name. I hoped to hear new voices and exciting ideas. At the very least, I expected serious discussion of, inter alia, radical reform of the financial system, digital ledger technology and cryptocurrencies, universal basic income (recently cautiously endorsed by the IMF), wealth taxation (also recently endorsed by the IMF), robots and the future of work. And I looked forward to the contributions not only from the speakers, but from the young, intelligent and highly educated attendees.

Not a bit of it. In the last two days we have had panel after panel of old white men discussing economic theories developed by old white men, many of them dead. Economic beliefs that I thought had been comprehensively debunked have reappeared, dressed up as “new thinking”.

She revisits all the panels and in unimpressed by most.

In the end:

For me, the ultimate insult came in the form of an announcement yesterday. INET is creating an Independent Commission on Global Economic Transformation. “Call for New Thinking and New Rules for the New World Economy; Final Report will Outline Solutions for Emerging and Developed Countries”, says the announcement. Here’s the remit of the new commission:

And here are the members of the Commission, so far:

  • Robert Johnson, President of INET and Former Chief Economist of the U.S. Senate Banking Committee;
  • Lord Adair Turner, Chairman of INET and former chairman of the UK Financial Services Authority;
  • Kaushik Basu, Professor of Economics at Cornell University and former Senior Vice-President and Chief Economist of the World Bank;
  • Peter Bofinger, Professor of Monetary and International Economics at Würzburg University and a member of the German Council of Economic Experts;
  • Winnie Byanyima, Oxfam International executive director; former member of the Ugandan Parliament, African Commission and Director of Gender and Development at the United Nations Development Program;
  • Mohamed El-Erian, Chief Economic Advisor, Allianz, and former chair of U.S. President Obama’s Global Development Council;
  • Dr Gaël Giraud, Economist and senior researcher at C.N.R.S. (French national center for scientific research); 
  • James Manyika, Director of the McKinsey Global Institute;
  • Rohinton Medhora, President of the Centre for International Governance Innovation (CIGI);
  • Danny Quah, Professor of Economics at the Lee Kuan Yew School of Public Policy, National University of Singapore;
  • Dani Rodrik, Professor of International Political Economy at Harvard’s John F. Kennedy School of Government, and President-Elect of the International Economic Association;
  • Eisuke Sakakibara, Professor of Economics at Keio University and former Japanese Vice Minister of Finance for International Affairs;
  • Beatrice Weder di Mauro, Professor of Economics, Chair of Economic Policy and International Macroeconomics at the University of Mainz, Germany and former member of the German Council of Economic Experts;
  • Yu Yongding, former president of the China Society of World Economics and director of the Institute of World Economics and Politics at the Chinese Academy of Social Sciences; former member of the Monetary Policy Committee of the People’s Bank of China.

Now, there are some wonderful people on this list. But collectively, they represent the elite establishment that I mentioned before: senior academics, rich businessmen, former and current public servants and policymakers. There are no new voices here, no-one from the heterodox economic community, no-one who has their feet in the real world. Everyone is at the top of an establishment hierarchy. How dare these people presume to take to themselves the responsibility for creating a radically new economic paradigm, when they have benefited so enormously from the existing one?

This is not “new economic thinking”. This is the establishment, reasserting itself at the behest of the elite, which fears the loss of its status and its privileges as the threat of populist revolt rises. The young crowd round the elite, hoping to be picked as their proteges: and the old scan the young to pick out the ones most like them. So the system perpetuates itself.  
And I, like the rest of the creatures outside, look “from pig to man, and from man to pig, and from pig to man again.” But already it is hard to say which is which. 

I had similar reactions on seeing the panel members. It looked quite similar to the Growth Commission floated a decade ago.

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