Archive for April, 2018

Indian Antecedents to Modern Economic Thought

April 30, 2018

This paper by Prof Satish Deodhar of IIM Ahemdabad was doing the internet rounds.

The history of economic thought begins with salutations to Greek writings of Aristotle and Plato. While the fourth century BCE Greek writings may have been the fount of modern economic thought that emerged in Europe starting 18th century CE, there has been a general unawareness of the economic thinking that emanated from the Indian subcontinent. Preclassical thoughts that had appeared in Vedas dating a millennium prior to the Greek writings had culminated in their comprehensive coverage in the treatise Arthashastra by Kautilya in the fourth century BCE.

In this context, the paper outlines various ancient Indian texts and the economic thoughts expressed therein, delves on the reasons why they have gone unnoticed, brings to the fore the economic policies laid down by Kautilya, shows how these policies exemplify pragmatic application of the modern economic principles, and brings out in bold relief, the contribution of this Pre-Classical literature in the history of economic thought.

This all has been known atleast amidst a few people. However, much of Indian economic thought is reduced to a few quotes here and there. Most of economics academia based in India, has been reluctant to teach these ideas in classrooms and encourage research on the same. This is a huge challenge which has to be overcome.

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Learning colonial history via cemeteries…

April 30, 2018

Fascinating piece by Siddharth Bhatia in Wire.

He points to how one can learn history from cemeteries and points to Surat’s ignored cemetery:

To get an idea of how Company officials saw themselves, one just has to head to the English cemetery in Surat. Obelisks, cupolas, pillars, many of them clearly inspired by Moghul architecture-they are all here, 250 years after they were erected by fond relatives and friends to commemorate the great and the good of the East India Company.

There is no dearth of graveyards of the British in different parts of India – from Park Street in Kolkata to Sewri in Mumbai and many other places where the British were based. Many of the graves have elaborate statuary and fancy memorials in graveyards, but hardly anything rivals the large and ornamental mausoleums of Surat. It is as if, like the great Pharaohs of Egypt, the officials, especially based here in the 17th century, wanted to leave behind structures that would inspire awe and wonder for centuries.

But as Shelley wrote about Ozymandias, King of Kings, it was a delusion. Today, the English cemeteries lie forlorn and neglected, the once important names obliterated – literally – and long forgotten, all the hubris and the pride gone.

Situated in Katargam, an old part of Surat, the cemetery remains neglected, with a sole caretaker from the Archeological Survey of India (ASI) manning the place. Only architecture students and tapophiles (tombstone tourists) visit the cemeteries and, very occasionally, someone from abroad tracing their genealogy comes by. But for anyone interested in colonial history, it can be very rewarding.

How the burials were show of power:

Many of those are buried here, including George Oxenden, the first Company governor of Bombay Presidency, his brother Christopher, and the second governor successor Gerald Aungier, said to be the man who laid the institutional foundations of the seven islands to transform the area into a town. The tomb is unmarked, but most historians now agree it is his. Both are handsome structures, with a dome and staircases leading to an upper level.

There are several others, the marble plaques faded, and quite a few unmarked, small graves, totalling over 400. The graves of those who died in the 19th century are far more modest – by this time the Company had moved its headquarters to Bombay,

The Dutch too had come to Surat, setting up a directorate there in 1616. They were traders and established a small base in the town. There was competition between the two European trading powers and rivalry also in building grand tombs.

The Dutch cemetery is walking distance from the English one; it is smaller but has no dearth of large mausoleums, the biggest one being that of Hendrik Adrian Baron Van Reede, a director of the Dutch East India Company who died in December 1691. “His grandiose mausoleum was intended to rival and eclipse that of his rivals the Oxendens,” says a board in the graveyard. It has a cupola and a gallery above supported by “handsome” columns below. The tomb was adorned with escutcheons and paintings, which have long since gone, though the walls and roof still retain floral designs.

In a small portion of the Dutch cemetery lie many stone plaques that are the graves of the handful of Armenians who lived here at one time, as traders. The caretaker says occasionally someone will come and specifically ask to see Armenian graves.

Hmmm…

But is anyone really interested in knowing about history, especially much reviled colonial history? Around the graveyards, are new residential buildings, small businesses and a busy flyover; how long before the inevitable pressures of the modern world once and for all wipe out this vestige of another time?

Here is an interview of Prof. Keith Eggener of University of Missouri who has studied evolution of cemeteries in US.

How will Swiss National Bank distribute its record profits?

April 27, 2018

SNB made record profits for 2017.

Jean Studer President of the Bank Council at Swiss National Bank gives an overview of balance sheet and profit distribution.

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World reserve currency: From Dollar to e-SDR

April 27, 2018

Andrew Sheng and Xiao Geng in this piece say time is ripe to push e-SDR or digital SDR as reserve currency:

A key hurdle for the SDR has always been the geopolitical interests and priorities of the reserve-issuing central banks (not just the US, but also the eurozone, China, Japan, and the United Kingdom). But the advent of cryptocurrencies may offer another way: the private sector can work directly with central banks to create a digital SDR to use as a unit of account and store of value.

Such an “e-SDR” would, in a sense, be the quintessential reserve asset, because it would be fully backed by reserve currencies, in the IMF-determined ratio. The supply of e-SDRs would be completely dependent on market demand.

Of course, to enable a gradual shift from the US dollar to an e-SDR as the dominant international reserve currency, a sufficiently large e-SDR-denominated money market would need to be created. To that end, a politically neutral body, owned by the private sector or central banks, should be established to issue the asset. Participating central banks and asset managers would then have to swap their reserve-currency holdings for e-SDRs.

Once the private sector comes to view the e-SDR as a less volatile unit of account than individual component currencies, asset managers, traders, and investors could begin to price their goods and services, and value their assets and liabilities, accordingly. For example, the Chinese government’s massive Belt and Road Initiative could be conducted in e-SDRs. In the longer term, an international financial center, such as London or Hong Kong, could spearhead experimentation with e-SDRs using blockchain technology, with special swap facilities being created to make the asset more liquid.

I am not sure whether e-SDR matters much here. How much of SDR is physical anyways? It is an accounting identity and has been in so called digital form since inception.

One also does not think cryptocurrencies are making any headaways given most central banks and governments opposing them.

The real question is not e-SDR or SDR. It is whether SDR can be created a reserve currency. There was never much support for it earlier and same stands true today as well.

Why dictators love development statistics?

April 27, 2018

Alex Galdstein of Oslo Freedom Forum in New Republic has an interesting piece. The usual feeling is dictators dislike all development stats but actually they like these numbers as they can be spinned to suit the regime. More importantly, the regime itself produces these stats:

Exchanges at the Organization of American States usually don’t do well on YouTube. But when the Honduran Minister of Foreign Affairs brought up Venezuela’s crackdown on dissent last summer, Venezuelan representative Delcy Rodríguez scored surprise points with a rebuttal citing the United Nations’ 2016 Human Development Index, which ranks Venezuela 59 spots higher than Honduras. Crackdown or no crackdown, “Venezuela does not demonstrate such terrifying statistics,” she said, in an exchange that soon went viral on Spanish-speaking social media. It was a win for the Maduro regime, and the key to victory was trusted U.N. data.

For those of us working to advance human rights, such episodes are becoming frustratingly familiar. From the development initiatives of Jeffrey Sachs and Bill Gates, to Tony Blair’s despotic partnerships or Tom Friedman championing Chinese autocracy in The New York Times, the last two decades have seen political concerns repeatedly sidelined by development statistics. The classic defense of dictatorship is that without the messy constraints of free elections, free press, and free protests, autocrats can quickly tear down old cities to build efficient new ones, dam rivers to provide electricity, and lift millions out of poverty.

The problem with using statistics to sing the praises of autocracy is that collecting verifiable data inside closed societies is nearly impossible. From Ethiopia to Kazakhstan, the data that “proves” that an authoritarian regime is doing good is often produced by that very same regime.

 

Urban Transport Planning in Bengaluru: A Polycentric Governance System

April 26, 2018

Any ideas to figure and ease Bangalore/Bengaluru’s transport system are hugely welcome.

In this paper, Vivek Vaidyanathan and Sujaya Rathi look at governance systems for transport:

Transport planning in Bengaluru is characterised by institutional fragmentation, increasing private modes of transport, and questionable investment decisions in the transport sector. What are the possibilities of implementing a polycentric governance system in such a city? Answering this question requires exploring the characteristics of polycentric governance systems as part of the larger discourse in institutional economics and reflecting upon how far Bengaluru satisfies such characteristics and where changes may be required.

 

 

Was Cairo’s grand opera house a tool of cultural imperialism?

April 26, 2018

Fascinating piece by Adam Mestyan, History Prof at Duke University:

The new Royal Opera House Muscat in Oman and the brand new Louvre Museum in Abu Dhabi revive vital questions. Are these new institutions instruments of Western domination, or are such cultural spaces compatible with Muslim social life? The theorist Edward Said argued that Cairo’s Khedivial Opera House was a folly and that Aida was a colonial opera. His book Culture and Imperialism (1993) very nearly equated European culture with European rule. Ever since, this idea about the cultural component of imperialism has played a dominant role in scholarship on empire. While a number of opera experts have since rejected the label of ‘colonial opera’, the idea of culture as a domain of imperialism and colonialism remains important in scholarship. Following Said’s logic, we should conclude that today’s new cultural institutions in the Gulf are representative of Western domination. But the question is an empirical one, and history tells us a more subtle and interesting story.

 

35 years of Diamond-Dybvig model of bank runs

April 26, 2018

Nice interview of Prof Dybvig where he narrates how the model was built and its implications..

How the South Indian idli became so widely available despite odds…

April 25, 2018

Superb photo essay by Vikram Doctor in ET.

He points how innovations in idli making helped especially in making batter readily available helped idlis ride over chapatis:

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The myth of Franco-German friendship

April 25, 2018

Ashoka Mody of Princeton Univ in this piece:

Dinner tables, caste networks, entrepreneurship

April 25, 2018

Thus blog had pointed to how dinner tables are so important for entrepreneurship.

Niranjan Rajadhyakhsha reviews the role of dinner tables in his new piece:

A few months ago, Mumbai Mirror reported how several of the biggest real estate developers in the city traced their roots to Bhinmal, a small town in Rajasthan. Almost all the new public buildings in this town have been funded by those who struck gold in the Mumbai real estate market. One of the locals perceptively told Chaitanya Marpakwar: “See, if one person moves to a new place and makes money there, others follow. But it is important to note that all these builders had business acumen and foresight. They made the right investments at the right time. Later, they helped people from their native place to set up a business in Mumbai. It was like a chain.”

I remembered this newspaper story when I came across a new paper by two economists on what they have evocatively described as dinner table capitalism. Hans K. Hvide and Paul Oyer went through reams of data on entrepreneurs in Finland to show that many of them went into industries in which their fathers worked. And those who set up new enterprises in areas where their fathers worked did better than their entrepreneurial peers who ventured into other lines of business. Four years after the new enterprises were set up, the ones in the former group were more likely to survive and have more employees.

Not just real estate, even much of diamond business is driven by Jains from Palanpur. There are several such stories of caste networks and entrepreneurship. And yes how they come from a common location..

Patanjali bidding for Ruchi Soya foods?

April 24, 2018

Baba Ramdev run Patanjali group always has some surprises. How the group has captured both the imagination and markets is quite a story.

This story in Business Line says that the Patanjali group is bidding for Ruchi Soya foods:

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Politics of building a metro line to airport: Case of Melbourne

April 24, 2018

Prof Ian Woodcock of RMIT Univ writes on the topic:

Public discussion of rail links to airports has been narrowly focused on the idea of a single line and where to run it. In Melbourne, the politics of this debate has so far prevented a railway from being built, because it is not possible for one line to meet all of the landside access needs of the airport. The issue of rail access for a new western Sydney airport has also not been resolved.

The history of planning for a Melbourne Airport rail link has been dogged by party-political differences focused on the idea of a single railway and the question of its route out to Tullamarine. Traditionally, the Coalition parties have favoured the express proposals, while the Labor Party has preferred alignments that benefit local commuters.

This difference and the impossibility of resolving it with a single line would be one of the reasons we have so far not gone to the bother of actually building anything. It has also distracted attention from more incremental ways to improve landside access to the airport beyond the SkyBus. Its market is similar to the main targets of the express route proponents.

Politics everywhere…

The author says Melbourne Airport traffic is going to be similar to that of Heathrow soon. However, London has multiple options:

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Japan’s rent a family industry..

April 24, 2018

Superb long piece by Elif Batuman. It is a narrative account of how Japan’s rent a family industry works:

People who are short on relatives can hire a husband, a mother, a grandson. The resulting relationships can be more real than you’d expect.

 

Garrulous central bank Governors (vs Reticent ones..)

April 24, 2018

Michael Reddell in his new post highlights how New Zealand has had very talkative Governors earlier citing case of Don Brash. This was also due to the central bank law which made the Governor the sole authority behind most matters.

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Post-Brexit: Pitching for Paris’ attractiveness as an integrated financial centre

April 24, 2018

Rise and fall of financial centres is one of the favorite topics of this blog. As we dabble through daily economics and finance, the slow and shifting trends of financial activity from certain places to another is quite fascinating.

Pre-Brexit, London was comfortably placed as despite maintaining  its own currency Pound, it was the centre of European finance. Post-Brexit, the future of London as a centre of European finance is being discussed.

London’s loss is being seen as Paris’ gain. The European Banking Authority headquarters has shifted from London to Paris. The French authorities have started making pitches to global financial to evaluate Paris.

In a recent speech, Banque de France (Central Bank) Governor, speaks of multipolarity and competition in financial centres:

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Bitcoin and the Dodo-Bones Theory of Money

April 20, 2018

Monetary debates are usually seen as between Friedman-Keynes or Friedman-Hayek and so on.

JP Koning points to this fascinating debate between Joseph Shield Nicholson and Benjamin Anderson. Both were not so famous economists but their views on what is money remains as relevant as ever.

For instance, Nicholson spoke about dodo bones being money:

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How does a city get to be ‘smart’? This is how Tel Aviv did it

April 20, 2018

One does not even know the meaning of a smart city but has become a buzzword.

If it means having technology in whatever we do, then it could also mean every step can be recorded.

However, there is another model of using technology selectively and make the city more people centric. For instance, Tel Aviv is doing its bit to use tech to involve citizens and become so called smart city. Interestingly, Thane has adopted Tel Aviv strategy as well:

Smart cities, digital cities, virtual cities, connected cities. Are these just trendy buzzwords? Perhaps. But these types of cities are supported by infrastructure that is more than bricks and mortar.  These cities are smart (thoughtful, people-centric), digital (driven by data acquisition, measured, analysed and sometimes exchanged) and virtual (experiential). And, as a result, they are connected, creating more potential interactions between people and their place.

Tel Aviv is one of these cities. Undoubtedly the 2009 book Start-Up Nation: The Story of Israel’s Economic Miracle contributed to its reputation as a “non-stop city” with innovation clusters teeming with companies at the cutting edge of technology.

However, Tel Aviv’s standing is not only built on commercial success — it has an internationally recognised local government. Winning first placein the 2014 World Smart City Awards not only boosted its profile on the international stage, but Tel Avivians, well, they actually have positive things to say about their local government.

I find all this tech usage a bit too much. One would still say Copenhagen type model is a better bet.

On Tel Aviv, there is also this interesting link on the city’s new Independence Trail…

 

Cryptocurrencies in the global economy: Norges Bank edition

April 20, 2018

One is summarising the speeches of several central bankers on digital and crypto currencies.

Here is Deputy Governor Jon Nicolaisen of Norway’s central bank. He does not think much of these digital currencies but says one should not miss on the potential of new technology.

 

Prof A.K. Bagchi: Bank frauds are not unknown in India

April 20, 2018

Nice interview of Prof A.K. Bagchi. His amazing work on SBI’s history should be widely read and taught but sadly people are not even aware of the history volumes.

Have Nirav Modi and Vijay Mallya done something entirely new?

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