Archive for May 6th, 2019

England-France: Channel Tunnel marks 25 years

May 6, 2019

The Tunnel that connected UK to France (and Europe) marks its 25 years. Post-Brexit, things have obviosly become complex

This DW piece goes into history and the paradoxes:

The seemingly simple commute between France and Britain via the Channel Tunnel is something we take for granted, but the tunnel has a long history and took two centuries to be realized.

Monday marks 25 years since the Channel Tunnel was opened. Its construction involved up to 15,000 people, with about 4,100 workers on the French side and nearly double that number on the English side from the county of Kent. 

The Channel Tunnel is actually comprised of three tunnels: two rail tunnels, used for freight and passenger trains, and a service tunnel. It is 50.45 kilometers (31.5 miles) long, with the underwater section covering 37.9 kilometers — the world’s longest undersea tunnel.

Queen Elizabeth II and then-French President Francois Mitterrand took the first official journey from Folkestone in Kent to Coquelles in Pas-de-Calais on May 6, 1994. Since then, some 430 million travelers have passed through the tunnel, which also handles a quarter of the goods moved between Britain and Europe.

The idea was conceived nearly 200 years ago and finally came into fruition in 1994.

Graham Fagg, the British miner who punched through to the French side and became the face of continental connection, on Friday told French news agency AFP that he was now a Brexit supporter.

“I worked on the Channel Tunnel and did the breakthrough, but I actually voted for Brexit,” the 70-year-old said. “I don’t see that as incompatible.”

Fagg said he supported joining the European Economic Community — the forerunner to the EU — in a 1975 referendum, but did not realize it would become a political union.

“We voted for a trade deal,” he explained. “I can’t remember anybody ever saying to me, ‘we’re going to turn it into a federal Europe. We’re going to set all the rules and you’ve got to obey them’.”

Hmm…

State Finance Commissions: How successful have they been in Empowering Local Governments?

May 6, 2019

Interesting paper on one of the least known aspect of Indian fiscal federalism: Working of State Finance Commissions.

It is written by Manish Gupta and Pinaki Chakraborty of NIPFP:

While the Constitution provides for setting up of SFCs at regular intervals, this has not been adhered to by the states. The paper reviews the reports of the latest SFCs of 25 states in India. This involves examining the status of constitution of SFCs, their functioning and the approach adopted by them in carrying out their task and the principles adopted by them in allocating resources to local governments both vertically and horizontally. It also quantifies the devolution recommended by the SFCs in order to get a comparative picture of funds devolved by them across states. It is observed that there is huge variation
in the recommended per capita devolution across States.

We do not find any relation between the recommended per capita devolution and per capita income of States, but per capita devolution is in general very low across states in India. Is it that the state governments arbitrarily reject the recommendations or are the SFCs themselves to be blamed for non-acceptance of their recommendations? The paper also examines the quality of SFC reports from the point of view of their implementability and finds that at times state governments are constrained to implement these recommendations on the grounds of poor quality of SFC report.

Karnataka has consistently devolved the highest…

Lots of other interesting points in the paper.

Rawls wisdom on interpreting historical figures

May 6, 2019

Amit Kapoor Chair, Institute for Competitiveness in this article discusses how India missed a permanent seat on UN Security Council. India was offered the seat twice but it could not materialise due to multiple historical forces at play.

Kapoor says this issue is being discussed heavily in current political discourse criticising the leadership of past. He adds that this is not really the way we should interpret history. He quotes Rawls:

An important argument that Rawls makes is that the giants of the past should be understood in the context of their times rather than ours. The benefit of hindsight is usually an unfair vantage point to pass judgements on the actions made by people in the past. 

Hmm..One of the many wisdom from Rawls.

In my research, one of my advisers would often tell me let historical research remain in historical context.

Why hiring the ‘best’ people produces the least creative results

May 6, 2019

An old piece by Scott Page (Leonid Hurwicz collegiate professor of complex systems, political science and economics at the University of Michigan):

While in graduate school in mathematics at the University of Wisconsin-Madison, I took a logic course from David Griffeath. The class was fun. Griffeath brought a playfulness and openness to problems. Much to my delight, about a decade later, I ran into him at a conference on traffic models. During a presentation on computational models of traffic jams, his hand went up. I wondered what Griffeath – a mathematical logician – would have to say about traffic jams. He did not disappoint. Without even a hint of excitement in his voice, he said: ‘If you are modelling a traffic jam, you should just keep track of the non-cars.’ 

The collective response followed the familiar pattern when someone drops an unexpected, but once stated, obvious idea: a puzzled silence, giving way to a roomful of nodding heads and smiles. Nothing else needed to be said.

Griffeath had made a brilliant observation. During a traffic jam, most of the spaces on the road are filled with cars. Modelling each car takes up an enormous amount of memory. Keeping track of the empty spaces instead would use less memory – in fact almost none. Furthermore, the dynamics of the non-cars might be more amenable to analysis.

Versions of this story occur routinely at academic conferences, in research laboratories or policy meetings, within design groups, and in strategic brainstorming sessions. They share three characteristics. First, the problems are complex: they concern high-dimensional contexts that are difficult to explain, engineer, evolve or predict. Second, the breakthrough ideas do not arise by magic, nor are they constructed anew from whole cloth. They take an existing idea, insight, trick or rule, and apply it in a novel way, or they combine ideas – like Apple’s breakthrough repurposing of the touchscreen technology. In Griffeath’s case, he applied a concept from information theory: minimum description length. Fewer words are required to say ‘No-L’ than to list ‘ABCDEFGHIJKMNOPQRSTUVWXYZ’. I should add that these new ideas typically produce modest gains. But, collectively, they can have large effects. Progress occurs as much through sequences of small steps as through giant leaps.

Third, these ideas are birthed in group settings. One person presents her perspective on a problem, describes an approach to finding a solution or identifies a sticking point, and a second person makes a suggestion or knows a workaround. The late computer scientist John Holland commonly asked: ‘Have you thought about this as a Markov process, with a set of states and transition between those states?’ That query would force the presenter to define states. That simple act would often lead to an insight. 

Interesting. Perhaps explains why economics organisations such as central banks keep making same mistakes….

The Empire Marketing Board, 1926-33: Britain’s failed attempt at soft trade policy

May 6, 2019

David M. Higgins and Brian Varian in this interesting research:

Will the history of our times be controlled by Facebook?

May 6, 2019

Interesting piece by Sandipan Deb in Mint:

Human memory is today increasingly owned by virtual monopolies such as Facebook and Google. In essence, we could be looking at a future where history is privatized; indeed, these private actors will have the power to manipulate our histories by deciding what content to release. In their study, the Oxford researchers reach a very sobering conclusion: “In order to prevent a possibly dystopian future of power asymmetries and distorted historical narratives, the task before us is to design a sustainable, dignified solution that takes into account multiple stakeholders and values. This inevitably requires a decentralisation of control and ownership of our collective digital heritage.”

In 1984, George Orwell wrote: “Who controls the past controls the future. Who controls the present controls the past.” The world needs a truly independent Unesco-like body to take care of humankind’s digital heritage.

Humanity keeps moving in circles….

Pakistan fires its central bank Governor and appoints a new one

May 6, 2019

The weekend was action packed in Pakistan. The Government removed both the central bank governor and head of Tax body:

Pakistan’s government has fired the governor of the central bank and the chairman of the tax collection body, two senior government officials told Reuters on Friday, in another setback to efforts to tackle economic turmoil.

The removal of the two comes only weeks after Finance Minister Asad Umar was asked to step down amid vital bailout negotiations with the International Monetary Fund, suggesting the government wants to overhaul its financial team amid weakening growth rates and soaring inflation.

“The government has decided to remove the governor of the State Bank and the chairman of FBR,” a Finance Ministry source said, referring to State Bank of Pakistan Chairman Tariq Bajwa and Federal Bureau of Revenue Chairman Jahanzeb Khan. A source at the prime minister’s office confirmed both had been sacked.

Central bank spokesman Abid Qamar told Reuters that Bajwa had “resigned”, and that it was unclear who would replace him.

Bajwa, appointed governor in 2017 during the tenure of the previous government, was one of the key figures in Pakistan’s ongoing bailout negotiations with the IMF. He was also seen to be close to Ishaq Dar, the former finance minister who appointed him and who championed a “strong rupee” policy that many analysts blame for Pakistan’s current economic woes, including ballooning budget and current account deficits.

The Government appointed a new Governor – Dr Reze Baqir,of IMF:

Dr. Reza Baqir has assumed the charge of Governor State Bank of Pakistan after President of Pakistan appointed him as Governor State Bank of Pakistan for a period of three years in pursuance of Section 10(3) of the State Bank of Pakistan Act 1956.

Dr. Reza Baqir has eighteen years of experience with the IMF and two years with the world Bank. He was the Head of the IMF’s Office in Egypt and Senior Resident Representative since August 2017. He has also held positions as IMF Mission Chief for Romania and Bulgaria, Division Chief of the IMF’s Debt Policy Division, Head of the IMF delegation to the Paris Club, Deputy Division Chief of the IMF’s Emerging Markets Division, IMF Resident Representative to the Philippines, and numerous other positions.

Dr. Baqir’s research has been published in top journals of the economics profession, including the Journal of Political Economy and the Quarterly Journal of Economics. Dr. Baqir holds a Ph.D in Economics from the University of California at Berkeley and an A.B. (Magna cum Laude) in Economics from Harvard University.

Not surprisingly, the opposition parties have called the appointment as new colonisation:

Pakistan Peoples Party Senator Raza Rabbani on Sunday branded the International Monetary Fund (IMF) as the “new East India Company”, adding that the appointment of the Fund’s Dr Reza Baqir as new governor of the State Bank of Pakistan (SBP) was “deplorable” and akin to “colonisation of Pakistan by international financial imperialists”.

The former Senate chairman said that “the SBP governor being an employee of the Fund which is giving a bailout package is a conflict of interest as it is obvious that his loyalties will not be with Pakistan.”

He said “it is a matter of shame that provincial finance ministers were made to appear before a middle ranking officer of the IMF (Baqir) and make promises of good behaviour.”

Rabbani said that Baqir’s appointment coupled with Dr Abdul Hafeez Shaikh’s induction into the cabinet as the prime minister’s adviser on finance means that the IMF has its “men in place” and “Pakistan’s financial sovereignty and national security has been compromised.”

The senator’s sentiments were also echoed by PML-N Vice President Maryam Nawaz, who in a series of cryptic tweets suggested that the government has surrendered the economy to the IMF.

“We will not go to the IMF; we will instead call the IMF here and hand over Pakistan to them,” Nawaz said, sarcastically referring to Prime Minister Imran Khan’s pre-election statements of never asking the Fund for another package when in power.

How politicians first mess up economy and then look for scapegoats. And how most of the time the scapegoat is the central banker who most likely would have warned of the economic mess for a while.


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