How the market was shaped by a visible hand – Raja Kesava Das – the dewan of the region:
Archive for the ‘Discussion’ Category
I came across this website:https://www.exploring-economics.com which is going to be used a lot by this blog in future.
It has this wonderful resource page on history of economic thought with this superb picture summing the core of most schools:
This is amazing!
As they say: A picture is worth thousand words and here it is worth much more than just thousand words.
These schools of thought are compared across different questions and issues. THese together should help develop comparative perspectives on these schools.
There are videos and lectures on the site as well. Do take a look..
Amy Farber of NY Fed’s Liberty Street blog has an interesting post.
She points how NY’s Bank Street does not have any banks. Infact, it is not even the street where banks were originally localted. It is a street where banks relocated due to yellow fever in NY:
Bank Street in New York City is a quaint little six-block stretch in Greenwich Village (see this 48-second video) with a huge cultural legacy—but no banks. Many cities and towns have a Bank Street and often the street is so named because that’s where most of the banks were originally located. (It is not likely that any Bank Street got its name because of its proximity to a riverbank.) However, New York City’s Bank Street is not where the banks were originally located and it’s not even in the financial district—it’s in Greenwich Village. Why, then, is it called “Bank Street?”
Okay, we cheated in that last paragraph. Manhattan’s banks were not on Bank Street originally but they were indeed there at some point—they moved northward from Wall Street in the late eighteenth and early nineteenth centuries in an effort to escape yellow fever. A post on the Forgotten New York website explains how there were two main waves of the epidemic in the city and that Bank Street was essentially named for the first bank to relocate, not the set of banks that eventually moved there:
Though most neighboring streets are named for local personalities in the Village’s early days (one early burgess, Charles Christopher Amos, had three streets named for him), Bank Street is named for one of the oldest institutions in NYC, the Bank of New York, which opened an office “uptown” after a yellow fever epidemic downtown on Wall Street in 1798 prompted a relocation. Several other banks followed suit in 1822 after a second outbreak.
One can view this relocation of banks as an early form of corporate contingency (or business continuity) planning. Think about how important continuity is in banking and how advantageous it would have been to keep those early New York banks functioning. In his 1922 book A Century of Banking in New York, 1822-1922, author Henry Lanier describes, in the chapter “The Year the Banks Migrated,” the Bank of New York’s forethought:
Some bankers and others had been more foresighted. As noted, one of the first deaths in the scourge of 1798 was a book-keeper in the Bank of New York. “Fearing another visitation of the pestilence, the bank made arrangements with the branch Bank of the United States to purchase two plots of eight city lots each, in Greenwich Village, far away from the city proper, to which they could remove in case of being placed in danger of quarantine. Here two houses were erected in the spring of 1799, and here the banks were removed in September of that year, giving their name, Bank Street, to the little village lane that had been nameless before. The last removal was made in 1822, when the yellow fever raged with unusual virulence, and the plot which had been purchased for $500 was sold in 1843 for $30,000.”
In this 1842 map of lower Manhattan, you can see Bank Street just to the right of the large “E” of the “Hudson River” label. (Here is a 1933 street view.) Of course, Wall Street is in the bottom tip of the island. Bank Street is about 2.7 miles north of Wall Street. Yes, it takes a bit of time to walk from one to the other—but not that long.
There is further discussion on how such a small distance relocation helped banks.
Some commentators have invoked Section 7 (1) of RBI Act to suggest the RBI Board had no choice but to go ahead with the 8 Nov 2016 move.
Section 7 (1) says:
(1) The Central Government may from time to time give such directions to the Bank as it may, after consultation with the Governor of the Bank, consider necessary in the public interest.
Given one was trying to figure RBI Board History, I came across why this section came into being at the first place.
As argued earlier, RBI started as a shareholder bank with Board nomination coming from both Government and shareholders. However, while working towards RBI’s nationalisation the shareholder angle did not matter anymore. A Bill was prepared to amend RBI Act.
In the bill, on one of the points RBI Governor suggested that in case of differences between the two, the government should take responsibility for their action. However, Finance Ministry refused this and added what is now seen as Section 7 (1). From RBI’s First History Volume:
Despite one wanting to withdraw from Currency Withdrawal exercise, it continues to ask questions and remains exciting.
The role of RBI Board in the exercise which was a mystery in the early part of the debate (not for the readers of this blog ) has become a major issue now. There are comments on both side of the debate. Some suggest the role of RBI Board shows how RBI has lost its autonomy and others who suggest this is not the case. Then there were concerns raised about FSLRC’s suggestion on reducing the RBI Board strength which has not been commented by anybody.
As there is so much chaos, it is best to get back to genesis. How did RBI Board evolve?
This Dec 2016 article by Matthew Wright in Reserve Bank of New Zealand Bulletin is a breezy read.
The Series 7 banknotes, introduced from late 2015, represented the first major re-design of New Zealand’s banknotes since the early 1990s. Although the selection of people, places, birds and other pictorial themes remained largely unchanged from the earlier Series 5 and 6 notes, the specific imagery was updated and full advantage taken of modern printing techniques to increase the reproduction fidelity. Some of the new security features, such as the ‘Spark Live’ bird image and the holographic window, are themselves of significant aesthetic appeal.
Indeed! Stunning pictures of banknotes can be seen here as well.
India’s central bank should take a cue. It should publish variety of research and not the usual boring type on inflation and growth..
Lot of noise was made regarding this RBI Governor appearing before a Parliamentary committee yesterday (another one tomorrow). It was called as grilling and what not. But in the end it just turned out to be a damp squib as RBI just refused to answer most of the questions.
Superb article by Prof George Selgin.
He comes from the free banking school which advocates banks issuing their own currency and managing their affairs with no central banks in picture. In such a case, one would imagine him advocating local currencies. But it is not the case as local currency does not help much if it does not enable trading beyond the local area:
Though the shortcomings of local currency are serious ones, they are far from being inherent shortcomings of all substitutes for official (national) currencies. On the contrary: far from being inherent, the shortcomings of local currencies are ones which have been purposely built into those currencies by persons seeking to make them serve an end quite at odds with that of making it as easy as possible for people to exploit potential gains from exchange.
There is, in fact, nothing to prevent other kinds of unofficial currency from commanding a national market. The key to having them do so is that, like modern bank deposits, they must be fully compatible with the existing monetary standard, and readily useful throughout the national economy, if not beyond it.
Historically, private banknotes have possessed these qualities wherever legal restrictions haven’t prevented banks from establishing branch networks or taking other measures to make their notes current beyond the banks’ headquarters; and it is conceivable that other forms of private currency, including privately-issued token coins, could also take the place of government-supplied alternatives, if only the government would let them.
So, while I applaud the effort of local currency proponents to break the Federal Reserve’s currency monopoly, I regret that they’ve chosen to sabotage this merit-worthy mission by linking it to the much less worthy one of keeping people from trading with “outsiders.”
As the ever-sensible Bastiat once observed, “The worst fate that can befall a good cause is not to be skillfully attacked, but to be ineptly defended.”
The Bastiat quote is quite apt to for the ongoing currency situation in Indian economy as well..
Interesting interview of Abhishek Lodha of Lodha Group which is building a greenfield city outside Mumbai – Palava
He says smart city is not just about technology:
McKinsey: What is a “smart city”?
Abhishek Lodha: A smart city is not just about technology. This misinterpretation has often led cities to make investments that are doomed to fail. Cities can be governed using technology but have to be designed with vision. I like to say that to make a place good to live, you need “CCTV” to work—citizens, community, technology, and vision. Probably because technology is more tangible than “community” or “vision,” people tend to grab it when they define a smart city.
When we started building Palava, we began with the classical definition. We used the notion of 5-10-15, which means everything you require daily should be within 5 minutes of walking, what you need every three to four days should be within a 10-minute walk, and things you use within a week to a month should be within a 15- to 20-minute walk.
When you start designing an entire city with this in mind, there are multiple benefits. Given our population, India can never build enough roads to solve our traffic problems. What we can do is design cities so you don’t need so many cars. It is also much healthier for people to walk more.
Interesting insights throughout the talk.
As India moves towards GST which is seen as a decline of Federalism, in Australia talks are on removing Federalism altogether. This means the States in the country to be abolished and there will be just one central government.
Former prime minister Bob Hawke’s recent call for the state governments to be abolished is worthy of support.
Labor has historically been in favour of centralisation, while the Coalition has supported federalism. So, Hawke’s position is not surprising. But leaving aside party politics, there are good reasons why Australia should consider this change to its Constitution.
The reason Australia has a federal Constitution is a negative one. It was due to fear from the colonies of domination by each other or by the new national government.
Taken at its best, the adoption of federalism in preference to a unitary system was the necessary price of creating Australia as a nation. At its worst, it was a base compromise pandering to colonial jealousies, which now saddles Australia with an unnecessarily complex and expensive form of government.
Unlike in countries such as Nigeria, where federalism serves the purpose of providing for ethnic autonomy, Australian federalism solves no problem and confers no benefit.
The supposed major benefit of federalism is that it provides protection against tyranny by diffusing power. But federalism does not affect what governments can do to individuals, only which government may do them. Distributions of power are not as effective a protection of liberty as are restraints on power. Federalism cannot provide an effective limit to what the state and Commonwealth parliaments can in combination do to the individual. Only a Bill of Rights can do that.
So, Australia is left with nine governments and 15 legislative chambers for a population of 24 million. The costs of this are staggering. In 2002, the annual costs of federalism to the economy was estimated at A$40 billion – a figure that would be much higher today.
Making such a change would mean that, as in New Zealand and the UK, Australia would have a single (national) parliament with comprehensive lawmaking power. That parliament could delegate lawmaking authority to regions and/or local governments, in the same way as state parliaments currently delegate power to local authorities.
However, there would be no more disputes over which lawmaking power the national parliament had, and no doubt that national law overrode regional and local law. The legal system would be much simpler, and compliance costs to business and individuals radically reduced.
Australia would also have one department of education, one department of agriculture, one department of the environment and so on, instead of multiple agencies currently.
Disputes over shares of Commonwealth revenue allocated to the states is a constant feature of federal-state relations. All that would be a thing of the past. Expenditure could be determined according to the needs of people, irrespective of where they lived and without reference to artificial state boundaries.
The current focus on “reforming” the federation avoids the real issue: why have federalism at all? If we were writing a constitution from new, would we really recreate the current nine-government system? If the answer to that is “no”, there is a good reason to change it.
Interesting. Was not aware of this debate at all..
This is a part of economics/finance which is least studied but is important. Who controls financial purses (the male or female) in a household and why? Most of the time why is related to the cultural practices.
Prof Supriya Singh (Sociology in RMIT University) shares her recent research with a colleague on the topic. She looks at two cultures in Australia – Anglo Celtic and Indians: