Archive for the ‘Discussion’ Category

‘People should be more aware’: the business dynasties who benefited from Nazis

May 18, 2022

A new book has been released which looks at some companies which benefited from Nazi connections.

TheGuardian profiles the book and the author:

Colonial and Confederate statues toppled. Looted objects returned by contrite museums. Tainted family names such as Sackler expunged from buildings. A worldwide reckoning with the past crimes of great powers is under way. But is there a glaring omission?

A new book, Nazi Billionaires, investigates how Germany’s richest business dynasties made fortunes by aiding and abetting Adolf Hitler’s Third Reich. It also examines how, eight decades later, they still escape close scrutiny and a nation that has done so much to confront its catastrophic past still suffers a very particular blind spot.

“What struck me was this is a country that’s so cognisant of its history in many ways but seemingly the most economically powerful actors do not engage with that,” says author David de Jong, a 35-year-old Dutchman. “That was the reason why I wrote the book. It’s an argument in favour of historical transparency.”

The former reporter for Bloomberg News examines German companies that own beer brewers and wine producers as well as famous US brands such as Krispy Kreme and Pret A Manger. But he casts an especially harsh light on car makers led by household names such as BMW and Porsche, which powered the postwar economic miracle and contribute about a 10th of the nation’s gross domestic product.


How Economics Found Science …and Lost its Subject Matter

May 18, 2022

Nicholas Gruen in this INET article questions the often quoted trade off between efficiency and equality by economics:

My point has simply been to show one theoretical framing of the relationship between efficiency and equality that proceeds from careful, critical observation of and abstraction from reality. If this is well-judged, our understanding of reality improves as do our prospects of improving it. The textbook approach couldn’t be more different. Turns out that it is metaphysical fairy-floss. The “efficiency-equality” trade-off exists as a particular case of the general one that if you wish to achieve one thing, doing something else could get in your way. That applies whether the things in question are apples, oranges, efficiency, spelling prowess, bananas, Nobel Prizes, stop signs, or fortune cookies. Oh — I nearly forgot — and equality. Who knew?

Disciplines like economics can be worse than useless without proper attention to what Mary Midgely called their ‘philosophical plumbing’ — the way their organizing ideas are brought into relation to get us closer to reality — like the philosophical plumbing I’ve offered in this essay. Without it, the ideas and techniques economists use are unmoored from any wider accountability for actually helping us understand the world. Yet that kind of close-grained reflectiveness about the way ideas are used in situ is completely absent, both from learned journal literature and from the core economics curriculum. (Indeed, in my experience, it barely makes its way into the “philosophy/methodology of economics” literature and pedagogy preoccupied as they have been with various more ponderous set pieces — for instance, Popper’s falsificationism and Milton Friedman’s call to judge theory by the quality of its predictions rather than the realism of its assumptions).

Finally, note how frequently the kind of thinking I’ve been critiquing in this essay perpetrates the fallacy of the excluded middle — and how much damage this has done to the fabric of economic and political debate, and therefore to our economy and polity. Thus, Friedrich Hayek compellingly demonstrated the impracticability of managing a complex economy entirely from the center. But he took this demonstration of the impracticality of one extreme to justify a lurch towards the other and the general principle that less government was in principle preferable to more. This piece of motivated impatience in going from arguments to practical conclusions — so typical of intellectuals — was a spectacular non-sequitur from which many economists have still not freed themselves and from which the world has still not recovered.


As Russia-Ukraine war rages on, remembering Andha Yug by Dharamvir Bharti

April 22, 2022

It is so sad and tragic to see pictures/videos of Russia-Ukraine war killing hapless people and spreading misery.

The war images made me remember the landmark play – Andha Yug – by Dharamvir Bharti. The play is based on the aftermath of the Mahabharata War.  Despite different geographies and contexts, the main lesson that wars should be avoided at all costs is not lost. Yet humans find and invent reasons to fight wars.

One can even watch the play on youtube.

100 years of BBC (British Broadcasting Corporation)

April 11, 2022

The year 2022 marks 100 years of the British icon.  BBC has put up a digital archive to commemorate the occasion.


The End of a Political Model in Uttar Pradesh

April 8, 2022

Gilles Verniers of Ashoka University writes in the TheIndiaForum on the shocking decline of Bahujan Samajwadi Party:

In a recent press conference at which Mayawati explained the causes of the Bahujan Samaj Party’s (BSP) defeat in the Uttar Pradesh elections, she blamed her supporters for deserting her and her candidates. She also blamed the Samajwadi Party (SP) for attracting the BSP’s Muslim voters, which, according to her, led to a Hindu consolidation behind the Bharatiya Janata Party (BJP).

This is not the first time that Mayawati has blamed voters for her electoral setbacks. In 2012, she criticised Muslim voters for supposedly causing her defeat by supporting the SP. Beyond pointing out the obvious lack of grace in defeat and keeping in mind that in a democracy, voters are free to vote for whomsoever they choose, it is worth wondering why so many voters deserted the BSP in the 2022 UP election.

There is a larger message for UP electoral politics that can be learnt from the decline of the BSP in UP. This is the decline of a particular way of doing politics that the BSP has been practising so far: of consolidating a core electoral base, and relying on fragmentation and vote bank transferability to win seats. The BJP, which emulated the BSP and SP’s winning formulas of 2007 and 2012, has come to understand that a campaign simply based on the mobilisation of narrow segments of the electorate is doomed to fail.


Thomas Bata on Sri Lanka from 1940s to 1980s

April 4, 2022

I had earlier reviewed a fascinating book on history of Bata shoes, written by Thomas Bata, son of the founder of Bata company.

In the book he writes on Sri Lanka:

At that time, the only oasis of peace in the area was Sri Lanka, or Ceylon as it was called before decolonization. When I first went there in the late 1940s, it was a Shangri- la full of smiling people, ambling elephants and king coconuts with delicious milk to quench one’s thirst. Almost in defiance of the horrors that were raging all around it, Ceylon was an island of tranquility and racial tolerance. Forty years later the Indian subcontinent, along with Singapore, Malaysia, Thailand and Indonesia all enjoy peace and varying degrees of prosperity, and our enterprises in these countries are among the strongest pillars of the Bata organization.

But in poor Sri Lanka, racial hatred has destroyed a model community and put an end, in most instances , to goodwill among people. I say in most instances because some of our employees have been nothing short of heroic in risking their lives to shelter their Tamil or Sinhalese co -workers. Unfortunately they couldn’t save them all.

None of us has a crystal ball to tell us what the future may bring, and entrepreneurs who aren’t willing to ride out occasional storms had better not venture beyond their home turf. But let us remember that, regardless of political upheaval and even bloodshed, people still have to earn a living. Even while Western news media were inundating us with pictures of massacres and civil war, ordinary citizens in Bangladesh, Malaysia and more recently Sri Lanka continued to go to work and collect their wages.

So nicely said. It is so sad how SL has moved an island of tranquility to civil war and now an economic crisis. The last lines (empasis is mine) rings true each time leaders push war on people…

US Presidents as economic managers

April 1, 2022

Brian Riedl in National Affairs:

Purely partisan narratives are often wrong; the familiar cliché that the economy is stronger when Democrats are elected president is no exception. Pointing to a simple correlation over a small number of presidential terms to assert that Democratic presidents are better stewards of the economy is as lazy as assuming that Democrats are worse on foreign policy because the vast majority of post-1865 war casualties have occurred on their watch.

In exploring the question of partisan differences in presidential management of the economy, it is important to emphasize the small degree of control federal policymakers really have in this arena. The U.S. economy is a $23 trillion machine powered by 330 million Americans and influenced by billions of people around the world. The effect of most federal policies on short-term economic performance is, at best, marginal.

What’s more, presidents do not control the business cycle, even if the business cycle plays a part in the outcomes of presidential elections. Since 1990, their economic records have instead been dominated by four events: the 1990-1991 recession, the late-1990s bubble bursting, the 2007-2008 housing crash, and the 2020 pandemic. None of these events was fundamentally a function of presidential policy, yet all four occurred at times that fed the perception that Democrats bring better economic news than Republicans. With the pandemic economy sure to recede, President Biden is set to become the next beneficiary of this accident of timing.

Ultimately, the notion that there is a simple partisan pattern to the health of the economy is an extension of the exaggerated politicization of our understanding of contemporary American life. Presidents are chief executives of the federal government; they are not masters of the universe. They can play a role in setting the direction of public policy, and can shape how our government responds to events. In short, presidents matter, but partisan narratives are no substitute for economic analysis.

How technology for investment tips is changing: From bulk SMSes to Social Media platforms

March 11, 2022

In 2020, SEBI had cautioned investors against taking tips on social media platforms.

On 11 March 2022, SEBI has carried out search and seizure operation at the premises of  individuals and 1 corporate entity. These people were passing stock tips to investors using social media platforms.

SEBI says changing technologies are enabling investment tips. Earlier bulk smses were used for passing investment tips. SEBI collaborated with TRAI to act on such bulk smses. Now SEBI says: “the perpetrators of such frauds are now adopting new methods and technologies to defraud the investors”. 






Why did Tamil merchants build Hindu temples in China? Answer lies in commerce

March 10, 2022

Anirudh Kanisetti author of Lords of the Deccan in this article in ThePrint:

The history of the Indian Ocean is one of extraordinary drama, full of violence and cultural innovation, greed and loss. What repeatedly emerges over time is that its peoples had a sophisticated understanding of each others’ courts, cultures, religions; they developed long-term commercial strategies spanning thousands of kilometres, all of which unfolded through diplomacy and gift exchange. These medieval peoples have much to teach us about creating respectful, deeply-involved trading policies in the 21st century as well as the possible risks of mercantile, military and political power coming together.

Select economists on Ukraine crisis

March 3, 2022

Peterson Institute economists on the Ukraine crisis:

With the situation in Ukraine changing rapidly, we decided to ask PIIE senior fellows for their thoughts. Below are their responses, edited lightly for clarity.

What has surprised you most about the response to Russia’s invasion of Ukraine?

Martin Chorzempa: The US has struggled for years to get allies on board with controls on China, but there has been a surprising degree of consensus about cutting off Russia’s access to high technology products through export controls, not only from the US and EU, but countries like Japan and Korea. The coordination here has both made the controls much more likely to be effective than unilateral action and created a foundation for new export controls that will likely be aimed next at China.

Monica de Bolle: The rapid, concerted, and unprecedented measures taken against the Central Bank of Russia—freezing assets, liabilities, and all possible transactions. The action is draconian and prevents the central bank from intervening in currency markets to prop up the ruble or even in stemming bank runs if the population wishes to exchange their ruble deposits for hard currency. I was also surprised by the coordination aspect of this measure, with all major central banks participating. Such coordination and multilateral cooperation have not been seen for a long time, and that was probably one of the reasons the action may have caught Putin completely off guard.

Jason Furman: I learned that extremely competent macroeconomic management—which Russia has had for over two decades now—is no match for a powerful and well-coordinated effort on the part of much of the global economy to punish a country economically. When even Switzerland is joining in, a country must know it has done something epically bad and cannot do much to shield itself from the economic consequences.

Patrick Honohan: First, the sharp change in German military spending plans (though these will have no immediate impact on the ground). Second, strange sequencing of very leaky financial sanctions. (Why so slow with high profile cut off of SWIFT [the Society for Worldwide Interbank Financial Telecommunication, the global cooperative that facilitates international financial transactions]; why so many banks not yet excluded; why emphasize the central bank?) By the way, it occurs to me that the central bank may not be displeased with the sanctioning to the extent that it may help distance them from much that will happen in Russian government action over the next weeks: They can just say “we can’t because we are blocked.” If/when there is regime change, they may exit with cleaner hands than would otherwise be possible.

Gary Clyde Hufbauer: If President Biden and European leaders had declared, in advance, in public, and in detail, the harsh and pathbreaking sanctions now imposed on Russia, Putin might have reconsidered. But advanced threats were fuzzy and deterrence failed, possibly because Putin grossly underestimated the punishment his invasion would evoke.

Mary E. Lovely: We learned this week that an information bubble surrounds not only Vladimir Putin, but also Xi Jinping. Whether he knew that Russia would invade Ukraine or not, and despite US intelligence warnings, China seems to have been caught off guard by the timing of the military operation. Chinese diplomats repeated admonitions that an impending invasion was an American fantasy even as tanks rolled, while thousands of Chinese nationals were caught inside an emerging war zone. East-West communication has deteriorated in dangerous ways over the past five years.

Jacob Funk Kirkegaard: The strength and unity of the Western response has been a huge positive surprise. First, it has significantly and negatively affected the Russian economy already, despite the Russian government’s preparations since 2014. Second, the accelerated delivery of weapons into western Ukraine remains unopposed by a Russian military, showing that the Russians did not foresee this outcome either. And lastly, the firm political commitment to treat Russia as an aggressive expansionist empire will rapidly lead to rising defense budgets across Europe and the likely expansion of NATO with Finland and Sweden.

Jeffrey J. Schott: Most surprised and disappointed that US and EU officials didn’t “go big” before Russian troops crossed the Ukraine border on February 24. The Russian invasion should have been anticipated by a detailed preview of comprehensive financial sanctions, beyond threatening to remove access to SWIFT and adding inevitable sanctions against Russia’s central bank and top ten banks. Unfortunately, it took several days after the shock of military action to get Western political leaders to enact strong and clear signals that Russia would pay heavily for its aggression in Ukraine.

Nicolas Véron: The freezing of the Russian central bank’s international reserves by a broad group of countries, including those in the G7 and the EU. There have been similar actions in the past, e.g. against Iran or Venezuela, but never against a fully paid-up member of the inner circle of central banks that are, for example, members of the Bank for International Settlements and all the related key global committees. I suspect few if any people in Moscow saw it coming. I for one certainly did not.

State of the Union Address 2022: Capping prices of diabetes vials

March 2, 2022

Joe Biden in his State of the Union Address (2022) said he wants to lower inflation:

One way to fight inflation is to drive down wages and make Americans poorer.  
I have a better plan to fight inflation. 
Lower your costs, not your wages. 
Make more cars and semiconductors in America. 
More infrastructure and innovation in America. 
More goods moving faster and cheaper in America. 
More jobs where you can earn a good living in America. 
And instead of relying on foreign supply chains, let’s make it in America. 
Economists call it “increasing the productive capacity of our economy.” 
I call it building a better America. 
My plan to fight inflation will lower your costs and lower the deficit. 

What is the plan? Let’s look at the first one:

17 Nobel laureates in economics say my plan will ease long-term inflationary pressures. Top business leaders and most Americans support my plan. And here’s the plan: 

First – cut the cost of prescription drugs. Just look at insulin. One in ten Americans has diabetes. In Virginia, I met a 13-year-old boy named Joshua Davis.   He and his Dad both have Type 1 diabetes, which means they need insulin every day. Insulin costs about $10 a vial to make.  

But drug companies charge families like Joshua and his Dad up to 30 times more. I spoke with Joshua’s mom. 

Imagine what it’s like to look at your child who needs insulin and have no idea how you’re going to pay for it.   What it does to your dignity, your ability to look your child in the eye, to be the parent you expect to be.  Joshua is here with us tonight. Yesterday was his birthday. Happy birthday, buddy.  

For Joshua, and for the 200,000 other young people with Type 1 diabetes, let’s cap the cost of insulin at $35 a month so everyone can afford it.  

Drug companies will still do very well. And while we’re at it let Medicare negotiate lower prices for prescription drugs, like the VA already does. 

Not sure which Nobel Prize laureate suggested capping of price of insulin vial. We have seen several policies imposing price caps but the end result is usually the opposite: prices for most people are higher than the capped price! Even worse is that people who pay higher prices are the ones with lower income and those who need it the most.

Will be surprised if the experience with this new cap will be any different ..


Putin’s claim to rid Ukraine of Nazis is especially absurd given its history

March 2, 2022

Jeffrey Veidlinger Professor of History and Judaic Studies, University of Michigan in this TheConversation article:

Russian President Vladimir Putin justifies his war on Ukraine as a peacekeeping mission, a “denazification” of the country.

In his address to the Russian people on Feb. 24, 2022, Putin said the purpose was to “protect people” who had been “subjected to bullying and genocide … for the last eight years. And for this we will strive for the demilitarization and denazification of Ukraine.”

The victims of the genocide claimed by Putin are Russian speakers; the Nazis he referenced are the elected representatives of the Ukrainian people. While Ukraine’s new language laws have upset some minorities, independent news media have uncovered no evidence of genocide against Russian speakers. In fact, as the historian Timothy Snyder has pointed out, Russian speakers have more freedom in Ukraine than they have in Russia, where Putin’s authoritarian government routinely suppresses political dissent. And while far right groups have been growing in Ukraine, their electoral power is limited.

As the author of a recently published book on anti-Jewish violence in Ukraine and a historian of the Holocaust, I know why the accusations of Nazism and genocide have resonance in Ukraine. But I also understand that despite episodic violence, Ukrainian history offers a model of tolerance and democratic government.

Regulations Review Authority continues to ease doing banking in India

February 22, 2022

In an earlier article, I had pointed how RBI’s Regulations Review Authority is making it easier to do banking in India. In the first set of recommendations, RRA had asked RBI to withdraw 150 circulars.

In the second round, RRA has asked to withdraw 100 more circulars and has identified 65 more which could be merged with other returns:

The Reserve Bank of India has set up a Regulations Review Authority (RRA 2.0) with an objective to reduce the compliance burden on Regulated Entities (REs). RRA had recommended withdrawal of 150 circulars in the first tranche of recommendations vide press release dated November 16, 2021.

2. In continuation of the exercise, RRA has now recommended withdrawal of additional 100 circulars in the second tranche of recommendations. Further, on the suggestions of an internal group (Chairman: Dr. O.P. Mall, Executive Director) the RRA has recommended elimination of paper-based returns and has identified 65 regulatory returns which would either be discontinued/ merged with other returns or would be converted into online returns.

RRA has also made this important recommendation of creating a one webpage which lists all the regulatory reporting across regulated entities:

The RRA has also recommended creation of a separate web page “Regulatory Reporting” in the RBI website to consolidate information relating to regulatory reporting and return submission by the regulated entities at a single source. These recommendations are expected to ease regulatory compliance for the regulated entities while improving the accuracy, speed and quality of data submission.

The regulatory reporting shows there are a total of 240 types of different returns which are to be filed and submitted by several RBI regulated entities! Of the 240, Department of Supervision asks 102 returns followed by Department of Regulation at 27 returns.

There is still a long way to go to reduce compliance/documentation/duplications costs for Indian banks. But RRA has made a good start towards the goal of ease of doing banking in India.


To manage creative destruction, we should build bridges and not walls

February 10, 2022

J Bradford Delong in this Project Syndicate article argues that we should build bridges and not walls to manage competition and creative destruction.

Technology and globalization offer far-reaching benefits, …., but they also increase the risk of some people being left behind. Accordingly, we should build bridges to help people move to the sectors that will define the new economy. What we should not do is build walls to protect the industries that will be rendered unproductive by the forces of creative destruction.


Saga of Punjab and Maharashtra Cooperative Bank (1984-2022) reminds one of similar saga of Punjab Cooperative Bank (1904-97)

January 27, 2022

The RBI announced that Punjab and Maharashtra Cooperative Bank (PMCB) has finally been amalgamated with Unity Small Finance Bank Ltd.

The crisis and it eventual amalgamation took me to history lane of Indian banking. It reminded me of one another cooperative bank named Punjab Cooperative Bank (PCB) which went through a similar albeit longer journey of 93 years compared to PMCB journey of 38 years.


Economics is once again becoming a worldly science

January 21, 2022

Tom Bergin of Reuters in this aeon essay criticises the neoclassical approach in economics and mentions how some recent scholarship provides hope for a change. Tom is the author of Spills and Spin: The Inside Story of BP (2011) and Free Lunch Thinking: How Economics Ruins the Economy (2021).

Social sciences like economics face certain handicaps compared with the physical sciences where one can easily isolate the phenomena one wishes to observe and experiments can be repeated without too much difficulty. Yet there is no reason why adhering to the scientific method of basing conclusions and world views on observable facts should be more challenging in economics than in physics. Except that the incentives are against it. If you have a dogmatic neoclassical view of how the world works, you’ll always have a solution to the economic problem of the day. And, therefore, you will have influence. Looking at the facts first may well mean having to say ‘I don’t know.’

If economics is to become more useful, its practitioners have a lot to learn. But in terms of impact, more may be gained if they focus on unlearning the pervasive myths they advance to policymakers.

Comparing online to in-person meetings

January 11, 2022

Shivani Taneja, Paul Mizen and Nicholas Bloom in this voxeu article compare offline and online meetings:

Bundesbank’s new president to battle two fronts: inflation and Europe

January 10, 2022

This blog had pointed how Joachim Nagel has been appointed as the new President of Bundesbank after the sudden resignation of Jens Weidmann.

Nagel takes over the helm at Bundesbank today on 10 Jan 2022.  David Marsh and Edoardo Reviglio in this OMFIF article writes on the twin challenges for Nagel – rising inflation and Europe.

First inflation at 3.1% is higher than 2 year average of 2.6%:


How Will the History Books Remember 2021?

January 7, 2022

Politico asks 18 top historians to imagine how this year will be written about a century from now.

How will history remember 2021? POLITICO Magazine asked 18 historians to envision the entry for this year in a hypothetical future history book. Many, not surprisingly, highlighted the erosion of democratic norms in the United States, most notably through the ongoing attempt to question and overturn legitimate election results. A number of submissions focused on the downstream effects of the pandemic, like labor market shifts and disruption to education. We heard about racial inequality: continued systemic racism against Black Americans, an uptick in violence against Asian Americans and an overall feeling that the country was polarized along racial lines. Other contributors believed 2021 will be remembered as as another missed opportunity to address the climate crisis, as the year the United States ended its 20-year war in Afghanistan, or as a worrisome inflection point for America’s place atop the post-World War II democratic order.


Beyond the BCCI

January 7, 2022

Sushant Singh of Centre for Policy Research in this TheIndiaForum essay:

If you want to see how the country is being run, just look at the BCCI. It treats the country’s highest court with disdain, flouts all rules and norms, controls and uses money power to the hilt, and bullies the weak (domestic and women cricketers) and the disadvantaged (scorekeepers and groundsmen). The media is managed through control of access to the most lucrative sport in the country.

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