Fernanda Saboia (senior product strategist at digital agency Huge in Rio de Janerio) has an interesting article.
He points how Brazilians have taken onto Whatsapp in a big way. The high sms charges were one of the reasons for this:
This blog has been really quiet on behavioral economics/nudging for a while. It was once the favorite topic and quite a few posts were written on it. Perhaps, have not stumbled on something interesting in the space.
Prof Utpal Dholakia (Professor of Marketing at Rice University) has a post on how nudging could backfire.
This is a hard hitting piece by Prof Steve Keen which questions the basic ideas on banking. It is hard hitting as he takes on Prof. Joseph Stiglitz of all people. I am ignoring the hard hitting bit and getting directly to the banking bit.
Traditionally, we are taught that banks intermediate between depositors (surplus units) and loan seekers (deficit units). So they take deposits from someone and pass them on to others as loans. It charges higher interest rates on loans than interest it pays on deposits. This spread in turn should ideally help recover operational costs and also result in profits.
Lately. this model is being questioned as too simplistic. Bank of England econs make a great case of this.
This one is by Norges Bank Deputy Governor Jon Nicolaisen. As he is a central banker, what more to expect than whether one should intervene ot let markets work during a crisis:
Superb video on Chris Blattman blog. Brilliant ride and its does feel like as if one is sitting on roller coaster. Highly recommended to take the ride.
The global economy is actually like this theme-park as of now with multiple rides. Some promise a lot of thrill but are a disappointment. Then there are those less hyped ones which give much better bang for the buck.
Ajay Shah has a post on the topic. The summary is:
Many times in India, subsidies are being used to express sheer value judgments; they are just the faddish thinking of one bunch of hausfraus running policy versus another. At other times, a market failure is indeed present. But instead of more subtle interventions and the minimum use of force — based on a sound scientific understanding of the anatomy of the market failure — we tend to rush to the excessive use of force that is a subsidy. Every subsidy is grounded in the monopoly of violence of the State that is required for tax collection. We should be far more circumspect before doling out subsidies. Subsidies are the last refuge of a failed policy maker.
One may disagree with what the author has to say but points have been well argued.
I guess the problem is not subsidies but open ended ones. Some form of subsidies might be needed to get things going in initial years. But they continue to go forever without looking at merits of the case. What is needed instead is a closed end approach to subsidies where after a definite time, they should be phased out.
Those who think shadow money/banking is a new idea and came to the fore only in 2008 crisis, should know better.
Similar concerns arose when banks started offering deposits and one was not sure whether they should be counted as money or not. Over a period of time, deposits are not just counted as money but has become the most dominant form of money as well. So will repos the new shadow banking instrument make the similar transition as well?
This is a nice interview of Professor Alfred L. Brophy, one of the Editors of the American Journal of Legal History.
He points to importance of knowing legal history. Much is obviously from an American angle but applies to other countries equally. Today’s ;aws are shaped by laws of the past..
It remains a puzzle why a body which is behind much of India story remains virtually ignored by pink papers and expert discussions. There is barely any acknowledgement of the fact that Indian capital markets have come such a long way since 1992 scam that much of it is unimaginable. We have perhaps the most developed capital market infrastructure in the world. If not the most, then we are there with the toppers. It is not about appreciation alone, even criticism is welcome as it is latter which helps more provided it is constructive ofcourse.
Apart from just capital market development, the one itching thing is to reach out and educate small investors. After all despite all this development the small investor has stayed away from the markets. This article looks at SEBI’s efforts to reach out to small investors:
Perhaps we would have lesser case of economic planning says Karl-Friedrich Israel in this article. Though if the list of awardees remained same post Mises getting it in 1969, likes of Mises would have opted out of the list rather than remain there..
I am surprised to read this bit. One wants markets and firms to gigure things but there are certain things which require regulation and forced one at that. This is especially the case with wearing helmets (or putting seat belts) which are fairly simple practices to save injuries from accidents. But people just don’t care especially in India. We do all possible to avoid these devices.
So, in Michigan they repealed this compulsory law of wearing helmets. There is some controversy around the findings:
Despite repeated efforts, statistics is something this blogger has failed to figure (the efforts are still on though). But there are somethings in statistics one should not just broadly know but more importantly be weary. So whenever you hear/read the word correlation and then see people using it to prove causation, you should be on a red alert. After all just because two things are correlated, it does not mean one causes the other. Correlation does not imply causation.
This article is just an example of such a mistake. It correlates falling deposits in India to two variables – real interest rates and outward remittances. It finds strong correlation for both and says they could be factors for falling deposit growth…
Gurgaon’s name has been proposed to be changed to Gurugram alongwith another distrci (Mewat to Nuh). This name change news has been there for a while. Now the proposal will be sent to Haryana cabinet for approval. The name change is dedicated to Guru Dronacharya who apparently lived here and trained princes (read Pandavas and Kauravas). These name change are luxuries which only govts can afford at taxpayer’s expenses. One should do a cost benefit analysis of such exercises.
Anyways, coming to Gurgaon. Came across this interesting article on how the city is run. It is based out of research by Shruti Rajagopalan with Alex Tabarrok. It is basically a private sector run city where basic public services are absent:
There is something in the airline business. As the old joke goes? How to become a millionaire? Own an airline. How does that help? Well, in this case you move from a billionaire to a millionaire…:-)
The failure of Kingfisher airlines is a stark reminder yet again of this really thorny business area. Though, most would hate to admit now but there was a time when Kingfisher airline was a darling of the investors and media. This was not just for artificial reasons but the financial ones as well.
And then you have the case of Air India, the perennial under-performer. It ensures the govt coffers can never be full as it always needs money to stay float. Every 4-5 years this is the same story. However, given Kingfisher’s performance and several other private players one can not say this is essentially a public sector problem. Airlines business is actually a problem for everybody.
In an interesting piece, Laveesh Bhandari makes a really bold confession. He prefers the state carrier to the private carriers: