How did we get salesmen knocking on our doors? Birth of the mighty idea..

August 20, 2015

Harvard Business School’s Walter A. Friedman has written this interesting book – Birth of a Salesman. In business, nothing else matters. You may have the ‘t best product but till you can’t sell it, it is all nought. Most corp leaders of yesteryears who shaped iconic firms  were all sales people par excellence.

Here is an interview of the Prof. He says Salesman is a quintessential American contribution:

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The inspiring lessons from managing logistics of Kumbh Mela

August 20, 2015

It is all getting so ironical really. The west gradually seems to be warming up to the east and showing more interest in the way latter has been doing things. On the other hand, the east is just busy copying the west. Within this, there is nothing more ironical than seeing Harvard University’s interest in Kumbh Mela. This mela which has been organised for ages but I dont think it has caught anyone’s fancy. Post Harvard  case study, there is a lot of interest.

Rahul Jacobs reflects on the lessons he learnt from a recent PPT on the holy mela:

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Financial engineering versus cancer..

August 19, 2015

This is interesting short note. Financial engineering can cause cancer to the financial firm but could be useful for curing the cancer to humans.

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Using twitter to predict bank runs

August 19, 2015

BoE’s Underground blog has a nice post on how to use (and not be mislead) by big data ideas.

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Are fast/greentop pitches in India the reason for poor spin show?

August 19, 2015

India’s recent losses in test matches has led to two stark revelations. One – our batters seem to be struggling big time against spin. Two – our spin cupboard is almost empty barring Ashwin whose performance outside sub-continent is still to be seen. Not too long ago, India seemed to be in surplus on both these factors and has suddenly become a deficit. I mean this is much like an economy which appears a tiger till the crisis exposes leads to all kinds of issues.

The recent loss to SL was outright shocking. SL which despite producing smashing cricketers hardly gets the attention. If Indian cricketers had done such a daylight heist, there would have been huge media coverage. It was all so shocking. The problem was not as much the second factor (as Ashwin bowled well) but the first one where we just could not chase a paltry 170 odd runs.

There are two articles which suggest it is the recent convert from spin pitches to fast pitches which is leading to the problem. First by the always briiliant Sharda Ugra and second by Karthik Krishnswamy.

India was losing regularly and badly to swinging and grassy pitches outside sub-continent. This led BCCI to make a rule in 2011 to leave 4 inch grass on the pitches which after an inning was always rolled. The result was spinners did not have a say in the game at all. As a result, even batters lost the patience etc needed to play spin.

First Ugra:

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Indradhanush: Same seven colours on a new skyline

August 18, 2015

Just at the eve of India’s 69th independence day, government announced a series of measures to correct the malaise in Indian Public sector banks. Immediately, talks of big bang reforms followed creating another round of hype and noise. But much was old wine in a new bottle or same colors painted on a new skyline given the name to the reforms.

This govt and its officials have an amazing knack of naming/terming such measures. This one they called it Indradhanush. The Finance Services secretary Hasmukh Adhia explained the logic:

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How a secret meeting at a secluded resort led to creation of Federal Reserve

August 18, 2015

A nice article by Jessie Romero of Richmond Fed.

The biggest irony of Fed is how it rose from being really an unwanted organisation to the most powerful central bank in the world. Econs/experts ridicule when some politician makes a case for ending the Fed. But the bigger point is this is the history of central banking in the country. A country which was built by states uniting together has always been sceptical of centralised finance. They had two editions of central banks (1791-1911 and 1916-36) but allowed the 20 year charters of both to expire. Whereas in UK, BoE was also on a charter but it kept getting renewed. So from 1836 onwards there was no central bank in the country and hardly any talk of having one was entertained.

Given the scepticism, any such effort to form a central bank in US is likely to be a highly secretive clubby affair. This was indeed the case as the central bank was given shape in Jekyll Island in 1910. A group of financial elite got together and planned a central bank for US in a meeting so secretive that its list of members is not fully known. Also, the members actually addressed each other by first names to ensure no one notices/overhears them.

The name of Jekyll Island is also ironical given the setting as one immediately connects to the story of Dr Jekyll and Mr Hyde. Most econs present the Fed as Dr Jekyll which has done a lot of good to US economy. But then there are people from Austrian school and some politicos who feel Fed is just Mr. Hyde which has caused far more harm than is visible.

Even the name suggested for Fed was given to hide the fact that it was a central bank. The first proposed name was Reserve Association of America which was later changed to National Reserve Association and finally to Federal Reserve.

So this piece by Romero gives a broad account of how things piled up at the famous island.

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Economists and the Real World..

August 17, 2015

Tim Sablik of Richmond Fed says ivy tower econs are trying to get accustomed to the real world.

This is noting new actually. Most econs actually worked before giving gyan:

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The World’s Oldest Public Policy Puzzle…

August 17, 2015

Aryeh Neier writes on the oldest Public Policy puzzle PPP – whether to prohibit or legalise prostitution?

Prohibition has proved harmful when applied to consenting adults’ use of liquor or drugs. Bringing such practices out of the shadows encourages the development of measures that mitigate its associated evils. The same is true of transactional sex.

The focus of public policy regarding prostitution should be to prevent violence and coercion, as well as to stop the spread of infectious diseases – which is exactly what Amnesty is recommending. There is little doubt that Shaw, who was convinced that women and men alike should be free to engage in commercial transactions that do not harm others, would have approved.

Oldest yet still remains unresolved…

How humans cause mass extinctions?

August 17, 2015

 

Back to Fundamentals in Emerging Markets..

August 14, 2015

Prof Dani Rodrik says that hype around emerging markets is now tapering off.  Much of the past growth was around foreign capital and buzz.

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India’s capital is Patna… … that’s what teachers are telling students in many Indian schools

August 14, 2015

Many a politicians do believe that politics in Bihar sets the tone for the country. In a way, what happens in Patna is the focal point for many an activities. Sharad Pawar said in a recent interview:

Lets come to Bihar, who has the upper hand?

Bihar has always been a game changer state. Gandhi started his agitations from Champaran. The first protests against the Emergency took place in Bihar under JP. The concept of social change started in Bihar with the Mandal Commission. Everything starts from Bihar. Bihar shows the direction to the nation. In this election I am looking at it from that angle.

However, it seems some of our teachers are taking this Patna bit as a fact. Shyamal Majumdar points to this sordid tale of teaching in Indian schools:

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Book Review: Railways In Modern India

August 13, 2015

There is a lot of discussion going on the subject of Indian railways. As always, much of discussions on India are just about some reform/efficiency and all that. Much of the ideas have been known for a long time. You can’t run any enterprise where expenses are more than revenues. Period. This has been the case with Railways for a long time. Some committee is formed, some decisions are taken. The engine starts chugging again only to lose steam again.

This book by Ian Kerr has a couple of essays on historical impact of Indian railways from different perspectives. So there is an essay on how railways helped more people go to pilgrimage places, how the various rail lines were built given the adversity and so on. India was one country which had one of the largest railway system in the world but industrial development remained negligible. This itself is a paradox of sorts thanks to the policies of British who made railways just to serve themselves. Then there is the classic debating question – Whether railways integrated India as a nation or it actually impoverished India as the resources began to be shipped to Britain in much quicker time and speed. This also is debated by scholars in the book.

It also has a brief interview of Mahatma Gandhi on why he thought railways to be more of a problem than a gain. He belonged to the second came and just thought railways  was mainly built for British interests.  There is Karl Marx too debating role of railways in India.

A useful book to learn a thing or two about Indian railways.

 

Using Anacondas, Crocodiles to nudge maintenance of Bangalore roads

August 11, 2015

Interesting article on how an NGO is using clever ideas to make its points on road maintenance in Bangalore:

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Milton Friedman and monetary freedom….

August 11, 2015

George Selgin has a food for (economic) thought piece on Prof. Friedman.

Free markets people esp those in Austrian school camp usually crticise and side from the Chicago School on issues of mon economics. Whereas the A school believes in free banking without a central bank, the stance of ‘C’ school is not as clear. Friedman always favored the central bank using his money supply rule preferably by a computer. So, he was more in favor of central banks which was surprising given his free market thinking on everything else.

Prof. Selgin does not think so. He says Friedman did move towards free banking overtime as well:

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Indian education system continues to be dominated by a colonial mindset..

August 11, 2015

Prof. Ramnath Narayanswamy of IIMB  makes an important point as we approach 68th year of India’s independence.

He says why Sanskrit continues to be ignored? Why is our Indian education system still dominated by vision of Macaulay:

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What can economists learn from literature?

August 11, 2015

Lots. I mean most of us will atleast learn to write better. What mattered for earlier generation of economists was how well and widely they read. Now it is just about showing whose model/equation is more sophisticated (read confusing ) than the other.

Sara Thornton, Professor of English at the Université Paris Diderot, tells us what econs can learn from literature. There is a video with a brief intro:

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With rising crime, banks emerge as biggest buyers of civilian guns..

August 10, 2015

Interesting article in ET on the subject.

With rising bank-related crimes in cities, Banks have emerged as the biggest buyers of guns.

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Microfinance industry is better at monetary transmission??

August 10, 2015

This is an interesting piece of news. Banks have not lowered policy rates following rate cuts by Indian central bank. This has hindered further rate cuts leading to this evergreen friction between government, central bank, banks and companies.

However, one part of banking industry is transmitting rate cuts faster  – MFIs:

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London’s infrastructure problems hold lessons for India’s big cities as well…

August 10, 2015

M Ramachandran, once a secretary in the Union urban development ministry writes on the city:

 

There are some key issues of concern to the city of London, where I was recently. Let me consider their similarity in nature to problems Indian cities face – but also the differences in approach in dealing with them between the two countries. The strike in the city’s metro system, or the Underground, which disrupted public transport to a huge extent; ongoing discussions about the desirability of having a third runway at the city’s main airport, Heathrow; the concerns of cyclists who face danger from lorries on the roads; whether metro rail fares are to be increased or brought down; rents becoming high and not all residents being able to afford houses – these are the issues that figure uppermost in discussions about cities.

Since people using the London Underground late at night have almost doubled over a decade, it is now proposed to run the trains overnight on Fridays and Saturdays from later this year. A general pay hike issue has been raised by drivers, and this got linked with the additional payment to be made for running trains extra hours. The Underground’s management says the leadership of the unions refused to respond to the proposals it made. The proposed late-night service is projected to create 2,000 new jobs, give a 360-million-pound boost to the economy, and facilitate faster night-time journeys. But the one-day strike was total – no services operated, and those who commute to work using the Underground had to try using buses or just stay at home. Those two days showed how central the regular functioning of the Underground system is to the city.

Saying that Londoners cannot continue to pay through the nose for the most expensive metro rail system in the world, one of the potential candidates for the mayor’s post – the present deputy mayor who oversees transport – promises a three per cent cut a year in fares. His claim is based on his performance of cutting council tax year on year. The outgoing chief of Transport for London (TfL) warns that such a move could put services at risk.

Mumbai metro is facing the same fare war now. People forget how pricing infra is as critical as building the infra. Should it be based on Marginal costing or Average costing ? The first choice leads to higher prices and lesser commuters. The second one is lower prices and hopefully more commuters. The conventional economic theory supports the first route but in infra setting there is a case for the second route as well.

Further:

Cycling gets encouraged in a big city like London. Work commencing on construction of a new cycling super highway could lead to delays, says an ad from TfL, which is responsible for overseeing all transport issues in the city. But cycling is not easy. A thousand cyclists were injured in hit-and-run accidents last year. Eight cyclists died on London roads this year. Of these, seven were hit by lorries. The London Cycling Campaign is concerned. They called on the mayor urging him to save lives by ending the lorry danger. The demand is that adding mirrors is not enough – there should be mandatory cameras, glass doors and sensors on the lorries.

Rent in every part of London is reported to be unaffordable for low-wage workers. Experts say the city is on the brink of a crisis and the only solution suggested is building thousands of new homes. To fix the housing crisis, which is considered the greatest threat to the capital, it has been suggested that the politicians will have to take a bi-partisan approach – or more powers need to be devolved to London city. There are lessons in all this for our big cities as well, because if affordable housing is nobody’s baby, then we will fail to address the issue properly and in time.

Well, India was once a cycling nation not out of choice but mostly out of poverty. Most people cycled not just to work but even long distance towns. Now, it is all over and leave highways, even city roads don’t have any space for either walker or cyclist. It is all about vehicles and more vehicles now. It is amazing how just at this time, west is rediscovering cycles and atleast talking about it. Being a Cyclist is back in fashion.

On housing prices and rent, well what to say? This blog is sick of saying that most of Indian  cities are just too unaffordable to live. All we are doing is encouraging speculation in real estate and huge gains for property owners over the non-owners. One just spends most of his salary on the rent and it is always going up. Most rental agreements have a clause that if extended next year, there will be an inbuilt inflation of 10-15%. So much so for lower inflation expectations in cities here. There is a reason most people just laugh off the inflation numbers in India which are just understated.

London’s problems are just a microcosm of those in Indian cities.


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