One would imagine someone like Hayek would favor free banking (banking system without a central bank running their own currencies) right from the very beginning. But no. This transition/change of views happened fairly late:
The title of John Milton’s verses Paradise Lost fits most of India’s cities. Quite a few historic cities in the west have managed to maintain their historic past despite rapid urbanisation. Not so with Indian cities which are in the middle of nowhere – neither historic nor modern.
Here is a nice tale of Simla lost in a similar transition.
He reflects on the ongoing Greece crisis (for how long will it continue). He says how earlier tanks took over countries and now it is banks:
The charter for US Exim Bank collapsed on 1 July 2015. It is now on the path to closure. What remains of existing Exim Banks in other countries? For instance, India’s own Exim Bank?
Exim Bank India chief thinks it will get more business post closure of its US counterpart:
IMF is seen as this uber platform for pushing capitalism and free markets down its member’s throats. The even mention of the letter S (for Socialism) and C (for controls) in the corridors of Bretton Woods institution is enough to land one in trouble. Though, post crisis, IMF has accepted C (as in capital controls) in a real change of heart.
However, if one thinks of IMF’s role in crisis it is just the opposite. It usually wants a super strong government/technocratic team to push its ideas despite strong opposition from the public. This is actually not democratic capitalism which IMF wants to be seen as pushing but abject socialism. In socialism only we have seen super strong governments just pushing things at people’s throats irrespective of public opinion.
The same is happening in Europe as well. Ryan Mcmaken of Mises quotes from an article in NYT:
A fascinating article on how narratives are built to sell certain products. It is ironical that companies which sell products are actually not doing the same in their home countries. Sanitary napkins seem to be such an example.
Sinu Joseph, a hygiene counsellor, exposes many a myth regarding this matter:
As India is still learning to build sustainable all weather roads, we are way off designing road safety measures. It is both amazing and horrific to see the callous approach of oiur authorities while building roads.
The end result is more and more road accidents and deaths:
Indian roads were at their deadliest in 2014 claiming more than 16 lives every hour on average. Over 1.41 lakh people died in crashes, 3% more than the number of fatalities in 2013. The numbers of crashes and of people left injured were also the highest levels since the recording of such data started in India—at 4.5 lakh and 4.8 lakh respectively.
According to the latest data released by the National Crime Records Bureau (NCRB), speeding and dangerous driving were the biggest reasons for road fatalities. Accidents involving two-wheelers and trucks & lorries accounted for nearly half of the lives lost in road crashes.
While 13,787 two-wheeler drivers were killed in crashes, 23,529 other people were killed in accidents involving these vehicles, while close to 1.4 lakh people were left injured in them. Over-speeding accounted for about 1.7 lakh crashes and nearly 49,000 deaths and dangerous/careless driving or overtaking claimed another 42,000-plus lives in 1.4 lakh crashes.
It is not that govt alone is responsible. People too are a part of the problem. Most who drive recklessly are overconfident of their driving abilities leading problems for both themselves and the other party in the accident.
Having said that, there is little doubt that road design can go a long way towards mitigating such accidents. Random roads come up from no where having no signs and instructions. Road maintenance is so so poor that people get killed trying to avoid some blackhole or the other.
Road accidents and deaths do not get the same negative publicity like other disasters. Only time road accidents are discussed is when there is a celebrity involved. But reality is roads kill far more people and happens at a fairly regular rate. They are actually increasing here. But somehow it continues to miss the attention it actually requires.
It is amazing to note how history is quickly forgotten. Leave history, even current times are ignored just to fit one’s agenda. There is a huge belief that it is high forex reserves which are the safeguard for Indian economy. The same reserve building was criticised greatly pre-2008 period as RBI should only do inflation management and not intervene in forex markets, build up of forex reserves is inflationary, forex reserves distort economy as one issues MSS bills and so on. Even currently, China has the highest forex reserves in kitty and all via its current account surplus (unlike India’s forex reserves which are mainly via short term capital flows) but is unable to keep global threats away. And then post 2008-crisis, Korea could not keep off speculatiion fears away despite pretty high forex reserves as well.
In nut shell, India is safer not because of forex reserves but just because we have kept ourselves relatively closed to world economy. And then compared to world, our macros are not as bad (it is always a relative game). However, our policymakers and media prefer to sing their own tunes.
Infact, one should actually be questioning all this forex intervention business as India had opted for inflation targeting. Earlier, the view was we need to target multiple things as in an emerging economy we cannot just stand by and let certain things like exchange rate go awry. In IT, the first thing central bank does is give up exchange rate management. The forex assets begin to be piled up at banking level and not at central banks. Central banks can instead sign up swap lines with advanced countries in case there is a shock. A swap line ends up being a much cheaper option as well.
C Shivumar has a piece on how all this forex reserve build up is not really chest thumping. It is actually the opposite – it exposes you to dollar policy:
A nice and rigorous review of Francis Fukuyama’s recnt work on Governance and insitutions:
It actually should not have been a case of (Amartya) Sen and (Pratap Bhanu) Mehta critiquing the state of India’s higher education. But has unfortunately become a case of Sen vs Mehta. Anything Prof Sen says these days becomes a controversy.
- Prof. Sen on his Nalanda ouster and the increasing govt intervention in Indian education.
- Dr Mehta calls the criticism just elitish. He says Nalanda is just part of the syndrome. Likes of Sen should have raised concerns when the rot was just stemming in.
- Prof Sen responds to the criticism
Lords of Finance was a stirring book. It bought alive the events of 1920s with its terrific narrative on how a few men actually bought disaster onto the world economy. These few good men were the central bankers of US, UK, Germany and France. The narrative then was these central bankers did not do enough to bail out their economies. To emphasize, they did not let go off gold standard which converted a crisis into a large scale depression.
Cometh 2008 crisis and central bankers just did the opposite. They let all hells break loose and intervened in ways never imagined before. However, the results are not really different. The same havoc continues.
Alexander Friedman, Group CEO of GAM Holding, reviews the lessons: