When negotiating a price, never bid with a round number

February 3, 2016

Interesting research on bidding. We usually round off numbers but while bidding make a precise offer. It signals the seriousness of the bidder:

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Why PMGSY (rural roads scheme) has performed better than MGNREGS (rural jobs scheme)?

February 3, 2016

Mr. NC Saxena has a nice detailed post on the topic.

He goes into the details of the two government schemes and points why PMGSY (Pradhan Mantri Gram Sadak Yojana) is better than MGNREGS (Mahatma Gandhi National Rural Employment Guarantee Scheme):

The central hypothesis that I wish to explore in this paper is that when a programme is well designed, adequately funded and frequently evaluated it does well even in so called BIMAROU or backward states. On the other hand, if the design is flawed programme does poorly even in better governed states. ICDS is designed to target children mostly after the age of three years when malnutrition has already set in. Very little of the ICDS resources, in terms of funds and staff time, are spent on the under-three child and this low priority must be reversed, otherwise its impact on reducing malnutrition will remain illusory. The primary responsibility of initiating correction in the design of such faltering programmes is that of the central Government.

Carrying this argument further, let us closely examine two somewhat similar programmes—PMGSY (Pradhan Mantri Gram Sadak Yojana) and MGNREGS (Mahatma Gandhi National Rural Employment Guarantee Scheme)—both initiated and supervised by the Ministry of Rural Development and discuss how their design affects their outcomes at the ground level.

Apart from PMGSY having a better design, building good quality roads usually makes more sense than other poverty related programs.

Who is the best cricket commentator on TV?

February 2, 2016

Cricket Monthly’s latest edition (Feb-2016) asks this question to a panel of experts.

The answers range from Richie Benaud (but obvious) to Naseer Hussain (who expresses himself rather freely).

 

Helmut Schmidt and the narrative of the Eurozone crisis

February 2, 2016

Helmut Schmidt was one of the key architects of modern Europe post World War II. He passed away in Nov 2015.

Athanasios Orphanides, former head of Bank of Cyprus writes a piece remembering the Chancellor and his vision for Europe. Being a German he was critical of the role Germany has played in building Europe and in the recent crisis:

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The rich history of mistrust behind China and western financial advisers..

February 2, 2016

Tom Plate has a nice piece on the topic.

Beijing’s warnings are directed generically rather than individually – at the global class of fast-buck investment jackals that care for no one’s welfare but their own.

He says this mistrust took shape post South East Asian crisis:

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Are government regulators more virtuous than everyone else?

February 1, 2016

I just posted on how BCCI despite being an independent body became badly mismanaged to become this hotbed of corruption. One suggestion to fix BCCI which keeps doing rounds is to make it a government body. The govt appoint the Board, Top Management and so on and let its functioning be broadly independent. But looking at how  messed up other Indian government appointed sports bodies are, one knows this cannot be the solution really.  We have not really given a lot of thought to the organisation of institutions.

This article also relooks at this idea of whether government regulators in the economic space. It ctiticises the recent book of Shiller and Akerlof:

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How lack of self-regulation made BCCI a mismanaged organisation..

February 1, 2016

Sharda Ugra has another notable column on how Lodha report is trying to fix the BCCI led misgovernance of Indian cricket. I mean how many sports journalists can write for EPW and do a great job.

The Lodha Committee report has been cataclysmic for the Board of Control for Cricket in India because of the precedent it has set. The highest court in the country has wrenched the BCCI’s door off its hinges and from now on, it cannot be fixed in the way the board would want it to be. The report has the power to become the lodestone through which India’s substandard sports governance can be reined in. It is also a case study of how a lack of self-regulation can lead to an independent, autonomous sports organisation mismanaging itself to within the reach of the law.

Her comments which I have emphasised are really interesting from economics point of view as well. After all, much of the discussion post 2008 crisis has been around these issues of regulation, self-regulation, mismanagement etc. It also tells you how there is no easy answer while trying to design organisations.

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Colombia’s discount currency exchanges are funneling drug money

February 1, 2016

I really like the way these illegal/informal exchanges work. This one is on currency exchange in Colombia:

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Don’t call politicians/leaders Nazis, call them National Socialists instead..

January 29, 2016

B.K. Marcus has an interesting post on labelling certain politicians/leaders by the dreaded N word.

He says it is not needed. Just call them National Socialistst:

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The market doesn’t solve problems, people do

January 29, 2016

A superb piece by Louis Rouanet which sums up quite the core of philosophy of market economics.

One of the most important debate in economics is state vs markets. There is little doubt that most economists are on the side of markets. The oft quoted phrase in economics is let the markets work. But what is this market? How does it work?

Rouanet says well markets is the people:

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Why South African test team did not get its laurels?

January 28, 2016

What a piece by Jarrod Kimber of espncricinfo.com. In these days when all kinds of journalism is getting mediocre and flashy one wonders what keeps the espncricinfo.com writers going. I  mean one piece after the other. This one by Kimber is couple of notches above their usual good standards as well.

This one is on the South African test team. This is a team which despite a terrific test record between 2006-15 (till India and recent Englad series which they lost badly) does not get any the same laurels. Leave laurels, they are not even mention anywhere. The One Day choker ghost sticks to them despite they performing much better in the gold standards of cricket – test matches. Even better is their performance away from home.

So what is special about the period 2006-15? Well, the team did not lose a single test series away from home in the same period:

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SBI vs shareholders: Case of e-voting in shareholder meetings..

January 28, 2016

Capital market regulator SEBI has made it obligatory for listed companies to provide remote e-voting facility to its shareholders.

In this context, an interesting case has emerged between SBI and its shareholders. The bank which is trying its best to don an e-avatar, says the SBI Act 1955 does not allow for any such facility!:

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Greek Business confidence decline in 2015: Varoufakis effect or Troika effect?

January 28, 2016

Yanis Varoufakis, the former and regular blog writing finance minister of Greece defends himself in this piece.

In his end-of-2015 missive, Holger Schmieding of the Hamburg investment bank Berenberg warned his firm’s clients that what they should be worrying about now is political risk. To illustrate, he posted the diagram below, showing how business confidence collapsed in Greece during the late spring of 2015, and picked up again only after my resignation from the finance ministry. Schmieding chose to call this the “Varoufakis effect.”

There is no doubt that investors should be worried – very worried – about political risk nowadays, including the capacity of politicians and bureaucrats to do untold damage to an economy. But they must also be wary of analysts who are either incapable of, or uninterested in, distinguishing between causality and correlation, and between insolvency and illiquidity. In other words, they must be wary of analysts like Schmieding.

Business confidence in Greece did indeed plummet a few months after I became Finance Minister. And it did pick up a month after my resignation. The correlation is palpable. But is the causality?

It was actually the Troika effect:

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The marketing of the American President..

January 28, 2016

Nina L. Khrushcheva of The New School writes on one of the biggest marketing exercises in the world.

When it comes to political entertainment, it doesn’t get much better than presidential election season in the United States. Foreign observers follow the race to determine who is best equipped to lead the US – and, to some extent, the world – toward a more stable, secure, and prosperous future. But in America, entertainment is king, and Americans tend to focus on excitement above all – who looks better, has a catchier sound bite, seems most “authentic,” and so on, often to the point of absurdity.

This is not a new approach, of course. Edward Bernays, the father of modern public relations, examined it in 1928, in his book Propaganda. “Politics was the first big business in America,” he declared, and political campaigns are “all side shows, all honors, all bombast, glitter, and speeches.” The key to victory is the manipulation of public opinion, and that is achieved most effectively by appealing to the “mental clichés and emotional habits of the public.”

A president, in other words, is nothing more than a product to be marketed. And, as any marketer knows, the quality of the product is not necessarily what drives its success; if it were, Donald Trump would not be regarded as a serious candidate for the Republican Party nomination, much less a top contender. Instead, a president must serve as a kind of imaginary friend: a beer buddy for men, an earnest empathizer for women, or a charming Twitter user for the millennials.

Thankfully, it happens once in four years:

Tracking investment portfolio to figure which politician is corrupt..

January 28, 2016

Interesting piece of research. It says one could actually figure corrupt politicians by looking at their investment portfolio. Corrupt politicians usually have more riskier portfolio (have a higher share of equity). I had earlier pointed to another such research on Mumbai politicians as well.

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Does India need to no longer be an Ashokan republic, but a Chanakyan one?

January 27, 2016

We should really debate this question raised by Sanjeev Sanyal. It questions basic premise of idea of India since independence.

The author says we have adopted values of  Ashoka’s republic who actually saw disintegration of Maurya empire. Ideally, we should be following Chanakya’s ideals who shaped the Mauryan empire at the first place:

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How truly disruptive innovation can cause societal crises and pushback..

January 27, 2016

Ajit Balakrishnan writes on how we forget the broad reality when it comes to innovation. It is the impact on the so called incumbents who are suddenly found grasping for survival. And when the incumbents are a sizable lot, one should expect a pushback:

He picks this brutal case of medical innovation:

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Creation of Paris as a top world city..

January 27, 2016

A fascinating story of Paris transforming from being a squalor to the great city of today. Most top cities have a similar story which is quite remarkable. Just shows how certain humans shape all these great living places against all odds.

Paris owes its transformation to a George-Eugène Haussmann:

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India and liberalisation : There was a 1966 before a 1991

January 25, 2016

There is always this debate in Indian economy academia that when did India start to liberalise its economy. Most obvious answer is 1991. But some people say – it was  with 1985 VP Singh budget, 1980 India Gandhi started tweaking some ideas, 1977 emergency, 1966 Shastri was receptive to reforms but for his untimely death and so on. So for all you know, 1991 was just a fire which caught on but was ignited much earlier.

Ankit Mital makes a case for 1966 in this article. He is apparently writing a book on 1991 story. :

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To tax or not to tax Bollywood movies…

January 25, 2016

An interesting story in Indian Express on UP State Government taxing Bollywood movies.

The states govt impose their own tax rates on movis tickets making them exorbitant. You only get to know the difference once you buy a ticket for a tax free movie. The govts usually free a moveie from taxes if it has some social message and so on. The govt loses revenues from such movies but it helps boost the sale of tickets for that movie.

It has so happened that UP State Govt has exempted quite a few movies in recent past. This has led to loss in tax revenue.  Moreover, there is no consistent policy of tax exemption from movies:

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