There is a general impression that economics as a subject is very dry, colourless and devoid of humour. Indeed, quite a majority of the students have not developed much romance with the discipline for the way in which it is taught. Disproving this general impression, one of my collegaues Prof. Ram Gopal, a great and passionate teacher of economics, has just sent an e-mail bristling with economics full of fun and frolic and heightened sense of humour. Let me share his thoughts with the broader audience.
RIDDLES
Why was it impossible to shake hands with Adam Smith?
Because his hands were invisible.
Which city would Marx first visit when he traveled to a foreign country?
The “Capital” city, of course!
Why did Keynes avoid participating in marathon races?
Because according to him “in the long run we are all dead”!
Why would it be nice to have Ricardo as a tenant?
Because he will never forget about the rent.
Why does Dracula hate economics textbooks?
Because of the crosses, the Marshallian cross and the Keynesian cross.
How many members of the Chicago school of economics will it take to change a light bulb?
None. The free market will change it automatically if necessary.
OTHER FUNNIES
“The invisible hand works well, but it often works by strangulation”. (Joan Robinson, about the market mechanism)
“A Russian proverb says that ‘Fear has big eyes’, but I would add that it also has deaf ears”. (Jagdish Bhagwati, referring to the attitude of middle-class Americans about outsourcing to India)
Name the two great personalities who abused each other as “Ba…td” and “SOB” respectively when they were introduced to each other.
Answer: Adam Smith and Samuel Johnson (This is a true story; who says great thinkers are always polite?)
It was said about Schumpeter that he always gave A grade to three groups of students: a) All girl students, b) All the Chinese students and c) All the remaining students.
Haseeb A. Drabu, now the chairman of Jammu & Kashmir Bank said “Delhi is Keynesian while Bombay is Schumpeterian.” I would like to extend the thought experiment. Bangalore is Coasian. (Economist Niranjan Rajadhyaksha in his column Café Economics)
The only case of a ghost written Ph.D thesis turning out as an excellent work: the American economist Paul Sweezy needed some money when he was a Ph.D student and so he ghost wrote a thesis for a classmate. That work is regarded as a masterpiece on the Japanese economy and the guy who bought it got a very good job because of the thesis!
Thursday, November 15, 2007
Tuesday, November 6, 2007
Recent Radio Talk on UN Day
Celebration of United Nations Day this year has tremendous significance in the context of Mahatma Gandhi’s birthday being celebrated as International Non-Violence day on the initiative of the UN itself. Has the UN accomplished its historical objective of averting war and establishing peace among the Nations? The track record of UN in this regard is not that pleasant to look at because it is not UN which has called the shots but only the superpower US which has been shaping the political and economic destiny of the world economy by sheer military might and hegemonial power associated with it, in spite of the fact that it is a shrinking economic power. Furthermore, if at all there is any failure on the part of UN it can be simply attributed to the collective failure of many Nation- States which embody United Nation.
Let me begin my talk with a simple but lengthy sentence I remembered to have heard from a radio talk delivered by one of the greatest statesmen of the country Dr. C. N. Annadurai way back in the late sixties.
“There stands a massive building where flags of more than hundred nations fly side by side with equal honour proclaiming to the world that they belong to different countries but belong to one world. They have a separate existence but for a common objective, they have riches and strengths of various dimensions to be pooled together for the common task of freeing mankind, from fear and famine, pestilence and ignorance, violence and vandalism, and above all to give man his due, the dignity of labour.”
It would not be an exaggeration to say that this simple quote captures the essence of the initial euphoria with which the UN was established in 1945. Its stated objectives were to maintain international peace and security, to develop friendly relations among nations, to achieve international cooperation for engineering collective security, promote and encourage respect for human rights and ensure freedom for all. Thus, the visionary ambition of UN was to prevent powerful States invading and occupying weaker ones and more important to prevent the eruption of another war. Except for a few occasions when UN was successful in mitigating the dangers of power politics especially during the Cold War, UN became defunct because of extreme bipolarity of international politics prevailing then. During this Cold War era, US found itself in an advantageous position to play the role of a world banker, supplier of world money and also an arbiter, at least in theory, in promoting democracy and human rights through UN. With 40 percent of UN funding contributed by American tax payers, US hoped that its veto power in UN Security Council would help protect America’s national interest. But at no time US was keen to make any multilateral framework to succeed; be it political or economic field. This was the reason the UN could not evolve closer to at least a semblance of world government.
The UN is just 60 plus. It has emerged as a symbol of global identity. It is essentially a platform where Nation-States can listen to one another and settle disputes if any with less reliance on force. It is a mechanism for conflict resolution in international security affaires. Theoretically at least, along with international institutions like IMF, IBRD and more recently established WTO, the UN is a closest thing to world government but in essence it is not. Since sovereign nations are unwilling to surrender their political sovereignty UN has not become an all powerful governing body. It exists because others want it. Many nation states have created and lived with it to serve their own national interest.
UN’s structure is built around General Assembly where each nation-state has one member one vote principle. General Assembly largely works through recommendations and advice to member states and to Security Council but they are not binding on any one of them. General Assembly also coordinates a variety of Third World activities through one of its principle body of Economic and Social Council (ECOSOC). It is this Council which coordinates the work of various UN specialized agencies like UNDP, UNCTAD, FAO and so on. Parallel to General Assembly is UN’s Security Council which consists of five permanent members and other 10 non-permanent members. This is the primary action agency of UN and vested with primary responsibility for the maintenance of peace and security. Administration takes place via UN Secretariat and International Court of Justice also known as world court is the judicial arm of UN. As of now, there are more than 190 members of the UN. The major strength is universality of membership, but democratization of UN is constrained by big five in Security Council and their veto power.
The major constraint impinging on UN is resource crunch. Despite many nations joining UN, it appears very small and fragile institution, lacking funding facility. Especially the US has played truant and for many years it did not pay dues. Indeed, US is largest defaulter in paying its dues and contributions to the UN. There can be two reasons cited for such US sleight: first, is the US inherent dislike of multilaralism for it curtails its maneuverability in international politics and it is in this context that UN is treated as an institution which will obstruct maximization of its national interest via unilateralism. Second, shrinking economic strength does not provide necessary financial wherewithal for taking care of UN. While world spends $800 billion on military, a mere $2 billion are spent on UN budget.
During Cold War era, in the face of perennial US-Soviet conflict, UN had only a limited role to play. It did not play any central role in resolving conflicts. Although the American unilateralism did not have any high cost, the relative roles of US and UN have been always a certain source of tension. The end of Cold War coincided with disintegration of Soviet Union and demise of communism. It was during this period that Iraq under Saddam occupied Kuwait fully convinced that it would go scot-free but the US through a formidable alliance within the UN framework and effectively dismantled the Iraqi occupation. This US effort gave a ray of hope that at long last nation-states especially those who are in key position were ready to give UN a chance to play the role intended for it. But alas it was not destined to be.
September 11, 2001 attack on US twin towers gave a fresh lease of life to US to declare war on terrorism as the central objective of foreign policy and in close collusion with Britain it invaded Iraq and removed Saddam Hussien ruthlessly citing the reason which has now become fully discredited exposing fully the shallowness and crookedness of these superpowers. UN was completely sidelined and marginalized in this entire military exercise.
Under the circumstances, UN is neither able to manage the world problems nor restrain the US which continue indulge in rampant unilateralism in its foreign policy under the guise of facilitating effective promotion of democracy, human rights and counter terrorism and so on. The UN has become a passive spectator and sitting on the sidelines virtually helpless.
Writing in New York Times January 12 2002, “On what is Americas place in the world now”, Alexander Stille says,
‘Clearly the world has changed. Developments in technology have given small group of people the kind of destructive power once available to national governments. The principal mechanism the world has devised – foreign aid , non governmental institutions, the world bank , the United Nations – have not succeeded in dealing with the most troublesome and difficult cases’.
In a world which has become flat – meaning globalization has ensured a level playing field, there are still a number of political and economic zones which are simply far away from the so called level playing field. Therefore, there is an imperative on the part of international institutions and organizations including the UN to play really a substantiative role in attacking all social, economic and political problems plaguing the globe. But unfortunately they are only making a notional contribution and UN is no exception. The time has come for all the stakeholders to change for the better. The US must realize that it does not own the world but shares it with others as it was aptly observed by Prof. Naom Chomsky. Therefore it can not claim a special and differential status.
For the UN to play a central role, radical changes are needed in the institutional structure in the pattern of administration of the UN to represent the changing times.
Let me begin my talk with a simple but lengthy sentence I remembered to have heard from a radio talk delivered by one of the greatest statesmen of the country Dr. C. N. Annadurai way back in the late sixties.
“There stands a massive building where flags of more than hundred nations fly side by side with equal honour proclaiming to the world that they belong to different countries but belong to one world. They have a separate existence but for a common objective, they have riches and strengths of various dimensions to be pooled together for the common task of freeing mankind, from fear and famine, pestilence and ignorance, violence and vandalism, and above all to give man his due, the dignity of labour.”
It would not be an exaggeration to say that this simple quote captures the essence of the initial euphoria with which the UN was established in 1945. Its stated objectives were to maintain international peace and security, to develop friendly relations among nations, to achieve international cooperation for engineering collective security, promote and encourage respect for human rights and ensure freedom for all. Thus, the visionary ambition of UN was to prevent powerful States invading and occupying weaker ones and more important to prevent the eruption of another war. Except for a few occasions when UN was successful in mitigating the dangers of power politics especially during the Cold War, UN became defunct because of extreme bipolarity of international politics prevailing then. During this Cold War era, US found itself in an advantageous position to play the role of a world banker, supplier of world money and also an arbiter, at least in theory, in promoting democracy and human rights through UN. With 40 percent of UN funding contributed by American tax payers, US hoped that its veto power in UN Security Council would help protect America’s national interest. But at no time US was keen to make any multilateral framework to succeed; be it political or economic field. This was the reason the UN could not evolve closer to at least a semblance of world government.
The UN is just 60 plus. It has emerged as a symbol of global identity. It is essentially a platform where Nation-States can listen to one another and settle disputes if any with less reliance on force. It is a mechanism for conflict resolution in international security affaires. Theoretically at least, along with international institutions like IMF, IBRD and more recently established WTO, the UN is a closest thing to world government but in essence it is not. Since sovereign nations are unwilling to surrender their political sovereignty UN has not become an all powerful governing body. It exists because others want it. Many nation states have created and lived with it to serve their own national interest.
UN’s structure is built around General Assembly where each nation-state has one member one vote principle. General Assembly largely works through recommendations and advice to member states and to Security Council but they are not binding on any one of them. General Assembly also coordinates a variety of Third World activities through one of its principle body of Economic and Social Council (ECOSOC). It is this Council which coordinates the work of various UN specialized agencies like UNDP, UNCTAD, FAO and so on. Parallel to General Assembly is UN’s Security Council which consists of five permanent members and other 10 non-permanent members. This is the primary action agency of UN and vested with primary responsibility for the maintenance of peace and security. Administration takes place via UN Secretariat and International Court of Justice also known as world court is the judicial arm of UN. As of now, there are more than 190 members of the UN. The major strength is universality of membership, but democratization of UN is constrained by big five in Security Council and their veto power.
The major constraint impinging on UN is resource crunch. Despite many nations joining UN, it appears very small and fragile institution, lacking funding facility. Especially the US has played truant and for many years it did not pay dues. Indeed, US is largest defaulter in paying its dues and contributions to the UN. There can be two reasons cited for such US sleight: first, is the US inherent dislike of multilaralism for it curtails its maneuverability in international politics and it is in this context that UN is treated as an institution which will obstruct maximization of its national interest via unilateralism. Second, shrinking economic strength does not provide necessary financial wherewithal for taking care of UN. While world spends $800 billion on military, a mere $2 billion are spent on UN budget.
During Cold War era, in the face of perennial US-Soviet conflict, UN had only a limited role to play. It did not play any central role in resolving conflicts. Although the American unilateralism did not have any high cost, the relative roles of US and UN have been always a certain source of tension. The end of Cold War coincided with disintegration of Soviet Union and demise of communism. It was during this period that Iraq under Saddam occupied Kuwait fully convinced that it would go scot-free but the US through a formidable alliance within the UN framework and effectively dismantled the Iraqi occupation. This US effort gave a ray of hope that at long last nation-states especially those who are in key position were ready to give UN a chance to play the role intended for it. But alas it was not destined to be.
September 11, 2001 attack on US twin towers gave a fresh lease of life to US to declare war on terrorism as the central objective of foreign policy and in close collusion with Britain it invaded Iraq and removed Saddam Hussien ruthlessly citing the reason which has now become fully discredited exposing fully the shallowness and crookedness of these superpowers. UN was completely sidelined and marginalized in this entire military exercise.
Under the circumstances, UN is neither able to manage the world problems nor restrain the US which continue indulge in rampant unilateralism in its foreign policy under the guise of facilitating effective promotion of democracy, human rights and counter terrorism and so on. The UN has become a passive spectator and sitting on the sidelines virtually helpless.
Writing in New York Times January 12 2002, “On what is Americas place in the world now”, Alexander Stille says,
‘Clearly the world has changed. Developments in technology have given small group of people the kind of destructive power once available to national governments. The principal mechanism the world has devised – foreign aid , non governmental institutions, the world bank , the United Nations – have not succeeded in dealing with the most troublesome and difficult cases’.
In a world which has become flat – meaning globalization has ensured a level playing field, there are still a number of political and economic zones which are simply far away from the so called level playing field. Therefore, there is an imperative on the part of international institutions and organizations including the UN to play really a substantiative role in attacking all social, economic and political problems plaguing the globe. But unfortunately they are only making a notional contribution and UN is no exception. The time has come for all the stakeholders to change for the better. The US must realize that it does not own the world but shares it with others as it was aptly observed by Prof. Naom Chomsky. Therefore it can not claim a special and differential status.
For the UN to play a central role, radical changes are needed in the institutional structure in the pattern of administration of the UN to represent the changing times.
Thursday, September 27, 2007
Anatomy of T20 Victory: Respecting the Losers
M.S.Dhoni’s young team has received a heroic welcome in the financial capital Mumbai, after having won the T20 world cup by sheer accident and of course collective hard work of every member of the team. No doubt, they deserve these accolades but did they expect that they would win?
When the tournament began they did not begin as favourites. Indeed, only through a tie they could sail through and moved towards the semi-final. This pre-final clash with mighty but unprepared Australians, gave a much needed boost to Sreesanth to remove the two openers for just 12 runs in his allotted four overs. When combined with in-form Yuvraj’s 70 in 30 balls, the script was ready for India to enter the final outsmarting Australia. These two young guys were instrumental in turning the tide in India’s favour.
But the grand finale was full of twist and turns of a typical drama. If anyone wants an empirical proof to estimate the distance between victory and defeat, the clash with Pakistan would provide many vital lessons i.e. the line separating the victor and the vanquished is very-very thin and the smile of the lady luck eventually determines the outcome. There was always a fluctuating fortune for both Pakistan and India. Yuvraj backed by 6 sixes in an over earlier, was not on full song in the crucial final. Gambhir played the role of an anchor and Rohit Sharma, a gentleman who was asked to sit all along in England, made a quick fire 30 in the middle. Irfan Pathan scalped three wickets and R.P.Singh and Sreesanth did some useful work.
Despite all this, the game was slipping away from India when Harbhajan was massacred for 3 sixes in the 17th over. The distance between the number of balls and number of runs began to shrink and Pakistan was in the driver’s seat.
Yoginder Sharma, a quite and pleasing bowler was brought in by the thinking captain to bowl the final over. Sharma did wonders at the semi-final. But in the Wandrers, he found it difficult to hold on to his nerves. The wide and a six must have shattered him. Then came an affectionate goading from the captain to play a cool game. Just six runs needed in four balls. In economic terms, those crucial marginal runs can be effortlessly taken in as many balls but Misbah, in his feverish enthusiasm to finish quickly, resorted to the much used and abused shot- a scoop. This mistimed shot soaring in the sky, instead of crossing over the boundary line, landed in the safe hands of Sreesanth. That sealed the fate of the game and Indians found themselves on the victory lap, while Misbah- who was proving himself as a key factor to fetch the cup, was on his knees alone and unhappy over the unexpected development.
Did India really win? Yes because Pakistan had lost by default. This is a time to respect the losers in the game because even the winners would have found it very difficult to believe at that time that they had indeed won the match. But all said and done, victory is victory and the monetary benefits are flowing like thunder showers for the winning team and Dhoni’s team will provide fresh oxygen to this new format of T20 cricket tournament, no matter what an all powerful Miandad says against it. This shorter version of the game will be more oriented towards entertainment which is what the game is all about.
When the tournament began they did not begin as favourites. Indeed, only through a tie they could sail through and moved towards the semi-final. This pre-final clash with mighty but unprepared Australians, gave a much needed boost to Sreesanth to remove the two openers for just 12 runs in his allotted four overs. When combined with in-form Yuvraj’s 70 in 30 balls, the script was ready for India to enter the final outsmarting Australia. These two young guys were instrumental in turning the tide in India’s favour.
But the grand finale was full of twist and turns of a typical drama. If anyone wants an empirical proof to estimate the distance between victory and defeat, the clash with Pakistan would provide many vital lessons i.e. the line separating the victor and the vanquished is very-very thin and the smile of the lady luck eventually determines the outcome. There was always a fluctuating fortune for both Pakistan and India. Yuvraj backed by 6 sixes in an over earlier, was not on full song in the crucial final. Gambhir played the role of an anchor and Rohit Sharma, a gentleman who was asked to sit all along in England, made a quick fire 30 in the middle. Irfan Pathan scalped three wickets and R.P.Singh and Sreesanth did some useful work.
Despite all this, the game was slipping away from India when Harbhajan was massacred for 3 sixes in the 17th over. The distance between the number of balls and number of runs began to shrink and Pakistan was in the driver’s seat.
Yoginder Sharma, a quite and pleasing bowler was brought in by the thinking captain to bowl the final over. Sharma did wonders at the semi-final. But in the Wandrers, he found it difficult to hold on to his nerves. The wide and a six must have shattered him. Then came an affectionate goading from the captain to play a cool game. Just six runs needed in four balls. In economic terms, those crucial marginal runs can be effortlessly taken in as many balls but Misbah, in his feverish enthusiasm to finish quickly, resorted to the much used and abused shot- a scoop. This mistimed shot soaring in the sky, instead of crossing over the boundary line, landed in the safe hands of Sreesanth. That sealed the fate of the game and Indians found themselves on the victory lap, while Misbah- who was proving himself as a key factor to fetch the cup, was on his knees alone and unhappy over the unexpected development.
Did India really win? Yes because Pakistan had lost by default. This is a time to respect the losers in the game because even the winners would have found it very difficult to believe at that time that they had indeed won the match. But all said and done, victory is victory and the monetary benefits are flowing like thunder showers for the winning team and Dhoni’s team will provide fresh oxygen to this new format of T20 cricket tournament, no matter what an all powerful Miandad says against it. This shorter version of the game will be more oriented towards entertainment which is what the game is all about.
Wednesday, August 22, 2007
India at Sixty- III
India, a land of more than one billion people has successfully survived as democracy for more than six decades (the imposition of emergency during mid-70s by Mrs. Gandhi being an aberration). Especially when considered against the complex problems such as communal divide in select pockets, sharpening caste conflicts, wide social and economic disparities, growing regional chauvinism, and language barriers and so on, it is really a matter of pride that India has evolved as a functioning parliamentary democracy.
True, the democracy we have had may not be vibrant or dynamic and perhaps more shallow and dynastic in character and yet the country has not fallen into the trap of military dictatorship. The worrisome feature of our democracy is that it is not only bristling with dynastic and feudalistic tendencies with all crookedness and wickedness built into the system but it is also increasingly rooted on the personalities rather than issues and ideologies. Politics has become almost a family business yielding a lucrative rate of return, cutting across various political parties in the country. The law of family inheritance seems to hold in politics more.
If only there had been a facility or rather a critical ability for the majority of the population to win an education – a quality primary school or secondary education at an affordable cost or grossly subsidized by the state, a fighting chance subsequently to land a job thereafter by sheer merit given transparency in job selection, the existence and operation of a benevolent nexus between the beau racy and judiciary leading to a just legal system – an orderly procedure of the rule of law that does not bend backward to shield the erring politicians, bigwigs and criminals, India would have traveled miles ahead in its economic journey with tremendous social empowerment but alas, we were not destined to be.
True, the democracy we have had may not be vibrant or dynamic and perhaps more shallow and dynastic in character and yet the country has not fallen into the trap of military dictatorship. The worrisome feature of our democracy is that it is not only bristling with dynastic and feudalistic tendencies with all crookedness and wickedness built into the system but it is also increasingly rooted on the personalities rather than issues and ideologies. Politics has become almost a family business yielding a lucrative rate of return, cutting across various political parties in the country. The law of family inheritance seems to hold in politics more.
If only there had been a facility or rather a critical ability for the majority of the population to win an education – a quality primary school or secondary education at an affordable cost or grossly subsidized by the state, a fighting chance subsequently to land a job thereafter by sheer merit given transparency in job selection, the existence and operation of a benevolent nexus between the beau racy and judiciary leading to a just legal system – an orderly procedure of the rule of law that does not bend backward to shield the erring politicians, bigwigs and criminals, India would have traveled miles ahead in its economic journey with tremendous social empowerment but alas, we were not destined to be.
Monday, August 20, 2007
India At Sixty- II
With the Nehruvian command model of inward looking insular Indian economy faltering and collapsing to deliver the goods, India made a paradigm shift in the early 1990s in its economic policy. Confronted with a severe payment and fiscal crisis India embraced market ideology. For more than a decade we have been seduced sufficiently to believe that our heightened romantic filtration with market economics and continual embrace of globalization administered on us by international agencies like World Bank, IMF and WTO would serve as an express way for growth, help alleviate poverty and inequality and also strengthen the roots of our democracy and freedom. Imperialism and colonialism are no more in a raw form. They have worn a new cloth namely economic globalization. We have never conducted any serious debate on pros and cons of liberalization and a marketisation process going on in our country.
Globally Berlin wall has fallen; in our economy too the command model which was more like a Berlin wall has been dethroned. Trade barriers are slowly breaking down. Finance capital has become more mobile. They inject more oxygen into sensex. For a long time our stock market was on song. Only very recently close on the heels of sub-prime lending banking crisis in the US and world wide stock market crash, our market received a setback. Along with rise in sensex there is also an escalation in the rate of farmers’ suicide. Windows have opened for the IT professionals but the doors are shut for dalits and adivasis. The world has become flat for the educated middle class but it is still a night mare for those lacking access to education and health.
Our scholar prime minister has clearly evolved and adapted himself to the status of a matured politician. He is now in a catch 22 situation over the nuclear agreement with the US. To what extent the Left can succeed in keeping the US at a distance from our foreign policy making is a moot point. There are doubts about the very survival of the government. We don’t think that the vested interests will allow the government to fall.
The single most fundamentally flawed aspect of our shallow democracy is stinking corruption and growing amorality in Indian politics at a time when the Indian economy is undergoing sweeping economic reforms, it is also time for ruminating over reforming politics and humanizing the tribe called politicians. Taming and pruning the inflated ego and misplaced arrogance of those politicians having criminal nexus is not an easy job. With all the aggrandizement of power which has resulted in an infinite accumulation of wealth, they really enjoy a monopoly power and it is very difficult to dislodge them. Even while debating the nature and content of our economic reforms, there is more politics and economics in it. Unless the political entrepreneurs and the economic policy entrepreneurs seriously commit themselves to remove the pitfalls and contradictions in the governance of our country, economic reforms and globalization can not work.
Globally Berlin wall has fallen; in our economy too the command model which was more like a Berlin wall has been dethroned. Trade barriers are slowly breaking down. Finance capital has become more mobile. They inject more oxygen into sensex. For a long time our stock market was on song. Only very recently close on the heels of sub-prime lending banking crisis in the US and world wide stock market crash, our market received a setback. Along with rise in sensex there is also an escalation in the rate of farmers’ suicide. Windows have opened for the IT professionals but the doors are shut for dalits and adivasis. The world has become flat for the educated middle class but it is still a night mare for those lacking access to education and health.
Our scholar prime minister has clearly evolved and adapted himself to the status of a matured politician. He is now in a catch 22 situation over the nuclear agreement with the US. To what extent the Left can succeed in keeping the US at a distance from our foreign policy making is a moot point. There are doubts about the very survival of the government. We don’t think that the vested interests will allow the government to fall.
The single most fundamentally flawed aspect of our shallow democracy is stinking corruption and growing amorality in Indian politics at a time when the Indian economy is undergoing sweeping economic reforms, it is also time for ruminating over reforming politics and humanizing the tribe called politicians. Taming and pruning the inflated ego and misplaced arrogance of those politicians having criminal nexus is not an easy job. With all the aggrandizement of power which has resulted in an infinite accumulation of wealth, they really enjoy a monopoly power and it is very difficult to dislodge them. Even while debating the nature and content of our economic reforms, there is more politics and economics in it. Unless the political entrepreneurs and the economic policy entrepreneurs seriously commit themselves to remove the pitfalls and contradictions in the governance of our country, economic reforms and globalization can not work.
Tuesday, August 14, 2007
India at Sixty- I
A man gets old in sixty years but India at sixty is a nation of a young and vibrant people given its demographic profile. While celebrating the completion of 60 years of independence we can be proud that ours is still a functioning democracy no matter how shallow or dynastic it is. It is time to ruminate over the path that we have traversed and take stock of the situation.
Despite the fact that Gandhiji was instrumental in getting freedom, when it did arrive on August 15, 1947 he was busy extinguishing the communal fire that was raging in Bengal’s hinterlands (Naokali) than becoming a part of the jubilations. Thanks to the visionary ambition of Pandit Nehru and his unquestioned authority for 17 long years, a diversified industrial base could be built up keeping the secular and democratic framework intact. Regardless of the criticism which has been voiced against his command model and his love for socialist ideals which came to be branded as Nehruvian post office socialism or Congress brand of bureaucratic socialism later, the inward looking, protectionist, import substitution model, dominated and frustrated by the state, had its own rationale in building up our economic strength.
Mrs Gandhi’s elevation to power against the backdrop of revolt by a bandicoot of syndicate, made her embrace a socialist policies like bank nationalization and abolition of purses and privileges. With the creation of Bangladesh under her preponderant show of strength virtually made her the modern incarnation of Goddess Durga at least in the mind of the generation of 1970s. However, with the passage of time this Goddess turned dictatorial and imposed emergency when she thought she was losing the unquestioned hold of power. Indian illiterate people showed the power of democracy by unseating her when the election was conducted. In her second innings at the helm of affairs she was found wanting in not resolving the communal question and religious extremism. The Kashmir and Punjab problems acquired communal and religious content under her dispensation which was neatly taken to its logical conclusion by her successors. Her son Rajiv Gandhi pandered to Hindu religious extremism by unlocking the locks of Babri mosque and then in an attempt to pacify Muslim extremism reverted back the Supreme Court’s indictment in the Shah Bano case and finally, Narasimha Rao who did everything under the sun, not only to hold on to power by horse trading but also becoming a party in the demolition of Babri mosque.
The greatest tragedy of this era of Nehruvian dynasty was that no concerted efforts were made to introduce basic structural reforms like land reform and no serious attention was paid to provide basic education, health care, connecting roads, affordable drinking water and so on to the bulk of the population in both rural and urban areas. The list of problems plaguing India is long, never ending and if one single reason is to be given for the plight of common man it would be a grand betrayal by the politicians and bureaucrats. The image that most of us have about them is not that pleasant to look at. There is a deep seated feeling and apprehension that a majority of them are not just honest and hence steeped into a sea of corruption and the current form of political democracy is becoming a source of irritant in the dynamic functioning of market based economic order. Politics has become business; education and health have too not remained untouched by it. There is a gross indifference by the vocal elites and the educated towards the elections and the poor people (the silent majority) increasingly come forward to change the destiny but alas they are caught between the devil and the deep sea as there is no better alternative for them. Indeed the honest and the decent will abhor politics when muscle and money power predominate over everything else and politics becomes a family business. Unlike corporate sector no special skill is needed here except the blind loyalty by the committed party cadre subservient to caste ridden political parties. You stretch this loyalty a little, it turns into sycophancy. Those who have mastered the art of conducting exhibition in the game of flattery have reaped rich dividends in the field of politics.
You may ask where is the young blood, the student community which stirred the conscience of the society in the swirling sixties. They are too busy in the IT and BPO world trying to chase the chimera of green card and/or getting those benefits by remaining within the country, thanks to internet revolution, digitizing work and changing the very nature of work.
Despite the fact that Gandhiji was instrumental in getting freedom, when it did arrive on August 15, 1947 he was busy extinguishing the communal fire that was raging in Bengal’s hinterlands (Naokali) than becoming a part of the jubilations. Thanks to the visionary ambition of Pandit Nehru and his unquestioned authority for 17 long years, a diversified industrial base could be built up keeping the secular and democratic framework intact. Regardless of the criticism which has been voiced against his command model and his love for socialist ideals which came to be branded as Nehruvian post office socialism or Congress brand of bureaucratic socialism later, the inward looking, protectionist, import substitution model, dominated and frustrated by the state, had its own rationale in building up our economic strength.
Mrs Gandhi’s elevation to power against the backdrop of revolt by a bandicoot of syndicate, made her embrace a socialist policies like bank nationalization and abolition of purses and privileges. With the creation of Bangladesh under her preponderant show of strength virtually made her the modern incarnation of Goddess Durga at least in the mind of the generation of 1970s. However, with the passage of time this Goddess turned dictatorial and imposed emergency when she thought she was losing the unquestioned hold of power. Indian illiterate people showed the power of democracy by unseating her when the election was conducted. In her second innings at the helm of affairs she was found wanting in not resolving the communal question and religious extremism. The Kashmir and Punjab problems acquired communal and religious content under her dispensation which was neatly taken to its logical conclusion by her successors. Her son Rajiv Gandhi pandered to Hindu religious extremism by unlocking the locks of Babri mosque and then in an attempt to pacify Muslim extremism reverted back the Supreme Court’s indictment in the Shah Bano case and finally, Narasimha Rao who did everything under the sun, not only to hold on to power by horse trading but also becoming a party in the demolition of Babri mosque.
The greatest tragedy of this era of Nehruvian dynasty was that no concerted efforts were made to introduce basic structural reforms like land reform and no serious attention was paid to provide basic education, health care, connecting roads, affordable drinking water and so on to the bulk of the population in both rural and urban areas. The list of problems plaguing India is long, never ending and if one single reason is to be given for the plight of common man it would be a grand betrayal by the politicians and bureaucrats. The image that most of us have about them is not that pleasant to look at. There is a deep seated feeling and apprehension that a majority of them are not just honest and hence steeped into a sea of corruption and the current form of political democracy is becoming a source of irritant in the dynamic functioning of market based economic order. Politics has become business; education and health have too not remained untouched by it. There is a gross indifference by the vocal elites and the educated towards the elections and the poor people (the silent majority) increasingly come forward to change the destiny but alas they are caught between the devil and the deep sea as there is no better alternative for them. Indeed the honest and the decent will abhor politics when muscle and money power predominate over everything else and politics becomes a family business. Unlike corporate sector no special skill is needed here except the blind loyalty by the committed party cadre subservient to caste ridden political parties. You stretch this loyalty a little, it turns into sycophancy. Those who have mastered the art of conducting exhibition in the game of flattery have reaped rich dividends in the field of politics.
You may ask where is the young blood, the student community which stirred the conscience of the society in the swirling sixties. They are too busy in the IT and BPO world trying to chase the chimera of green card and/or getting those benefits by remaining within the country, thanks to internet revolution, digitizing work and changing the very nature of work.
Wednesday, August 8, 2007
Seven Year Battle Comes to an End:
My office manager who was suffering from cancer for seven long years breathed his last yesterday. He was not merely an office staff to me but something more than that. Right from my appointment in the university (1994), I had developed some physics and chemistry with him; perhaps I was seeing some replica of my childhood school friend in him. So my relationship with him became not hierarchical but just emotional and sentimental. This did not change even after I became the Head of the Department. Indeed at one stage in the early 2000s I told him that if he was not available in the department as office manager I would not even accept the headship. The wise and benevolent destiny delayed my professorship and in the process denied my headship too. He felt more than what I missed.
Right from the day when he was diagnosed as a cancer patient, another office staff who worked as manager at that time played a very supportive role and he was the one who was present at his death bed. Very rarely I have come across a person like him who was willing to run around to save his life. In the beginning my friend was slightly indifferent to his ailment and when the time came for treatment his one leg had to be amputated from the hip. With tremendous religious faith and will power he managed to walk with crutches and ride tricycle to come to office. He never allowed his physical ill health paralyze his work ethics. He had to undergo two operations in the lungs and he successfully negotiated all kinds of physical and financial discomfort with courage and fortitude. Affectionate wife and lovely daughters gave him the necessary oxygen to live, love and respect the fellow human beings. He was always soft spoken and kind and very meticulous in doing office work, sometimes carrying files home and on important occasions attending office on Saturdays.
Such a nice young man in his forties was just snatched away by the almighty for the reasons known to him only. It was only a month ago he complained of stomach pain. We all felt at that time that it should not have anything to do with his ‘problem’. But this time he was quick to go to Chennai Cancer Institute and check. Like a bolt from the blue the scan report revealed that the cancer had invaded his liver and pancreas and he was told that he must switch over to some alternative medicine as further surgical operation was not just possible.
Being a deeply religious person, he somehow felt that God would not abandon him and somehow he would come out of this acute pain but alas he was not destined to be. Given my pressure of work and my own health problems I could not frequent his house in the last one month as I used to in the past. There is only some consolation that I was at his side just four hours before his death. His face was fresh and serene despite his problems he spoke to me. That picture of his will remain as one who fought against the deadly disease with all the smiles on his face. I don’t know whether he was aware that his days were numbered. Given his acute pain and many other complications that had developed I feel that God was merciful enough to take him to his kingdom with tremendous love, care and concern giving relief to him and also to persons who were close to his heart and hence were not able to bear the pain that he was suffering from. The entire university including the new VC were sharing the agony of the bereaved family and also willing to shower the much needed financial benevolence for the family. As and when the university does adequate compensation which will definitely provide some economic wherewithal to my friend’s wife in the form of a job the uprooted family tree can get some sustenance to live and thrive.
Personally it was a great loss. Outside our family circle we get closer only with a select few and Mr Murugan was one such person. His whole life is an example for many of what one should do (about work) and what one should not do (ignoring health). While giving condolences, I just pleaded before the faculty and administration that all of us during our brief stay on the planet must conduct ourselves in such a way that we will be of some help to fellow human beings in whatever way we can. This is what I have learnt from Murugan. I also wish I had his faith in the almighty.
Right from the day when he was diagnosed as a cancer patient, another office staff who worked as manager at that time played a very supportive role and he was the one who was present at his death bed. Very rarely I have come across a person like him who was willing to run around to save his life. In the beginning my friend was slightly indifferent to his ailment and when the time came for treatment his one leg had to be amputated from the hip. With tremendous religious faith and will power he managed to walk with crutches and ride tricycle to come to office. He never allowed his physical ill health paralyze his work ethics. He had to undergo two operations in the lungs and he successfully negotiated all kinds of physical and financial discomfort with courage and fortitude. Affectionate wife and lovely daughters gave him the necessary oxygen to live, love and respect the fellow human beings. He was always soft spoken and kind and very meticulous in doing office work, sometimes carrying files home and on important occasions attending office on Saturdays.
Such a nice young man in his forties was just snatched away by the almighty for the reasons known to him only. It was only a month ago he complained of stomach pain. We all felt at that time that it should not have anything to do with his ‘problem’. But this time he was quick to go to Chennai Cancer Institute and check. Like a bolt from the blue the scan report revealed that the cancer had invaded his liver and pancreas and he was told that he must switch over to some alternative medicine as further surgical operation was not just possible.
Being a deeply religious person, he somehow felt that God would not abandon him and somehow he would come out of this acute pain but alas he was not destined to be. Given my pressure of work and my own health problems I could not frequent his house in the last one month as I used to in the past. There is only some consolation that I was at his side just four hours before his death. His face was fresh and serene despite his problems he spoke to me. That picture of his will remain as one who fought against the deadly disease with all the smiles on his face. I don’t know whether he was aware that his days were numbered. Given his acute pain and many other complications that had developed I feel that God was merciful enough to take him to his kingdom with tremendous love, care and concern giving relief to him and also to persons who were close to his heart and hence were not able to bear the pain that he was suffering from. The entire university including the new VC were sharing the agony of the bereaved family and also willing to shower the much needed financial benevolence for the family. As and when the university does adequate compensation which will definitely provide some economic wherewithal to my friend’s wife in the form of a job the uprooted family tree can get some sustenance to live and thrive.
Personally it was a great loss. Outside our family circle we get closer only with a select few and Mr Murugan was one such person. His whole life is an example for many of what one should do (about work) and what one should not do (ignoring health). While giving condolences, I just pleaded before the faculty and administration that all of us during our brief stay on the planet must conduct ourselves in such a way that we will be of some help to fellow human beings in whatever way we can. This is what I have learnt from Murugan. I also wish I had his faith in the almighty.
Sunday, August 5, 2007
Have Your Come Across 100 Mile Diet?
Thomas L Friedman is a famous columnist in New York Times and best known for his books on globalization, ‘The Lexus and the Olive Tree’ and the more recent ‘World is Flat’. In the latter, he has identified three phases in the evolution of globalization. The first one dates from 1492, the year when Columbus set sail to discover India until around 1800 and the dynamic force behind integration centered on physical power like muscle and steam. The second phase begins from 1800 to 2000 during which the focus shifted from countries to companies and the fall in transport cost and later telecommunication costs leading to diffusion of PC and internet was the prime dynamic force behind global integration. This made shrinking world to go from medium to small. The third phase which begins from 2000 is more momentous one. The internet revolution has not only made the world tiny but also flat meaning there is a level playing field for everyone- be it an individual, a company or a country. This enables an individual to compete and collaborate globally through internet and e-commerce.
Mr. Thomas L Friedman may have been right in articulating from the standpoint of business process out sourcing (BPO) economy. But there is also a powerful resistance to globalization. Indeed the drive for localization will also equally thrive so long as the bulk of the population gets marginalized and devastated by those segments profiting by globalization. I remember a Malayalam movie seen long ago wherein a boy would go to a water tank lorry and take water in an empty Coca Cola tin and proudly say, “This is pure water. It won’t spoil your health”.
As if to challenge the sophisticated nuances of globalization articulated by Thomas L Friedman, I saw a news item yesterday stemming from Seattle, the place synonymous with IT revolution as also anti-globalization demonstrations. It is all about the commitment of some 80 local residents of Seattle to eat only what is grown 100 miles from home. This Seattle project is in a way a repeat of an experiment by ‘Vancouver, B.C., couple who for a year eat food from no farther than 100 miles away’.
Those of us who are away from our home for work would realize how valuable the good food is even while we work in air conditioned cities like Bangalore. Seattle project reminds all of us that the local farmer and local business will get immense benefits if the residents resist buying goods which shipped cross countries or internationally. No one can challenge that the food coming from radius of 100 miles would be fresher, healthier and better tasting.
Mr. Thomas L Friedman may have been right in articulating from the standpoint of business process out sourcing (BPO) economy. But there is also a powerful resistance to globalization. Indeed the drive for localization will also equally thrive so long as the bulk of the population gets marginalized and devastated by those segments profiting by globalization. I remember a Malayalam movie seen long ago wherein a boy would go to a water tank lorry and take water in an empty Coca Cola tin and proudly say, “This is pure water. It won’t spoil your health”.
As if to challenge the sophisticated nuances of globalization articulated by Thomas L Friedman, I saw a news item yesterday stemming from Seattle, the place synonymous with IT revolution as also anti-globalization demonstrations. It is all about the commitment of some 80 local residents of Seattle to eat only what is grown 100 miles from home. This Seattle project is in a way a repeat of an experiment by ‘Vancouver, B.C., couple who for a year eat food from no farther than 100 miles away’.
Those of us who are away from our home for work would realize how valuable the good food is even while we work in air conditioned cities like Bangalore. Seattle project reminds all of us that the local farmer and local business will get immense benefits if the residents resist buying goods which shipped cross countries or internationally. No one can challenge that the food coming from radius of 100 miles would be fresher, healthier and better tasting.
Friday, August 3, 2007
July 1997 Currency Crisis Revisited
A few days ago Indian sock market got the beating following the global market crash. The greatness of the financial market is that it is always very difficult to anticipate its strange behaviour. Ten years ago I was lucky to predict the inevitable fall of Thailand’s baht by accidentally stumbling upon the London Economist’s cover story ‘Fall of Thailand’. As a keen student of international finance I had already internalized the fundamental factors leading to Mexican peso collapse in 1994-95. I could foresee the repeat of that currency episode in Thailand. I wrote a piece for The Hindu Business Line in mid-June 1997 and a week after Thailand was amidst its worst currency crisis.
Ten years after the crisis I would like to revisit now. An interesting paradox of Thailand’s crisis was that it was only a few months before the crisis both IMF and Asian Development Bank had given a good report card about its economic performance. Like other Asian miracle nations, Thailand too had a remarkable macro economic stability for a longish period. Inflation was moderate within manageable limits; government did not run into any budget deficit; indeed there was a fiscal austerity and the budget was in surplus. Until mid 1990s, Thailand’s export growth was robust. It was only threatened after Chinese currency’s devaluation in 1994. The debt service ratio was around just 10 percent. Huge capital inflows in pursuit of high interest rate at home and booming stock market conditions kept the exchange rate stable. All these made the banks and firms which had borrowed dollars not to hedge their exposure. Everyone was under an illusion that the fixed exchange rate would rule forever and not pose any problem at the time of repayment.
Then why did the currency was molested by the speculators? The prime villain of the piece was rise in current account deficit which stood at 8 percent of the GDP- a magic number which figured in the preceding Mexican currency crisis also. Another worrisome factor was huge rise in short term component of external debt which far exceeded the exchange reserves and more important for 12 long years exchange rate had been almost fixed with the dollar which really warranted a revision (devaluation) given a high real exchange rate appreciation that had taken place through inflation which itself was the consequence of cumulative capital flows resulting in expansion in money supply, notwithstanding some measure of sterilization under taken by the central bank of Thailand.
The currency was now ripe and ready for the speculators’ attack. Central bank by active intervention in both spot and forward markets tried in vain to protect the currency. Even the interest rate defence could not rescue it. On July 2, 1997 Thai’s baht had to fall. At that time no one would have imagined that this was only a beginning in a series of currency crises which were going to envelop not only the Asian region but also even distant lands such as Russia, Brazil, Argentina and even the US. If one single reason is to be given for the crisis, it can be rightly stated that a premature embrace of financial market liberalization and capital account convertibility without making any serious attempt to put banking and financial system in order.
Ten years after the crisis I would like to revisit now. An interesting paradox of Thailand’s crisis was that it was only a few months before the crisis both IMF and Asian Development Bank had given a good report card about its economic performance. Like other Asian miracle nations, Thailand too had a remarkable macro economic stability for a longish period. Inflation was moderate within manageable limits; government did not run into any budget deficit; indeed there was a fiscal austerity and the budget was in surplus. Until mid 1990s, Thailand’s export growth was robust. It was only threatened after Chinese currency’s devaluation in 1994. The debt service ratio was around just 10 percent. Huge capital inflows in pursuit of high interest rate at home and booming stock market conditions kept the exchange rate stable. All these made the banks and firms which had borrowed dollars not to hedge their exposure. Everyone was under an illusion that the fixed exchange rate would rule forever and not pose any problem at the time of repayment.
Then why did the currency was molested by the speculators? The prime villain of the piece was rise in current account deficit which stood at 8 percent of the GDP- a magic number which figured in the preceding Mexican currency crisis also. Another worrisome factor was huge rise in short term component of external debt which far exceeded the exchange reserves and more important for 12 long years exchange rate had been almost fixed with the dollar which really warranted a revision (devaluation) given a high real exchange rate appreciation that had taken place through inflation which itself was the consequence of cumulative capital flows resulting in expansion in money supply, notwithstanding some measure of sterilization under taken by the central bank of Thailand.
The currency was now ripe and ready for the speculators’ attack. Central bank by active intervention in both spot and forward markets tried in vain to protect the currency. Even the interest rate defence could not rescue it. On July 2, 1997 Thai’s baht had to fall. At that time no one would have imagined that this was only a beginning in a series of currency crises which were going to envelop not only the Asian region but also even distant lands such as Russia, Brazil, Argentina and even the US. If one single reason is to be given for the crisis, it can be rightly stated that a premature embrace of financial market liberalization and capital account convertibility without making any serious attempt to put banking and financial system in order.
Wednesday, August 1, 2007
Poem by R A Mundell
In the course of preparing for the class, I stumbled upon a poem by R A Mundell in his book ‘Man and Economics’ published in the mid-sixties. We are now living in a time when almost the prices of all goods are driven by the market to touch dizzy heights; RBI is so obsessed with inflation in its recent monetary policy announcement yesterday. Although inflation is manageable still our central bank wants to dampen inflationary expectation and in line with global monetary tightening, it is also sucking excess liquidity from the economy by hiking CRR to 7 percent. Shall we go to Mundell’s articulation which goes to disprove the conventional notion that economics is a dry subject and economists are the driest of the lot.
Free goods, scarce goods
Goods made for market
Public goods, private goods
Goods made in Chile
There are necessaries, luxuries
Snob goods of Veblen
There are war goods and peace goods
Goods sent to Vietnam
There are present goods, future goods
Consumer goods and capital
Wholesale goods and wholesome goods
Goods not for children
There are stolen goods, hot goods
Used goods and services
Intermediate goods and final goods
Goods made for retail
Dry goods, Hong Kong goods
Import goods with the taxes
Traded goods, home goods
Goods made with axes
Substitutes, complements
Bread, Butter and cheese
Superior goods, inferior goods
Goods made for deep freeze
Outputs, inputs
Goods and factors
Inventions and patents
Plays by actors
Goodness!
Free goods, scarce goods
Goods made for market
Public goods, private goods
Goods made in Chile
There are necessaries, luxuries
Snob goods of Veblen
There are war goods and peace goods
Goods sent to Vietnam
There are present goods, future goods
Consumer goods and capital
Wholesale goods and wholesome goods
Goods not for children
There are stolen goods, hot goods
Used goods and services
Intermediate goods and final goods
Goods made for retail
Dry goods, Hong Kong goods
Import goods with the taxes
Traded goods, home goods
Goods made with axes
Substitutes, complements
Bread, Butter and cheese
Superior goods, inferior goods
Goods made for deep freeze
Outputs, inputs
Goods and factors
Inventions and patents
Plays by actors
Goodness!
Sunday, July 29, 2007
Who Am I - I
Many issues such as 'Ten Years After the Currency Crisis', 'Chinese Yuan's continuing filtration with a variant of fixed exchange rate' cry for attention. But for now I would like to take a digression towards some autobiographical components. In less than a week, I would be completing 37 years of teaching Economics in the Union territory of Puducherry (formerly known as Pondicherry).
"Blessed is he who has found his work/let him ask no other happiness", a poet wrote once. I have been blessed and previliged enough to have been associated with Economics for a long period, in the capacity of a student and a teacher for more than four decades.
Born in a village to hard working parents 17 years after their marriage, I had enjoyed all the warmth and affection of the family. Primary and Secondary education at the government school in my village under the able guidance of one head master by name Venkata Subramaniam cemented my foundation, though the medium of instruction was Tamil, my mother tongue. Thanks to the head master teaching English in English, transition to college education in English medium did not pose any problem. But my problem areas were mathematics and science. Somehow by divine grace I could scrap through those difficult terrains and I feverishly embraced Economics at an undergraduate level. Those were the days when Mathematics component in Economics was minimal in this part of the region. Among the teachers who taught us in Tagore Arts College I must single out Prof. V Sasankan and Prof Palani G Periaswamy (who later went to University of Pittsburg for his PhD and even later became a CEO of Dharni Sugar and Cement companies in India), for exerting a beneficial influence in shaping my foundation in Economics.
State first and rank in Tagore Arts College was a god sent opportunity to get a berth in Presidency college, Madras. The competion among the students was keener. As compared to the best and the brightest from each district of Tamilnadu, who got addmission in my class I was an ordinary student straight from the village environment, struggling to negotiate the nuances of essentially an urban life. Nevertheless, god has kept me in a good stead and virtually placed me in the company of few of my professors who anchored my studies, thus assisting my evolution as a person. Professors S P Viswanathan, S P Palanisamy, Dr Kulandai and Dr Panneerselvam ought to be singled out for their contribution towards my academic enrichment.
There was a pleasant accident in the form of one of my student collegues getting married and becoming pregnant in the final year on the eve of examination; that proved to be a turning point in my life. Can you guess? A girl who was my immediate competitor in the class could not write examination and the fortune favoured me with a gold medal and first class in the Presidency college (1970). Besides delving deep into the issues of Economics I would be writing such autobiographical sketches now and then.
"Blessed is he who has found his work/let him ask no other happiness", a poet wrote once. I have been blessed and previliged enough to have been associated with Economics for a long period, in the capacity of a student and a teacher for more than four decades.
Born in a village to hard working parents 17 years after their marriage, I had enjoyed all the warmth and affection of the family. Primary and Secondary education at the government school in my village under the able guidance of one head master by name Venkata Subramaniam cemented my foundation, though the medium of instruction was Tamil, my mother tongue. Thanks to the head master teaching English in English, transition to college education in English medium did not pose any problem. But my problem areas were mathematics and science. Somehow by divine grace I could scrap through those difficult terrains and I feverishly embraced Economics at an undergraduate level. Those were the days when Mathematics component in Economics was minimal in this part of the region. Among the teachers who taught us in Tagore Arts College I must single out Prof. V Sasankan and Prof Palani G Periaswamy (who later went to University of Pittsburg for his PhD and even later became a CEO of Dharni Sugar and Cement companies in India), for exerting a beneficial influence in shaping my foundation in Economics.
State first and rank in Tagore Arts College was a god sent opportunity to get a berth in Presidency college, Madras. The competion among the students was keener. As compared to the best and the brightest from each district of Tamilnadu, who got addmission in my class I was an ordinary student straight from the village environment, struggling to negotiate the nuances of essentially an urban life. Nevertheless, god has kept me in a good stead and virtually placed me in the company of few of my professors who anchored my studies, thus assisting my evolution as a person. Professors S P Viswanathan, S P Palanisamy, Dr Kulandai and Dr Panneerselvam ought to be singled out for their contribution towards my academic enrichment.
There was a pleasant accident in the form of one of my student collegues getting married and becoming pregnant in the final year on the eve of examination; that proved to be a turning point in my life. Can you guess? A girl who was my immediate competitor in the class could not write examination and the fortune favoured me with a gold medal and first class in the Presidency college (1970). Besides delving deep into the issues of Economics I would be writing such autobiographical sketches now and then.
Wednesday, July 11, 2007
What Kind of Country We Want To Be?
At a time when India is on a high growth trajectory, forex reserve swelling, stock market continuing to be on a bullish trend and official inflation rate contained to the tolerable level, the fundamental question to be asked and answered about our economy is simply this: are we on a comfortable track?
Normal south-west monsoon has flooded Mumbai, exposing the vulnerability of financial capital. Invariably during each monsoon time many select pockets of the country get battered, bruised and submerged by copious rains. The authorities can not remain content and complacent by simply winking and saying with the tone of sadness that they are helpless against the fury of nature.
Building up of a right kind of infrastructure not just in financial capital or metropolitan cities but all over the country with proper provisioning for clear drainage system, an institutional mechanism for harnessing water resources, improving the quality of water table, rediscovering the forgotten and almost abandoned lakes and pounds, providing health care and minimum primary education to the majority of the population and so on are the first step that the globalizing India must initiate so that the greatest possible number of individuals will benefit and share the bliss of growth process.
It is a matter of irony and definitely not a matter of satisfaction that under market led economic order, state has been withdrawing from the crucial activities where its presence is abundantly needed. The state must generate basic welfare and education to all its citizens as a matter of right, help develop their critical abilities to take charge of their lives and thus give them a stake in country’s development. Mere high growth rate alone will not make us leaders. The ongoing stock market socialism alone can not bring happiness to the bulk of the population. Global integration will have more analytical meaning only when close attention is shown to the quality of life available to all our citizens especially the poor who silently suffer without much resistance and slowly decay without much fight and then exit gracefully from the face of the earth. Should not the country as a leader provide the basic launch pad for their growth?
Normal south-west monsoon has flooded Mumbai, exposing the vulnerability of financial capital. Invariably during each monsoon time many select pockets of the country get battered, bruised and submerged by copious rains. The authorities can not remain content and complacent by simply winking and saying with the tone of sadness that they are helpless against the fury of nature.
Building up of a right kind of infrastructure not just in financial capital or metropolitan cities but all over the country with proper provisioning for clear drainage system, an institutional mechanism for harnessing water resources, improving the quality of water table, rediscovering the forgotten and almost abandoned lakes and pounds, providing health care and minimum primary education to the majority of the population and so on are the first step that the globalizing India must initiate so that the greatest possible number of individuals will benefit and share the bliss of growth process.
It is a matter of irony and definitely not a matter of satisfaction that under market led economic order, state has been withdrawing from the crucial activities where its presence is abundantly needed. The state must generate basic welfare and education to all its citizens as a matter of right, help develop their critical abilities to take charge of their lives and thus give them a stake in country’s development. Mere high growth rate alone will not make us leaders. The ongoing stock market socialism alone can not bring happiness to the bulk of the population. Global integration will have more analytical meaning only when close attention is shown to the quality of life available to all our citizens especially the poor who silently suffer without much resistance and slowly decay without much fight and then exit gracefully from the face of the earth. Should not the country as a leader provide the basic launch pad for their growth?
Tuesday, July 10, 2007
India's road to leadership
Given its size- both physical features and demographic profile, civilization heritage, composite culture, long historical continuity, successful secular democratic institutions, original signatory to GAAT agreement and abundant skilled personnel and a substantial workforce, India must have emerged as a great leader long ago and shaped the world affairs.
In the early stages of freedom and partition, we were much mesmerized by Soviet brand of command model. The result: Nehruvian vision of keeping distance from western influence via non-alignment and also the embrace of import substitution led industrialization model aimed at self sufficiency in all fields of economic activities. It is quite unfortunate that Indian planning experiment was more dominated and frustrated by an all encompassing state to the neglect of individual initiatives and enterprise. Despite the diversified industrial base which India built up under the planning era, Nehruvian post office socialism and to be precise the congress brand of bureaucratic socialism as late Prof. S. Ambirajan of IIT Madras aptly put it, did not help alleviate the sufferings of the poor. This command model did not have the crucial provision for land reform and other structural changes needed to lift the poor from the rut of poverty.
The alternative hindutva view of BJP was a matter of no consequence in so far as improving the conditions of the poor although it made a huge noise of difference from the monopoly congress and there was not much ideological difference in the matter of economic reforms as they appeared to be two sides of the same coin.
After opening up of the economy, liberating the markets and deregulating the economy, there is now a new vision of global finance and also growing nexus with US, with an assumption and heightened expectation that they will make our country a super power eventually. Will high growth and subtle strategic relations with US make a turn around in our economic and political fortunes and make us leaders?
In the early stages of freedom and partition, we were much mesmerized by Soviet brand of command model. The result: Nehruvian vision of keeping distance from western influence via non-alignment and also the embrace of import substitution led industrialization model aimed at self sufficiency in all fields of economic activities. It is quite unfortunate that Indian planning experiment was more dominated and frustrated by an all encompassing state to the neglect of individual initiatives and enterprise. Despite the diversified industrial base which India built up under the planning era, Nehruvian post office socialism and to be precise the congress brand of bureaucratic socialism as late Prof. S. Ambirajan of IIT Madras aptly put it, did not help alleviate the sufferings of the poor. This command model did not have the crucial provision for land reform and other structural changes needed to lift the poor from the rut of poverty.
The alternative hindutva view of BJP was a matter of no consequence in so far as improving the conditions of the poor although it made a huge noise of difference from the monopoly congress and there was not much ideological difference in the matter of economic reforms as they appeared to be two sides of the same coin.
After opening up of the economy, liberating the markets and deregulating the economy, there is now a new vision of global finance and also growing nexus with US, with an assumption and heightened expectation that they will make our country a super power eventually. Will high growth and subtle strategic relations with US make a turn around in our economic and political fortunes and make us leaders?
India Is Catching Up
Traditionally, the US, Western Europe and Japan also called the famous triad, have provided the economic leadership to the international economy. Japan showed all promises of greater economic growth in the 80s but only to falter in the late 80s buffeted by speculative bubbles and eventually slipped into a tailspin of recession through out 90s. despite experiencing Viagra economic growth in the 90s- one of the longest economic expansions in the US, that imperialist power is now getting weighed down by huge current account deficits, and the consequent loss of confidence in dollar.
With the launch of Euro, Europe is now more unified monetarily but sluggish economic growth and huge unemployment continue to plague them. Before the onset of 1997 financial crisis the Asian miracle economies were poised to become the natural leaders of 21st century. But these tiger economies got into serious economic trouble and banking crises and they are now back on their feet.
However, the emerging great players/leaders in the economics game are China and India. More particularly China has been enjoying an unprecedented growth rate, suffused with significant current account surplus. The significant point to note is that for more than a decade it has been cooperating with a rigidly fixed exchange rate with dollar, deriving thereby a mercantilist advantage of an undervalued exchange rate to boost its exports. Not only its wage rate is very low but even the interest rate the cousin of exchange rate has been also kept at a reasonably moderate level to assist the process of growth. Small wonder then, China is sitting on a mountain of $ 1 trillion exchange reserves and more recently it has shelled out a few million dollars for private equity investment in order to get better returns.
Will India compete and also cooperate with China strategically to become a leader in the economics game? There are reasons to believe that India is catching up. It may not be emerging as a raging tiger but as a slow moving sure footed elephant, it has been evolving as one of the high growth profile economies with sound financial system and a good institutional structure. Despite a cumulative failure on agricultural front, thanks to service sector growth, the overall growth statistics is very impressive.
With the launch of Euro, Europe is now more unified monetarily but sluggish economic growth and huge unemployment continue to plague them. Before the onset of 1997 financial crisis the Asian miracle economies were poised to become the natural leaders of 21st century. But these tiger economies got into serious economic trouble and banking crises and they are now back on their feet.
However, the emerging great players/leaders in the economics game are China and India. More particularly China has been enjoying an unprecedented growth rate, suffused with significant current account surplus. The significant point to note is that for more than a decade it has been cooperating with a rigidly fixed exchange rate with dollar, deriving thereby a mercantilist advantage of an undervalued exchange rate to boost its exports. Not only its wage rate is very low but even the interest rate the cousin of exchange rate has been also kept at a reasonably moderate level to assist the process of growth. Small wonder then, China is sitting on a mountain of $ 1 trillion exchange reserves and more recently it has shelled out a few million dollars for private equity investment in order to get better returns.
Will India compete and also cooperate with China strategically to become a leader in the economics game? There are reasons to believe that India is catching up. It may not be emerging as a raging tiger but as a slow moving sure footed elephant, it has been evolving as one of the high growth profile economies with sound financial system and a good institutional structure. Despite a cumulative failure on agricultural front, thanks to service sector growth, the overall growth statistics is very impressive.
Subscribe to:
Posts (Atom)
