Month: May 2007

The Indian Education System – Part 8

Scarcity

Consider this list: cars, scooters, telephone service, airline ticket, seats in schools and colleges, electricity, and railway tickets. Think of the year 1980. Notice the common feature of the list: shortages. Now consider the list in the year 2007. Notice some things on the list are no longer scarce. It cannot be mere coincidence that only those items which the government has released it stranglehold on are no longer scarce. Could it be possible that if the government lets go of its vise-like grip of schools and colleges, that shortage of educational services will also be a thing of the past?
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Blinder on Offshoring

Alan Blinder claims that “Free Trade’s Great, but Offshoring Rattles Me” in a Washintonpost.com article. He has dug up an old 2004 US election issue. He begins with

I’m a free trader down to my toes. Always have been. Yet lately, I’m being treated as a heretic by many of my fellow economists. Why? Because I have stuck my neck out and predicted that the offshoring of service jobs from rich countries such as the United States to poor countries such as India may pose major problems for tens of millions of American workers over the coming decades. In fact, I think offshoring may be the biggest political issue in economics for a generation.

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Hitchens, the American

So what do you know — Christopher Hitchens has become a naturalized American citizen. That’s simply great. I can prove syllogistically that Hitchens doesn’t think he is god. Here’s how:

1. Hitchens thinks he is great. (I agree.)
2. God is not great. (According to Hitchens as the title of his latest book is God is not Great: How Religion Poisons Everything.”)
3. Therefore, Hitchens doesn’t think he is god. Q.E.D.

(Proving Hitchens is allah is left as an exercise for the interested reader. )

Here’s Hitchens speaking with Lou Dobbs on CNN.

The Indian Education System — Part 7

Markets Work

Imagine for a bit what it would be like if education were provided by private sector firms. Can it be done? Would a socially optimal amount, variety, and quality of education be provided? Would there be market failures? If so, how can those market failures be corrected? Can one devise mechanisms to correct those failures?

The answer to whether the private sector can provide education is clearly ‘yes’ because around the world for a very long time private firms have provided education very successfully. Both private sector for-profit and not-for-profit business models exist. Education, at some level of description, is a service like any of a very large variety of goods and services provided very efficiently by the market. The generalization that markets work holds quite meaningfully in the specific case of education broadly.
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Stupidity Revisited

It’s been a while since this blog has visited Bush, the POTUS. Here’s Bill Maher psychologically analysing Bush at Crooksandliers.com. It is hard to comprehend the mentality of a population which voted for a stupid person like Bush not once but twice. Words defy me. Oh that reminds me, here’s a google video titled Words Defy Me by the incomparable Jon Stewart.

And talking of stupid people and their stupidity, read the Story of Stupidity at whereelse but stupidity.com. To get a quick feel for the book, I would recommend you read the last chapter, the Age of Arrogance. For the record, I quote the epilogue of the book here.
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Information Overload

One of my favorite obsessions is information. Naturally so considering that I am an economist, and markets and information are inseparable. Information is the lubricant that keeps the huge big machinery of the market humming. Which is of course why information and communications technology (ICT) is so critical today as the modern world is a huge marketplace where stuff gets exchanged. Globalization (which I define as the integration of markets on a global scale) and the explosion of ICT are conjoined twins.
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The Indian Education System – 6

Incentive Matters

Alistair Cooke in his weekly radio broadcast on BBC Radio 4, A Letter from America, once explained the theory of public choice to his listeners as “the homely but important truth that the politicians are after all just the same as the rest of us.” It is an accessible, though incomplete, definition of what public choice is about. You could read James Buchanan, who in 1986 won the “The Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel” (popularly known as the Nobel Prize in Economics) “for his development of the contractual and constitutional bases for the theory of economic and political decision-making.” But Cook’s version is adequate for our needs to explain why the Indian educational system is a disaster.
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The Indian Education System — Part 5

One underhanded way to scare a neoclassical economist out of his wits is to creep up on him and shout “monopoly power.” Economists regard monopolies with the same mixture of dread, contempt and fascination as biologists regard cancer. They recognize the awesome virulent power of monopolies to wreak havoc on their world of mutually beneficial voluntary exchanges. Monopolies, whether public or private, lead to social welfare losses. At the other extreme, perfect competition leads to maximization of social welfare, subject to some reasonable conditions often approximated in the real world.
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India Cannot Afford Villages

“Can India Afford its Villages?” is the title of an opinion piece in today’s livemint.com (a joint HT and WSJ newspaper). The subtext says, “The answer to the problems of our rural economy paradoxically lies in urban development.” If you have been reading this blog for a bit, you would immediately suspect that I wrote that piece. Partly so. I co-authored the piece with Reuben Abraham.

The Indian Education System — Part 4

The absence of universal basic literacy and education is a constraint on present economic performance and future growth. Doubtless, education is costly but the opportunity cost of not having an education is even higher. The old adage about a stitch in time saving nine holds with special force in the case of basic literacy. Here’s the argument. At most one generation requires help in becoming literate; the children of literate parents are overwhelmingly literate; and the children of illiterate parents are more likely to be illiterate compared to those of literate parents.
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