Author: Atanu Dey

Economist.

Culling Improves the Herd

Culling is a well-known phenomenon in biology — the process of selective removal of weaker individuals from the breeding stock. Although not done deliberately, something similar happens in markets. Entities that are “weak” are selected out of the marketplace, and the health of the economy improves.

In a previous post, I wrote:

If an unprofitable firm fails, it is bad for the workers of the firm. But the failure of firms within an industry could be good for the health of the industry and for the larger economy. At the next level up, an entire industry could fail and cause misery for its workers, and yet that could be very good for the economy. Continue reading “Culling Improves the Herd”

Well, China, the Game is Up

Until a few months ago, China was doing spectacularly well in terms of economic growth, and the power and influence that the new wealth bought. But I think China’s goose is cooked, thanks to the Chinese virus that causes the Wuhan flu aka Covid-19. There’s going to be a backlash. OECD countries’ manufacturers who were off-shoring their production in China will pull out as fast they can. In all likelihood, electronics majors will cut their China-based supply chains.

This is not mere wishful thinking. It was economics that led to China becoming the global manufacturing destination. But the world has learned a lesson that will be hard to ignore — that putting all eggs in one basket is not a sound strategy. In any event, it was time for manufacturing to return to the OECD countries; the Wuhan flu just advanced the move a few years.

And one more thing. I think these institutions have to be given a quick burial: the FDA, the WHO and the UN. They are all evil. Continue reading “Well, China, the Game is Up”

Best Wishes on Mahavir Jayanti

Bhagavan Mahavir, the last of the 24 Jain Tirthankaras, was born in 599 BCE in the kingdom of Vajji (somewhere in present-day Bihar.) Much of the biographical details of his life are, of course, disputed by various scholars but they are not really important. What’s important are his teachings.

It is believed that he was a contemporary of Gautama Siddhartha, the Buddha. Maybe they were contemporaries or maybe they were not. Again it does not matter.

Their are parallels in their lives. Like the Buddha, Mahavir was born and raised in a royal family, renounced his family and wealth when he was around 30 years old, and went in search of truth and spiritual awakening. He became an ascetic, gave up all his possessions (including clothing) and meditated under a tree. He even lived in Rajagriha for many years, the same place that the Buddha lived in for a while. Rajagriha appears to have been a special place. It was also the birthplace of the the 20th Jain Tirthankara Munisuvrata. Continue reading “Best Wishes on Mahavir Jayanti”

Two Kinds of Capitalism

Ayn Rand is thoroughly despised in leftist circles. The leftists are justifiably incensed because Rand tirelessly criticized government control of the economy, while the coercive power of the government is the primary instrument leftists rely upon to achieve their Utopian dreams.

One does not have to agree with every aspect of Rand’s philosophy. Decent people can reasonably disagree with her on many of her positions. But it is impossible to deny the force of her arguments against government’s interference in the economy. Countries that don’t understand her point are doomed to be poor. Indians suffer because they are incapable of understanding the evil consequences of government — even well-meaning — control of the economy. Continue reading “Two Kinds of Capitalism”

The Silver Lining to the Chinese Virus – 2

Apollo 1

The US Apollo space program got started in May 1961 was a spectacular success in landing 12 astronauts on the moon. But it had a very rocky start when Apollo 1, which was scheduled to launch in Feb 1967 as a low Earth orbit test, never launched. A disastrous cabin fire during a ground test killed all three astronauts on the launch pad on 27th Jan 1967.

That set the program back by about 10 months but during that time, processes and procedures were put in place that ultimately resulted in the Apollo program being much more robust than it would otherwise have been. That is a prime example of how sometimes problems are portals to a better trajectory, provided that the right lessons are learned and changes made. Shocks to systems force systemic redesign and the system improves. Continue reading “The Silver Lining to the Chinese Virus – 2”

The Silver Lining to the Chinese Virus

The Chinese Virus

The cost of the latest Chinese virus, aka SARS-CoV-2, is now going to be tallied in trillions of dollars and perhaps hundreds of thousand, maybe millions, of deaths. All that seems to be pretty horrific, to be sure. But here I am going to argue that that cost is worth the benefit that is sure to arise. That is the conclusion of my argument that this Wuhan coronavirus is going to be a blessing in disguise. It will make the world a far, far better place than it would have been otherwise.

What is the appropriate response to the disease now called Covid-19? That depends on the time and place, and other contextual particulars. In early Dec 2019 when the first cases were detected, the appropriate measure (seen in hindsight) would have been total containment. Continue reading “The Silver Lining to the Chinese Virus”

Ask me Anything — the Dolly Parton Edition

I love music

It’s hard for me to convey precisely how much I enjoy music. I’d rather go without food for a few days than go without music for a day. Fortunately for me, that would never have to happen. I have music on my phone, my computer, laptop — and of course on Youtube.

Over the decades, I have curated a very large and eclectic collection that includes all kinds of music — Indian classical, Indian popular, Western pop, country, rock and roll, Western classical, world music, electronic and trance, acoustic, heavy metal, and so on. Continue reading “Ask me Anything — the Dolly Parton Edition”

The Joy of Counter-intuitive Truths

I think one of the main reasons why I find economics so fascinating is that I am a contrarian (adj. taking an opposing view, especially a view opposite to that taken by the majority; n. a person who habitually takes a view opposite to that held by the majority.)

Many of the findings of economics are counter-intuitive. When I come across those results, the delightful “Aha!” moment follows. I realize that I was wrong about something and enjoy being less wrong than I was previously. Continue reading “The Joy of Counter-intuitive Truths”

Covid-19: What Should the Government Do?

The Covid-19 pandemic is caused by the virus SARS-CoV-2. It’s highly contagious with an R0 around 2 — an infected person passes the virus on to two others on average. Exponential growths always end up in large numbers pretty rapidly, contrary to our basic intuition. They are explosive, like in uncontrolled nuclear reactions. Once a few people in a population get the virus, nearly everyone gets it without proper containment.

Communicable diseases can be controlled and stopped, as has been demonstrated by the eradication of smallpox viruses (certified in 1980.) Smallpox eradication was mainly done by governmental and multinational health organizations. It could not have been otherwise since the non-governmental sectors (markets and civil society) were not up to the task. Continue reading “Covid-19: What Should the Government Do?”

Goods, Property and Externalities

Basic economics partitions goods into private goods and public goods, and property into private property and public property. Private goods are defined as those goods that are rival — one person’s consumption of the good  reduces the amount available for others to consume — and excludable — a person can be prevented from consuming the good. Thus a cookie is a private good. A cookie eaten reduces the stock of cookies, and cookies can be locked up.

In contrast to private goods, public goods are non-rival and non-excludable. The services of a lighthouse is an example of a public good because one person’s use of the lighthouse signal does not affect the use of the signal by others, and people cannot be prevented from seeing the lighthouse signal. Continue reading “Goods, Property and Externalities”