Category: Economics

Who’s the boss?

The other day I received a forwarded email informing me that in Mumbai there is a traffic law which requires that a taxi driver has to comply with a request — no, not request but rather a demand — for service. Here’s what the email said:

Do you know, Rickshaw & Taxi Drivers do not have a right to say NO. So remember that each time the rickshaw/taxi driver tells you a NO, take down his vehicle registration number, note the time date and place, please click on the following link and register your complaint.

We have had enough of these guys bullying us around, and refusing to ply specially when its urgent. They have been told that they cannot say a NO to any customer when their meter is FOR HIRE! not even for short or long distances. I’d suggest you stop asking them whether they will take you wherever you wish to go and rather tell them where you want to go. And if they refuse. REGISTER a COMPLAINT. Let’s teach these guys who’s the customer , and who’s the boss!

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Drugs and their Protection

A cyber-friend wrote to me asking what was “the rationale behind giving monopoly rights to big-global-drug-companies in India (by the way of patent protection).” He said that this was “leading to prohibitively expensive life saving cancer drugs (Rituximab at 1.3 lakhs/dose is actually daylight robbery and murder) … India is an insignificantly small (revenue % wise) part of global drug market … the unrealistic pricing shows that drug firms are not even bothered about us. India would be much better off if it produces (at fair prices) some of the life saving drugs and tries to save/elongate lives of some of its 5 lakh people who die of cancer every year.”
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The Importance of Agriculture in GDP

[Repost of a July 2003 article.]

A head’s up from Rajesh Jain on an article Asia Times Online titled Why India’s Economy Lags Behind China’s got me thinking once again about popular misconceptions about development matters. Journalists are particularly susceptible to some of these. An example appears in the article. Continue reading “The Importance of Agriculture in GDP”

Economics in One Lesson

The art of economics consists in looking not merely at the immediate but at the longer effects of any act or policy; it consists in tracing the consequences of that policy not merely for one group but for all groups.
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Making Distinctions

Hauled from the archives, here is a bit on the distinction between information and knowledge. This is important because I think we are in an age of superfluous information (followup to that here.) Making distinctions aids comprehension and consequently the ability to efficiently effect change. I like to distinguish between economic growth and development because economic development is the goal and in many cases economic growth is the instrument for development.

Art of Living: Another Letter

Not having the gift of foresight, one rarely knows how far one will stray having embarked on an ill-advised direction. So it is with me and my simple assessment of Sri Sri Ravi Shankar many years ago. I began with concluding that SSRS is very skilled in marketing a good and ancient Indian technique generally known as yoga. Many others from India have done so and I approve of all of them because I approve of good ideas being shared. Some made huge fortunes (self-styled “Bhagwan” Rajneesh AKA Osho, for instance) and some labored out of sheer love and devotion for the ideas.

However, my conclusion that SSRS is a “useful” person, just like you and I, did not go down too well with those who are persuaded that SSRS is God Almighty incarnate (whatever “God” is.) So I get nastygrams from these fairly regularly. But once in a while I also get letters from dissatisfied AoL customers. The curious thing is that the nastygrams from SSRS worshippers are pretty incoherent rants; and the dissastisfied customers are generally pissed off but coherent. Because I have published one recent incoherent rant from an SSRS worshipper, I am publishing one from someone who has an opposing point of view. Here it is, for the record.
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A Bit on Mobile Advertising

Advertisement as Signaling

Advertising is the communication of a signal (information) with the express purpose of gaining advantage over one’s rivals in a competitive environment. That’s my definition of advertising in the broadest terms. In those terms, advertising is not limited just to the world that is human made. All sorts of life forms over evolutionary time scales have been in the business of advertising. In the natural world, advertising serves a very useful function, the end result of which is the astonishing appearance of beauty and diversity. A beautiful human face is not just an advertisement but also the result of successful advertising. Little wonder that beautiful people appear in advertising pictures.
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A Trivial Economics Question

Here is the story. I have an object X that I wish to assign (gift or give away) to one of three: A, B, or C. How do I determine whom to give it to if I am concerned about allocative efficiency? Assume that A, B, and C have different preferences and abilities to pay.

To put a nice twist to the story, what if I am also concerned about equity? That is, although I have only one object X, I don’t want to be unfair to the other two who will not get the object X. What is the best way—the mechanism—to resolve this issue?

Of course, the answer changes if I don’t wish to give more than just the object X, as opposed to the case where I am willing to give more than X just for the sake of being fair to all three.

Finally, a real world situation. My siblings and I have inherited our parents’ property. The eldest occupies it, but the other three (including me), are waiting for our share. What is the most economically efficient way to distribute the value of the property if the property itself is indivisible?

Your views are solicited. Let’s see if we can find answers to the questions that we find satisfactory. And if we do, perhaps we will understand a little more about the question of how economies work. That is the beauty of economics. From seemingly trivial—though interesting—questions, one can gain insight into larger questions.

POST SCRIPT: I made the mistake of putting two entirely different scenarios on the same post. So there is much confusion. I wish to clarify that the “efficient allocation of an object X” is a seperate matter from the “fair and efficient distribution of an indivisible inherited property.” Conflating the two was not my intention.

Milton Friedman: A Joke and Some Serious Stuff

One day an economist looked up and saw a little girl being attacked by a vicious dog, just down the street. He rushed over and saved the girl by strangling the dog.

A reporter interviews him and says, “Sir, this is a wonderful thing you have done. Did you say you are an economist?”

“Yes, I am,” says the economist.

“Very good, sir,” says the reporter, “this will be our lead story tomorrow, and the headline will be ‘Radical libertarian economist saves little girl from vicious dog.‘ ”

“Well, I’m not that radical,” says the economist. “I’m really more of a classical liberal.”

The reporter scratches his head and says, “Well, we’ll come up with something. Whose views would you say you are closest to?”

“Oh, I suppose it would be Milton Friedman,” says the economist.

Next day, the economist buys the paper. Across the front page is splashed: “CHICAGOITE KILLS FAMILY PET!”

Continue reading “Milton Friedman: A Joke and Some Serious Stuff”