Did You Agree to be Bound by the Constitution?

Some time ago I published the draft of a “Constitution for a Free India(click to read, right-click to download pdf) which I propose should replace the current Indian constitution. In the preamble of the draft, it says —

“… The people of India as the principals agree unanimously through this constitution to empower as their agents governments at the national and state levels which shall carry out the legitimate wishes of the people as expressed by their political choices in elections. … “

What does “agree unanimously” mean and imply? When you agree to something, you give your consent, assent. Agreeing implies coming to a common understanding or arrangement. Continue reading

The Price of Econ Textbooks

I haven’t read these books that Amazon recommended to me via email today. But I hope that within the pages of these books the authors somewhere explain the economics of textbook publishing and why these books on the principles of economics cost an arm and a leg.
Thankfully in modern times, the principles of economics is accessible to many who can’t afford those prices. It’s all there on the web. Continue reading

The Demand and Supply of Fines and Corruption

supply-and-demandA comment on the last piece prompts this tiny lesson in microeconomics.

“Corruption is one big pain point in the economic growth of a country. I have this funny idea but would like your inputs from an economists perspective. If things get costly it reduces its demand. Can corruption be made costly? This may increase compliance. Just to illustrate. If we raise fine for a fault, say traffic violation, which suppose today is Rs 500 to Rs 5000. Today the violator gets away by paying Rs 100 to traffic police. This is 20% of legal cost. If the penalty is 5000 and assuming traffic police acts rationally thereby asking for bigger bribe…won’t that deter future violations by the offender? Here I presume that traffic police will act smart knowing fully well that offender isn’t going to pay 5000 but at the same time he himself won’t settle for just Rs 100 and may raise ‘price’ to Rs 200 or 300. This is effective 100-200%% jump in bribe money that may pinch offender at some point in time. Pls throw some light.”

To start off, let’s examine the statement “If things get costly it reduces its demand.” In lay terms, that is true but economically speaking, prices don’t affect the demand or the supply of a product. To understand why not, we have to clearly understand what economists mean by “demand” or “supply” and distinguish them from “the quantity demanded” and “the quantity supplied.” Continue reading

Why does India grow so fast if its education system is so poor?

educationWe have to admit that India’s education system gets an F grade. India does not feature in any of the world rankings of universities. Sure there is a lot of hype about the IITs but aside from the delusions of the seriously uninformed, the IITs don’t add up to a hill of beans. I have been writing about IITs on this blog for a over a decade. Here’s one — IITs are not what they are cracked up to be, which is likely to stick in the craw of many IITians.

If India’s education system, including higher education, is so poor then how is it that it is one of the fastest growing large economy?
Continue reading

Hanson’s essay on “Trump and the American Divide”

Make America Great Again
Make America Great Again

Victor Davis Hanson, a Senior Fellow at the Hoover Institution in Stanford University, wrote a long piece for the Winter 2017 issue of City Journal magazine titled “Trump and the American Divide.” I find reading a well-written, thoughtful long piece in a magazine more interesting and informative than a few dozen breathlessly written newspapers short pieces. Good long pieces take time to write and are usually written a reasonable interval after the event(s), which allows both the writer and the reader a wider perspective. Continue reading

The Ownership Society — Revisited

deg320 The idea of “empowering” people was all the rage a few years ago. The answer to all of India’s woes, it seems, lay in empowering people, whatever that meant. I thought it was basically stupid. Why? Because people who are not free in any meaningful sense of the word cannot be empowered. Here’s what I wrote back in October 2005 on what is an “Ownership Society.” Brief excerpt follows: Continue reading