Category: Uncategorized

NOBEL PRIZE-WINNING economist Douglass North observed that “economic history is overwhelmingly a story of economies that failed to produce a set of economic rules of the game (with enforcement) that induce sustained economic growth.”

A sound education system is the foundation of sustained growth. Yet, nowhere is the failure to produce a set of economic rules more evident than in the Indian education system. India’s literacy rate of around 60 percent places it in the company of countries such as Uganda, Rwanda, Malawi, Sudan, Burundi and Ghana. Broadly speaking, India accounts for 50 percent of the world’s illiterates even though India has only 17 percent of the world’s population. The failure of India’s primary education is predictably reflected at the higher education level: gross enrolment ratio is a mere six percent. Furthermore, the quality of Indian college graduates is poor to the extent that only about a quarter of them are employable.

Education in India is heavily controlled by the government both at the state and federal levels. Government agencies and regulations dictate every aspect of education, sometimes to the smallest details: who can run educational systems (generally only non-for-profit trusts can), who teaches, what is taught, who learns, what the fees and salaries should be, and so on. Most unfortunately, the entry barriers that the government imposes on the sector lead to such effects as high costs, low quality, and rampant corruption. Continue reading “This Policy, Alone – Part 8”

Nothing warms the cockles of this economist’s heart like seeing a market do its bit beautifully. As we say in the trade (pun intended), markets work and incentives matter. That sums up very neatly two of the fundamental insights of economics.

Consider this fact (from a Dec 2013 Quartz article): “Amazon changes its prices more than 2.5 million times a day. By comparison, Walmart and Best Buy changed their prices roughly 50,000 times each in the entire month of November.”

Those numbers for Amazon must have gone up since then. Perhaps Amazon changes its prices 4 million times a day now. Continue reading “Amazon is Amazing”

Walter E. Williams insisted that the E in his name stood for excellent. He was excellent. He suffered no fools. He passed away today. About him, the wiki says:

Walter Edward Williams (March 31, 1936 – December 2, 2020) was an American economist, commentator, and academic. He was the John M. Olin Distinguished Professor of Economics at George Mason University, as well as a syndicated columnist and author known for his classical liberal and libertarian views.

 

A few quotes: Continue reading “Walter E Williams, RIP.”

Of all the American holidays I like Thanksgiving the best. For starters, it’s a secular holiday. Secular in the true sense of the term — not religious — and not in the way that secular is understood in India where it means “not Hindu.” In India, Islamic or Christian is secular but Hindu is not secular. In India, Diwali is not secular but Christmas is secular. But in the US, Christmas is not secular but Thanksgiving is secular. That is an important distinction.

But the main reason I like Thanksgiving is that it represents something that should be our perrenial attitude — that of gratitude for what we have. Certainly we wish we had more of the goodies of life but let’s also frequently pause and give thanks for all the good things we already have. I pause quite frequently and observe the simple fact that things are pretty good as they are. I ask myself “Isn’t this good?” and answer, “Yes, it’s good.”

That’s what I learned a long time ago. In Hesse’s book Siddhartha, the protagonist says to his friend Govinda, “the world is perfect in every moment.” The same idea is expressed thus in Desiderata: “And whether or not it is clear to you, no doubt the universe is unfolding as it should.”

Happy Thanksgiving.

 

I am always struck by the variations in human capacities. We humans are strikingly unequally endowed in physical and mental capabilities. Non-human animals of a particular species are generally very similar. For instance, individual members of the species common pigeon  are quite indistinguishable; if you’ve seen one, you’ve seen them all. The pigeons from Germany are not that different from the ones in India. Can you tell which one is a German pigeon and which one Indian?

But we humans are different. The range of human physiology is vast even though all humans belong to the same homo sapiens species. People from different regions of the world look different and we easily distinguish between Germans and Indians. Not just across regions, individuals vary within regions too. That is not an earth shattering fact but it is worth noting.

I believe that the range of mental variations is much wider than physical variations among humans. We are seriously unequally endowed when it comes to brains. Most of us are sort of average but among us there are outliers who are a few sigmas above the mean. The outliers also are varied. There are geniuses in chess, and in music, and mathematics, and physics, … the list goes on indefinitely. Continue reading “Wisdom, Genius, Knowledge and Intelligence”

In a recent email exchange, my correspondent wrote, “they say if everyone consumed like the US, we would need 2.5 earths.” That sort of claim is commonly made and readily accepted as true. A June 2015 BBC magazine article titled “How many Earths do we need?” begins with the claim “that if everyone on the planet consumed as much as the average US citizen, four Earths would be needed to sustain them.”[1]

Those types of claims are half-truths, and like most half-truths, they confuse rather than clarify. Fortunately, a little bit of reasoning and checking the facts are sufficient to get closer to the truth.

Earth is an Open System

The undeniable fact is that the earth is finite, which means nothing on earth — soil, water, minerals, etc. — is infinite. But for all practical purposes what we need is virtually infinite. The reason for virtual infinity in a finite earth is that the earth is not a closed system.

If you have some content in a finite box, that content has to be finite too. If you can neither add anything to the box or take anything out of the box, it is a closed system. Conversely if you can add or remove stuff from the box, it’s an open system.

The earth is an open system because it receives energy from the sun. That makes an enormous difference in that it enables material to be recycled. A simple example of that is water. We never “use up” the water we use. Though the amount of water is finite, the amount of rainfall on earth is unbounded because of the hydrological cycle: the sun’s energy continually evaporates water into the atmosphere and that falls back to earth as rain. This cycle has been going on for billions of years and will continue for the indefinite future. We cannot “use” up the limited water because it gets naturally recycled. Continue reading “Finite System, Infinite Cycles”

In an essay titled “Sham Battle” published in October 1936 in the Baltimore Evening Sun, H. L. Mencken enunciated a truth that is one of the core axioms of public choice theory. That axiom is the homely truth that politicians are people just like the rest of us. Homely truths, as Mark Twain recognized, are unpalatable. But they are true nonetheless.

People are motivated by their self-interest in their private lives. That is not to say that they are narrowly selfish but rather that they do what they believe to be in their interest, whatever those interests may be — including altruism if that is what interests them.

Homely truths endure. In 1936 Mencken wrote, “The state—or, to make the matter more concrete, the government—consists of a gang of men exactly like you and me.”

James Buchanan and Gordon Tullock developed public choice theory (PCT) in the 1960s. One of the assumptions of PCT is of behavioral symmetry: people behave the same way in their public capacity as they do in their private capacity. The person in the marketplace is the same person in the voting booth. A person is not transformed from a self-interested being with imperfect knowledge, foresight and morality in his private capacity into an other-directed being with perfect knowledge, foresight and goodwil in his public role as a politician, bureaucrat or a voter. By being elected or appointed to a public office, a person does not magically get endowed with the ability to know “the public good” and pursue that diligently. In other words, politicians are just like the rest of us. Don’t expect them to be better than you’d expect people to be. Continue reading “An Auction of Stolen Goods”

Even though it is just a couple of days to the US elections, it is still uncertain whether Trump will keep his job come January 2021. The opinion polls favor Biden but they can be wrong, since it is a closely contested race. I hope Biden loses, and I hope Trump wins because that would be better for the US and better for the world.

There are a couple of things I find remarkable about US elections. First, the date of practically all elections is fixed and therefore predictable. Every year, all elections at all levels of government — city, county, state and federal — are held on the Tuesday following the first Monday of November. If the first Monday of November falls on the 1st, then election is on Nov 2nd — the earliest possible date; and the lastest possible date will be Nov 8th. That happens every year, and every four years, it is a presidential election year. That too is totally predictable.

The second remarkable fact relates to the election of a US president. The US president is not elected through a popular vote. Voters don’t actually directly vote for a presidential candidate. The voters in each state determine through their popular vote what the state’s “electors” would do when they go to Washington DC in December. These electors form the electoral college. Here’s a bit from the Wiki on the US electoral college: Continue reading “US Presidential Elections”

Lots of stuff happening on (and around) the same day.

Sharad Purnima

Today it’s Sharad Purnima, a Hindu tradition. It is a harvest festival that is celebrated on the full moon day of the lunar month of Ashvin. It’s also called Kojagiri Purnima. It’s the birthday of Devi Lakshmi, and she is worshipped on this day. Also worshipped are Indra, and Shiva and Parvati. Lots of worshipping going on among Hindus.

Today it’s Halloween, a Christian tradition. The all-knowing Wiki says, “Halloween is the evening before the Christian holy days of All Hallows’ Day on 1 November and All Souls’ Day on 2 November, thus giving the holiday on 31 October the full name of All Hallows’ Eve (meaning the evening before All Hallows’ Day). … These three days are collectively called Allhallowtide and are a time for honoring the saints and praying for the recently departed souls who have yet to reach Heaven.”

Today we will also have a blue moon. And talking of time, today is the last day of Daylight Saving Time. Tomorrow morning at 2 AM, the clock will be set back to 1 AM. That will bring us back to Standard Time. I think this shifting of clocks business is insanely stupid. It makes no sense to keep shifting between DST and ST. Just stop this crap, people. Continue reading “Once in a Blue Moon”

Today it’s Maha Ashtami in India, two days before Vijay Dashami, the final day of Durga Puja. I like to listen to some Indian classical vocals based on Raga Durga. Here are two. The first is by Ustad Ghulam Mustafa Khan, and the second by everyone’s favorite Veenatai (Veena Sahasrabuddhe).

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Indian classical vocals are out of this world. Listen.