Hell’s Angel

Teresa the Merciless
Teresa the Merciless

My distaste for poverty is only exceeded by my utter contempt for those who nurture that awful monster of poverty that chews up living human beings and spits them out like so much garbage. True evil to me is that impulse that disregards human suffering, and more often than not, that evil force emanates from ideology and dogma. Communism is one such evil; the other horror is organized religious dogma mostly represented by the monotheistic religions. The richer the organized religion, the more powerful it is, and has the will and the means to wreak havoc and cause misery. The Catholic Church is exhibit A. It has a shining history of centuries of wholesale murder and it has not deviated one bit from that unholy crusade to this day. Its most celebrated foot-soldier — nay, general — in its war against decency and humanity was Mother Teresa. Christopher Hitchens called her (among other things) the Ghoul of Calcutta. I call her Teresa, the Merciless.

Here’s Hitchens (from one of his live debates): Continue reading “Hell’s Angel”

Model Based Thinking

A brief reminder is in order here because from time to time, I do resort to very simple economic models. The utility of simple models in assisting thinking about complex matters is under-appreciated by most of us whose professional interests do not require model-based thinking. In the hard sciences, physicists and cosmologists commonly use models to clarify their thinking and illuminate the essential features of the complex theoretical subjects they study. Where the search space of a solution is unmanageable large, simulations based on simple models come in handy, such as in meteorology.

Elegant models are amazing things. That is why economists do it with models. The study of the real world would be too confusing if it were not stripped of all inessential details. The hard part lies in figuring out which bits to retain and which to discard while creating the model. Model building is an art and the product is often a thing of spectacular beauty and elegance. They illuminate and enlighten; they capture the imagination and make accessible features of the real world that would otherwise be lost in a haze of misapprehension. It seems to me that learning simple models has to be part of a well-rounded education. Children should be exposed to simple models and then taken through the logical deductions that the assumptions imply. But I will not digress into models and our education system for now. What I want to do is quote a passage from Paul Krugman, an economist whom I especially admire for his clarity of thinking and exposition, about how serious economics is done.
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LOSADS!

Law of Supply and Demand

Not to put too fine a point on it, but the law of supply and demand is a bitch. Stripped of all details it basically states that the price of something is determined by the interaction of the quantities supplied and demanded. Therefore (1) an increase of the quantity demanded, holding the supply constant, will increase the price; (2) an increase in the quantity supplied, holding the demand constant, will decrease the price; (3) a decrease in the quantity demanded, holding the supply constant, will decrease the price; and (4) a decrease in the quantity supplied, holding the demand constant, will increase the price.

Sing pretty songs, if you please, or dance nimbly invoking the gods, or pass sincere legislation to suspend the effects of that law. You would have as much success doing that as you would have in suspending the law of gravity and legislate against it effects. The law of supply and demand is not quantum mechanics and can be taught to the average 6 year-old with ease. Ignorance of the law should be a matter of shame, and willful disregard of the law by policymakers should be punished through public floggings.
Continue reading “LOSADS!”

Moving Mountains

Golf, not Chess

Economic growth in a sense, and to a much larger extent economic development, is more akin to a game of golf than a game of chess. In golf, the opponent’s moves matter very little; you may as well play by yourself and later compare scores if needed. In chess, your move depends on how your opponent has moved and how he is likely to respond to your move. In other words, chess is a strategic game while golf is not. All this is very broadly speaking, naturally. I don’t mean to imply that there are no dependencies among economies as they grow; what I mean is that, especially for a large economy like India, how much it produces and how determines how materially prosperous it is and is independent of how other economies are growing. For strictly benchmarking purposes, one can glance over at the neighbors. And if one is smart, one can learn from the experiences of those neighbors. Still, when it comes to economic growth, it is largely the case that you are playing against yourself.

Here I want to glance at India’s large northern neighbor and recently a strategic competitor in the fiercely competitive game for control of scarce resources. China has been moving mountains — quite literally as you will soon note — for quite a few years for growing its economy. From an Indian perspective, it is a chilling reminder that there are no shortcuts to economic growth and that it takes something special in terms of will and perseverance to overcome the ill-effects of flawed economic policies and failed leadership. It is also a story of hope and the indomitable human spirit, a story of almost superhuman striving by mere mortals.
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The Celestial Teapot

If I were to suggest that between the Earth and Mars there is a china teapot revolving about the sun in an elliptical orbit, nobody would be able to disprove my assertion provided I were careful to add that the teapot is too small to be revealed even by our most powerful telescopes. But if I were to go on to say that, since my assertion cannot be disproved, it is intolerable presumption on the part of human reason to doubt it, I should rightly be thought to be talking nonsense. If, however, the existence of such a teapot were affirmed in ancient books, taught as the sacred truth every Sunday, and instilled into the minds of children at school, hesitation to believe in its existence would become a mark of eccentricity and entitle the doubter to the attentions of the psychiatrist in an enlightened age or of the Inquisitor in an earlier time.

That’s Bertrand Russell holding forth on the idiocy of revealed religions. I am quoting him here because I feel it is time I paid more attention to what is going on with the mad monotheists (I know, redundant) are doing to wreck the world.

Poverty and Freedom

“If poverty were simply an economic problem, we would be closer to a solution by now. But underdevelopment is a web of economic, political, institutional, ethnic, and class-related connections with persistent historical roots.” That’s Bob Solow, eminent neo-classical economists, winner of the Bank of Sweden’s Economic Sciences Prize in the Memory of Alfred Nobel (1987). Clearly, he understands the distinction between economic growth and economic development as he is the celebrated author of what is called the Solow-Swan economic growth model. That model, developed in the 1950s, was supplanted by endogenous growth models in the 1980s. The latter models have microeconomic foundations and one of their implications is that you can affect the long-run growth rate through suitable policy interventions that change incentives and which in turn affect the rate of innovation.
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Pranab Bardhan on the Indian Economy

One of my gurus at UC Berkeley was Pranab Bardhan, professor of economics. “He has done theoretical and field studies research on rural institutions in poor countries, on political economy of development policies, and on international trade. A part of his work is in the interdisciplinary area of economics, political science, and social anthropology. He was Chief Editor of the Journal of Development Economics for 1985-2003. He was the co-chair of the MacArthur Foundation-funded Network on the Effects of Inequality on Economic Performance. for 1996-2007.”

Everything I know about international trade, I learnt from his lectures. He is matchless in his ability in making difficult concept accessible. It is always a pleasure to listen to him and learn. I spent some time in conversation with him last month in Berkeley. The transcript of the entire conversation I will post later. For now, here is a brief write up.
Continue reading “Pranab Bardhan on the Indian Economy”

California Fires

Fires, floods, earthquakes, riots. What’s not to like about southern California? 🙂

<img src="https://deeshaa.org/wp-content/uploads/2007/10/culdesac4301.jpg"

That picture is from the recent fires there. In one cul-de-sac, all but one house is standing; in the other, all but one is ashes. Yehi hai ishwar ki maya, kahin dhoop and kahin chaya.

Techno-hype

Really productive ideas, like internal combustion and the assembly line, are hard to find… But the techno-hype that surrounds us has some real costs. It causes businesses to waste money; it causes politicians to seek high-tech fixes (give every child a laptop!) when they should be getting back to the basics (teach every child to read). The slightly depressing truth is that technology has been letting us down lately. Let’s face up to that truth, and get on with our lives.

That is Paul Krugman writing in Dec 1996.