The Wednesday Lunch Club

There are things we can accomplish as individuals and there are things that we can more effectively and efficiently achieve collectively. For the latter, we create what are called institutions to serve as instruments for getting things done. The lunch club introduced previously is a simple example of an institution.

Institutions

The club, like all institutions, is an abstract entity. It does not have a physical existence other than the existence of the individual entities that constitute it. The members of the club exist physically but the club is only a set of rules that members of the club agree to abide by. The club exists in some Platonic realm though the benefits it provides to its members are tangible.

The benefits of the lunch club include companionship, the opportunity for discussions, etc. But there are costs too. For example, when the club chooses a particular cuisine on some occasion that is not to your liking, you incur a cost. When you join the lunch club, you weigh all the costs and benefits of joining. You join the club because you figure that the benefits exceed the costs.

The existence of any institution, thus, depends on whether the benefits exceed the costs as subjectively and objectively evaluated by the members. The lunch club continues to operate only as long as there are people who receive net benefits from membership. Being a member means abiding by the club rules. So now we come to the rules. Continue reading “The Wednesday Lunch Club”

Clubs and other Collectives (and the Welsh Incident)

I’d like to explore a few important concepts like government, constitutions, democracy, etc. They are embedded in the fabric of Indian society. Taking a clear-eyed view of their genesis, nature, function, modes of failure, and implementation can be intellectually rewarding but more importantly it can help in creating the good society. I’ll start with something seemingly unrelated — clubs.[1]

Consider an average workplace lunch club. We will call it the “Wednesday Lunch Club.” A bunch of coworkers[2] — five in our club — go out to lunch every Wednesday. Where? The restaurant is decided by a simple majority rule vote. If three out of the five members agree on Chinese food, then a Chinese restaurant it is that Wednesday. The two that wanted Indian food have to go along with the group decision. It’s not that they hate Chinese food but on that particular day they preferred Indian food. So they incurred a loss in terms of not being as satisfied with lunch as they would have been if the WLC had gone for Indian food.

Models

That’s a simple story. But if one examines it carefully, in detail and in very small steps, it can be instructive. It’s a very small elephant but it’s still significant. Slowly walking around the small elephant, examining its features carefully, making sure we are on firm ground each step of the process, and integrating different bits of what we learn gives us an understanding of the big elephants we encounter in real life. The small elephant is a model. Continue reading “Clubs and other Collectives (and the Welsh Incident)”

Censorship on the Internet — Revisited

In response to my piece “Censorship on the Internet“, a friend from Mumbai emailed me two questions: “How should we look at issues like pornography. Is it okay to let people say/show what they want to and let children and other vulnerable groups see/listen to all that ?” and “How can India move in the direction of First amendment?”

Let’s take the issue of pornography. Different societies have different standards about what’s acceptable in all aspects of living — what to eat, how to dress, how to worship, sing, dance, make music, make art, etc. These evolve with time and technology. Whether we like it or not, the moral code too evolves.

What’s considered obscene also differs among societies, and the standards change with time in the same society. There was a time, for example, when the sentence “Frankly, my dear, I don’t give a damn” was considered too vulgar to be uttered in a movie. (Gone with the Wind, 1939.) Now you can say WTF to that and no one would bat an eyelid. Continue reading “Censorship on the Internet — Revisited”

The End of Poverty — Revisited

To a previous piece , “The End of Poverty“, my friend Indradeep added a few thoughtful and thought-provoking comments. I take him seriously since he’s a fellow member of my tribe (namely, economists). In the following, I will do my best to address the points that he has raised. But first, here’s what I wrote in summary in my piece:

Technology is advancing at an exponential pace. Therefore the cost of energy will continue to drop. Therefore the cost of production of stuff will monotonically decrease, until a point that it will be practically close to zero. Therefore all the basics of life will be available for consumption at zero price. Therefore extreme poverty will be solved. This will happen in about 15 years.

I reproduce Indradeep’s comment here for reference:

Hard to argue with the idea that technology will reduce cost to near-zero levels. But the rest of it borders on wishful thinking. Especially, the expectation that some system of distribution will magically appear, sounds almost as sanguine as the familiar and now roundly discredited argument advanced by free-market fanatics that free trade is surely beneficial and the matter of how the winners compensate the losers is only a minor wrinkle that we do not need to worry about. Political economy, voice, agency – these things are nowhere in the picture. Does not a system of representation of voice have to precede the appearance of a system of distribution? If the rich have no intrinsic interest in alleviating poverty, how will that first system come into existence?

Let’s examine the “now roundly discredited argument advanced by free-market fanatics that free trade is surely beneficial”. Continue reading “The End of Poverty — Revisited”

The Growth of Inequality

In the context of exponential technological growth (a topic that I explored in the piece “The End of Poverty“), Akshar asked in his comment, “Don’t you think the gap between a poor person in India and a poor person in say USA would only increase ?”

Yes, I think that the gap will only increase with time. But that is just part of a broader trend of increasing inequality in numerous dimensions — within and between nations. In technical terms, the Gini coefficients (a measure of inequality, where 1 means perfect inequality and 0 means perfect equality) will continually increase.  Continue reading “The Growth of Inequality”

The End of Poverty

This is an optimistic piece — a rarity for sure around this blog. Here I claim that in 15 years or so, extreme poverty which afflicts around one billion people, mainly in the so-called third world, will be eradicated. That problem has plagued mankind since the beginning but the end is in sight.

Technology

Global extreme poverty will be eliminated as a side-effect of technological advances, primarily made by people who probably neither care about poverty nor do they intend to solve that problem. Which is good news for India. India has the largest number of people suffering extreme poverty in the world. Around half of the billion extremely poor people of the world live in India.

There are two kinds of problems. There are hard problems and there are impossible to solve problems. Given time, with advances in knowledge, all hard problems will be solved. Poverty is a hard problem but not an impossible problem since in many parts of the world it has been solved for all practical purposes. The critically important key to eradicating poverty is knowledge.

Knowledge

Knowledge is what economists call a “public good.” Once produced, knowledge can be repeatedly used without diminishing the available stock. It is “non-rival” in consumption. Technology increases monotonically because of the accumulation of knowledge. And technology (which is essentially knowledge of how to do something) developed somewhere gets adopted in the rest of the world with surprising rapidity. It is very cheap to use once developed.

Consider the cell phone, internet and computer technologies that were developed in the Western economies (they are called developed economies partly because they developed technology) but those advances spread to every part of the globe. Just like the computation and communications technologies, it will be people in rich countries who will develop the technology to eliminate poverty in poor countries, albeit not by design nor intent.

That means India’s dire poverty will be solved not by Indians — least of all by the insanely inept, criminally corrupt government of India which is arguably the fountainhead of India’s poverty — but by others. I note in passing that India’s telecommunications problem was created by the government but it was solved using foreign technology.

In the following I conjecture how the end of poverty will happen.  Continue reading “The End of Poverty”

AMA – the Ducklings Rescue Edition

Welcome to 2018. The past year was good but this one is likely to be much better. I think in 2018 I will get a good deal of stuff done. One of the major tasks is the cleaning up of this blog. There’s too much stuff here, some of which needs to be sorted, rewritten, polished up and published.

I will write more frequently. Also, I will post interesting videos, and extended quotes, audio, etc. Here’s a quote from Frank Herbert’s “Chapterhouse: Dune.” (1985):

All governments suffer a recurring problem: Power attracts pathological personalities. It is not that power corrupts but that it is magnetic to the corruptible.

Humans do bad stuff. But not all the time. Sometimes they are good. They become superheros and rescue a brood of ducklings. I wonder how did they fall into the storm drain in the first place, considering the fact that ducklings are precocial — they are born with eyes wide open and are able to fend for themselves within hours of hatching.

Anyway, this is the first ask me anything this year. What’s on your mind?  Continue reading “AMA – the Ducklings Rescue Edition”

Censorship on the Internet

Freedom of speech, expression, and the press is a distinctive mark of civilization. It distinguishes — and indicates the degree of civilization achieved among — the nations of the world. Nations that valued the Enlightenment traditions of the likes of Kant and Voltaire prospered and became culturally (not to mention militarily) powerful enough to profoundly impact, and indeed create, the modern world.

Just compare where the Islamic nations are in relation to the Western nations in terms of social, cultural and economic well-being. The Islamic nations fail miserably. They languish in the bottom of the heap suffering terrorism and imposing it on the rest of the world. Part of the explanation must be that their civilization lacks the freedom of speech and expression.

“Congress shall make no law …”

And consider that the most powerful nation in the world, the United States of America, is what it is partly because of the wisdom of its Founding Fathers who included the critically important First Amendment in the “Bill of Rights” of the US Constitution which says, in part, “Congress shall make no law … abridging the freedom of speech, or of the press …”.

Say what you may (and you may say whatever pleases you) but I am a freedom of speech fundamentalist. It is non-negotiable, it is off the table, it is not for sale, trade, barter or exchange. I reserve the right to say whatever I wish, and I defend your right to say whatever you wish. And equally importantly, I reserve the right to choose to hear, read and watch whatever others freely choose to express in whatever form. The operative word is choose. You choose to speak, and I choose to hear, without compulsion on either side.

Freedom

I recognize no authority over me that will dictate to me what I may say or listen to, read, write or watch. I will resist any government that attempts to take away my right to free speech, and the corresponding right to listen to the free speech of others.

Now that I have expressed my position on the matter, let me get down to why I did so. Continue reading “Censorship on the Internet”