The Club Of Clueless CEOs: Not just being silent on injustice but also giving prejudiced statements

May 14, 2024

Priya Ramani on India’s club of clueless CEOs:

We know that corporate India rarely speaks up against injustices, but recent examples confirm that the conservative, ‘traditional’ or, as I call it, prejudiced/hateful thinking comes straight from the top.

When did Argentina lose its mojo?

May 14, 2024

Sebastian Katz and Eduardo Levy Yeyati in this voxeu post point Argentina lost its mojo in the 1950s:

There are recurrent debates about the ongoing underperformance of Argentina’s economy. This column proposes a metric to characterise and date Argentina’s divergence from a benchmark group of countries with comparable initial incomes per capita. The authors find Argentina’s divergence to be longer than usually conjectured, with marked tranches in the first half of the 20th century and the post-WWII period. They identify specific dates for the inflection points, discuss the context in each case, offer an explanation for the enduring divergence, and describe Argentina’s volatile chapter since the 1990s.

“Modern banking business” – Silent movie from 1927

May 14, 2024

Historically people have worried about technology replacing jobs.

As early as 1928. a German bank showed a future bank with only machines working in the empty room:

For most people in the pre-industrial age, there was no distinction between where they worked and where they lived. Working from home was the norm. Offices came about later – as a counterpart to workshops and factories. And with the machines came the question: are they helping people do their work or taking it away from them, making people redundant? Are they ’friend or foe’? It was obviously a contentious issue as featured in the1927 science-fiction dystopian silent movie Metropolis.

As early as 1928, a major bank in Germany thought it had found the answer and printed the following quote in its staff magazine: “It is obvious that as machines are adopted in companies, it will soon be possible to distinguish between those who only use the machine and those who can make use of it.” And the advertising clip “Modern banking business” from the same period gave viewers an idea of this new reality. The film ends with a scene showing an empty room with only machines at work. It beggars the question: have they driven people away or given them more time for other work or even more leisure time?

 

150 years of BEST (Brihanmumbai Electricity Supply and Transport Undertaking)

May 14, 2024

The Bombay Tramways COmpany was established in 1873. The Government of Bombay enacted the Bombay Tramways Act in 1874. The Act enabled the Tramways company to run tram services in the city.

The first horse-drawn tram made its début in the city on 9 May 1874. The first route was Colaba–Pydhone via Crawford Market, and Bori Bunder to Pydhonie via Kalbadevi routes. The initial fare was three annas (15 paise) , and no tickets were issued.

In 1905, Bombay Electric Supply and Tramways Company or BEST was established and given monopoly for running tram services. BEST bought the Bombay Tramways Company and two years  later  electric trams made their debuts. BEST also started offering Bus Services leading to name change to Bombay Electric Supply and Transport. In 1964, BEST discontinued trams due to high costs.

When Bombay was renamed as Mumbai in 1995, BEST name was again changed to Brihanmumbai Electric Supply & Transport (BEST).

History of BEST is so many histories put together: urban development, transport, electricity supply. people, politics….

Demand-side and Supply-side Constraints in the Market for Financial Advice

May 14, 2024

Happy 125th Birthday FA Hayek: Debate between Hayek and Nehru (using AI)

May 9, 2024

FA Hayek was born on 8 May 1899. Yesterday marked his 125th birthday.

Adnan Abbasi, alumni of Ahmedabad University has started this AI driven lab named Thotica. He has created this fascinating conversation between Hayek and Nehru, in collaboration with Friedrich Naumann Foundation (FNF), a German public policy think tank. Through their cutting-edge technology, they have resurrected the voices and minds of F.A. Hayek and Jawaharlal Nehru, enabling them to engage in a profound dialogue on India’s mission to become a developed nation by 2047.

AI is helping recreate history in interesting ways!

 

The Economic Constitution of the United States

May 9, 2024

Cass Sunstein in Journal of Economic Perspectives says US has an economic constitution:

The said economic constititution is here.

South Africa introduces Deposit Insurance

May 8, 2024

Interesting to note that South Africa did not have Deposit insurance till date.

The central bank has floated a Corporation of Deposit Insurance. CODI provides cover of up to South African Rand 100,000 to each qualifying depositor per bank in the unlikely event of a bank’s collapse. This coverage limit fully protects 9 out of 10 qualifying depositors in the country.

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Will ZIG end hyperinflation in Zimbabwe?

May 8, 2024

Zimbabwe central bank recently announced a new currency named ZIG or Zimbabwe Gold.

My new piece in Deccan Herald on whether the new currency will end the longstanding hyperinflation problem in Zimbabwe.

How economists could help inform economic and budget analysis used by the US Congress

May 7, 2024

Staff of the Congressional Budget Office in the new edition of Journal of Economic Perspectves suggest how economists’ research could inform Congress:

Access to Credit Reduces the Value of Insurance

May 7, 2024
Sonia Jaffe, Anup Malani & Julian Reif in the new NBER paper say access to credit reduces community value of insurance:

Deep Dive into China’s Intellectual Odyssey

May 7, 2024

Wang Hui has written this interesting looking book The Rise of Modern Chinese Thought. The edition is now available in English.

Lynn Paramore of INET interviews Hui:

Lynn Parramore: Your book traces the development of three concepts: “principle” (li), “things” (wu), and the “propensity of the times” (shi). What makes these crucial to understanding the progress of Chinese thought?

Wang Hui: Why these very specific concepts? I employed these concepts as clues to describe historical change, rather than employing social history, cultural history, economic history, or military history. I wanted to use these concepts to link different things together. Basically, I think that in all of Chinese studies — and not only Chinese studies, but historical studies, generally, especially in non-Western cultures — two prevalent misgivings have often left scholars feeling frustrated.

First, they struggle with whether or not they can effectively use existing theoretical categories or social scientific paradigms to describe and interpret historical phenomena. For example, if we talk about the traditional Chinese wellfield system [an agrarian plot division for equitable land distribution], people will often describe it as an economic system. But the wellfield system is not only an economic system, but also a social, political, and military system, and, after all, a racial system. So in that sense, once you reduce that phenomenon into the category of the economy, you’ve lost a lot of things. That’s one issue.

The second, of course, is that we are all studying Western social science — it’s a universal phenomenon – so the concepts and paradigms we deploy usually come from studies of Western history. Can they be usefully applied to non-Western historical phenomena? I have found that you always need to construct a dialogue between the different concepts.

In my book, I discuss principle (li), things (wu), and the propensity of times (shi) as philosophical ideas. These are three key categories, but at the same time, I use another set of three antithetical concepts in the more historical analysis. The first is the ancient rites and music culture and institutions. The second concerns political systems, enfeoffment [the feudal land grant system], and centralized administration. The last one was more of a response to what contemporary Western scholars are working on, and also something we’re working on in Chinese studies: the empire and the nation-state. I question these binaries and their application to Chinese studies

The Money Kings: The Jewish Immigrants Who Transformed Wall Street

May 6, 2024

Interesting essay in Financial History Magazine run by American Museum of Finance:

The founders of Goldman Sachs, Kuhn Loeb, J. & W. Seligman & Co. and Lehman Brothers—who formed close business and personal connections and whose firms, at various points, dominated American finance—were German-Jewish immigrants, mostly from Bavaria, who sought refuge in the United States in the mid-19th century. The kingdoms of pre-unification Germany had largely treated Jews as a permanent underclass, restricting them from most professions, barring them from property ownership, dictating where they could live and forcing them to pay extortionate “protection” money for the privilege of residing there. One Bavarian lawmaker, enraged by a bill that would have conferred equal rights to the region’s Jewish population, summed up the prevailing attitude when he argued that Jews would remain foreigners even if their German roots stretched back a millennium. 

…..

More than 100 years have passed since the time of the “money kings.” But their influence is inescapable, whether strolling through Manhattan, whose very landscape they helped to shape, or in the mechanics of the financial markets. The ongoing immigration wars, the debate over tech monopolies and income inequality, rising antisemitism—there are many eerie modern echoes from that era. Today, the world of over a century ago, the world of the “money kings,” seems closer than ever.

The article sums up both…Hatred and Hope…How hatred drives certain communities to migrate to more open regions and with hope recreate history.

It also sums up how humanity never learns lessons from history..

The Indian Economy is Doing Well, But Not Many Indians Are

May 3, 2024

TN Ninan (former editor of Business Standard) in TheIndiaForum:

The economy is growing rapidly and many economic indicators are flashing green. But the path that India has chosen, of promoting national business champions, has its limits. Economic distress is widespread, which cannot be handled forever with welfare handouts or religion as an opiate.

World Press Freedom Day: Governments failing to protect journalism

May 3, 2024

Today that is 3rd May marks as the World Press Freedom Day.

Reporters Without Borders which ranks Press Freedom across the world says freedom of press is under serious threat. From who? Governments of course:

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Historical Disinflation Episodes: Which Falls First, Goods or Services?

May 3, 2024

Interesting article by  Charles S. Gascon and Joseph Martorana of St Louis Fed. They say disinflation is first in goods followed by services:

Annual inflation in the U.S. has slowed over the past year, decreasing by 2.9 percentage points from February 2023 to February 2024 and settling at 2.5%, as measured by the personal consumption expenditures (PCE) price index. Despite progress toward the Fed’s 2% target, FOMC participants in March 2024 projected only a 0.4-percentage-point drop in PCE inflation over the coming year.1 Why is progress toward 2% inflation expected to slow? Historical experience—specifically, disinflationary episodes of the early and late 1980s—suggest that goods price inflation tends to fall quickly, while the last mile of disinflation is driven primarily by a lengthier disinflation of services.

Summarising recent research on International Finance and Macroeconomics

May 2, 2024

Mark Aguiar and Linda Tesar summarise recent research on International Finance and Macroeconomics in NBER Reporter:

Affiliates of the International Finance and Macroeconomics (IFM) Program study financial interactions among nations, including cross-border capital flows, exchange rates, responses to global financial crises, and the transmission of economic shocks. Rather than attempting to summarize the more than 1,000 working papers these researchers have distributed since the last program report in 2015, we focus here on three issues that have attracted substantial research attention from this group: impacts of the COVID-19 pandemic, global supply chain shocks, and the privileged position of the US dollar in global asset markets.

 

Electoral Bonds and Electricity Supply in Bhiwandi

May 2, 2024

Tanvi Deshpande of IndiaSpend has an interesting story that weaves Indian politics, economics and society:

Torrent Power supplies power to Bhiwandi near Mumbai, and powerloom owners and public representatives allege that power bills have doubled or tripled since the franchise was brought in, which has dealt a blow to the Rs 10,000-crore powerloom industry here

Democracy is good for the economy. Can business defend it?

May 1, 2024

Vanessa Williamson of Brookings in this paper asks businesses to preserve democracy. The businesses gain from democracy:

  • Democracies thrive because they are better at ensuring the provision of public goods, including education, public health, and infrastructure; because they manage markets more effectively; and because they channel contestation into political compromise rather than political violence.
  • Democratic decline is associated with a panoply of economic “bads,” including instability, brain drain, stagnation, and kleptocracy.
  • There is a strong need for more robust nonpartisan business associations that are explicitly and actively committed to protecting democratic institutions, as well as greater engagement on the part of existing business associations to preserve electoral democracy.

Most of the time businesses either look the other way or even worse join forces to undermine democracies in respective countries.

 

The Pitfalls of Protectionism: Import Substitution vs. Export-Oriented Industrial Policy

April 30, 2024

Reda Cherif and Fuad Hasanov in this IMF paper:

Industrial policies pursued in many developing countries in the 1950s-1970s largely failed while the industrial policies of the Asian Miracles succeeded. We argue that a key factor of success is industrial policy with export orientation in contrast to import substitution.

Exporting encouraged competition, economies of scale, innovation, and local integration and provided market signals to policymakers. Even in a large market such as India, import substitution policies in the automotive industry failed because of micromanagement and misaligned incentives.

We also analyze the risk tradeoffs involved in various industrial policy strategies and their implications on the 21st century industrial policies. While state interventions may be needed to develop some new capabilities and industries, trade protectionism is neither a necessary nor a sufficient tool and will most likely be counterproductive.