Wednesday 27 May 2009

Genetically evil

In The Caged Phoenix sociologist Dipankar Gupta convincingly argues that our many ills don’t stem from our being exotically culturally different but from bad politics, bad economics, and lazy scholarship that goes for easy answers (caste, religion) which are completely wrong. Such inputs would have produced a mess anywhere.

Yet, he leaves his readers – this particular reader, at any rate - with the (unstated) conclusion that we couldn’t have done so badly unless we were peculiarly rotten to begin with! So, we are hopeless.

Tuesday 19 May 2009

Why is China not Japan?

The biggest datum in global economics is that China has had 10% growth year on year for the last quarter century, that is, ever since they embraced the free market.

In which case its industry (or whatever industrial growth measures) should be nearly 11 times what it was 25 years ago. How many times richer should the workers be? What should they have? What standard of living should they have, on average, attained by now? Have they come very near those theoretical standards?

Is today's English labourer 10 times better off than his Victorian ancestor (who was probably at 1984 China standards)?  

Monday 18 May 2009

Why the surveys were all wrong

Apparently the Congress win in the recent was not predicted by any pre-pool or exit survey. I find that rather difficult to digest. However, let's say that is indeed the case. How can it be possible? Two possibilities come to mind:
All the surveys were badly done. They didn't go for representative samples; instead they just interviewed people near their homes and hotels.

Many seats were decided by the narrowest of margins. This was reflected in the surveys, but was left of by the publications. The newspapers and news channels left out the uncertainty so that the innumerate millions are not confused.

Also, the Congress, because it contested more seats this time (thanks to Ekla Cholo), won more of those marginal seats. A person who calls many tosses is almost sure to win more (numbers, not percentage) than one who calls few.

And, hey, where's the landslide? Congress & Co are 11 short of getting a simple Vote of Confidence. We don't have a hung parliament, but Vajpayee's and Dr Singh's terms show that that doesn't necessarily mean fatal crisis. Let's get real for once.

PS: One thing I heard no commentator talk about was the inordinate length of this election, the consequent presence of central security throughout the country, leading to free and fair (one assumes and hopes) voting. We all agree that corruption is a great ill, yet discuss matters as if it is not even a factor!

Second, I am sure someone has tried to find the role of luck in elections in our country. Very simply, we may look at the correlation between vote shares and seats, after adjusting for state size (In a state with one or two seats, the correlation will probably be weak). Do political parties employ statisticians? Shouldn't they?

Tuesday 12 May 2009

The logic of the evil moneylender

The village moneylender is the villain of countless movies. His two great crimes being high interest rate and ruthless demand for  collateral. Doubtlessly, he did and does both. However, there may be more to his sins than greed.

All businesses have low rates for bulk orders and high rates for small orders.

Second, all lenders, including the Nobel winning Gramin Bank, have different terms for borrowers with bad credit ratings. Undeniably, most Indian farmers are shaky debtors.

Third, the moneylender’s business, one assumes, had and has little or no legal protection. One cannot imagine the government, of any age, paying off farmers’ loans to him. So what choice did he have besides strongmen?

This is not to say that the moneylender was a misunderstood and unappreciated do-gooder. But to suggest that had his limitations been taught in schools, instead of evils – which probably had far more to do with justifying political rather than economic reforms – people would have a better idea of what needed to be done in rural credit.

For example, (good) organised rural banking may well be a viable business at high interest rates and high penalties for non-payment. Yet it may be impossible if people are brainwashed into believing that both are unnecessary evils. Also, if the US were wrong about sub-prime credit for homes, why are we right on waiving repayment on sub-prime credit on farms? The humanitarian reasons are readily apparent, yet one wonders if no ‘restructuring’ was possible.