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Showing posts from June, 2020

Decision Making as Output and Bounded Rationality

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  The classical economics theories proceed on the assumption of rational agents. Rationality implies the economic agents undertake actions or exercise choices based on the cost-benefit analysis they undertake. The assumption further posits that there exists no information asymmetry and thus the agent is aware of all the costs and benefits associated with the choice he or she has exercised. The behavioral school contested the decision stating the decisions in practice are often irrational. Implied there is a continuous departure from rationality. Rationality in the views of the behavioral school is more an exception to the norm rather a rule. The past posts have discussed the limitations of this view by the behavioral school. Economics has often posited rationality in the context in which the choices are exercised rather than theoretical abstract view of rational action. Rational action in theory seems to be grounded in zero restraint situation yet in practice, there are numerous restra
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Tik Tok Popularity and Government Ban- Some Thoughts

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As India-China tensions continue to rise with so signs of de-escalation, India began a new front in the digital space. India has banned on grounds of national security some 59 mobile apps owned and operated and by the Chinese. These include the popular Tik Tok, ShareIt, Weibo, Wechat among others. There might be an expected reprisal from China but that should hardly deter India from taking further steps. These are the baby steps in signalling India’s intent to hit where China will feel the most. The biggest signal yet will be when India bans Huawei from it building and managing the 5G infrastructure in India. Aside of the ban, it would be interesting to see how China will feel the same. TikTok for instance is very popular in India and was expected to be big revenue spinner or in other words, a BCG star going forward. Digital apps function on a lock-in paradigm and given the Indian use patterns of Tik Tok, some feel that it might boomerang on India without corresponding impact on China.
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Should India Do a Israel 1967?

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India China tensions at the border continue to build up. Talks are on for possible disengagement but despite the apparent movement towards de-escalation, there is hardly any change on the ground. The site of the clashes in the Galwan Valley was about the Chinese obstinacy in refusing to withdraw behind the agreed points. Yet the moment clashes ended, China seem to be back at PP-14 in the Galwan valley. The tensions are far higher in the Pangong Tso area where the disengagement is around the grey area between Fingers 4-8. The Indians are moving to occupy the heights and the tensions are unlikely to subside. Given the trust deficit that exists between the two countries especially after the Galwan incidents, it is unlikely that India will scale down in response to Chinese possible de-escalation moves. On the contrary, there is hardly any optimism or even expectation that China will back down despite its humiliation in Galwan. There seems to be all the more reason for China to hit back and
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Kremer, Patent Buyout and Innovation

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The world continues to combat the Wuhan virus unleashed by China. The world at the moment grapples with two problems. The first is the efforts to discover a vaccine or a cure for the COVID-19 and the consequent distribution of the same to the global population. Secondly, it is to revive the economy which is suffering the lockdown. Theorists from Schumpeter onwards have viewed the restarting the economy being possible only through innovation. As the economy struggles, it is the new innovation that infuses life into the economy and enables it to build on the V shaped or U shaped or whatever shape the curve might posit itself to be.   Yet in the twin challenges that the society finds itself confronted with, lies a commonality and a challenge so as to speak. It is about innovation and protection of innovation and consequent prospect of monopolizing the innovation. Take the instance of a prospective discovery of vaccine or cure for the Chinese virus. The firm engaged in the discovery wo
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Deciphering Dynastic Privilege

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In the post “ Why Elitism Flourishes ?” an attempt was undertaken to decode the elitist dominance in life. It sought to understand the barriers of entry of an outsider into an industry. In the analysis, connections determined the entry into the network. Implied is merit degenerating into an auxiliary element and not the critical element.   Meritocracy often seems more of a rhetoric with the organizations and as an extension, the society, rather discouraging old boy network seemingly encourage the same. Often, membership of such a club is a sign of growth and prosperity, rebelliousness indicates an exit from the career path. Numerous instances abound of the same. It would be interesting to decipher the flourishing of the clubs.   The recent instances from Bollywood seem to confirm to a substantial degree the power of elitism and the barriers of entry in breaking through the elitism. The recent talk about unapologetic defence of privileged entry and progress in the entertainment indu
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Deciphering the Social Media Ranting

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Social media is synonymous with ranting. The rants might not have any reasons but to many a rant a day is conceivably the only way to keep a doctor away or so as the adage goes. The social media indubitably has turned the nature of conversation upside down. Expertize in the pre-internet days stemmed from the ability to have their byline in a newspaper or a magazine or a bit of presence in the news television or radio. Given the supply demand dynamics of the media, it was not possible for many to have their views aired or published so as to become celebrities. This however did not stop people from getting published under Letters to the Editor column in many newspapers and newsmagazines. Moreover, the townsquare was ubiquitous for the celebrities in the community to hold fort on topics all and sundry. The social media with its arrival and subsequent expansion changed the dynamics.   The vertical ‘raja-praja’ hierarchy was dismantled with the horizontalization of information flow. Pla
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Real Life Economics and Home Purchase Industry

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The past posts have delved on different instances wherein economics can explain the real life phenomenon. As noted earlier too, many instances we encounter often have an underlying economics angle to them whether consciously or subconsciously. To an economics graduate seeking to apply theories learnt during the course into real life, the posts offer a structured way of implementing the same. Yet many who might not have taken economics as a subject but still would have applying the concepts into their daily life thanks mainly to the life experience curve. The current post takes the past forward into understanding examples from the real estate, construction and the housing industry.   There are many factors that determine the demand function for purchase of a flat or a house. The hedonic attributes might vary from location to the size of flat or house, the built up area, the area available outside for aesthetic or utilitarian purposes, the price of the land, the neighbourhood, the di
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Decoding Modi's Popularity

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There is an interesting article by GZero media on the continuing high popularity ratings of Prime Minister Modi. The article can be found here . The article sought to find reasons why PM Modi continues to be popular despite the lockdown, the economic challenges and the continuing rise in cases of Wuhan flu. It discusses about a few reasons. It would be interesting to decode some reasons why PM Modi continues to command high ratings into his second term.   In the past, PM Indira Gandhi experienced the zenith of her popularity post Bangladesh war of 1971 but soon he regime turned into a disaster. Her comeback in 1980 did not end her troubles as Punjab exploded into cauldrons on Khalistani struggles leading to Operation Bluestar followed by her own assassination. PM Manmohan Singh was literally dysfunctional in his second term more so after the Anna Hazare fast of 2011. PM Nehru in his third term suffered setback due to the Chinese invasion of 1962 from which he never recovered. So in
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Games Dhirubhai Played!

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The success of the recent rights issues by Reliance Industries Limited (RIL) takes one’s memory to a wonderful anecdote in Gita Piramal’s Business Maharajas. The anecdote concerns Dhirubhai Ambani and his relationship with the stock market. The power he commanded on the markets did not emerge overnight. Nor did it come easy. In fact, if one has to term the coming of age of the Indian stock market, one has to go back to 1982 episode in the Bombay Stock Exchange.   Dhirubai loved perhaps roulettes and nothing better illustrated the episode of 1982. As India Today put it then, on one side of the ring lay rags to riches, ambitious, manipulative, high flying and perhaps possessed the most intelligent of the business brains, Dhirubhai Ambani. To Dhirubhai, it was hardly a decade and half that he had made it to the virtual top of the Who’s Who in the Indian industry. Up against him, again to borrow from the India Today, was a syndicate of stock market men, deeply drenched in the satta dyn
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Economics Primer in Real Life- Transportation Infrastructure

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In any discussion on economic growth and development, the role of transportation has a prime position. Transport economics thus would deal with the semantics of transport infrastructure and mechanisms that propel economic growth in any country. Often when economy is slowing down, the focus shifts to the transportation infrastructure. There is increased emphasis on transportation infrastructure as things gather pace. There will increased movement in construction of new roads, railway lines, airports, shipping lanes, waterways among other things. It is not just the emphasis on the national highways but increased allocation and work happens on the feeder roads and rural roads also. It is not just about new railway lines but enhancement of existing railway infrastructure also. It is not about more air traffic but increased connectivity to more cities and tourist destinations. N the context, it would be pertinent to examine a couple of instances wherein one finds an economics dimension appl
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The Economic Construction of Corruption

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One word that makes one take notice is corruption. People are, at least in theory, seemingly opposed to corrupt practices and project a need for honesty. While there would be little dispute or rather undisputed stated preference towards eliminating corruption or critical of corrupt, revealed preference often demonstrates otherwise. People may go hammer and tong on the corrupt, yet given an opportunity, they are unlikely to resist themselves from exercising what is termed corruption. People might tend to proclaim themselves honest and non-corrupt, yet a detailed analysis of their personal or professional lives might indicate otherwise. It is obvious that no one   wants to describe themselves as corrupt   but would engage in practices that can be deemed corrupt.   A story comes to the mind that was revealed by co-passenger in a train. He was describing principles imbibed by his father and father in law which shaped his views against corruption. He was against bribery and would not pa
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Is Trump 2020 Mirrors 1968?

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The US violence over the death of George Floyd has assumed greater proportions. It is increasingly shaping up the divide that exists in the US. Its spill overs are threatening across Europe and other places too. Irrespective of the immediate cause, it is apparent that the Antifa among others have hijacked the protests towards their own narrow ends. The liberal game plan is unfolding to the extent even the articles or newspaper columns by the anti-protest commentators are not being allowed to publish. Given the state of the ecosystem, many commentators are drawing parallels to similar protests in1968. To many, it seems that 2020 elections might go the way of 1968.   Niall Fergusson, the noted conservative commentator however differs on this assessment. In his article, he assesses that while 1968 in many ways ended the Presidential campaign of incumbent Lyndon Johnson thus forcing him to withdraw, current incumbent Donald Trump might actually benefit from the same. The year 1968 was
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Epidemiological Data and Wuhan Pandemic

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The lockdown is on the way of it being lifted but the cases continue to rise in India. The Wuhan virus does not seem anywhere near the peak at the moment. Yet there are signals from different quarters about need to open up the economy. As the economy begins to open up and the mobility is restored, the movement of people across the country is resulting in the Wuhan flu getting spread to other parts of the country. States like Karnataka, Orissa, Assam which had managed very well are now fighting hard to contain the disease thanks to the migration from states like Maharashtra, West Bengal among others. As the states and the centre begin the mitigating strategies, it becomes pertinent to have a look at the data before the appropriate strategic choices are made. Any decisions in the absence of signals from data are bound to be self-limiting and on the contrary generate numerous unintended consequences not necessarily pleasant.   It has been nearly 100 days since the cases began flowing
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