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Showing posts from April, 2021

Why Government Has to Provide Public Goods? No Private Army or Police or Justice System!

- April 29, 2021

Economics literature recognizes the differential nature of goods. Each good is unique in itself. It must be pointed out that in economics, good is something than enhances economic welfare while bad is something that reduces economic welfare. For practical reasons, one can assume economic welfare to be equivalent to social welfare. Secondly, contrary to public perception about distinctions between goods and services, economics literature clusters both of them into goods (the singular of which is good). The past post “ Examining the Nature of Good ” went to certain depth in examining the nature and classification of goods. The current post would seek to build up on the same and strive to understand why certain goods are provided in the market whereas certain goods are offered only by the government. In theory, nothing prevents the private sector from offering every good, or in other words converting each good into either private or club good. Similarly, nothing prevents the government

Self Interest, Lock-ins and Encyclopedia Britannica Story

- April 28, 2021

Firms have a configuration of assets, resources and market positions which are often unique. They are something that cannot be translated into other contexts easily. Once a market position is obtained, it becomes difficult to reposition the firm. Similarly, the assets are configured to a certain market position and are aligned to work in pursuit of the interests of the market position thus obtained. This is precisely a reason why many firms fail to make the cut when faced with technological changes. There might be a strong innovation culture yet the ability to commercialize might be constrained because of the configuration of assets and resources. For instance, Xerox set up the Paolo Alto Research Centre (PARC) to work on the avante garde technology and did manage to do very impressive work in terms of technologies developed. Yet none of them could be commercialized by Xerox. In fact, while many technologies have gained significant traction in the market, they are hardly associated w

Indian Economy and COVID-19 Second Wave

- April 25, 2021

The challenge in the second wave of the coronavirus orginatiing in China is managing the economy. In the previous instance of the first wave of 2020, India had gone in for an early lockdown when the cases were hardly in double digits. India had perhaps one of the strictest lockdowns in the world. This certainly managed to contain the wave and slow down the spread. The peak came something later around mid-September, partly causes by the increased flow of migrants across the country. The gravity was essentially a result of mismanagement in contact tracing by states like Maharashtra and Delhi. The lockdown took a heavy toll on the economy. The economy crashed to fall nearing 25% yoy. The lockdown also led to the recession for the first time in India. The economic scars is something government wants to avoid this time around. The economic impact and consequent social transfers led to the fiscal deficit hitting close to 10% of the GDP. There is of course a question whether India would be

Copyright Day, Enforcement , and Demising Returns

- April 23, 2021

April 23 is celebrated as the World Book and Copyright Day. It marks the commemoration of the birthday of William Shakespeare. It is moot whether the Bard of Avon was born on this day, but nevertheless, there is a celebration and this is associated with the books and the ideas behind those expressions in the books. Books are expression of an idea that is sought to be conveyed by the author. The idea needs protection since anyone else can steal the idea. Yet ideas can arise independently to many of them. The way they might express would be different. For instance if someone were to express an idea through a book, somebody might convey the same idea through a movie or they might be a musical composition seeking to project the same idea. A story might be told to the audience, yet when asked to write down the story or orally retell the story, each member of the audience might convey in different style and form. Therefore, while the underlying might be the same, the way in it is expressed

Modi and the Second Wave of Chinese Pandemic

- April 22, 2021

India is in the grip of the second wave of the pandemic induced by the virus originated in China. The cases are hitting records which were unseen in the previous wave. India has now recorded more than two thousand deaths per day. Though the death rate is lower relative to the first wave, the fact that deaths happen around a week or two after testing positive cannot be ruled out. Therefore, it would be premature to discuss the deaths in comparison to the first wave. There has been a lot of talk about the reasons for the second wave. While there might reasons one too many, what cannot be discounted is the fact that once the wave strikes, there is very little one can do other than cessation of economic and social life. Britain has been able to come out of the second wave thanks to the lockdown accompanied by the rapid increase in vaccinations. Europe is still in the grip of the lockdown. It seems inevitable that India too would have to go in for a lockdown. One of the reasons why

Polarizing Economic Debate and Shades of Grey

- April 21, 2021

Any debate on economics tends to evoke extremes rather than any midway or realistic paths. There is a polarization between those who advocate free markets to the extreme and those who advocate total command and control economy. The former are usually identified with Adam Smith though Smith rarely talked about free markets at its fullest. The latter are usually associated with Karl Marx and communism though Marx was more a reaction to the diminishing returns of capitalism. The schools of thought that evolved over a century and half since Marx have generally associated with a degree of polarization among the two different streams. As the social media gathered momentum, the debate on economics and economic thinking often revolve around these extremes. At times it seems there is little meeting ground between the two. There is something normative as suggested by the proponents on either side of the divide and there is something realistic, something that exists on the ground which might be

Repugnant Sports

- April 20, 2021

In the past posts, there have been discussions on defining and classifying sports. There has been an attempt to quench the curiosity of what constitutes and what does not. Sports going through various definition autotelic and is an activity that warrants sufficient seriousness in its engagement at the professional level. There certainly exists an element of competition and of course physicality though there is a subset of what are called mind-sports. It is moot whether these mindsports constitute sports in itself or otherwise. There is of course a requirement by some scholars that sports need institutionalization and be stable over a considerable period of time. Given many sports are games, they are expected to demonstrate characteristics of gameness. There certainly would be constitutive rules and space which is autonomous of the real world. While there are some activities which fit into sports very easily, there are others which perhaps are borderline. There are some others which a

Opening Up the Indian Vaccine Policy

- April 19, 2021

The second wave of the Chinese flu is not showing signs of decline. There are a few who are talking about the peak being hit in Maharashtra but there is very little evidence of the same. Maybe in the next few weeks, one could observe any decline. While there are quite a few experts who are talking about the peak being in three weeks and then a slow plateau and decline the cases, these opinions are bound to be taken with certain skepticism. The plan must be to prepare for the worst case scenario rather than the optimistic scenario. In fact, one of the drawbacks of the Indian policy making apparatus has been the plans based on optimism rather than worst case scenario. Indian vaccination approvals too was based on perhaps the minimum need to vaccinate a certain mass to break the chain. There was no realization that the chain could be broken only if all the Indians are vaccinated or at least those eligible. This has set back the process of vaccination and perhaps in some ways did aggrava

Robert Aumann's Agreement Theorem: A Note

- April 17, 2021

In 1976, publishing in the Annals of Statistics, Robert J Aumann made a contribution that perhaps is not just significant but provokes certain debate. He propounded what has to come be known as the Aumann agreement theorem. It is about agreeing to disagree or rather there would be no agreeing to disagree. To Aumann, two people let’s say 1 and 2 are said to ha have common knowledge of an event E if both know it, 1 knows that 2 knows about it and 2 knows 1 knows about it and 1 knows that 2 knows 1 knows about it and so on. Implied is the knowledge about the event is public with no secrecy. Carrying on, the theorem suggests, if two people have the same priors and their posteriors for an event A are common knowledge, then there posteriors are equal. If one were to decode the meaning, it implies given the absence of information asymmetry about an event, the two people in knowledge of the events would hold the same views even though their source of information would have differed in quanti

Basic Income for Housewives: A Note

- April 14, 2021

In the recent elections in Tamil Nadu, it was the filmstar turned politican Kamal Hassan who came with the proposal of basic income for housewives for undertaking domestic work. The idea was women do household work yet they are not paid in any form. This work constitutes productivity and needs to be monetized and hence must be paid. This idea has been gaining some traction or debate though the context in which Kamal would have spoken was electoral. The view that household work needs to be monetized is not something new. Feminist literature has been discussing about the same. There are certain judicial observations on the same, though judiciary hardly has any role in the same. Therefore, it would be interesting to examine at some length the proposals that are in play. Women engaged in household work, in the unpopular opinion, has nothing to do with patriarchy. It is essentially an outcome of the division of labour. There is a household production function. The household does pro

Lockdowns, Utility, Costs and the Second Wave of the Chinese Pandemic

- April 12, 2021

India is facing a second wave of corona virus induced pandemic. The cases are rising quite sharply. Hardly any state has been left untouched. The experts feel the peak is a little distance away. The tests have to increase and definitely have shown an increase. The spread is faster compared to the first wave. The cases are already increasing in excess of 1.5 lakhs per day compared to a peak of around 1 lakhs in the first wave. The vaccinations are steady, yet given the sheer size of India, they appear inadequate. India is vaccinating perhaps at the highest rate in absolute numbers but still they fall way behind the required rate to attain herd immunity in the shortest period of time. At this stage, there are again voices all around calling for a lockdown. There is increasing view that Maharashtra will have to go in for a lockdown maybe for a couple of weeks. Despite the disagreement with the coalition partners, it would be safe to assume that Maharashtra is left with no option b

Technology - Prosperity Linkages : Cause or Effect

- April 04, 2021

Technophiles often equate technological adoption with increased prosperity. There is a sense of technological determinism detected by them. To these economic agents, technology provides a deterministic solutions to the global problems and thus enables the rise in prosperity. One might wonder a certain merit being detected in their argument. Prima facie, their arguments do sound impressive. For instance, the invention of the automobile has revolutionized transport and accompanying it were the network effects that enhanced growth. The increased growth certainly translated into a substantial degree of prosperity. There might be an argument on the degree of diffusion of prosperity or the relative shares in income by different socio-economic groups but what is undeniable is a reduction in poverty is something visible. There are of course many others who argue that the technology has accentuated inequality across the global society. They tend to argue that technology does not further

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