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Showing posts with the label China

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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China and the Time Warp

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  China has fascinated the West for a very long time. They have been inquisitive about the way China has gone about in it thousands of years of history. Partly because China has been secretive, in part the curiosity has been about China’s handling of its relations overseas, its expeditions, its kingdoms in the Middle to Late Age, the Forbidden City and of course its Communist Revolution and post Maoist period. China was largely forbidden to the West for many years. For many years, China played a role of contented kingdom which had everything to satisfy the needs. The only things it needed perhaps was those goods which had certain snob or entertainment value. In the Middle to Late Middle Ages, it projected itself as something interested in Veblen imports and not something routine. In the Maoist period, the revolutionary impact made it forbidden to the rest. China was perhaps not colonized the way India for instance, yet there were many regions in China that were under Western control at
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President Biden's Challenges

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  As President Biden took office a couple of months ago, conservative historian Niall Fergusson wrote an interesting piece juxtaposing the challenges President Biden might face in the coming months and years. The article is available  here . The challenges range from China to Chinese virus to crime to racial divide in a country deeply torn by divisions. To add, would be his age- he is already the oldest to occupy the White House for the first time- apart from his health concerns. President Biden was favored by the establishment as the socialist Bernie Sanders threatened to run away with the Democrat nomination. The choice of Biden was also dictated perhaps by the fact he was the least unacceptable among the contenders. His term as Vice President during Obama administration cemented his credentials. Yet as he assumed office, US is certainly not in the best of the times. There are some scholars who are already talking about the Soviet days during Gorbachev. There are enough obituaries ab
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Phases in Chinese Economic Structure and Organization Post 1949 Revolution

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  The events in the last few months induced by the spread of the Chinese virus has brought attention onto the China’s role destructive or otherwise in the global economy. China for long, as many argue, apparently has had a free pass despite it being a non-market economy functioning on mercantilist principles seeking a victory in a zero sum game over the rest of the countries. It is perhaps an antithesis to the rule based order intended to promote global trade, commerce and mobility in a peaceful atmosphere. By opening up multiple fronts, it seeks to intimidate its neighbours, land ad maritime alike. Therefore, it would be of interest to understand the Chinese economic path. An earlier post had sought to link up the current Chinese behaviour through a prism of its behaviour throughout its history. The current post seeks to understand the nature and structure of Chinese economy through a glance at its immediate past. The solutions too would perhaps lie in adjusting the behaviour of the
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State Led Reforms and the Switch from China: Some Thoughts

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The past few days have seen reports from states like Madhya Pradesh, Uttar Pradesh, Gujarat among others about the announcement of new reforms in labour laws and land laws. Similarly some states have moved into reforming agricultural laws. Karnataka, Haryana, Orissa are among few other states that are following suit. It is expected that some more reforms might be announced in the next few days and weeks. A similar push from the Centre cannot be ruled out. Though most of these reforms were long overdue, apparently, the economic crisis induced by the Wuhan pandemic driven shutdown and the possibility of firms relocating production from China seem to drive these reforms.   Every crisis generates an opportunity. There is a silver lining in the darkest of the clouds. As the pandemic originating from Wuhan continues to create havoc, it is time to think of the post pandemic world order. It is possible for a gated globalization to emerge or a sort of economic NATO. Yet the first signs are
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China, Rationality and Pandemic Uncertainty

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The emergence of coronavirus in Chinese region of Wuhan and subsequent spread elsewhere in China and abroad is sending shockwaves. The governmental response is a shutdown of cities and provinces home to millions. It could not have come at a worse time given the holidays for Chinese lunar New Year. People would be travelling back home, to their ancestral places, to be with their friends etc. The virus has put paid to the plans and tourism industry is at a standstill. Worse, the panic seems to be gripping large scale population and upheavals not ruled out. Historically Chinese Communist Party has been secretive about the incidence and spread of virus and this adds to the rumours all around. Most accounts suggest, underreporting on casualties from the Chinese authorities, some even suggesting underreporting by factor 8-10. Setting aside the exaggerations, it can be safely assumed the reporting would be around 40-50% of the total cases in the best case scenario. Given the global travel
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Geopolitics of Electric Vehicles

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At the dawn of 2020, India seems to be on a trajectory to switch to electric vehicles for mobility. Unarguably, mobility both intra city and inter-city pose huge challenges for policy makers. For centuries, mobility was essentially a function of the speed of human legs and animals. Machine power touched mobility solutions only in the last two centuries or so. Horse drawn trams were all over New York even 120 years ago till the car took over. The IC engine transfigured the mobility across the world. Personal mobility as distinct from public travel got a new spur. Fascinatingly, the early cars were more electric than fuel based. Large scale discoveries of oil in the Gulf at the dawn of the 20 th century in addition to the reserves in the US led to an era of cheap fuel. Private ownership of cars began to increase, US in particular. Increased competition supplemented by innovation and price drops enabled the virtuous cycle in automobile industry. Distinctive to car as theme
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Weather changes and food production

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Agriculture is often characterized by high variability of production outcomes or, production risk . Unlike most other entrepreneurs, farmers are not able to predict with certainty the amount of output that the production process will yield due to external factors such as weather, pests, and diseases. While one cannot deny the rapid advances in technology in food production through better seeds, yield management, irrigation systems etc, weather and climate yet remain wild cards. The drought in South Asia in 1987 and consequent wheat imports and havoc in livelihoods still remains fresh after 25 years.   The origin of Arab spring in late 2010in Tunisia started with the failure to quell food prices and the rise of water wildcatting in Yemen flared up protests there.  Some scientists believe that weather changes due to global warming can depress the food production beyond the current estimates.   UN estimates in 2011 revealed that food prices rose consecutively for eight months
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