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Showing posts with the label pandemic

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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Modi and the Second Wave of Chinese Pandemic

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  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
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Blake Moulton Grid and the Unconditional Economy First Advocacy

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The issue of extending lockdown or reopening of the economy continues to border on rhetoric than substance. There are a few who hold an extreme view of complete reopening of the economy while few advocate the lockdown. At times, it seems rather than the individual judgment, it is the views of their ideological mentors sitting thousands of miles away from the location that determines the views. In India, many state governments notably ruled by the opposition parties are clamouring for an extension of lockdown. This makes the usually vociferous right wing activists on social media see red on any news of possible extension of the lockdown. Their views that India needs to open up fully arises from the fact of the need to oppose the views of the political left and so-called political liberal.   The debate on the feasibility of economy first or the health first has been discussed in this post .   The analysis is underpinned on the classical societal dilemmas of allocation of resources the
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The Post Pandemic Globalization

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While the world fights the Wuhan originated virus, it is unlikely that the post COVID-19 world would be the same. As with any war, the post war architecture undergoes a transformation change with little similarity to the past. The new normal is something different. The current global architecture in social, economic, political, cultural, military and technological governance is a product of the discussions and thinking that emerged in the immediate post World War II regime. The end of the Cold War with the collapse of the Soviet Union or rather a little earlier through a collapse of the Berlin Wall drove the world into an era of unabashed globalization. The outcome of such an era was the optimization of business resources perhaps an euphemism for cost minimization given the level of price. This led the business to seek new hunting grounds for production something that led them to China. The post “ Coronavirus, Global Economy and Redundancy ” captures the need for redundancies du
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Migrant Egress, Wuhan Virus and the Indian Shutdown

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The three week shutdown has turned the focus on the hundreds of homeless and daily wage laborers. Many of them have migrated from different parts of the country into the metro cities in search of livelihood. Question marks arise about their sustenance given there is no possibility of work in the next three weeks. There are of course vultures who want to scavenge on the living homeless and daily wagers. There are others who too are concerned about their survival. Some organizations are taking up work to provide free food etc. to these bottom of pyramid group yet in the curfew it would be difficult to reach out the genuine needy. Some want the government to implement a Universal Basic Income (UBI) so as to support these families with some nominal amount. Further many living in slums, tents, pipes, roads etc. it would be seen as an easy prey for the China virus. There are of course some voices that have called for egress of these back into their villages. In fact, one of the key cr
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A Note on Risk-Uncertainty Trade-offs

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There is risk and there is uncertainty. Risk is about factoring a possible positive or adverse occurrence that changes the payoff and in addition there exists a positive probability of the occurrence of the event. Uncertainty is unknown risk. There would be no way of knowing an event happening and its consequent impact either discrete or continuous. Supply chain disruptions due to global wide pandemic with epicentre in the production hub might have a very low positive probability, yet the risk levels would be so low that they would not be factored in. Moreover, the multiplicative nature of the event creates an uncertainty which cannot be factored in. A question like will Olympics happen on schedule is simply not answerable given there is zero clarity on the future directions of the pandemic. The directions of the multiplicative uncertain events often depend on individual motivations and risk assessments and their conflicting nature with the societal assessment and coping with th
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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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