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Archive for the ‘Economics and Startups’ Category

The advantages of living in a third world country.

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You get free access to NBER papers!

So what is the NBER ?

Founded in 1920, the National Bureau of Economic Research is a private, nonprofit, nonpartisan research organization dedicated to promoting a greater understanding of how the economy works. The NBER is committed to undertaking and disseminating unbiased economic research among public policymakers, business professionals, and the academic community.

Or so their website says.

And the best part is allmost all their work is free for people who  are associated with the government or have an academic subscription or – hold your breadth – living a developing country!

Don’t you just love living in a third world country with first world internet facilities 😀

Signing off,
Vishnu Vyas

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Written by vishnuvyas

August 19, 2006 at 4:00 pm

Innovation Air – the ingenuity of the free market.

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Freemarket advocates like me usually focus on the efficiency of the free market ignoring another equally powerful factor that makes it such a wonderful system – Innovation. After the london terror threat and virtually stalling all trans-atlantic and european airlines, passengers facing delays in airports and getting hassled have been chosing private chartered carriers recently. The BBC reports.

“Flight delays and cancellations at London’s airports in recent days have sent demand for executive jets and other private charter aircraft soaring.”

A system discussed more that 400 years back by Adam Smith seems to have stood the test of time and has once again proved that it can come up with completely amazing solutions for even the most difficult of problems.

Signin Off,
Vishnu Vyas.

Written by vishnuvyas

August 17, 2006 at 4:28 am

In search of the econimic equality and why protectionism is bad.

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Economic equality is such a sensitive topic, that is close to so many people’s hearts that even the most rational person is not immune to the emotions that come with such discussions. But the reality is that economic equality is not unidimensional, if you move towards economic equality, you are actually moving away from something. The fact that economic equality looks egalitarian on paper and the something you are moving away from isn’t visible makes matters much worse. Here is a case against economic inequality.

  1. Its discrimination against the rich : As laughable as it might sound, its easy to forget that when you are taking about classes such as the rich and the poor, you are actually talking about people. And secondly not all rich people are rich because they robbed the poor, some might have actually made it because they worked hard, not only enriching themselves and their families, but in all posibility others around them. So, is it fair to actually support a form of discrimination against a section of people, in the name of fairness and egalitarianess?
  2. Are there really no class divides ? : Its easy to say that class divisions are removed when economic equality is ensured, but is that really true? On deeper introspection that theory doesn’t hold good. If you mandate equal sharing of wealth (by communes and other socialistic practices), then aren’t the slackers getting a free ride? The slackers are getting more in return for less work, even though their work doesn’t carry as much value as your regular busy body, it carries more value in the arithmetic sense because, you get as much as the busy body next to you for working lesser . Isn’t that some form of opression against the busy bodies? Wouldn’t that breed discontent which elimination of class-divides hopes to achieve? And secondly wouldn’t that be an incentive for less work, rather than more? Is that really the correct way to move towards prosperity?
  3. External factors : Assume the commune or the socialistic government provides housing for people in an area. Then they build a school somewhere near that area. Even though each housing unit started off with equal value, the ones near the school are more valuble than the ones farther away. People would want their homes to be nearer to schools and thus demand for homes near schools increases. And inspite of no fault of theirs, people whose houses were farther got off with the bad deal. Luck plays as much a role in centrally planned economies as much their capitalistic counterparts.

Economic equality might be a nice goal to strive for, but its far from practical in the real world. Theory works nice in theory, but in practice it often fails. Yet, the left in india and elsewhere seem to be harping on this absurd vilification of “greed” which drives a capitalistic economy and talk about this equally absurd ideal of “economic equality”. And yet no one has called their bluff? Sad, really sad.

Again, replace “economic equality” with “social equality” you would get my argument against reservations too. protectionism, economic or social doesn’t help. Neither does cultural protectionism. A good example that I recently found out was in the case of airtel super singer, a tamil equivalent for American Idol. A friend actually refused to vote for a better singer simply because he did not share his ethinicity inspite of the obvious fact, which he acknowldged openly, that person he refused to vote for was a better singer.

If all decisions here are based on ethinicity,not only does it impoverish the person culturally by refusing him cultural experiences which it might have provided if he had won the popular vote, but also all members of his own ethinicity who just lost an interesting oppurtunity to enrich their own culture with a whiff of novelty and spice introduced by the other culture. Sadly, protectionism cuts bothways and cuts pretty deeply. When will we ever learn!

Signing off,

Vishnu Vyas.

Written by vishnuvyas

July 29, 2006 at 4:06 pm

The Right to Private Property.

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I have always considered myself a liberal and one thing that is inexcusable for a liberal is the violation of the right to private property. The attitude of politicians and the society in general towards the property rights of induviduals here is something that is far from even being considered acceptable. Right from the "not in my backyard syndrome" to the whole brouhaha of the Sardar Sarovar Dam issue. It is downright depressing. The latest in the series of atrocities that are being hijacked and either being grossly misrepresented and/or glorified is the election promise of two acres of land to farmers by the DMK in tamil nadu.

Among the various promises, many fancy, imaginative and at most only partially implementable with high costs is the promise of two acres of land to landless farmers. And the land for all these small farmers comes from other arable, but unused land which in most cases are owned by private citizens. This so called 'tharisu' land also includes lands in private hands. And this promise is basically a violation of the property rights of those induviduals. Whats even worse is our beloved minister of finance supporting this. I know for a fact that he is more sensible than he actually appears on the dias. But would some one be actually willing to forego what he thinks is correct for the sake of petty politics? And by the way Mr.Chidambaram, I've lost all respect I had for you.

One thing that is true today, and as I believe the finance minister is well aware is that farming on the small scale is not the way of progress. Its about time we moved our massive labour force to something thats more productive, probably manufacturing and let the farming to the corporates. Yes, Corporate Agriculture is the way to go. The means of agricultural production, is better used when it is in the hands of large corporate entities, espescially when indian agriculture is at the mercy of the monsoons. Not only would they have better bargaining power and be able to handle the vagarancies of the market, they would also be able to manage the seasonal fluctuations and why we may even see some innovations in agriculture. But thats not whats important now.

What is important is that property rights of private citizens are important. It is simply atrocious to see a political party glorifying blatant violation of such rights. Its even worse when a central minister praises such a scheme. But something that is by far the most incomprehensible is complete and universal apathy shown by the general public regarding this issue. Will I ever find a level headed, sensible, and progressively minded politician? (Note, I din't mention honest, I lost all hope of finding honest ones a long time ago).

Signing Off,
Vishnu Vyas.

Written by vishnuvyas

April 28, 2006 at 2:13 am

Free Writing: The Cathedral and the Baazar.

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This is something I wrote on an extremely mind numbing 40 kilometre bus journey from my house to my college.

There is an interesting article in todays' paper about how big a market place that china has become. But the line that piqued my curiosity more than anything else was this particular line.

The largest manufacturer of christmas decorations and santa claus dolls is offically atheist china.

Well, for some-one who knows a bit of world history, china's is not the first atheistic country. India is supposed to be one too, but the meaning of the term 'secular' has been hijacked and mutilated beyond repair by our politicians. A few decades back, it was the godless russians, now its 'officially atheist china'. Interesting isn't it? Atheism has always been inextricably entangled with communism and in most cases socialism. It may be true that socialism may imply atheism, but why the converse? Stated otherwise, why has free market, a purely economic concept been so deeply tied with relegion outside purely academic circles?

It is highly inconcievable that such a link could have been forged and enforced over few decades. Even taking into acount the the strong images that the link draws to christian america or the persecution of faulon gong. What's more ironical about this link is that, if you practice religion, then as the many "relegious heads" seem to concur, relegion seems to be all about equality and the well-being of every one. But aren't those the same goals of a socialist ideology? I've heard of the religious right, but never the about a religious left or even an 'agnostic right'. Are there more deeper connections that I don't know about or is it just blatant american media hegomony that seems to be all-pervasive. An Interesting conundrum after all!

Signing Off,
Vishnu Vyas.

Written by vishnuvyas

April 23, 2006 at 4:14 pm

My Sentiments Exactly!

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I've been usually criticised (of course by a lot of well meaning people) for bashing the current development model of the indian economy, or the fact that I constantly rant about how its really bad that low entry barriers to the BPO and other back office industries imparts a serious strain on innovation within the economy. But hearing the ex-CEO of Wipro, a major player in the Indian IT and ITES diaspora echoing my sentiments was definitely as pleasent surprise that I never could have expected in a million years.

Here is the link to the interview at Knoweldge@Wharton.

Written by vishnuvyas

April 20, 2006 at 2:18 pm

Musings on Indian Economic Growth

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The phenomenal growth that has occurred in the last few years in India can be attributed to two major factors. One the outsourcing boom in India, which brings in a tremendous amount of foreign exchange to our country. And secondly the improved investor confidence in the stock market which has also led to FII investing in the Indian stock market. But looking a bit behind the second reason, the new economy which is primarily dependent on the outsourcing boom, is the reason why there is improved investor confidence. There is higher spending power, and the new day knowledge worker is more cognizant of other forms of investments like stocks and mutual funds.

Though, all this is a reason to rejoice and revel in the prosperity that our new economy has bought us, we must for a moment pause and think about whether is it really sustainable? And is it as good as it seems? As I see it, the answer sadly is no. Unfortunately "India shining" applies only to a small section of the Indian social diaspora. Which is mostly dependent on the powerful outsourcing boom. Bluntly put, the new Indian middle class, is fundamentally not dependent on Indian markets for its lively hood.

This is such a skewed situation. With a more than 16% of world population residing in India, Indian markets are huge. Mind bogglingly so, yet they are mostly untapped. Purchasing power for major parts of the society has not improved in spite of the considerable increase in the outsourcing boom (because, mostly they are not correlated). The Indian consumer still is less powerful than an average western consumer that most of the outsourcing boom caters too. Our local markets are weaker and hence does not have enough power to drive capital asset appreciation. The new information economy is dependent on a weak rupee to be profitable. The local market has been neglected by the government at the cost of promoting the "new economy". We haven't made more Indians richer, we have just made a few Indians more richer.

So, what's wrong with that you may ask? Well, sustaining the new economy means keeping the rupee weak, and decreasing the purchasing power for a majority of the Indians. This means, our markets (not the stock market) but local Indian markets are weaker than local western markets and hence keeping a lot of Indians poor. In the worst case it might lead to violent revolutions and sometimes duct-tape solutions which are promoted with revolution like whats happening with the people's war group in many parts of the country. And keeping a majority of Indians poor for the benifit of making a few indians richer is never a good idea.

Signing Off,
Vishnu Vyas

Written by vishnuvyas

March 30, 2006 at 7:06 pm