scep1_corporatetower_1Read my article “The Human Cost Of Zoning” on FEE.org. I hope zoning in the third-world gets more attention with essays like this. I am glad that Financial Times, Bryan CaplanTyler Cowen, Alex Tabarrok, ACI Scholarly Blog IndexOrange County Register, FreakonometricsUrbanomics and economist Ajay Shah blogged about this article. Government Of South AustraliaQuartz shared it, and NYU Stern School Of Business’ Urbanization Project, Marron Institute,  and Brandon Fuller tweeted it.  Continue Reading

Books, Uncategorized

ag_imgFarming is considered a patriotic enterprise, and nearly half of India’s labor force is engaged in agriculture and allied activities. Almost everyone believes that in the election season, political parties should pledge to aid this patriotic endeavor to feed the nation.

After the Indian independence, the annual production of agricultural goods has risen many folds. At the same time, the prices of agricultural products have risen many folds too. In surveys, inflation is on the top of the list of the scourges that anger the Indian voters. Except for a short period in the early 2000s, inflation in independent India has always been high. How could agricultural productivity and prices rise simultaneously, year after year? It is surprising that such obvious questions have not occurred to the policy analysts who take such claims at face value. The prices rise when there is more money chasing fewer goods. Remember that even in 2008, when the then President Bush complained about rising global food prices, the average inflation in the United States was only 3.8 percentage. This was the highest in that decade. If this were fueled by the global economic crisis, it would have affected other countries too. But, in the countries were central banks are independent and have an inflation target, the inflation rates were often ridiculously low. India would not have found an inflation of 3.8 percentage worth losing sleep over. In its history, India has almost never seen such low levels of inflation.

But, if so many people produce so little as they claim, perhaps not many people should engage in farming. A short evening on a farm might have convinced the panegyrists of the past that the farmers themselves might not agree with their romantic view of the farmer.

Read my column in DNA.

Books, Uncategorized

He has the tidiest and most orderly brain, with the greatest capacity for storing facts, of any man living.

“My mind,” he said, “rebels at stagnation. Give me problems, give me work, give me the most abstruse cryptograms, or the most intricate analysis, and I am in my own proper atmosphere.” 

He is not a man that it is easy to draw out, though he can be communicative enough when the fancy strikes him. 

He was quiet in his ways, and his habits were regular.

He has the tidiest and most orderly brain, with the greatest capacity for storing facts, of any man living.

Holmes could talk exceedingly well when he chose, and that night he did choose. He appeared to be in a state of nervous exaltation. I have never known him so brilliant. He spoke on a quick succession of subjects—on miracle plays, on medieval pottery, on Stradivarius violins, on the Buddhism of Ceylon, and on the warships of the future—handling each as though he had made a special study of it.

“I was never a very sociable fellow, Watson, always rather fond of moping in my rooms and working out my own little methods of thought, so that I never mixed much with the men of my year.”

Sherlock Holmes had, in a very remarkable degree, the power of detaching his mind at will. For two hours the strange business in which we had been involved appeared to be forgotten, and he was entirely absorbed in the pictures of the modern Belgian masters. He would talk of nothing but art . . .

“He sits motionless, like a spider in the centre of its web, but that web has a thousand radiations, and he knows well every quiver of them”

“All that I have to say has already crossed your mind.”-Moriarty to Sherlock Holmes

“Doyle and Holmes were both tall and physically strong, both loved boxing and Turkish baths, were both untidy, both had a horror of destroying documents, both were omnivorous readers, and both favored the political union of England and the United States. Both were deeply interested in heredity, ancient manuscripts, and the Cornish language. Pierre Nordon describes Holmes as one of the last defenders of chivalry in English-language literature and most of all as an advocate of the innocent and victims; that is how Doyle saw himself, given the many public campaigns he fought, such as that against colonial Belgian oppression in the Congo. The point is not that Doyle and Holmes were similar in every way but rather that Doyle was well aware of how closely he was tied to his most beloved character. It’s also worth noting that none of Doyle’s other works succeeded in producing any memorable characters at all, perhaps because he had used up the main source material he had, namely himself.”

The quotes are from Tyler Cowen’s Create Your Own Economy

Books, Uncategorized

The Power Of Abstract Thinking

The root cause of most social ills is not that people are not activists or poverty-eradication thinkers. These are character flaws, and weak character is never in short supply. I am perhaps the first person to make this claim, but even “eminent” Indian intellectuals are not capable of making rapid fire abstract associations. By this, I mean the power to think quickly, to build arguments and counter-arguments, to spot non sequiturs, and to instantly pick holes in the arguments of their opponents. This is a major cause of social evils.

Look at the Sen-Bhagwati debate.  A key position of Amartya Sen is that “There isn’t a single place where growth has taken off without an educated and healthy workforce.”

Is it true that Indian poverty and weak economic progress is largely a result of a physically weak and uneducated workforce? The assumption is that Indian workers earn less because they are capable of exerting less physical and mental effort. Now, don’t deny this. Taken seriously, this is what this claim implies.

If this is true, transporting them to a different country, keeping their education level and health constant won’t improve their productivity and income levels significantly. But, we know that a low skilled Indian worker who moves to the US might see his income instantly rising twenty fold. In a prosperous country, they will live longer and healthier, being incomparably more productive. This means that there are cheaper and quicker ways of raising their income and productivity than building huge schools and hospitals, and hoping that growth will take off in a generation or two. This also means that the problems lie elsewhere. Continue Reading

Books, Uncategorized

As usual, inflation targeting began in the United States. In 1971, the US cut the link between the dollar and the Gold. Soon other countries followed suit. Inflation started rising to unprecedented levels in the US and the other industrial nations. Like in today’s India, the inflation of the 70’s was blamed on the rising oil prices, and various external factors.  Like in today’s India, many economists had believed that with rising inflation unemployment would fall. Low growth was also associated with high inflation. But, in the 70s, with high inflation, growth fell and unemployment rose.

In 1979, the Fed decided to have monthly target rates for the growth rate of M1. (M1 consists of the public’s holdings of currency and the checking account deposits in banks and other depository institutions) In 1971-81 period, the inflation in the US was in double digits, but, something changed after that.For close to three decades, inflation in the US was steady, but historically low. Fluctuations were mild till the ongoing global slow down. This is historically unprecedented. In the 70’s and 80’s, inflation in New Zealand was higher than in other OECD countries. In 1988, the CPI inflation in New Zealand was 9%. Inflation targeting began in 1990, and by 1991, the inflation was down to 2%. Inflation and output volatility declined. By 1994, New Zealand was among the fastest growing OECD countries.  In the financial year 2012-13, prices fell in New Zealand, month after month. It was so remarkably successful.

Read the whole article in the Business Standard.  Continue Reading