Econ Mom starts liking politicians

Friday night. We were watching Singham, with Ajay Devgan in full form, the lil one gleeful, hubby dozing between fights and me cringing every time some goonda broke one more limb on my TV screen. Hmmm, my allergetic reaction to the violence apart, I must say that it’s kinda nice to see this one man army taking on the corrupt Jaykant Shikres of this bad, bad world.

Even while watching Lil One ape all the fight moves impeccably and punch some invisible baddies in my living room, my mind was hovering uncomfortably to this new assignment I am handling. Because this new assignment has to do with politicians and corruption and efficiency of their working. And let me confess, much as I am learning a lot of new stuff pertaining to the subject matter of the assignment, I am also learning some uncomfortable truths about my own self and my biases whilst handling it.

Ok, first about the assignment. This is a kind of a political economy thing, where amongst other things, we have to work out measurable criteria to see how well politicians at the centre are performing and work out who the more efficient MPs are. Now, the first time we ever looked at the assignment, our team automatically switched back to the basic criteria of measuring the usual performance indicators: Attendance record of the MPs, number of criminal charges against them etc. These would form the first set of “negative” criteria to kind of reduce the list of the 545 MPs from the Lok Sabha to something, more manageable. The tone at the meeting was (rather gleefully) that these two criteria themselves should be able to help us to reduce the number of MPs down to 200; the sub-conscious level ideation being that politicians in India are basically crooks, and pros at bunking the boring sessions of the Parliament.

Heehee. Having grown up on a steady and masala diet of Hindi films full of lewd, leering, pot bellied and totally corrupt Mantris who eventually get bashed up by either common men with uncommonly big biceps or by Strider type of police officers without any back up and/or reporting hierarchies, I was thinking that getting even data on 200 MPs with decent attendance and clean records would be tough. And it’s not only the films. It’s also all those family gatherings and celebrations that Indian kids get to attend, with the males discussing politics pompously. As a child, I remember all the elders arguing vociferously about political issues and much as they would look furiously to and argue loudly against anyone who didn’t agree with their political views, on one view there would always be unanimity. “All politicians are crooks,” someone would say and the tension would break, generally making way for hot samosas and ice-creams over this newly found amicability over the corrupt quotient of the Indian politician.

Thank God for the corruption! How else would have Bollywood survived? Just think! We would have been poorer for never having seen (with awe bordering on incredulity) the dhai kilo waale haaths of Deols and the Shettys. The great Indian family gatherings would be reduced to mere gossip sessions. And most importantly, we would have had good roads, good power supply, good infrastructure…what would then happen to the millions of people who get employed today building the same roads multiple number of times? I am sure that if Lord John Maynard Keynes were to visit India, even he would be overwhelmed and moved to tears by how very literally our politicians seem to have taken him “The government should pay people to dig holes in the ground and then fill them up.”

All in all, you see, I was fairly sure that the negative list would work quite negatively against the MPs and we would be left with only a hundred or so people, who would then become our initial candidates to qualify as “efficient”.

Imagine my surprise, when the Lok Sabha data revealed the following details. Of the 546 MPs in the LS, there are 485 MPs that have an attendance record of more than 50%! What a pleasant surprise! That means that nearly 89% of our MPs attend the Parliament at least half of the time. This is good indeed. And it gets better.

On www.myneta.in, it is possible to get data on whether there are criminal charges pending against any of the MPs. Now, out of the 485 people with healthy attendance, there are 157 people who have criminal charges pending against them. That gave me a list of 328 MPs who had good attendance AND clean records. Impressive! I also came across data on whether Mantrijis have a PAN card or not and interestingly found that of the 328 winners, only 5 didn’t ahm…have PAN cards. Well, our list reduces to 323 MPs.

Clean decisions require a clean conscience. Well, think of the following situation. An MP has a stake in some food processing units and now becomes part of a Parliamentary Committee on Food Processing Industry in India. There could be a situation where he/she influences the policy in a manner that gives that helpful push to the units he has a stake in. This kind of a situation is called as a “conflict of interest” and it is now getting mandated that all MPs in both houses make declarations so as to avoid conflicts of interest. Again, I was very thrilled to see that there is a database on which we can check which of the Rajya Sabha MPs have given these declarations, though, such a database, sadly, is not being maintained for the MPs from the LS.

The 323 MPs with PAN and clean records and good attendance also take part in debates and discussions and ask a healthy number of questions in the Parliament. When I reported the statistics back to the team, there was great indignation and angst, to say the least. What! After getting scores and scores of bad movies dedicated to them, the politicians have done quite the volte-face and have, in their usual fashion, turned the statistics against us! How corrupt!

The humor in the shock apart, it was good to see these statistics. It is good to see that changes are coming through. It is good to see that more than 75% of our representatives are at least graduates. It’s good to see that norms for transparency are being set in both houses. For the first time, something about politicians is making me smile.

When I tried telling my Lil One later that night that not all politicians are bad, his reaction was typically Singham. “Ataa maajhi satakli,” he said.

Yoganomics!

Dear Reader,

This article appeared in the Hindu Business Line under my column titled “Tweakonomics.” You can see the article directly at http://www.thehindubusinessline.com/opinion/knotty-problem/article7339329.ece. Enjoy!

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Sigh! This International Yoga Day is really getting to the economists. The closer it gets, the more hassled they look.

And now that it’s here, even as the world celebrates the uplifting art and science of the body and the mind, the economists will be seen frozen in a corner, with numb bodies and dumb minds. Why, you may ask. Why, you may wonder. Why, you may well say with that snooty indifference which only muggle non-economists can have.

It’s simple. Our hopes stand crashed. We were told that Yoga is the most generic solution to any problem, personal or interpersonal. But we have been conned. And we are now sore as hell. Because it looks like Yoga does offer solutions to all types of issues, so long as they are not of the economic type. The UN Secretary General Mr. Ban Ki-Moon (BaMo) says that the singular act of getting the tree posture (Tadasana) right gave him that “simple sense of satisfaction” of having set the world right. Just try getting that GDP series into the tree posture.

So, imagine, how Baba Ramdev would react on seeing the GDP growth series. OMG! That would be like seeing a seriously distressed patient, with pathetic levels of energy. “Anulom Vilom!” The commanding voice will bark and while all 3500 participants at the Nehru Stadium will demonstrate the sharp intake of the breath, the GDP series will give out a huge sigh and continue on its way out of the stadium, looking more depressed than usual.

Send in the WPI. Hell lot of negativity all over. The Ramdev solution? Immediate pranayam to get the positive vibes back into the series. The entire RBI is now breathless doing Pranayam for the past 6 months, but WPI hain ke manta nahi. Perhaps the right thing is to get the Arabs into Pranayam mode, so that they’ll not swamp the markets with crude.

And just look at the exchange rate series. Like a temperamental artist, it goes all over. It’s so volatile, surely Yoga can help us to calm down this hyper energetic model? “Padmasana!” says the Master. The Lotus will help to stabilize the exchange rate. Really, now. Ahm, that’s too politically correct, isn’t it? No, let the exchange rates dance their zumba.

Baba will have to really think when he sees the interest rate though. Firstly, there’s a schizophrenia issue. Sometimes, the series is a repo, at times it can convert itself into lending rates, and sometimes it dons on an international personality like the LIBOR. “Shavasana!” The posture of the dead body. The classic remedy to calm down mental issues. But surely, we can’t afford a lifeless interest rate, can we? They have been in a dead state in Japan for nearly 15 years now and still the gloom persists.

Further, this is a series that is not in great form physically either; it’s seen too many surgeries for its own good. It is sometimes raised to a great height and pegged to a target and then slashed. Hmm, post-surgical Yoga. Tricky, this one. But no problem. We have a solution, says the Master. “Ardha Titaliasana!” The butterfly posture. But that is recipe for chaos theory. Fluttering of a butterfly in Indian banks causing a storm in businesses, you see. Thanks, no thanks!

Bring in those tricky blighters. The fiscal deficit and public debt. The sweetmeats you consume everyday and the total added up weight of the body. The diagnosis is immediate. Obesity. “Shirshasana!” The headstand. And view everything upside down, eh? And then you’ll claim that economists are freaks and need Yoga to calm down.

 

 

Economics inside the Matrix

                       “What is real? How do you define real?”

                                            – Morpheus, The Matrix

This week will be a quantum leap for Bengaluru , to which physicists from all over the world will gravitate. The prestigious Strings Conference 2015 will witness the presence of Nobel prize winners and young scientists to discuss the many principles of the string theory.

There are many underlying themes to the string theory. And while I am no physicist, it is impossible to remain unexcited and untouched by the many dimensions that strings unfold. Let me just share the story of the development of the string theory as I understand it.

Well, the general theory of relativity as given by Einstein managed to explain quite well how the forces of gravity hold objects at different distances. It did not only explain this, but there was verifiable evidence in front of our eyes, with predictions on movements of cosmic bodies coming true. There was yet another theory out there, the theory of quantum mechanics, which actually spoke about the tiny, tinier and the tiniest. It gives a mathematical identity to atoms and sub-atomic particles and explains their movement and behaviour mathematically.

However, there are certain situations where the world of the relativity theory and the world of quantum mechanics clash, and that too, magnificently. Unification of the two is impossible and it becomes difficult to predict behaviour patterns. What am I talking about? Black holes!

Well, at one extreme, a black hole is something so dense, that its gravity is terrifying. Any light that enters it is sucked into its core and cannot make its way out. That means that a black hole has gravity which is so colossal that it kind of collapses down to only one point: Singularity. Now, here is the issue. That means that black holes are incredibly dense and incredibly huge in their gravitational pull. But it also means that black holes are incredibly tiny and exist only in their singularity. So, should we use the general theory to explain it or the quantum theory?

You use both and you get different answers. It’s said that Einstein spent his last few years trying to unify the two. Now, there’s been this new theory on the horizon, which may presumably manage to unify both these theories to explain the universe properly: The theory of Everything, or simply the String theory.

The String theory essentially says that sub-atomic particles are made up of strings of energy that vibrate to give birth to different kinds of particles. But why do they vibrate?

Now, here, I quote the contribution of Juan Malcadena, the guy who’s pretty much shaken up the world by claiming that the universe is actually only a hologram!

Well, what we perceive around us is a 3-dimensional space. However, what Malcadena has done is to show that all 3 dimensional perceptions can be expressed mathematically as projections from a 2-dimensional space. So, there is an underlying 2D space that contains all the information to understand the 3D space in which we live. Get to the 2D space, and reality will unfold. The Matrix, anyone?

How does this tie up to string theory? Strings are holograms of events that are happening on that unknown 2D space. So, once we create the maths to collapse the string behaviour down to the 2D disc, there hopefully, should be light.

We are living in a giant hologram, and everything we see around us is a projection of a 2D surface. This is the bizarre theory put forward in 1997 by Juan Maldacena. Now researchers in Austria have, for the first time, been able to show how this strange holographic principle can work in a realistic model of our cosmos

When I read about ideas in pure, fundamental sciences, the social scientist in me gets a bit perturbed. Here I was, trying to explain movement of prices and growth in a world that is only a hologram! Asset price bubbles are like some super bubbles in what is already a bubble. Every economic equation I understood so far, every explanation of social phenomena, every movement in exchange rates, every notion of the poverty line, every hope of development boils down to one singularity: We exist. However, when the existence itself gets challenged, the economist is rendered jobless, better jobs data in the US be damned. My heart “strings” pull at my Neo identity when I am doing passionate work in a world full of the Andersons. Who am I? Only one more 3D projection of restlessness elsewhere in a 2D framework?

But, wait, maybe there is some relief from this torment around the corner, if only in its innocent humor. Economists are smart people. End of the day, wasn’t it Thomas Friedman who claimed that the World is Flat?

 

The repo rate cut and Maggi Noodles: A Tweakonomics spoof

Dear Reader,

Two minute trouble! This is the article that appeared in the Hindu Business Line under my column titled “Tweakonomics.” You can see the original article at http://www.thehindubusinessline.com/opinion/trouble-in-two-mins/article7298755.ece.

Enjoy!

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June 2; 10 pm. Eve of the Monetary Policy Review. He was seriously worried. To cut or not to cut was cutting into his mind. On the one hand, moderate growth revision from 7.8 per cent to 7.6 per cent had the doves squawking to him incessantly about how a rate cut is necessary.

And pressure from the government. Lower rates needed to support Make in India. And then, those self-proclaimed, pompous market gurus who had “factored in” a repo cut. How the hell can they factor anything in at all, he wondered irritably.

On the other hand, the inflation-averse advisors. Sigh! Typical RBI. He could almost hear the voices of his team droning on about higher inflation. Monsoon uncertainties and even more uncertain, the government response to poor rains. Oil moving into correction. Add better jobs data in the US and Yellen will move into an interest rate hike. Some fun it’ll be if I slash and she raises in the same month.

No, no, no, that won’t do at all. And that inflation warrior tag, that’s kinda nice. Hmmm. I think I won’t cut. This is final. No slash in the repo tomorrow.

God, I am so stressed, I really need a quick snack. And so he headed into the kitchen, looking for his favourite snack, when it hit him. Gosh, there’s no Maggi noodles to de-stress me this time around.

Why God, why? They couldn’t reduce the MSG and I can’t reduce the CRR. They market the lead and I lead the market. Here I am, trying to run an entire banking system, and nothing quick to eat. It took him the next 12 minutes to fix a sandwich.

Hmm, he thought. Maggi Noodles. ₹1500 crore sales. Assuming a ₹10 price point, that’s 150 crores of Maggi Noodles packets being sold in the fiscal.

Now, every packet takes 2 minutes to cook. Sans Maggi, the next best alternative takes about 12 minutes. OMG, that is 10 minutes extra.

That means that Indian people will now spend 150 crores x 10 = 1500 crore minutes extra time in just cooking. That’s 1.04 crore days. Now, personal experience tells me that when an Indian woman works an extra one hour in the kitchen, the probability of her getting into a foul mood increases by 10 per cent. Gosh, 1.04 crore days additionally spent in cooking will create social disturbance of a type unseen before.

There’s also the economic cost. Average cost per manday is around ₹500. So we are now looking at a loss of ₹520 crore (1.04 crore days x ₹500 per manday) in GDP just because people can’t have Maggi noodles. And this is just the direct effect.

A Keynesian multiplier value of 5 implies that the actual loss in GDP will be ₹520 x 5 = ₹2,600 crore. On a base of ₹120 lakh crore (GDP estimate), this is another 0.0002 per cent reduction in the GDP which my team never thought of!

That means growth will become even softer than 7.6 per cent and will hit an unbearable 7.5998 per cent this fiscal. Multiply it by 10,000 and you get 75,998; that’s the additional calls I’ll get from the FM. Multiply it by 1,000 and you get the Nifty levels; 7,599 will be a bloodbath. Multiply it by 100 and you get the Sensex down by 759 points.

Multiply it by 10 and that’s the additional 75.9 decibels with which Times Now will attack me. Unbearable! Multiply it by 1 and you get the current repo rate, the cause of all the trouble. Drat it! It’s final. I cut the rate tomorrow.

Econ Mom has some Kindle fun

I always read at least 5 books at a time. So, while I packing my bags for my vacation, I was undecided as to which of the 5 to carry. Actually, this packing bit is really stressful. I don’t know who in the world has come out with this “travel light” mantra; you are always under tremendous pressure to conform to the light standards. Actually, after a while I got so stressed, I decided to now even pack in things I definitely knew I wouldn’t use at all. With hubby staring at me in total disbelief, I decided to put in a couple of hangers, a photo album, 2 handbags, 3 pairs of shoes…errr…each, lots of biscuits (with “Surely you can buy Marie in Kerala” as background score) and even toyed briefly with a wall hanging just to challenge hubby to keep his temper. Heehee. And then went to fetch my books. All 5. But even I had to admit it, we were now travelling heavy. Real heavy. Just then, the phone.

One of my friends (he belongs to the category of friends I call my “book adda”) had called to say hi. On hearing about my which-book-to-carry issues, he said “Ok, I am coming right over with my Kindle and you are taking it with you.” Now he actually knows how I react to technology but he wouldn’t hear of any excuse. “I have loaded 152 books onto this, ok? So please carry this with you.” Now, that was really very sweet of him, but you see, my tech fear kept cropping up while holding the damn thing. Lil one however learnt all the features in no time at all and then spent the rest of the evening teaching me to…read. Grrrr! I was, quite literally, feeling quite illiterate.

There actually were 152 books in that tiny, slim machine. When Lil one patiently took me through the list and showed me all the titles and asked me to select any one, I went in for the Gun Seller by Hugh Laurie, highly recommended in my book adda. When the book opened, I instinctively sniffed at the Kindle, causing the lil one to retort “What are you doing mom?” Well, now, come on. New book, right? I can’t do without sniffing at it. Oh, I so love the smell of the unopened pages…remember Hermione detecting the smell of new parchment when confronted when Amortentia? I like smelling the book for a while before reading it; however, no such luck with the Kindle! Lil one was staring at me incredulously and hissing, “If you are done? And you can’t smell the Kindle, mom! Noone does this kind of stuff, mom. And you want to know how to go to the next page.” There’s no turning the page here, you kind of click your way into the new one. But it’s simple enough, and it grew on me in those 2 days before the travel. However, I surreptitiously did put in a hard copy (What if the battery fails) of a Terry Pratchett, just in case…

Just then, the phone rang, yet again. Supergeek on line. Now most people call us to say hi or to just catch up or to share some news. But Supergeek is different. This guy mostly calls to just laugh at my tech trauma. Grrrr! He started by telling me nonchalantly that he has newly acquired an activity tracker for just Re.1. I was snorting rudely at the mere idea. I mean, for the thing to work, you need to have…activity, right? I then informed him loftily that I too have a new acquisition and that I have switched to the Kindle, for the supergeeky reader experience. “Oh, but Kindle is so… unromantic. The idea of using technology in a thing as close to the human mind as reading is itself flawed.” Really! Apparently, technology is only applicable to tracking the mundane movements of the human body (even when there are none), not of the human mind. After generally ticking off his ideas with some well-chosen, rude words, I was now hell bent on using the Kindle all over Kerala.

Cut to the flight. We all were seated separately and after take-off, I started on my Kindle read. Next to me were these two women, gossiping like crazy about some third woman called Rita, about whom they apparently knew everything by the devious yet simple means of sharing the same maid. Not that I mind them knowing all about Rita, but people, there is a certain volume etiquette in travelling, isn’t there. By the end of the flight, everyone on board was thoroughly and totally educated about the wild habits of Rita, who apart from being very “fashionable” didn’t want to marry. My problem was something else. This entire Rita talk was biting into my Hugh Laurie experience so madly that I was really on the verge of asking that youngish looking chap across the aisle if he could marry Rita, just to shut these crazy women up. So this is how my reading went…

Laurie: It is the middle of December now, and we are about to travel to Switzerland – where we plan to ski a little, relax a little, and shoot a Dutch politician a little.

Woman 1: What these new girls are thinking!

Woman 2: Arre, they are not thinking. That is their problem.

Laurie: I think you’re a dangerous, corrupt, lying piece of nine-day-old mosquito shit

Woman 1: And now yesterday she went and bought herself a new car! Just like that! No discipline, I tell you. What these new girls are thinking..

Laurie: There’s an undeniable pleasure in stepping into an open-top sports car driven by a beautiful woman. It feels like you’re climbing into a metaphor

Woman 2: So she is now taking loans also without asking her parents!

Laurie: This was the tricky bit. The really tricky bit, trickiness cubed.

Woman 1 (predictably): What these new girls are thinking!

Arrrrgh! Arrrrgh! And more Arrrrgh! Just then, the stewardess bent over to offer me a juice and to my great discomfort, my neighbour (Woman 1) realized that there is this specimen sitting by the window with a something in hand. I could almost imagine her telling her adda later “And huband sitting separately and kids sitting somewhere else! What these new girls are thinking…”

Sigh. To my greater discomfort, she now turned in her seat to offer me her most winning smile. I was now terrorized since I was truly between the devil and the deep sea that I could spot from my window. “I also like to read. What are you reading? And what is that? Is it a tab?” she boomed loudly, looking at the poor Kindle, which I thought quivered quite nervously in my hand. I gave it a reassuring squeeze and already bugged with the two of them, decided to belt it back. Heehee. “Oh, don’t you know this? This is a Kindle. Surely, you don’t read actual paperback…books!” I said, with that pitying look in my widened-for-greater-impact eyes and that tone of gentle disdain. It was tough, balancing the soft look with the hard elbow I was giving the Terry Pratchett hardcopy present in my bag. Forgive me, oh God, for I know exactly what I do.

“My son gave me a tab. He is in IT na..” The defence.

“Oh, a tab” Again, gentle, gentle pity in the tone. “But tabs are not meant for reading. Firstly, they have backscreen lights that hurt your eyes (In my mind, I could almost see Lil One  lighting up with pride at my argument and Supergeek rolling his eyes till they hurt at this new tech-avataar of mine). So if you are planning to read long hours, its really not a great idea. A Kindle on the other hand, is like reading a book. See?” I said, tilting the Kindle screen towards my loud neighbours. “And its battery lasts for weeks together and hardly any weight. And this one has 152 books loaded on it. Technology has great advantages, you know..”

Heehee. This was great fun. Even as I write this blog, I am sure Woman 1 has ticked off the IT son for the 15th time this summer for having bought her a tab. And has ordered a Kindle for herself immediately. Amazon may not know it, but it’s good old econ mom who is the driving force behind “May 2015 sales of Kindle accelerate after a two month dip”. Kindle is kinda fun!