Roth and Shapley have made a perfect match. The latter may well have been labelled an ivory tower economist. But Roth has shown that good theory can have important real world applications. The Nobel economics prize could not have gone to a better matched pair.
Archive for the ‘Economics’ Category
For this, the current high fiscal deficit must be contained and, hence, the hike in the prices of diesel and cap on liquefied petroleum gas (LPG) cylinders became essential. The subsidy on petroleum products, we are told, was “ Rs. 1,40,000 crore last year”. If the prices were not increased, then this would “have been over Rs. 2 lakh crore. Where would the money for this have come from? Money does not grow on trees”.
How has this subsidy figure been arrived at? This is much higher than the budget estimates. This seems to be calculated on the basis of the ‘under recovery’ of the oil companies. What is this? It is the difference between the retail price of petroleum products and its import price. It is, hence, notional in nature because import prices include duties, insurance, freight and other levies. These are not paid by the Indian companies since what we import is crude oil, which is processed in India to produce petrol, diesel, kerosene, etc. Instead of linking the price to the cost of imported crude plus domestic refining cost, the international price is taken as the benchmark. This is the gigantic fraud.
This fraud is reflected in the fact that all the oil companies are reporting handsome profits, not losses. Oil and Natural Gas Corporation (ONGC) Limited declared a net profit of Rs. 25,123 crore for the year 2011-12. For the following quarter ending June 30, 2012, it has reported a further growth of 48.4%. Indian Oil Corporation (IOC) has reported a net profit of Rs. 4,265.27 crore. Hindustan Petroleum Corporation Ltd (HPCL) reported a net profit of Rs. 911 crore. For the last quarter, January-March 2012, this further increased by 312%. Bharat Petroleum has reported a net profit of Rs. 1,546.68 crore.
Further, parliamentary answers and proceedings show that from 2010 onwards, the central exchequer has been earning anything above Rs. 1,30,000 crore annually through taxes and duties on petroleum products. After accounting for all subsidies, the Centre was still left with a surplus of over Rs. 90,000 crore in 2010-11. Who is subsidising whom, Mr prime minister?
Interesting throughout. Take a look!
A nice piece on why netflix did not implement the algorithm which won the million dollar prize, towards the end of which I found this:
The viewing data obviously makes a huge difference, but I also find it interesting that there’s a clear distinction in the kinds of recommendations people that work if people are going to “watch now” vs. “watch in the future.” I think this is an issue that Netflix probably has faced on the DVD side for years: when people rent a movie that won’t arrive for a few days, they’re making a bet on what they want at some future point. And, people tend to have a more… optimistic viewpoint of their future selves. That is, they may be willing to rent, say, an “artsy” movie that won’t show up for a few days, feeling that they’ll be in the mood to watch it a few days (weeks?) in the future, knowing they’re not in the mood immediately. But when the choice is immediate, they deal with their present selves, and that choice can be quite different. It would be great if Netflix revealed a bit more about those differences, but it is already interesting to see that the shift from delayed gratification to instant gratification clearly makes a difference in the kinds of recommendations that work for people.
Link via MR.
The standard measure of inequality is the Gini coefficient. It is equal to one if all income goes to one person; if one woman owned everyone in an economy, fed them what she liked and made them work according to her will, if all income belonged to her and everyone else was her slave, the Gini coefficient in her monarchy would be one. If, on the other hand, everyone got exactly the same income, the Gini coefficient would be zero.
If people are ranged from the poorest to the richest, and if the cumulative proportion of the population is plotted against the cumulative proportion of income it commands, one gets a Lorenz curve. If everyone got the same income, the proportion of income and the proportion of population would be the same, and a graph of one against the other would be a 45-degree straight line. If all the income went to one person, the graph would hug the x-axis till it reached that last person, and then rise vertically. The ratio of the area between the Lorenz curve and the 45-degree line to the total area under the line is the Gini coefficient.
The Organization for Economic Cooperation and Development has recently been looking at trends in income inequality. The countries with least unequal incomes amongst those for which OECD got data (mostly for 2008) are the Czech Republic and Scandinavian countries — Norway, Sweden, Denmark and Finland — all with Gini coefficients of 0.25 or less. Czech Republic was communist; the Scandinavians have extremely progressive taxation, and their people are honest in paying taxes. The countries with most unequal income are Mexico, Turkey, the US and Israel, with Gini coefficients of 0.48, 0.42 and 0.38 and 0.38 respectively. Most OECD countries cluster in the range of 0.25 to 0.33.
Take a look (I find, by Googling, that Gini coefficient of India is about 0.325 at present and it is increasing).
The illusion of eliminating uncertainty from corporate decision-making is not merely a question of management style or personal preference. In the legal environment that has developed around publicly traded corporations, managers are strongly discouraged from shouldering any risks that they know about—or, in the opinion of some future jury, should have known about—even if they have a hunch that the gamble might pay off in the long run. There is no such thing as “long run” in industries driven by the next quarterly report. The possibility of some innovation making money is just that—a mere possibility that will not have time to materialize before the subpoenas from minority shareholder lawsuits begin to roll in.
Today’s belief in ineluctable certainty is the true innovation-killer of our age. In this environment, the best an audacious manager can do is to develop small improvements to existing systems—climbing the hill, as it were, toward a local maximum, trimming fat, eking out the occasional tiny innovation—like city planners painting bicycle lanes on the streets as a gesture toward solving our energy problems. Any strategy that involves crossing a valley—accepting short-term losses to reach a higher hill in the distance—will soon be brought to a halt by the demands of a system that celebrates short-term gains and tolerates stagnation, but condemns anything else as failure. In short, a world where big stuff can never get done.
IR is at the 8th position and is the only Indian entity. Very interesting data; link via MR.
There is a proliferation of economic blogs, with increasing numbers of economists attracting large numbers of readers, yet little is known about the impact of this new medium. Using a variety of experimental and non-experimental techniques, this study quantifies some of their effects. First, links from blogs cause a striking increase in the number of abstract views and downloads of economic papers. Second, blogging raises the profile of the blogger (and his or her institution)and boosts their reputation above economists with similar publication records. Finally, a blog can transform attitudes about some of the topics it covers.
Take a look!
I spent most of my academic career doing what most of us do—teaching, writing, reading graduate applications and theses, having office hours, reading in my field, doing research. I didn’t pay much attention to the University and its administration. None of us have that luxury anymore. Budget cuts after budget cuts after budget cuts have left us all painfully aware of how the sausage is made, or not made.
Having served in administrative posts for most of the last five years, I have come to know the budget issues very well. We are now past the tipping point. We are on a rapid downhill slide that will have profound effects for our state, our families, our country, and our world.
In the space of less than a single lifetime, the University of California, Riverside went from being a small agricultural experiment station to being one of the top 100 universities in the world. An incredibly dense and elaborate web of specialists across all fields of scholarship, science, and the arts was developed, and it took enormous efforts by thousands of people over those years to make it happen. In less than the four years it used to take to graduate, it is being destroyed.
Read the entire post; it goes on to give the reasons behind the destruction and what can possibly be done about it:
Why is this happening? Political demagoguery and corruption. Thirty years ago UC received 9% of the state budget and prisons 3%. Now UC gets 3% and the prison-industrial complex gets 9%. The legislature is taking the money that should be used to educate the best of its citizens and using it enrich the people who make a profit from the imprisoning the poorest. The percentage of the cost of higher education provided by the state has been cut in half, cut in half again, and is on the verge of getting cut in half a third time. The people in the legislature understand the value of public higher education—the vast majority of them (in any given year over 80%) have degrees from our state system, and many of them have multiple degrees—all made possible by the legislators who preceded them, and who had more courage. They do not protect the University for a very simple reason: if they do, they will suffer a flow of conservative attacks and Tea Party racism, funded by the Koch brothers and their ilk, the standard price if one stands up for anything that is directly devoted to the commonweal.
In my darkest moments, I think the monied interests working against reasonable taxation are doing so because they consciously, actively seek to make sure we do not have an informed, educated citizenry, the better to extract our collective labor and wealth unimpeded. But such intentionality isn’t necessary. Simple, short-sighted, grab-it-now, bottom-line greed explains their destruction of our culture, without recourse to any dystopian conspiracies.
I hope you get angry. I hope you get active. Call and write your legislators, get out in the streets, take back your university, don’t let yourselves be the last people to have even this chance.
Do take a look!
Remarkably, however, Kerala in the recent past has shown a slightly higher growth rate than the Indian economy as a whole, and only a slightly lower growth rate than Gujarat with which it is always compared unfavourably as a destination for private capital. The gross domestic product at factor cost in constant (2004-5) prices in 2009-10 was 25 per cent higher than in 2006-07 for the country as a whole; for Kerala the gross state domestic product was 28 per cent higher and for Gujarat 31 per cent higher. Growth rate, though much advertised these days by Central government spokesmen, is an utterly inadequate index for judging economic progress. Even by this criterion, however, Kerala, despite not joining the rat race for attracting capital, has performed quite creditably.
Some may argue that Kerala would have done even better if it had also exerted itself to be hospitable to private capital; but that is erroneous. A state cannot both expand welfare expenditure significantly and be generous in providing inducements to private capital. State government resources being limited, a strategy of providing inducements to private capital takes up so much of these resources that little is left for increasing welfare expenditures noticeably. According to a report in The Hindu, for instance, the Gujarat government promised to give out Rs 31,000 crore, no doubt spread over several years, to induce the Tatas to shift their Nano plant to that state. With such largesse, clearly the scope for increasing welfare expenditure gets severely constricted.
Putting it differently, we have here two alternative development strategies, which cannot really be combined. One uses the public exchequer to induce capitalists to invest in the state in the belief that this investment will generate growth. The other uses the exchequer to increase government expenditure on a variety of schemes, in particular welfare schemes, in the belief that this will not only directly benefit the people, but also, as a consequence, enlarge the domestic market, to cater to which there will be an automatic increase in investment, not necessarily of big capitalists but of a range of small entrepreneurs.
I do not have to tell you which one of the strategies is better!
In six years from 2005-06, the Government of India wrote off corporate income tax worth Rs.3,74,937 crore — more than twice the 2G fraud — in successive Union budgets. The figure has grown every single year for which data are available. Corporate income tax written off in 2005-06 was Rs.34,618 crore. In the current budget, it is Rs.88,263 crore — an increase of 155 per cent. That is, the nation presently writes off over Rs.240 crore a day on average in corporate income tax. Oddly, that is also the daily average of illicit fund flows from India to foreign banks, according to a report of the Washington-based think tank, Global Financial Integrity.
Take a look!