Saturday, May 31, 2014

Jacobin comments on Piketty

seem deeper than many previous reviews. Mike Beggs introduction to the comments Not another Piketty Symposium. These are by Mike Beggs, Suresh Naidu and possibly the best one by Seth Ackerman.
Steve Roth explains Wealth is not capital: The brilliant Seth Ackerman explains it all for you.

Friday, May 30, 2014

Andrew Haldane on Piketty

 "Enough has already been said and written about a book bought by many, read by few and understood by even fewer (Piketty (2014). I am guilty on all three charges.
"I suspect never, in the field of human endeavour, has so simple a line chart done so much to fuel the debate among so many, not just in the salons of Paris but in the Starbucks of London and New York.
"Suffice to say, the inequality issue seems unlikely to be a French fashion. It is a global public policy trend and a rising one."

On Piketty's second law

It is an asymptotic law : :Piketty’s Second Fundamental Law is not an identity or an approximate identity. It is, as Piketty makes clear at some length on pages 166-170 of the book, a long-term asymptotic law. For the benefit of the general reader, Piketty abbreviates the statement of the law in the form  “β  = s/g”. But it might be stated more carefully this way: “For a fixed savings rate s and growth rate g, the capital-to-income ratio β converges over time to s/g.” He might have abbreviated it in more conventional fashion in the form β → s/g. Piketty sketches an elementary proof of this convergence theorem in his online technical appendix. Like any limit theorem proved over the real numbers, it requires implicit restrictions on the range of the variables to avoid singularities."
Dan Kervick has written more about it in an earlier post. Piketty explicitly says that it does not explain shocks "but it does allow us to understand the potential equilibrium level toward which capital/income ratio tends in the long run, when the effects of shocks and crises have dissipated", page 170. He goes on to discuss this factor (as well as others like privatization) for the increase of β after the shocks of the wars (page 187 onwards).
Anyway this law seems to be drawing some criticism from various sources.

Wednesday, May 28, 2014

Our number's up

says Monbiot. I too keep wondering when we will stop talking about growth. I found equally depressing a video posted earlier where around 12:30, where one of the victims says that coal industry is over regulated. When victims start supporting their exploiters, may it is a sign that our time is up. There will be some stages in between with around fifty percent of the people in virtual slavery.

Piketty to update his data

From Business Insider "I welcome constructive discussion of data (that’s why I put everything on line); but the FT people are not really constructive; although they try to pretend the opposite, the small changes they made to my series (and which I disagree with) do not change anything to the long run evolutions and to my analysis. I will update the book’s technical appendix in the coming days so as to clarify this further."
So far, one criticism that I found interesting is by Michael Hudson but that is not about data. I assume that data controversy will sort out basically in favour of Piketty, I think.

Tuesday, May 27, 2014

The illusion of explanatory depth.

From MindHacks post The best way to win an argument :"A little over a decade ago Leonid Rozenblit and Frank Keil from Yale University suggested that in many instances people believe they understand how something works when in fact their understanding is superficial at best. They called this phenomenon “the illusion of explanatory depth“. They began by asking their study participants to rate how well they understood how things like flushing toilets, car speedometers and sewing machines worked, before asking them to explain what they understood and then answer questions on it. The effect they revealed was that, on average, people in the experiment rated their understanding as much worse after it had been put to the test."

Monday, May 26, 2014

Dan Kervick has a Piketty workbook

Check Naked Piketty-with a bonus workbook. My impression is that many who reviewed Piketty, particularly economists (possibly much of it is familiar to them and so turn pages), have not read Piketty. Dan Kervick, though not a regular economist (?), seems to be one of the few who read it thoroughly.

Debraj Ray comments on Piketty

in Nit-Piketty
" At the time of writing, the Financial Times (May 23, 2014) is reporting arithmetical errors in some of the Piketty spreadsheets. I am not yet competent enough to comment on these empirical critiques, but I’m pretty sure that the overall observation of rising inequality will stand in some definitive shape or form."
Ray also says
 "Piketty’s Third Law [r>g] has been known to economic theorists for at least 50 years, and no economic theorist has ever suggested that it “explains” rising inequality. Because it doesn’t. It can’t, because the models that generate this finding are fully compatible with stable inequalities of income and wealth. (More on this in the appendix to the pdf version.) You need something else to get at rising inequality."
Then he goes on to explain his views. There is an appendix too. But his derivation of the second law assumes that β is constant. As I understand, it is a dynamic asymptotic law. Assuming β is constant probably robs it of any explanatory power.

Sunday, May 25, 2014

The development we have to have

 Notice at 12:30 the lady whose family has health problems which they believe are due to water contaminated by mining believes that mining is over regulated.

Links to Giles criticism of Piketty

Some in Economist's View's Links for 5-25-2014/ Others can be found at Marginal Revolution, Naked Capitalism, Greg Mankiw's blog... I am not reading most of them since they are beyond my expertise. I would guess that they would eventually sort out. With big book covering 300 years of data, there are bound to be mistakes. Improvements and other methods of evaluations is a necessary part of the process.

Under the pinewood trees

I thought nothing grows under them. Appartently ginseng does, at least in New Zealand "Along with particular soil, land slope and climate requirements, ginseng requires a high level of shade making planted forests an ideal environment in which to grow the herb. 

Chief Executive of Maraeroa C, Glen Katu, approached Scion to help determine what the optimal conditions for growing ginseng were and other areas in the central North Island with similar conditions, as well as its economic value as an export. 
Although the risks are high, wild simulated ginseng may have a huge bearing on the profitability of forestry, providing earlier returns and considerable long term employment opportunities. Conservative estimates indicate ginseng could potentially double profitability compared to forestry alone, returning an additional 154 - 188 per cent value per hectare of planted forest. With an expected fresh yield of 675 kilos per hectare (225 kg dried) returning $2,000 per kilo for dried ginseng, the economics are clear."
May be there are possibilities in some parts of India like Meghalaya where I have seen pinewood forests.

Saturday, May 24, 2014

A dirge for democracy

in The Nation What was democracy? by Thomas Meaney and Yascha Mounk:
"There is no steady convoy of nations converging on liberal democracy in the world today, but rather monarchies trying to keep democracy at bay (Morocco, Jordan, Saudi Arabia); oligarchies posing as social democracies (Indonesia); theocratic republics (Iran); totalitarian patriarchies (North Korea); democratic populist governments facing elitist uprisings (Thailand, Turkey); socialist gerontocratic oligarchies (Algeria); praetorian oligarchies (Burma); democratic populist governments facing populist uprisings from their own constituencies (Brazil, Argentina); anti-liberal autocracies (the Russian Federation); anti-liberal democracies (Hungary); and constitutional plutocratic republics (the United States)."

Friday, May 23, 2014

From some comments on Piketty

Greg Mankiw " I don’t see wealth as naturally growing at the rate of return on capital, and as a result I don’t see as wealth concentration as continuing to increase." April 29
Larry Sumners "His argument is that capital or wealth grows at the rate of return to capital, a rate that normally exceeds the economic growth rate." A few days ago
Yves Smith "In year 2, you multiply r by your year 1 capital plus r from year 1. Piketty’s definition of capital is extremely broad (it’s been criticized for that reason). Folks, this is basic compounding, and that’s where the fallacy in his reasoning lies. It’s bloomin’ obvious." and "As Piketty defines capital, the return on capital in one period becomes capital in the next time period by virtue of being capital-type assets (loans, stocks, investments in more production, etc.)" May 22

 Piketty says in Chapter 10, page 351,”For example, if g=1%, and r=5%, saving one-fifth of the capital from income (while consuming the other four-fifth) is enough to ensure that capital inherited from the previous generation grows at the same rate as the economy. If one saves more, because one’s fortune is large enough to live well while consuming less than one’s annual rent, then one’s fortune will increase more rapidly than the economy, and inequality of wealth will tend to increase even if one contributes no income from labor.”

Dan Kervick points to some of these in his posts A proper Pile of Piketty Posts and also Matt Bruenig posts on Piketty's Capital

P.S. In the Yves Smith post quoted above, Dan Kervick has several useful points clarifying Piketty's book. See in particular the 10:35, May 22 remark. An excerpt "Look what’s going on here. The Marxists don’t like Piketty because they have an analysis that predicts capitalism leads to an endless increase in the capital share, a crisis of profitability, and then possibly revolution. The liberals don’t like Piketty because he is arguing that the problems with actually existing capitalism are deeper than those that can be fixed just by making markets more perfect while building a safety net. Piketty is arguing that capitalism can persist in a relatively stable condition for a very long time where the rich just keep getting richer. And in the end, even after returns to capital fall and this process of increasing inequality levels off, you don’t get crisis or collapse, but a stable neo-feudal system with a flat, but very high, capital share, and with rich people collecting their rents year after year." On the whole a useful discussion. Even though Yves Smith keeps posting anti-Piketty posts, she has allowed the discussion to go on. See also William Neil at 9.48 A.M. "As to the other factors which may affect capital accumulation and its rate of return, don’t underestimate the not fully explicated but suggestive implications of the words Piketty uses in Chapter 7, “Inequality and Concentration: Preliminary Bearings,” specifically on page 262: “Indeed, whether such extreme inequality is or is not sustainable depends not only on the effectiveness of the repressive apparatus but also, and perhaps primarily, on the effectiveness of the apparatus of justification.”"
This seems to be a discussion that I will go back to off and on.

Thursday, May 22, 2014

Recent reflections on GM foods by Glenn Davis Stone

and Dominic Glover Genetically Modified Crops and the 'Food Crisis': Discourse and Material Impacts
There have been several posts in this blog about Glenn Stone's work in Warangal and other places. He also blogs and his posts are also linked in agroecopeople.
Meanwhile Duncan Green says "Since I started globetrotting many decades years ago, I’ve always asked peasants and farm labourers a simple question – ‘would you like your kids to become farmers?’ Across continents, the answer has hardly ever been ‘yes’. "

Monday, May 19, 2014


From the May 19 links article Doctors and tests cannot always find answers to legitimate ailments 
"Four years, 22 specialists, three doctors and several unfortunate forays into the world of alternative medicine later, Townson was able to get most of her symptoms under control after she realised through her own research that gluten - a protein found in wheat, barley and rye - seemed to be causing her ailments."
I also posted this in Facebook. After seeing this Rahul Siddharthan pointed to an earlier article in New York Times The Boy With Thorns in His Joints  which is possibly gluten related. Rahul adds "My own symptoms were nowhere near as severe but the improvement (psoriasis in particular, but also other things) after stopping gluten has been just as dramatic. I had no symptoms until I was almost 30, as far as I can tell. I think this is a severely underdiagnosed intolerance, and in particular, most medical professionals refuse to recognise it unless you have full-blown coeliac, despite plenty of literature supporting non-coeliac intolerance."
Rahul has a  Facebook account. He also blogs and may write about it in one of the two. He is more qualified to write about it than me; he started as a physicist but also works on biology related topics.

Dance music with some Busby Berkeley type shots

Minai writes about such shots here.

A popular Tamil song from 1956

Links, May19, 2014

Sunday, May 18, 2014

Shamshad Begum and Bhanumati in Nishan 1950

Bhanumati sins for herself in the telugu version Nijamo Maayo Emo Kaani Atadokaanoka Raajeyounata (నిజమో మాయో ఏమో కాని ఆతడొకానొక రాజేయౌనట) in Apoorva Sahodarulu
The Tamil versio Apoorva Sahodaragal Came in 1949 and Randor Guy writes about this song here "A duet meant for the Hindi version was composed on the piano by Rajeswara Rao, and Vasan liked it so much he wanted it for the Tamil version too. This song was added after the shoot was over! Acharya invested the song sequence with fine creative touches — Radha’s hand covering Bhanumathi’s and both their hands gliding across the ivory keys of the piano! ‘Maanum Maiyilum Aadum Solai…’ (the opening lines of the piano song) became quite popular." Tamil version 

Padmini in 1957 film Pardesi
First part of the film and the second part

Brad DeLong smackdown watch

"As for a prominent economics professor at Berkeley, mere weeks before the recession began in December 2007 the professor asked that a New York Times columnist be retired for suggesting that the economy was faltering." from a discussion in Economist's View in the first comment by 'anne'. Later, she gives the link.

William Dalrymple on Modi

(via 3quarksdaily) Narendra Modi: man of the masses. One relatively optimistic passage "One of his biggest admirers in Delhi, who has known him for many years, told me that Modi’s Hindutva views haven’t changed but his interests have: that he was now much better travelled and more sophisticated than he was when he first came to power, and that his obsession was now catching up with China, whose rise he has followed closely." 

Saturday, May 17, 2014

Backyard gardeners

Attended Backyard Harvest Gardeners Q&A Panel  organized by the Darebin City Council as a part of Darebin Food & Wine Festival. One of the highlights is a fifteen minute talk by Robbie Kershaw mentioned in The Age yesterday:
"The boom in growing your own fruit and veg has sparked plenty of friendly rivalry but the Kershaw family of Thornbury has a secret weapon. Fresh fish poo.
Your yard may be bursting with celery, rhubarb, coriander and potatoes. But the Kershaws also have 100 trout.
The rainbow trout aren’t there to look pretty. As part of the Kershaw’s avant-garde aquaponics system, the fish tank water, including fish waste containing nitrates, is pumped as fertiliser into garden beds lined with clay beads and volcanic rock.
The plant roots filter the water and that water is then fed back into the fish tanks, in a continuous loop.  Robbie Kershaw says he has barely had to add water in five years. ‘‘The only thing going in there is fish food.’’..................
After moving to their 200 square metres in Thornbury 10 years ago, Mr Kershaw developed a keen love of gardening.
Over a year, the family grows more than 50 different fruit and vegetables, including 12 fruit trees, 10 types of tomato, eight kinds of lettuce and strawberries, broccoli, chilis and masses of herbs.
Passers-by have been known to pinch rosemary, vine leaves for dolmades and recently a cantaloupe, but Mr Kershaw doesn’t mind. ‘‘It’s part of being in a community,’’ he says. 
He discovered aquaponics online five years ago and it beautifully combines his passions of fish and gardening.
He reckons the family saves on average 50 per cent of its annual fruit and vegie bill. He spent about $2200 building and buying two 1000-litre tanks, pumps, clay beads for the garden beds plus buying trout at $1 each and $50 a year in fish food."
 I could not get much more out of the talk but Mr. Kershaw suggested that there is much information available on line and on YouTube about aquaponics from one Murray Hallam of Queensland. Robbie Kershaw is currently the Board Secretary for an organization 'Cultivating Community'

Dhak Dhak Karti Chali

Friday, May 16, 2014

Michael Hudson on Ukraine

The New Cold War's Ukraine Gambit Concluding paragraph:
"The past century has seen a counter-revolution against the Enlightenment, classical economics and its culmination in socialist hopes to steer industrial capitalism to evolve into democratic socialism. What is occurring today is a self-destructive financial dynamic of impoverishment, dependency and breakdown in many ways like what happened when Rome’s creditor oligarchy plunged the Empire into the Dark Age two thousand years ago. The post-feudal real estate and financial oligarchies, the landed aristocracies of Europe and the great banking families and American trust builders have made a comeback, and the New Cold War is intended to lock in their victory. Ukraine is simply the latest battlefield, and battlefields end up devastated."

Matt Bruenig posts on Piketty

Bowles and Gintis

Mike Beggs says "In contrast, Marxian economics is united mainly through shared adherence to a political tradition – a very fractious political tradition. It is academically marginal, with few institutional supports – its theorists tend to lead isolated scholarly existences, in a pocket of like-minded thinkers at best. Instead, its history shows a succession of writers, occasionally coalescing for a time into schools, who have developed in one direction or another, only to be ignored or rejected by those who came after. There is a tendency for productive debates, which drive analysis forward, to peter out and be forgotten as the tradition repeatedly circles back to its founding text, its only common ground. Interpretation of a text has trumped interpretation of the world."  in Zombie Marx
It seems to me that there were some Marxian economists in USA but like even the ever respectable Sam Bowles, they were ignored by the more dominant groups. In an earlier post Sam Bowles said that he was not allowed to teach a graduate course on inequality in 1968. Mike Beggs is more optimistic in Dollar Diplomacy:
"In this post I have riffed off only a part of just one strand of Panitch and Gindin’s fantastic book. I have tried to connect their narrative about Bretton Woods to the macroeconomic policy theory of the time. It seems to me that this is a useful way forward for Marxian state theory – to critically analyze how contemporary economic theory has framed the situations facing the state. This is historical and non-deterministic, because it does not read state institutional forms or actions off the preconceived needs of the economic system. But it still recognizes how economic dysfunctions and needs shape the capitalist state, as they are interpreted through the fallible, contestable models of applied economics. It integrates questions of class, because class conflict appears all over the place in these models, once you start looking for it. It is there in the strategic context within which policymakers operate. This approach seems to fit the vision opened up by The Making of Global Capitalism, a rich and detailed story of the strategic formation of the modern US state and the world that evolved around it."
 Tim Shenk discusses this in Millenneal Marxists. Strangely neither of them seems talk of Bowles and Gintis whose encounter with Martin Luther King and their later work on education, inequality, privilege, lack of mobility are reasonably well known. Many of their papers are available at Herbert Gintis website and Sam Bowles site at Santa Fe Institute. Aaron Swartz on Bowles book on micro economics. Bowles and Gintis book Schooling in capitalist America and their paper on inheritance of inequality. There are some clues in this discussion 
 from Barkley Rosser
"Of course, Bowles and Gintis were once upon a time fuly heterodox and leftists, self-identified as Marxists, if of a heterodox variety. Bowles was famously turned down for tenure at Harvard for political reasons, and the move by them to University of Massachusetts-Amherst set the tone of that institution that still holds. 
However, they have both retired from there and become more mainstream since, having abjured Marxism in the mid-1980s. They are arguably somewhat non-mainstream, into evolutionary game theory and behavioral economics, but much more "respectable" than in the past, and it is since they made their moves that they began appearing in those "leading journals," not back in their more seriously heterodox days. "
 Then there are others like Michael Hudson and some who write in Econospeak. So the non-influence of Marxist economists may not be completely due to the reasons mentioned by Mike Beggs, but due to some policies of exclusion of those with Marxist tag.

Thursday, May 15, 2014

From Jogan 1950

A portrait of Sam Bowles

Born Poor?Santa Fe economist Samuel Bowles says you better get used to it By Corey Pein
Discussions at  Crooked Timber and Economist's View and MR

"Most economists in 1968 thought of inequality as “somebody else’s problem,” Bowles tells SFR. “I actually was denied the right to teach a graduate course in inequality because it was said not to be economics.” It wasn’t always thus."

Wednesday, May 14, 2014

A duet from Anand Math 1952

Piketty still in the news

Thomas Edsall in New York Times "Despite the criticism of Piketty from right, left and center, he has, by shifting the focus from income to wealth, successfully transformed the debate over inequality......Now we need effective politicians to articulate this challenge in ways that resonate with a striving electorate determined to achieve a higher standard of living through grit and hard work."
Dani Rodrik in Project Syndicate "Capital in the Twenty-First Century has reignited economists’ interest in the dynamics of wealth and its distribution – a topic that preoccupied classical economists such as Adam Smith, David Ricardo, and Karl Marx. It has brought to public debate crucial empirical detail and a simple but useful analytical framework. Whatever the reasons for its success, it has already made an undeniable contribution both to the economics profession and to public discourse."

Reading on kindle

Reading three books on kindle is not working too well. May be physical books would be better. I seem to forget where I was last time. Reading two of the books, by Michael Hudson , Panitch and Gindin (together with a book by Gregory Clark) mentioned here. Mike Beggs discusses one strand of Panitch and Gindin in Dollar Diplomacy. So far, the few pieces I read by Mike Beggs are pretty good; a bit more about him by one of his friends here.

Tuesday, May 13, 2014

Alopecia areata

Alopecia areata " is a condition in which hair is lost from some or all areas of the body, usually from the scalp." In Telugu, it is పేనుకొరుకుడు. I had this once and rubbed the scalp with hibiscus flowers and it disappeared ( I remembered the treatment from my father, I think). I recommended it to an acquaintance about three years ago; she too had relief and no recurrence so far. Search పేనుకొరుకుడు and there seem to be several such treatments. Search for Alopecia areata too for different perspectives. I do not want to make recommendations on medical matters. Possibly there are different types of varying severity. It is possible that for milder cases there are many traditional treatments. Here is a link in Telugu from a doctor who discusses various types of treatment including the hibiscus one.

Monday, May 12, 2014

Links May 12, 2014

Dangers of Hero worship: Reading Ambedkar in the time of Modi by Ramachandra Guha Seems to have forgotten Sanjay Gandhi and Rajasekhar Reddy in A.P, both removed by accidents.
How some of India's brightest minds have bought into Modi myth by Salil Tripathi in Caravan Maazine
On Fascist movements from Understanding Society
More companies than people in a tax haven
Palestinian mother remembers her son in garden of Israeli tearas cannisters
The sticky wages of sin from Econospeak

About discussions

Andrew Gelman on "What should we talk about?" starts discussion on a quote of Robin Hanson:
 "If your main reason for talking is to socialize, you’ll want to talk about whatever everyone else is talking about. Like say the missing Malaysia Airlines plane. But if instead your purpose is to gain and spread useful insight, so that we can all understand more about things that matter, you’ll want to look for relatively neglected topics. . . ."

Unfortunately, we are interested in several topics which concern us from climate change to economic matters on which we (I) do not have expertise. How to make sense of these discussions, sometimes by supposed experts with lots of trolls floating around, is not very clear. Recently I read Piketty, thought that it was good but incomplete in terms of processes leading to inequality and suggestions to overcome it. I read a number of reviews in the prominent blogs which did not seem to lead anywhere. But finally I found from a link two interviews with Michael Hudson (one was linked by Yves Smith) who has not read the book interesting. Though that may change with more reading, browsing discussions which one does not quite understand may lead to some momentary insights.

Sunday, May 11, 2014

Happy Mother's Day

 I did my bit. I walked to the shops for groceries twice (since I do not drive) and made okra, egg curries and pappucharu since Jhansi is down with a virus. But if our son were here today, she would have somehow made a meat dish, as she cheerfully admits.

About Anil Gupta

For a few years, I have been trying to keep track of Anil Gupta's work and wondered why it did not take off. Finally he seems to have some impact. Here is one of several posts about him in this blog

links, May 11,2014

Possible changes in Economics teaching at some places: "Kingston will respond positively to calls from students for genuine reform of economics education—like those made by the Post-Crash Economics Society in Manchester, and the International Student Initiative for Pluralism in Economics (which was launched only days ago).
These student calls for genuine reform are timely, because though there are some initiatives for reform, academic economics has, if anything, become more hostile to criticism of the mainstream and to presentation of alternative perspectives than it was before the crisis."

Trying to find a bit more about Ukraine, I find from this site ""Arseniy Yatsenuk, it should be noted, has something called the Arseniy Yatsenuk Foundation. If you go to the foundation’s website you will see the logos of the foundation’s “partners.” Among these partners we find NATO, the National Endowment for Democracy, the U.S. State Department, Chatham House (Royal Institute of International Affairs in the UK), the German Marshall Fund (a think tank founded by the German government in honor of the U.S. Marshall Plan), as well as a couple of international banks. Is any comment needed?"

From Duncan Green (Remember Chindur) "But citizen activism has always been characterized by spikes of activity, rather than the steady, long term grind of states and business lobbyists. As an issue moves down the policy funnel. technical content gets greater, and the chance to mobilize the public declines"
From an old Hindu article(2001) on the origins of HMT rice "SIXTY-FIVE-YEAR-OLD Dadaji Ramaji Khobragade is a farmer with a grouse. He is a celebrity in Vidarbha for developing a variety of rice called HMT, which is now grown over a large part of the region. A native of Nanded village in Nagbid tehsil of Chandrapur district in Maharashtra, a decade ago, he selected and bred a variety of rice, mystifyingly named HMT, which has become popular in neighbouring States as well.
However, his efforts have gone largely unnoticed by the agriculture research establishment." 
But there seems to be some recognition later "A rice farmer from Nanded village in Maharashtra became celebrity as the 'Forbes' magazine named him in the Most Powerful Rural Indians list for his innovation in rice production." and Anil Gupta's article.
And David Brin on politics.

P.S. More on the Forbes list There are several posts earlier about Anil Kumar Gupta and Honey Bee Network

Saturday, May 10, 2014

To rent or own

My experience in Australia is quite different from the advice in this article "The fact that Americans still financially fetishize homeownership baffles me. Never mind that so many people lost their shirts (among other possessions) in the recent housing bust. Over an even longer horizon, owning a home has not proved to be a terribly lucrative investment either. " My experience:
I had two experiences of buying a house, both in Melbourne Australia. The first time was in 1988, when I was 47. The rents seemed high and I bought a house for 105,000 with a down payment of 10 percent. The rates went up to 14.5 percent, it was difficult. The neighbourhood schools were bad, we experienced some racism but it was difficult to get out. Finally in 1992, I saved some money on a foreign trip and rented a house for myself and rented our house. After a few months rents did not come and I sold the house for 80,000. It was a bit of disaster. Finally in 1995, I bought a house again since I felt that I should own a house by the time I retired. This time the price was 150,000 and rates around 6 percent. It was bearable and by 2004, it was mostly paid off and I retired. We kept a bit of the loan so that we could borrow money if we wanted. Off and on we borrowed money on the house, once to buy a small business and sometimes to help the children to buy houses or other things. I never borrowed to invest in stocks. Now the house (mostly for the land) is worth over a million and I am comfortable with the superannuation I get. Without a house, it would not have been enough. Even the first place I bought is now worth around 500,000. So I generally advice our children to buy a house. But I am not sure about it since it may affect their mobility.There were automatic savings since one had to pay mortgage. There are people who after paying some mortgage, used it to borrow and buy more houses. It depends on the area whether rents are safe and stable. There seem to be too many variables to give a uniform advice. I hope that the above article is not put up by rentiers.
Mote on the above article in Calculated Risk and by Matthew Yglesias

Friday, May 09, 2014

Economic discourses

From the Wikipedia article, I find that Michel Hudson has good track record with forecasts like this " His May 2006 Harper's cover story, “The New Road to Serfdom: An illustrated guide to the coming real estate collapse,” was the first major national article forecasting - in precise chart form - the bursting of the real estate bubble and its consequences for homeowners and state and local government solvency." and his two interviews on Piketty are among the most comprehensive I have seen. Yet there is no mention of him in most of the posts linked to in Mark Thoma's Economist's View (except by Yves Smith). There are links to reviews by students and others, some of whom have clearly not read the book. Noah Smith courageously pointed out one such blog. But the trend continues; here is a positive review with lots of links to other reviews but no mention of Michael Hudson.

Einstein on socialism

This is probably well known but I came across it only today. In Why Socialism?, Einstein starts "Is it advisable for one who is not an expert on economic and social issues to express views on the subject of socialism? I believe for a number of reasons that it is.
Let us first consider the question from the point of view of scientific knowledge. It might appear that there are no essential methodological differences between astronomy and economics: scientists in both fields attempt to discover laws of general acceptability for a circumscribed group of phenomena in order to make the interconnection of these phenomena as clearly understandable as possible. But in reality such methodological differences do exist. The discovery of general laws in the field of economics is made difficult by the circumstance that observed economic phenomena are often affected by many factors which are very hard to evaluate separately. In addition, the experience which has accumulated since the beginning of the so-called civilized period of human history has—as is well known—been largely influenced and limited by causes which are by no means exclusively economic in nature. For example, most of the major states of history owed their existence to conquest. The conquering peoples established themselves, legally and economically, as the privileged class of the conquered country. They seized for themselves a monopoly of the land ownership and appointed a priesthood from among their own ranks. The priests, in control of education, made the class division of society into a permanent institution and created a system of values by which the people were thenceforth, to a large extent unconsciously, guided in their social behavior.
But historic tradition is, so to speak, of yesterday; nowhere have we really overcome what Thorstein Veblen called “the predatory phase” of human development. The observable economic facts belong to that phase and even such laws as we can derive from them are not applicable to other phases. Since the real purpose of socialism is precisely to overcome and advance beyond the predatory phase of human development, economic science in its present state can throw little light on the socialist society of the future." and then goes on to explain his socialist bent.

Thursday, May 08, 2014

Karl Marx on India (1853)

Karl Marx "Modern industry, resulting from the railway system, will dissolve the hereditary divisions of labor, upon which rest the Indian castes, those decisive impediments to Indian progress and Indian power. " from Brad DeLong.

Wednesday, May 07, 2014

A review of 'Super Imperialism' by Michael Hudson

by Shuoying, Chinese Academy of Social Sciences "First published in 1972 – one year after gold was demonetized – and updated thirty years later, in 2002, Michael Hudson’s Super Imperialism is the first book to recognize the policy of monetary imperialism consciously pursued by the U.S government for exploiting the world. Together with Henry C.K. Liu, well known for his book “The Financial War Between China and the U.S.,” they have published a series of works on dollar hegemony in opposition to the Chicago School’s monetarist ideas."
I think that Piketty is very good as far as he goes, but does not really go into the mechanisms of accumulation for which I found the earlier two interviews of Michael Hudson about Piketty interesting. But neither discussed the role of dollar as universal currency. It seems that Michael Hudson has been studying this for a long time. I will link to more discussions as I read some of these books.

From Rajput Ramani 1936

Tuesday, May 06, 2014

Patriotic song from 1946 telugu film

I have actually seen this film around 1948 in a 'touring talkis' between Gudavalli and Kanagala. It cost one and half annas (16 annas to a rupee) to sit on the floor in front and watch. Behind were benches and then chairs.

Michael Hudson on Piketty

An earlier longer interview was posted before. Generally the bits by Michael Hudson seem reasonable to me. He started working for banks and became a Marxist (of what denomination I do not know). He was one of those economists who explicitly warned about the housing crisis. Some excerpts from the interview:
"And so, basically, he’s described the symptoms of what’s wrong. And people are very glad that at least he’s described the symptoms that everybody knew but nobody had spent the three or four years that it took to make all of the charts charts that he’s made...
Well, the one percent have got rich by holding the 99 percent in debt. Basically, you have an economy where governments and businesses, homeowners, credit card users, and people getting an education all have to run into student debt, mortgage debt, credit card debt, government debt, corporate debt, all to the 1 percent. So the 1 percent wouldn’t be making all of this income and concentrating all this wealth if they didn’t hold the bottom 99 percent in debt to itself. So you have a polarity. You wouldn’t have the 1 percent getting rich if they weren’t–if it wasn’t in an exploitative way, making the 99 percent more dependent on them.
Now, if the 1 percent made their money–you know, they call themselves job creators as if they’re creating the prosperity, but they’re not creating the prosperity, because what they’re getting is interest and economic rent much more than profits. They’re getting rich in an exploitative way, not in a productive way that helps the economy grow and raises living standards....
So the first thing he wants is an inheritance tax.
The second thing he wants is more problematic. He said, well, maybe there can be a world tax on wealth, because after all, the rich families in America hold their money offshore or in Swiss banks or in the Caribbean. So he wants a general wealth tax. And that’s what he’s been criticized for, because he hasn’t really gone to the root of what is creating this polarization."
And then comes the criticism. Well worth a read.
P.S. Piketty has been getting it both from the right and left ( those from the left are usually posted by Yves Smith). The above seems to me to be a good appraisal of what Piketty has done and what is missing. MH said earlier that he did not read Piketty's book but is familiar with Piketty papers on which it is based. See in particular 'Capital is back' by Piketty and Zucman.
P.P.S. A bit more about Michael Hudson The man who fired Alan Greenspan and a review of one his books Super Imperialism.

Some rodent research

Monday, May 05, 2014

From a 1940 Telugu film

About an even earlier film Harischandra 1935 here. Apparently, it was Kannamba's first film. And the musical fare in cineradham.

Noah Smith on Tyler Cowen on Thomas Piketty

Tyler Cowen's anti-Piketty crusade
"So why has Tyler turned into an anti-Piketty crusader? Well, Piketty is a popular topic, and his thesis is encountering a huge amount of skepticism, so there is demand out there for a one-stop anti-Piketty shop.

But it also seems possible that Piketty has deeply worried economists and pundits who thought that concern over inequality was a thing of the past, and that laissez-faire had basically won the battle of ideas. Piketty's immense popularity might seem, to these folks, to threaten to drag us back into a dark age when radical wealth redistribution was taken seriously, not only by large segments of the public, but by a number of prominent economists as well. Piketty might seem like the vanguard of an onrushing wave of socialist thought that could succeed in turning back the tide of neoliberalism that had been advancing for at least 40 years. So Cowen - and the numerous anti-Piketty writers he links to - may simply be worried about Piketty and what he represents."

As I mentioned before quoting a passage from Piketty, some of the reviewers have not read Piketty's book completely. For a layman like me more substantial discussions discussing the terms with various omissions and commissions by Pikettey would be useful. It seems that Piketty is usin terms somewhat differently from others and also lookin at different thins. First, his use of the term capital itself seems different and drew the wrath of James Galbraith "Piketty had to reverse more than two centuries of abuse by economists and sociologists of the notion of capital to make his powerful empirical and theoretical case. His data are based on a commendable redefinition of the concept that ends an age of obscurantism." Then there seems to be different versions of the rate of return on capital. It is not clear to me how this is measured even in Piketty's version. Thirdly, Piketty's estimates for future capital to income ratio are based on some models which seem unrealistic to me. Whether this can be done in other ways, whether it is just what the data are indicating need some discussion. There are more points of that type. May be it is time for a second reading of Piketty.
Another discussion here where Dean Baker who was initially critical takes part. Here is an article by David Leonhardt "For all of the clarity of Piketty’s historical analysis, I emerged from the book not quite grasping the mechanics of rising inequality. What is it about market economies that typically cause the assets and incomes of the rich to rise more rapidly than those of everyone else? So I called Piketty at his office in Paris, and he agreed to walk me through it."
P.S. I did not know that Tyler Cowen is the Chairman and general director of Mercatus Center associated with Koch brothers.

Discussion on Gary Becker and Michael Foucault

at Crooked Timber (one of the more understandable discussions, up to 13 comments). One of the comments links to an earlier interesting discussion at the University of Chicago "Becker on Ewald on Foucault on Becker"

Sunday, May 04, 2014

Maye ni Maye mere geetan

Separate schools?

Kuffir links to a report on education 'The primary trauma' "The latest report of the Human Rights Watch (HRW) has brought to light everyday instances of discrimination against Dalit, Adivasi and Muslim children in primaryschools. They are asked to sit separately, clean toilets, bring their own utensils for midday meals to keep school utensils "unpolluted" and reprimanded and punished routinely. Despite being illegal and supposedly abolished, belief in untouchability and its continued practice marks these children as objects of humiliation, ridicule and stamps them with a "stigmatised identity". The HRW report documents how this leads to many dropouts from primary schools and rehabilitation programmes don't really work as children put back in school end up in classes with much younger peers, giving teachers and classmates one more reason to taunt and shun them." On the other hand, schools mainly for the underprivileged run by APSWREI Society where they are essentially separated from the more privileged seem to be doing well. 

Saturday, May 03, 2014

Population growth and economic growth.

I do not know economics. Piketty's book was the first one that I read in some detail. I was surprised to see that population growth was included in growth rate. Now I find from a paper on city states  (via Chris Blattman) "As is common in work on the early European economy, population growth is used as a (admittedly imperfect) proxy for economic growth."
From the conclusion of the paper ".. I have examined the proposition whether the establishment of political autonomy for a city may have initially led high state of growth followed by a subsequent period of stagnation as barriers to entry prevented the entry of entrepreneurs. Using a sample of 173 cities, I have presented several forms of evidence to support this proposition".