07 July 2017

Ten Greatest Economists

Ten greatest economists:

1. Adam Smith
* Wealth of Nations (1776)

2. David Ricardo
* Principles of Political Economy and Taxation (1817)

3. John Stuart Mill
* Principles of Political Economy (1848)

4. Karl Marx
* The Capital (1867)

5. Carl Menger
* Principles of Economics (1871)

6. Leon Walras
* Elements of Pure Economics (1874)

7. William Jevons
* Theory of Political Economy (1871)

8. Alfred Marshall
* Principles of Economics (1890)

9. John Maynard Keynes
* General Theory of Employment, Interest and Money (1936)

10. Paul Samuelson
* Economics (1948)

19 June 2017

Why Government Must Not Fix/Control Prices

Why government must not fix/control prices:

What is a free-market system? It is an economic system in which prices are decided by market forces – ie, demand and supply. In this system, a product's price is decided by the demand for that product and the supply of it. If the demand is high or/and the supply is low, then the price will be high. If the demand is low or/and the supply is high, then the price will be low.

The free-market system thus fixes the prices of all the products. It also does something else. It ensures that people get the things they want – in sufficient quantity. Example: Consider some product X which people want very much – but is not being produced in sufficient quantity. That is – its demand is high and supply is low. Then what will happen? In the free-market system, its price will be high. High price means high profits. Then other producers will start making this product to make those high profits. Then production will increase – and people will get more of this product that they want badly. Also, due to the increased supply – under the free-market system – its price will go down. Thus not only will people get more of the product that they want, but they will also get it at a lower price. So the free-market system is a double-advantage system.

So prices in a free-market system perform two functions:
1. They give information about the demand/supply for all the products.
2. They give incentives to producers to make the products that people want the most.

Now the prices of some products are very high. This means that it is difficult and expensive to make those products. Sometimes we feel the price is much higher than the difficulty and expense of making that product. If we are right, then it means the profit is very high. Then other producers must start making that product to make that high profit. And that should increase the supply – and decrease the price. If the price is still high, that means this is not happening. Which means one of two things:
a) We are wrong. Our estimate of the difficulty and expense of making that product is wrong. The product is much more difficult and expensive to make than we think. So the high price is justified.
b) Other producers are not able to make that product. That is, there is a lack of free competition and easy entry of new producers.

Some people want the government to fix the prices for expensive products. What happens when the government does this? Then the whole system described above will collapse. If the price is fixed by the government – instead of by demand and supply – then it will no longer perform its two functions. That is, it will no longer give information and incentives to producers to make that product. Then the price will be low – but the quantity produced will also be low. Then everybody who wants that product will not get it. Only some people will get it. Other people will not get it – even though they have the money to buy it. This is socialism. It is a very inefficient system. The greatest example of the socialist economic system was the Soviet Union – in which the government fixed the prices of ALL products: from grains and vegetables to shirts and trousers to televisions and refrigerators to cars and computers. The result was it finally collapsed in 1991 even though it was a superpower. It is impossible to create a more spectacular demonstration of the inefficiency of any economic system (in this case – socialism).

The solution for high prices is not the government fixing the price. High price is not the problem. It is only the symptom of the problem. The real problem is low production. And low production is due to lack of free competition and easy entry of new producers. So the real solution is to allow free competition and easy entry of new producers. Then production will increase and prices will decrease. Instead if government fixes the prices, it will be a case of the cure being worse than the disease.

13 June 2017

Loan Waivers and Farmers/Agriculture

The financial system is the circulatory system of the economy – supplying money to whoever needs it. It may be a farmer who wants to buy a tractor. It may be a factory owner who wants to buy a machine. And this financial system stands on a critical foundation – which is the obligation of the borrower to repay his loan. As long as borrowers repay their loans, lenders will lend – and the financial system will work smoothly and the economy will also work smoothly.

Now what happens when loans are waived? Then borrowers no longer have to repay their loans. And if borrowers stop repaying, then lenders will stop lending. That is, the financial system will grind to a halt. People who need money for economic activities will no longer get it. The farmer can no longer buy his tractor. The factory owner can no longer buy his machine. That is, the whole economy itself will grind to a halt.

The 'economy' doesn't mean CEOs sitting in the top-floor of a skyscraper or stockbrokers shouting on the floor of the stock exchange. It means farmers growing grains and vegetables on their farms (agriculture). It means you and me working in offices and factories (industry and services) for a salary – and using that money to buy those grains and vegetables in the market. This system is essential for our survival. But we take it for granted. We think it will run properly all the time without any problems – no matter what we do. Nothing is further from the truth. This economic system stands on some invisible foundations. And one of those foundations is the sacred obligation of a borrower to repay his loan. Loan waivers directly strike at this foundation – and puts the whole economic system at risk.

Farmers are in trouble and they need help. But loan waiver is the worst way of doing it. Because loan waivers damage the economic system and farmers – who are the most vulnerable people in the economy – will be the worst sufferers. If we care so much about farmers, we must simply give money to ALL farmers – regardless of whether they have repayed their loan or not, or (even further) regardless of whether they have taken a loan or not. This will help farmers without destroying the financial system and the economic system.

22 May 2017

'Hindi Medium': Review

A review of 'Hindi Medium':

Some people think a movie must not merely entertain but must also have a 'social message'. But movie is a fictional art and fictional art's primary purpose is to entertain. If it directly tries to give a 'social message', it will deviate from its basic purpose. It will become boring and preachy – and it will fail. But if it tries to do it indirectly – without deviating from its basic purpose of entertaining (by emotionally connecting with the audience) – then it can work. Now imagine an entertaining movie about big issues like society, development and poverty. Impossible? Well, writer-director Saket Chaudhary has achieved the impossible with his Hindi Medium.

A Chandni Chowk businessman's (Irfan Khan) wife (Pakistani actress Saba Qamar) wants to put their daughter into a prestigious Delhi school. So begins their Great Indian Circus: the School Admission – an endless merry-go-round of applications, consultants, interviews and lists. Hindi Medium starts off as a hilarious comedy about our education system. But it doesn't stop there. Saket Chaudhary has something much bigger in mind. He gradually widens the lens to look at no less a subject than Indian society itself.

Hindi Medium examines all the 3 sections of our society: rich, middle class and poor. The rich think modernisation means Westernisation and de-Indianisation. The middle class are desperate to become like them. And the poor struggle for the basic needs of life. Hindi Medium ruthlessly exposes our hypocrisies and double standards on every major issue – be it language, education or culture. It looks at Indian society better than any sociology textbook. It looks at development better than any economics textbook. And all this while being a heart-warming entertainer throughout.

70 years after getting freedom, most of our people still don't have a decent life. Hindi Medium brutally looks at this harsh reality – but never becomes even remotely depressing at any point. When you walk out of the theatre, you have a smile on your face. Why? Two reasons. First reason: though we still face grave challenges, we know that things are slowly improving. And second reason? It is right in front of your eyes – a movie like Hindi Medium has been made, and people are watching it (and liking it). Why does this matter? It does matter. Because if we can look at ourselves mercilessly – through the eyes of an honest and courageous artist (like Saket Chaudhary), then something must be right with us.

Hindi Medium is ambitious, brilliant and powerful. Watch it. Tell your friends to watch it. Tell them to tell their friends . . . (OK, you get the idea)

13 May 2017

'Sarkar 3': Review

Why did Ram Gopal Varma make Sarkar 3? (A review)

A. DRDO made him do it.
Sarkar 3 is a series of completely illogical scenes with absolutely no connection with one another whatsoever. I desperately tried to somehow connect them all together into a remotely logical story – but failed miserably. Further, the level of absurdity went on increasing at an exponential rate. So my head exploded into a hundred pieces. If you walk out of the theatre with your head intact, that means your skull is the hardest substance on earth. Then DRDO will harvest it and use it to develop a next-generation cutting-edge super-weapon – one that China and America can never hope to match. Of course, the easiest solution for all this is to simply kidnap people and directly test the hardness of their skulls. But that is technically illegal under Indian laws. So Sarkar 3 is nothing but a part of DRDO's top-secret weapons program.

B. A drug cartel made him do it.
Cocaine, heroin and meth can move over. They are now just for kids. Because a drug cartel has synthesised a new chemical that makes all these drugs look like chocolate. And they have been injecting it into their test specimen – Ram Gopal Varma – for the last one year. Then to market their new product, they told him to make Sarkar 3. Because after watching this mind-numbing sense-destroying brain-killer, people will know the power of the new drug. So Sarkar 3 is nothing but a 2-hour long ad for the drug cartel's new drug. The only question is which drug cartel. Sinaloa? Tijuana? Juarez? Which one?

C. Amit Shah made him do it.
In Karnataka, BJP is in such a great shape that Congress will easily win the state election next year. So Amit Shah had to make a master plan. He got his chance when Chief Minister Sidramayya announced he will reduce movie ticket prices to Rs 200. Then Amit Shah immediately told Ram Gopal Varma to make Sarkar 3 and release it on the Friday when the ticket prices were reduced. Due to the reduced ticket prices, the people of Karnataka will flock to the theatres and see whichever movie is released that Friday – ie, Sarkar 3. And after watching this ridiculous piece of shit, they will be totally outraged. They will be totally mad with Sidramayya. And they will overwhelmingly vote against Congress in next year's election – thereby giving BJP a landslide victory. So Sarkar 3 is nothing but Amit Shah's master plan to win the Karnataka election next year.

D. Nirbhaya's rapist-murderers (NRM) made him do it.
NRMs are desperate to delay their hanging. So they told Ram Gopal Varma to make Sarkar 3. Because after watching this atrocious piece of crap, the people of India will be so furious that they will demand the hanging of each and every single person who is involved in any way whatsoever in the making of Sarkar 3 – starting from the producer and going all the way up to the sweeper. This also includes all those critics who gave this monstrosity a score of anything above minus infinity. And that will be quite a few people to hang. So it will automatically delay the hanging of the NRMs. Thus Sarkar 3 is nothing but the NRMs' desperate plan to somehow delay their own hanging.

E. Karan Johar and Aditya Chopra made him do it.
Karan Johar and Aditya Chopra have made Bollywood's biggest blockbusters. But in spite of this, intelligent movie fans don't respect them. So they told Ram Gopal Varma to make Sarkar 3. Because after watching this worthless piece of garbage, even intelligent movie fans will agree that K-Jo and A-Cho are the apex of cinematic brilliance – second only to the great Satyajit Ray. So Sarkar 3 is nothing but K-Jo and A-Cho's amazing plan to somehow earn some respectability.

F. Ram Gopal Varma did it himself.
RGV is depressed that his Satya is just one of Bollywood's all-time greatest movies (along with Sholay, Deewar and Maqbool) – and not the all-time greatest movie. He wants a superlative completely for himself, one that will not be shared with anyone else. Hence he decided to make Bollywood's most pathetic movie ever, one whose record will never be broken. So he made Sarkar 3 – and succeeded beyond his wildest dreams (and our wildest nightmares) . . .

30 April 2017

'Baahubali' - Raja Dharma

A lot has been said and written about Baahubali – and will continue to be said and written. But the central theme of Baahubali is Raja Dharma. What is Raja Dharma? It means that the duty of a king is to work for the good of the people. It means that the king is not the master of the people – he is the servant of the people.

This simple but profound concept of Raja Dharma is at the core of the Indian civilisation. It was first laid down in the Vedas and later the Dharma Shastras. It was beautifully expressed in the great epics Ramayana and Mahabharata (in the form of Rama and Yudhishthira). It was scientifically analysed by Chanakya in his Artha Shastra. It was the foundation of the ancient Indian political system.

After independence, we were fortunate to have great leaders like Sardar Patel and Lal Bahadur Shastri who were living embodiments of Raja Dharma. But soon in the name of secularism, we got rid of all Dharma – including Raja Dharma. The result is today we have MPs who beat airline managers with their chappals because they don't get a business-class seat . . .

29 April 2017

'Baahubali - 2': Review

Review of 'Baahubali-2':

Remember when we were kids? We used to make up stories of brave kings, princes and warriors. We used to turn our simple toys into vast armies of soldiers, horses, chariots and elephants. And we used those armies to fight big bloody battles. Then we grew up. We became mature. And we forgot those stories. But one kid called Srisaila Sri Rajamouli refused to grow up. He remained a kid. He kept those stories with him. And now he has told it to us with a ₹ 200 crore special effects budget. Watch Baahubali-2 - and feel like a kid again . . . :-)

There have been a few negative reviews criticising Baahubali-2 for its lack of subtlety, restraint and understatement. Such criticism only reveals the reviewers' complete ignorance of Indian society, culture and art. Because the same criticism can also be made about any village drama version of Ramayana or Mahabharata. But it misses a much larger point.

For 5000 years, India has been held together by Dharma. But Dharma is an abstract philosophy. And only 1% of people are interested in philosophy. So how do you teach Dharma to the remaining 99% people? The genius of our ancestors lies in successfully dealing with this challenge. They wrote two great epics - Ramayana and Mahabharata - that taught the abstract principles of Dharma to ordinary people by using entertaining stories and characters. Thus our ancestors taught Dharma to every man, woman and child in every village - and nourished this civilisation for 5000 years.

True, Baahubali is no Ramayana or Mahabharata. And Rajamouli is no Valmiki or Veda Vyasa. They don't have to be. They are what they are. And that is good enough for 21st century India . . .

PS: My review of Baahubali-1

Basava Jayanti

India is the world's oldest civilisation – 5000 years old. How is this possible? How can a civilisation survive for 5000 years – especially when it was subject to invasions and conquests for half its history (2500 years)? Two reasons:
1. The foundation of the Indian civilisation is a way of life (Hinduism) that is built on universal and eternal moral laws (Dharma).
2. From time to time, great thinkers came and interpreted this way of life and its moral laws for their time, and taught them to the people - like Buddha, Mahavira, Shankara, Guru Nanak, etc.

One such reformer was born in the 12th century. His name was Basava. He taught the fundamental truths of Hinduism to ordinary people in their own language. More important, he practised what he preached. One of the truths he taught was 'ಕಾಯಕವೇ ಕೈಲಾಸ' (Work is worship). If all of us follow just this one teaching of his, we can make India a superpower very soon. Bharat Mata ki jai . . .

PS: Today is Basava Jayanti.