Government equity infusions into PSU banks

Harsh Vardhan’s excellent blog post on this subject made me think further about the questions.

Finance policy makers in India are often proud of the fact that India has avoided a large systemic crisis in which substantial fiscal resources have been put into rescuing financial firms. I think this optimism is overstated. If we . . . → Read More: Government equity infusions into PSU banks

Should government capitalise public sector banks?

by Harsh Vardhan.

What would you say if someone was borrowing money at 8% and investing it to earn around 3%? “Uninformed!”, “financially illiterate!” or even outright “foolish”! And yet this is what our government has been doing with trillions of rupees over the last many years and has committed to continue to do . . . → Read More: Should government capitalise public sector banks?

White label ATMs

by Harsh Vardhan.

On 20 June, RBI issued guidelines that permitted White Label ATMs (WLA) to be operated in India. These guidelines could make a very significant change in the banking business – one that would go a long way in improving penetration of banking. This was a move that was long overdue. We . . . → Read More: White label ATMs

Public Goods

Let’s play spot the fallacies:

We do not just have governments in order to rob Peter to pay Paul. We have governments because there are things they can provide that the private sector is either unable or unwilling to provide effectively – courts, police, schools, roads, other infrastructure, etc. Conservatives focus so much on . . . → Read More: Public Goods

Spot the Fallacies, Free Trade Edition

From Mises.org, in response to Obama’s claim that international trade isn’t always fair:

Here we see the view, commonly held by the media and non-economists in our universities, that international trade is a competition, analogous to sports or military competition (sometimes, “trade competition” is compared to the Cold War). If the playing field is . . . → Read More: Spot the Fallacies, Free Trade Edition

A Stupid Question

From Don Boudreaux:

If Beijing’s intervention into the Chinese economy justifies U.S.-government ‘retaliation’ to ‘correct’ market distortions created by those interventions, shouldn’t the still-significant lingering negative consequences of Beijing’s interventions into the Chinese economy from 1949-1978 be considered? Shouldn’t Beijing’s artificial destruction, during the middle decades of the 20th century, of production efficiencies in . . . → Read More: A Stupid Question

The Technology Gap

A while back I theorized that government intervention in the market causes labor disruptions in that it pulls demand for technology forward in order to reduce the costs of unskilled labor. It turns out that I may be on to something:

Parlier earns about $13 an hour. She’d like to become one of the . . . → Read More: The Technology Gap

Too Bad the Name "Illuminati" is Already Taken

Our household transitioned to Compact Fluorescent Lamp (CFL) light bulbs years ago. We did it over time, replacing our incandescent bulbs as they burned out. At this point, the only remaining incandescents in the house are those “makeup bulbs” in the significant other’s vanity lamp.

Why did we change over? Because the CFLs were . . . → Read More: Too Bad the Name Illuminati is Already Taken

Pop Quiz

Q: Who said this:

Second, the idea that U.S. economic difficulties hinge crucially on our failures in international economic competition somewhat paradoxically makes those difficulties seem easier to solve. The productivity of the average American worker is determined by a complex array of factors, most of them unreachable by any likely government policy. So . . . → Read More: Pop Quiz

India's governance crisis: Tales from the battlefront

The Competition Commission of India (CCI) has written an order on NSE and MCX-SX in the currency derivatives market. Even if you do not take interest in financial markets, this is an interesting episode in Indian governance. It illuminates the larger problems of building regulatory agencies, and India’s middle income trap.

In an impressive . . . → Read More: India’s governance crisis: Tales from the battlefront