Business to the Buddha

Search results for: “Globalization and its discontent “

  • The Price of Inequality

    I have read Dr Joseph Stiglitz. He is a Nobel prize awarded economist. The book I read first was Globalization and its discontents and recently I started reading The price of Inequality.

    I realized that Dr Stiglitz may not be the so called capitalist economist, he is capitalist but with a touch of a Just and relatively Equal society. So, when I started reading “The price of Inequality” I started wondering what kind of wealth difference exist in the US. Since, I have never been to the US so the picture of the USA I have always created is – no poverty, everyone having enough and more to not only survive but also a lavish life, a home with front garden, a car parking (of course too), wonderful interiors of the home etc. This picture is largely because of the Movies we watch – on a lighter note Hollywood is responsible for that ;).

    Well, while reading the book, I came across a video on Facebook (watch below).

    [youtube=http://www.youtube.com/watch?v=QPKKQnijnsM]

    Though, some may argue this video is shared for more socialistic reform e.g. healthcare reform, but that is not the point of contention for me. Watch Margin Call to understand the point of view of the bosses of the investment banks – well to sum up “They do not care! Everything will be fine in sometime.”

    My perspective is not a fight on any economic approach e.g. socialism Vs Capitalism, I favor inclusive growth and I believe for achieving that we need to follow a middle path wherein a mixed approach be used.

    Read my previous blogs related to the book – Globalization and its discontents

    Blogs here

  • #CoalGate, corruption, politics & economics

    A few days back I completed this book Globalization and is discontent by Dr Stiglitz, a nobel laureate. I wrote on that recently – Interdependent co-arising a macroeconoics example. Besides this macroeconomics example, I had this intra-country example of the same concept of interdependent co-arising. Stiglitz has written so many things more than 10 years back which are happening in India currently. However, here I am just interested in quoting a small part of the book which relates to the corruption of coal mine allocation in present day India. This example is from page 71 of the book –

    …

    There is more to the list of legitimate Complaints against Foreign Direct Investment (FDI). Such investments often flourish only because of special privileges extracted from the govt. While standard economics focuses on the distortion of incentives that result from such privileges,  there is a far more insidious aspect: often those privileges are the result of corruption the bribery of govt officials. The Foreign Direct Investment comes only at the price of undermining domestic processes. This is particularly true for investments in much oil and other natural resources where foreigners have a real incentive to obtain the conversation at low prices.

    Moreover such investment have other adverse effect- and often so not promote growth.  The income that mining conversation brings can be invaluable but Development is a transformation of society. An investment in mine – say in a remote area of a country – does little to assist the development transformation, beyond the resources it generates. It can help create a dual economy, an economy in which there are pocket of wealth. But this duel economy is not a developed economy. Indeed, the inflow of resources can sometimes actually impede development, through a process that is called “Dutch disease”

    …

    So effectively, what Stiglitz said was bribing of officials for mining in developing / undeveloped countries. Further, the dual economy this FDI may create is not best for country to develop. I would take this example of Dutch disease in my next post – “Business to the Buddha”.

    Here what I want to highlight is this – the current issue in India – #CoalGate scam is a clear example of what Stiglitz wrote more than 10 years back. Indian Prime Minister – Dr Manmohan Singh – being an economist might have been aware about this and perhaps therefore kept Coal Ministry with him. This is just an extrapolation. Otherwise why would Law ministry and Law minster would want to change parts of report? According to the Supreme Court of India, the changes are Heart of the report.

    After reading the book – Globalization and its discontents – I realized that Stiglitz is not against Globalization but against the way Globalization is happening. So, when you read the above part, you should not infer that Stiglitz is against Globalization.

  • Interdependent co-arising – macro-economics example

    I hae written on Interdependent co-arising (older blogs at the link) earlier.  The concept simply means – we are all dependent on each other.

    Those who want to know the concept in layman term follow this blog – interdependent co-arising example of a farmer.

    Definintion of interdependent co-arising is below with a macro-economics example. In late 90’s the East Asian countries faced a very serious economic challenge of decades. The financial system came down like a house of cards. Dr Joseph Stiglitz – Economics Nobel Prize winner of 2001 – shares the concept of interdependent co-arising (dooming in otherwords) in his book  – “Globalization and its discontent“. On Page 106-107 he invariably – and inadvertently perhaps – explains what is interdependent co-arising. Hope economists would understand this lesson, if not from the Buddha then from Dr Stiglitz.

    Beggar-Thyself Policies

    Of all the mistakes the IMF committed as the East Asian crisis spread from one conuntry to another in 1997 and 1998, one of the hardest to fathom was the Fund’s failure to recognize the important interactions amont the policeis pursued in the different countries. Contractionary policies in one country not only deepened that country’s economy but had adverse effects on its neighbors. By continuing to advocate contractionary policies the IMF exacerbated the contagion, the spread of the downturn from one country to the next. As each country weakened, it reduced its imports from its neighbors, thereby pulling its neighbors down.

    The beggar-thy-neighbor policies of the 1930s are generally thought to have played an important role in the spread of the Great Depression. Each country hit by a downturn bolster its own economy by cutting back on exports and thus shifting consumer demands to its own products.A country would cut back on export by imposing tariffs and by making competitive devaluation of its currency, which made its own goods cheaper and others countries’ more expensive. Howeer, as each country cut back on imports it suceeded in “exporting” the economic downturn to its neighbors. Hence the term bagger-thy-neighbor.

    …

    Solution to all these economic, social, personal, spiritual or other problems?

    Its interdependent co-arising itself. We all need to help each other grow – grow the pie and share it well, if not equally!

  • MBA is not about Money, Blazer, Arrogance

    Recently one of my friends – Krishna Kranthi has written a novel – “MBA is not about Money, Blazer, Arrogance“. Generally I don’t read fiction but the title of the novel made me read it. It is an interesting read and good authorship for a first time novelist. I liked it so much that I almost completed it in single reading. Many MBA students feel the same as the protagonist in “MBA is not… “. Only a few not only think but also write about it. Yet only a few not only write but also live the lessons learnt through this soul search, Krishna is one. Take an example – whatever small profit earned through the sell of the novel would go to an NGO. A very noble cause – who and how many think and act like that?

    In the novel, the protagonist asks pertinent questions. The protagonist – somewhat confused and a lot more explorer – is trying to search for the real purpose of the MBA. If I take the freedom to extend the realm – searching for the real purpose of life! The book is very good read for all students (not just MBAs) – it may help them find the objective for doing what they are doing?

    When I am writing this, I am reading “Globalization and its discontents” by Prof Joseph Stiglitz. I see through these books and connect the two things. I realized that there are more things beyond the ivory towers of AC rooms and excel sheets of calculations (as we MBAs are generally absorbed in). That something is – the drought stricken Marathwada Maharashtra (read Mumbai mirror Sunday 17th feb 13) etc. There is hope, there is opportunity for all of us to think beyond our own small goals. The opportunity to do something good for the society as a whole.

    —-
    There are two kinds of people. The Preservative and the Transformer. The Preservatives are trying to protect the status-quo, while the Transformers are trying to do something new update / innovate / improve and do something worth for self and society.

    I see a transformer in Krishna a different fellow who is different from the preservators. Who has asked few core questions for education (MBA). I think readers can find their own selves in the protagonist of novel and do some soul searching while reading the novel.

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