Business to the Buddha

Tag: Great Depression

  • Keynes







    I enjoyed learning economics in my MBA, thanks to Prof Mankad for teaching Macroeconomics as a well narrated story of History of the world. He taught it so brilliantly that we all used to sit, go through the roller coasters up and down the history lane by-lanes and learn the development in economics and policy making.

    Being an average engineer, I too was unaware (still am) about economics before taking the course with Prof Mankad. This was the class where I came to know about John Manyard Keynes and keynesianism. I buy into his theory of Govt intervention (which wont go down well with many capitalists); however the way I have seen recent past is – challenges and largely corruption in implementation. In India, Govt has launched Food Security, Employment schemes – seems good as Keynes suggested, but the money is not reaching the right place.

    Well, I thought to write on Keynes because something moved me deeply in Prof Mankad’s class. That statement itched profoundly, whenever I thought about future that sentence resounded. Prof Mankad talked about Great Depression in his lectures. He introduced us to the Keynes and his idea, opposition to his idea and so on. In the lecture Prof Mankad said – what Keynes was – “in the long run we are all dead”.

    This statement is right however we can think on this two ways –

    1. (bad one) Anyway I will die one day – why worry, indulge and enjoy. [may be Tarun Tejpal (recent Tehelka sexual harassment case) and many others think this way]

    2. (Good intentions) Yes, if I am going to die, everyone dies, so what is the purpose of my being here? Am I like any other animal or plant, or I have some brain, who gave it to me? And so on…

    So, if …in the long run we are all dead… why all this drama (delusion)? in Hindi – यह प्रपंच क्यों?

  • 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!