The problem with all these 1 rupee – 2 rupee offers in indian aviation is that they aren’t really that cheap. On top of this you have the various taxes and user charges which come up to some Rs. 1500 (I’m not sure of the exact number). What has effectively happened is that these charges have put a floor on the price of airline tickets in India.
Category: economics
Looking for porn in Sringeri
Now that this half-blasphemous title is out of the way, let me get straight to the point. Actually I think a bit of beating around the bush is warranted. When I read Tyler Cowen’s Discover Your Inner Economist, I wasn’t sure if i would be quoting part of this book on my blog. However, considering that I almost directly applied one of the ideas mentioned in the book, I think it deserves a mention.
SLV Banashankari 2nd Stage
Around this time last year, I was doing a series of blog posts on delivery and revenue management practices in restaurants in Bangalore. My apologies for not updating on that series for so long.
This morning I had my breakfast at SLV in Banashankari 2nd stage (near the BDA complex; opposite the park next to the complex). Despite being within 200 metres of my school, I don’t particularly remember going here too often. This is one of the very old-school darshinis – for a long time, these guys made no dosas. Even the last time I went there (about a year back), they served only idli, vada, kesari bhath and khara bhath. Today, however, I noticed that they were also making masala dosa.
Correction
In a post I wrote a month back, I had talked about Predicatably Irrational Traffic – in which I talked about a bunch of motorists collectively jumping a signal which they deemed unfair.
Now, having read “The Logic of Life” a couple of weeks back, I’m not sure the heading of that was correct. I’m not sure if we were being irrational there in jumping the signal. I think what happened that day can be better classified as, to use the terminology developed by Gary Becker, etc., a “rational crime”.
Scrap the spending limit
There are two notable things regarding the ongoing elections in Karnataka. The first is the presence of a large number of real estate developers in the elections. The second is the virtual non-existence of corruption, rather the removal of it, in party manifestos. These two points, I believe, are not independent. Under the current system, political parties are forced to rely on black money to fund election campaigns. For people with black money, election funding is an extremely lucrative investment, and with the right bets or good hedges, can give excellent returns.
The political parties have no way out of this. In the name of austerity, and conserving public money, there is a limit on spending in elections. Currently, it stands at a measly Rs. 10 lakh per candidate. In other words, what the rules say is that no candidate is allowed to spend more than this amount on his campaign. Assuming that the average assembly constituency has about 2 lakh voters (this is the case with Karnataka this time round), this works out to Rs. 5 per voter.
A “normal” election involves considerable expenses – banners and posters and flyers; speeches by national politicians; public meetings; door to door campaigning; rallies (And I’m not even thinking about “illegal expenses” such as buying liquor and saris and crowds). It is obvious that in order to put up a serious campaign, one needs to spend a large multiple of the official limit. There is only one way to fund this – using “black money”.
Notice that even if a particular party wants to be honest, and doesn’t want to use black money, it can’t do so unless it is willing to badly hurt it’s own chances in the elections. There is simply no way out. Yes, you might think of increasing the spending limit, but if the other guy is willing to spend over and above the new limit there isn’t much you can do.
As you might have figured out from the title of this post, my recipe is to scrap the spending limit on elections. It is fairly common knowledge that no one really sticks to these limits. Why not just legalize this? It still won’t stop parties from using unaccounted money. However, it gives the parties an OPTION to be honest, and use only honest sources of money.
If a party wants to go to the polls on an anti-corruption platform, it would be able to do so without being corrupt during the process itself. And once some party takes the plunge and “goes honest”, the other parties are likely to follow soon, unless they can afford to lose their reputation. And where will “honest” political parties get their funding from? I’m sure there is a large number of businesses who stand to benefit a lot from a corruption-free government. It shouldn’t be a problem to tap them for funds.
I concede that it’s not a foolproof solution. There is no guarantee that there will be some party which will take the bait and go “all white”. Even if one party does so, there is no guarantee that the entire flawed system can be cleaned up. However, this proposal doesn’t cost too much. I can see no real negative aspects of removing the cap (if you can think of anything, please let me know in the comments). It is definitely worth a try. It is definitely superior to give people the choice to be honest, rather than forcing them to be dishonest.
Cross posted at the Indian Economy Blog
Rice prices
Recently, Tyler Cowen wrote in the New York Times saying that lack of free trade in rice and growing protectionism is not a good thing from the long-term perspective.
IAS Officer Gulzar Natarajan (now with the Vijayawada Municipal Corporation) took him on and elaborated as to why protectionism might be necessary.
I left the following comment on Gulzar’s blog. Given that I’m not blogging much nowadays, and I almost wrote an essay over there, I reproduce here that comment in full.
“trade” doesn’t necessarily mean foreign trade. it can also stand for trade within the country. and this is essential in order to “send out the right signals”.
basic thing is that we need to ensure that farmers receive a fair price for the rice they grow. given that the total demand for rice is increasing, it is only fair that the farmer sees this increasing demand by way of higher rice prices. higher rice prices (as realized by hte farmer) will lead to increase in production which can combat the growign demand.
international trade is one thing. the bigger problem lies with the procurement of goods such as rice by the governments. a number of countries don’t allow the farmer to sell to the open market. procurement is highly controlled, and despite the rising prices, the farmer gets none of it. and thus has no incentive to grow more.
yes, a country might ban exports because it feels that the rice available is enough only to feed its own population. however, this shouldn’t be done at the farmers’ cost. and they should be able to see the right demand for the commodity so that they can adjust.
The met department and randomness
Ok. Nothing unusual about the title of this post. There is intuitively a lot of randomness where the met department is concerned. This post is about an editorial in the Business Standard.
Now, the Indian Met department used a new process for forecasting the monsoons last year. Now, this process yielded good results in the north-east and north-west in terms of forecast accuracy. In the center and south, however, it was a disaster. The process had predicted a small shortfall in rain in these two regions, and it turned out the rains here were more than a quarter more than normal!
So what does the met do now? They decide to discard the process for the center and south. And will continue to use it for the north-west and north-east. Even if you know a little bit about randomness and testing, and I assume that the people at the met department should definitely be well-versed in this, you will know that they have done is ridiculous. How can you form an opinion about something by looking at just one data point? Wouldn’t there have been a good chance that this an anomalous result? Now, what will the met do if the method fails for the north-east and north-west also? Will they completely abandon this new method?
I find the system that the met department is using no more intelligent than the one that I use to classify my shirts as “lucky” or “unlucky” (and trust me that isn’t very intelligent; I just use 1/2 data points and quickly derive an opinion).
God help us, if the met department is like this. The sooner weather derivatives (rainfall, temperature, etc.) get launched (or have they already been launched? I know they are now legal in india) the better for us. At least in that case we will get the wisdom of crowds to forecast the monsoon.
option to escape
From The Logic of Life – “your option to escape means you cannot be relied upon”.
Harford makes this point while he is talking about “acting white”. That black kids who work hard at acads are discouraged by family and peers because they are now getting an option to exit the misery. It’s the old story of the crabs in the jar. That nothing will escape despite the lid being open.
From a job perspective, this factor might not help people who are seen as being over-qualified for their job. The boss won’t trust them. The boss knows it’s easier for these guys to move out when they want to. So unless they manage to project an extremely strong degree of commitment, it would be difficult for the boss to invest in them.
And two years back, when I left A T Kearney, I had thought I should get into something where I’m overqualified thinking it might help me be seen in a better relative light and thus grow…
Tim Harford
I first came across Tim Harford when Tyler Cowen linked to his blog some six-seven months back. He used to blog fairly prolifically back then, and I used to enjoy reading it. In the matter of a couple of months, he had upstaged Tyler to become my favourite econ-blogger (that position currently belongs to Arnold Kling of EconLog). I wasn’t long before I bought “The Undercover Economist“.
Now it’s the turn of the economists
To fear the engineers that is. It seems like TCA Srinivasa Raghavan had an extremely tight deadline with respect to his analysis of the Raghuram Rajan Report. So, instead of taking on the report, he decides to go after the chief author instead. And he doesn’t even do a good job of this. He goes after the chief author’s educational background (Raghuram is a BTech (elec) from IITD). And proceeds to say that the invasion of engineers into economics has in a way ruined the subject.