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Urbanomics





Updated: 2018-04-22T12:14:35.429+05:30

 



I want you to thank for your time of this wonderfu...

2018-03-31T13:25:13.036+05:30

I want you to thank for your time of this wonderful read!!! I definately enjoy every little bit of it and I have you bookmarked to check out new stuff of your blog a must read blog
RK Dubey



Yes I observed this in so many debate. Just like t...

2018-03-26T18:47:47.413+05:30

Yes I observed this in so many debate. Just like this one
https://youtu.be/-CJnGMldmZU

Niti Aayog chief is talking about incentive based approach (naming and shaming) I think in Indian context that's better possible option. This blog repeatedly explain structural weakness and lack of political will power is main reason for administration mismanagement at ground level. while keeping in mind inter-state and intra-state capacity differences this approach may not bring major change but it will surely catalyse process and create breeding ground. Just like ambitious target kept by indian government
100GW solar power generation by 2022

All I can understood from this is India or any real time action need some 'Unconventional NUDGE'



You are absolutely right about the stall of global...

2018-03-25T15:13:56.767+05:30

You are absolutely right about the stall of globalization. Paul Krugman in a recent Rising India speech focused on how we take globalization for granted but it has its own cycles. It is dependent on the relationship between the rate of growth in manufacturing technology vs rate of growth in transportation technology. Even Bruce Greenwald had a similar take on it. The benefits of transportation technology have been largely captured and in some cases, they have been overdone with the same product crossing seas multiple times in the entire production process. He said, manufacturing outsourcing in labor-intensive parts of production will go on but recent advancements manufacturing technology are pushing back on gloabalization.



Thank you for highlighting this point. I remember ...

2018-03-12T18:36:49.312+05:30

Thank you for highlighting this point. I remember a colleague, who was working on RCTS at that time, mentioning the same point in a discussion about external validity of RCTs about five years ago. The colleague called it the "RA effect on fidelity of implementation and the selection of RA is highly non-random by design. Perhaps replicability studies can be designed to address some of it?



Thank You Gulzar for putting things in perspective...

2018-03-06T18:50:04.248+05:30

Thank You Gulzar for putting things in perspective. Every dispensation has its political color, but this by far has proved capable of walking the talk on governance. Also the Indian tendency to get selectively self righteous and expect a religious morality from politics, forgets, that even the law is not of absolute morality (if one exists), but of pragmatic smoothing of societal functioning.

regards, KP.



Thanks for that comment. I completely agree with y...

2018-02-27T02:07:04.991+05:30

Thanks for that comment. I completely agree with you. I got that tangled up and have corrected it.



The first might be less likely than the second or ...

2018-02-26T10:52:14.809+05:30

The first might be less likely than the second or not, I do not know. I think both are equally likely explanations!

But, I agree that commentators would avoid those two explanations and opt for the third!



http://www.thehindu.com/business/Industry/Maersk-L...

2018-02-23T18:21:46.670+05:30

http://www.thehindu.com/business/Industry/Maersk-Lines-charts-new-course-to-Alang-for-recycling-ships/article16073000.ece

This case study shows, how quality of firms working bring multiplier effect on industry.



Thanks Ananth. I am coming from the view that ther...

2018-02-22T05:32:49.755+05:30

Thanks Ananth. I am coming from the view that there is no one policy whose efficacy remains the same at all times and that governments need to be flexible opportunistically. For that reason, asymmetry too varies in time. It is in that spirit that I am sympathetic to their suggestion. My belief is that a higher corporate tax causing any significant enough disincentive to investments is very remote, especially in the current environment.

Why can't we have counter-cyclical corporate tax policy?

At the least, corporate incomes coming from financial investments should be taxed at a higher rates. If, as the Credit Suisse report shows, tech corporates are equivalent to the largest investment banks in the bond markets and their share buybacks are distorting stock markets, what is wrong with taxing the negative externality causing activities?

In a modern historic perspective, we live today at a time when tax rates are at their lowest levels. There is no evidence that the decline in tax rates has contributed to higher investment during the Great Moderation. Can we say that the very sharp Bush and Clinton tax cuts boosted investment in any meaningful way? So how can we say that higher taxes will make it bad/worse?

Further, we have politically and socially got entrapped in an environment where taxes can only go down, never up. Why should this be the case? With the recent Trump tax cuts, corporate taxes in the US have reached a level where any fiscal expansion through tax cuts in a future recession is simply off the table. Almost like zero bound with interest rates. Just as interest rates in normal times should be somewhat high so as to provide the cushion for cuts during slowdowns, should we not have a reasonably high corporate tax rates to stimulate with cuts during similar slowdowns?



A great summary, Gulzar. You should link this to...

2018-02-20T08:39:03.348+05:30

A great summary, Gulzar.

You should link this to the post on corporate ethics in India. What is the difference? May be, one is too sophisticated and one is not. But, does that matter to the outcomes?

You might also want to link this post to the NYT page link you had given in your 'Weekend Reading Links':

https://www.nytimes.com/series/private-equity-bottom-line-nation

You had suggested this to the World Bank President Kim. But, it also is a suggestion to governments.

But, now, let us go philosophical.

How do we solve this? If governments are captured, how do you expect the government to extricate itself out of it? It is now powerless. Ex-ante, it had. Now, it does not. It is captured.

The only way is to wait for change agents to come when a crisis presents itself. Over time, the change agents are captured too and we wait for newer change agents! It is an unending struggle between power and people.

Lot of permanent fodder for bloggers :-)

Without a spiritual outlook and detachment on the part of the rulers - they minimise the risk and incidence of capture - the cycle of capture and releae and capture will be endless.

Some change agents come with their own agendas.For example, is Trump draining the swamp? I doubt because he has just received a certificate from Lloyd Blankfein of Goldman Sachs. That says it all.

Now, if and when he finally goes, after one term or two terms or whenever, the old elites will be back in the saddle - the elites who gave us financial de-regulation, Public-Private Partnerships, etc.

But, amidst all this, some good have happened. Millions of Chinese workers have had better lives than they would have. Few millions of Indian software workers and their families benefited from globalisation. The Philippines and Mexico workers have benefited.

So, amidst the capture, let us count the small blessings because 'WE (the World Economy) are like this only'.





Excellent post, Gulzar. Too sobering. Now, combine...

2018-02-20T08:21:21.681+05:30

Excellent post, Gulzar. Too sobering. Now, combine this post with another one that you had posted later, 'Ethics in Corporate India'. The situation is rife and ripe for exploitation of the exchequer, i.e., the taxpayer - by the private sector, in the name of the poor.

But, as you had pointed out, it is a politically expedient solution. It maximises political payoff at the expense of positive economic or health outcomes.



"This is truly scary. The only thing that wou...

2018-02-20T08:05:35.115+05:30

"This is truly scary. The only thing that would be of some comfort is the Chinese government's commitment to address the problem and its credibility in terms of translating talk into actions."

Eh?! That is not at all borne out by facts and numbers.



I agree with the problem definition. But, I am not...

2018-02-20T08:03:47.860+05:30

I agree with the problem definition. But, I am not sure of the solution - higher levels of taxation. We might be a little bit rushing here - towards solutions that have been tried and failed. Also, remember asymmetry. Lower taxes may not make businesses invest. But, higher taxes can surely make it worse. We should just observe and let the problem sink into our consciousness. Over time, the mind will come up with a more realistic and feasible solution that recognises and accepts asymmetry and other such behavioural constraints.



Thanks, Gulzar. Just a doubt - Any estimates on t...

2018-02-08T15:43:22.253+05:30

Thanks, Gulzar.

Just a doubt - Any estimates on the share of tertiary expenditure on avoidable cases? Avoidable cases are those whose escalation to tertiary level could have been avoided with strong preventive public health and curative primary health care systems.



Gulzar, Do you think there are lessons to be lear...

2018-02-06T20:23:27.466+05:30

Gulzar,

Do you think there are lessons to be learnt from this PPP evidence, that are relevant to "insurance model of tertiary health care" (public funded but service delivery by private players) in the Indian context?

If the decision of public vs. insurance model of health care is a matter of comparison between the capacity to run public hospitals vs. capacity to regulate private players... are we stuck in a trap where we don't have either of these capacities? In this context, which capacity is easier to build from the current state?



Thanks for the post - I found it particularly inte...

2018-02-03T11:19:54.796+05:30

Thanks for the post - I found it particularly interesting in the context of recent work on automation presented at the AEA meetings this month modeling the effects of productivity growth from automation on growth of new jobs. The trends pointed out here fit in well with the theoretical work that was presented. For more info, I wrote a blog post on it at chandniraja.blogspot.com.



The effort of Alibaba in developing Electronic mar...

2018-02-03T10:38:41.930+05:30

The effort of Alibaba in developing Electronic markets in Rural areas and for farm produce seems to be yielding much better results than what we could achieve in eNAM.



The point that Uday Kotak made about India funding...

2018-01-21T14:06:49.372+05:30

The point that Uday Kotak made about India funding its deficit through equity. I feel the recent announcement of the government mulling over 100% FDI in banking is motivated by an upcoming planned deficit in the budget due to a pre-election year.

I also feel that the USA is funding some of its deficits through real estate sale to foreigners, especially the Chinese.

Any thoughts on this?



good post on accident of birth, it is very good in...

2018-01-20T16:42:48.444+05:30

good post on accident of birth, it is very good information. I think it should be updated so, that it will be great to know.



Karthik, thanks. You will find exactly similar p...

2018-01-17T02:15:03.686+05:30

Karthik, thanks.

You will find exactly similar points to quote in exactly the opposite direction in the paper linked here (as well as the graphic) http://gulzar05.blogspot.co.uk/2017/12/the-costs-and-benefits-of-transport.html

Btw, this is what I am increasingly finding out in such complex problems - for every evidence data point in one direction, there is another in the opposite direction!

But that is not the point I am making.

Consider this. We already have too many vehicles in our roads - maybe 2-3 times the number in peak times in the larger cities (and growing very fast). The primary objective of public policy (or any market innovation) should be to get a significant number of vehicles off the road by inducing people to use public transport (assuming complementary investments in public transport) or shift their travels to off-peak times. Btw in most cities, congestion has become so excruciating that increasingly off-peak times are only when we are all asleep!

For Uber to be doing this, it would have to induce people who were using private cars to either shift their travel times to off-peak hours or use pooled Uber. And this would have to be done in very large numbers to at the least off-set the natural rate of increase in private cars entering the roads each year. We also know about the lack of success with dynamic toll-pricing and HOV lines in changing travel behaviours (by shifting travel times and using pooled vehicles) and thereby lowering congestion in several cities.

Besides, it would also have to ensure two things - one, as I mentioned in the linked post (and the paper referenced), that the middle-class who have recently gravitated from cars and motor-cycles to the new Metro rail will have to stay on with the rail; and two, those who (not rich enough to own a car, but not poor too) otherwise would not have used cars or would have used the auto (say) or a bike would now not shift to the greater personal comfort of a Uber. We can safely say that both these will happen in large numbers.

I could actually list out several more factors (that drive private vehicle use and reluctance to ) that Uber will have to offset. Not to mention evidence from places like London where private cars have actually decreased since 2012, while Uber vehicles have more than made up the decline, leaving London ever more congested in every passing year since (also due to increased delivery vehicles).

The counterfactual (in my judgement) is orders of magnitude off, for me to be even taking the paper you mentioned seriously...

The point is this - we need public policy and market innovation that gets vehicles off the road. I don't believe you can do that by getting more vehicles on to the road.



Gulzar, The paper compares "congestion befor...

2018-01-16T10:52:47.470+05:30

Gulzar,

The paper compares "congestion before Uber" v. "congestion after Uber put cars on road". It finds that congestion decreases after Uber puts cars on roads, as compared to the case without Uber.

From the paper -

"....after entering an urban area, ride-sharing services such as Uber significantly decrease traffic congestion time, congestion costs, and excessive fuel consumption. "

"...difference-in-differences framework to examine the difference in congestion before and after Uber entry across multiple areas"

Intuitively, it seems that Uber puts more cars on road and hence it should lead to congestion. But what these results suggest is that the other effects are significant enough to counter the effect of "putting more uber cars on road. The countering effects being the removal of personal cars from the road, disincentivizing people to use roads during peak time, better utilization of car seating capacity, and so on.



Thanks for the comment. I am inclined to agree wit...

2018-01-16T02:40:06.584+05:30

Thanks for the comment. I am inclined to agree with you about the perils of including economic growth... Health, education, infrastructure and jobs are a good set of priorities...



Karthik. Thanks. 1. The point I am making is that...

2018-01-16T02:16:01.748+05:30

Karthik. Thanks.

1. The point I am making is that just getting Uber into the roads (more vehicles on road) is itself contributing to congestion. Then managing the larger pool of vehicles with price signals is only salvaging the situation which is already more congested than would have been the case without Uber (with only private cars and taxis).

2. On your Sl No 3, it is precisely such efficiency gains that can be reaped by having existing taxis move into aggregator platforms through some business model.

The central point is that Uber/Ola etc are innovations that bring in more vehicles into already congested roads. We need to control them. Alternatively, every private car (personal cars, Uber, taxi etc) ride inflicts a social cost. Further, given the traffic levels in our cities, the incremental cost is even more.



The analogy you had drawn about United Nations han...

2018-01-15T19:45:38.262+05:30

The analogy you had drawn about United Nations handing down goals for sovereigns is rather apt. That immediately makes it clear to the reader the sub-optimal situation prevailing in the Districts.

It is desirable that priorities are tailored to the conditions and the context of the District. If I were to draw up priorities for district administrators, I would say it is health, education, infrastructure and jobs. For Municipalities, it can be transport, traffic, sanitation, drainage, street lights, etc.

However, there may be some Districts and Municipalities with some unique issues or challenges or priorities that do not fall under the above. In such cases, their objectives can be modified suitably or be different.

Locating big industrial plants in Districts will be the responsibility of the Union and/or State governments with the District administration playing a facilitating role.

District collectors can be given six months to draw up their priorities, upon taking office. Then, they can be evaluated on that basis and even offered financial incentives if they exceed goals set or if they do better than their peer group.

I will avoid economic growth altogether. Indeed, I would be hesitant to give that as a goal for even Union and State governments. Economic growth, in my view, is a residual or a natural outcome of getting the ingredients and getting the plumbing of economics right.

Far too many factors influence economic growth. Failure to achieve it brings pressure on governments to go for temporary fixes which could be harmful in the long run. Second, there is the risk of numbers being cooked up.

In China, many cities are now admitting to overstating their growth numbers by about 20%. Christopher Balding questions if the government in Beijing is not doing so. In that case, he is wondering if China's true gross debt (public and private) debt ratio is not 375% instead of 300%. Similar issues will arise in India too.

So, let us stay clear of economic growth as a goal for district administrators.



The analogy you had drawn about United Nations han...

2018-01-15T19:45:17.118+05:30

The analogy you had drawn about United Nations handing down goals for sovereigns is rather apt. That immediately makes it clear to the reader the sub-optimal situation prevailing in the Districts.

It is desirable that priorities are tailored to the conditions and the context of the District. If I were to draw up priorities for district administrators, I would say it is health, education, infrastructure and jobs. For Municipalities, it can be transport, traffic, sanitation, drainage, street lights, etc.

However, there may be some Districts and Municipalities with some unique issues or challenges or priorities that do not fall under the above. In such cases, their objectives can be modified suitably or be different.

Locating big industrial plants in Districts will be the responsibility of the Union and/or State governments with the District administration playing a facilitating role.

District collectors can be given six months to draw up their priorities, upon taking office. Then, they can be evaluated on that basis and even offered financial incentives if they exceed goals set or if they do better than their peer group.

I will avoid economic growth altogether. Indeed, I would be hesitant to give that as a goal for even Union and State governments. Economic growth, in my view, is a residual or a natural outcome of getting the ingredients and getting the plumbing of economics right.

Far too many factors influence economic growth. Failure to achieve it brings pressure on governments to go for temporary fixes which could be harmful in the long run. Second, there is the risk of numbers being cooked up.

In China, many cities are now admitting to overstating their growth numbers by about 20%. Christopher Balding questions if the government in Beijing is not doing so. In that case, he is wondering if China's true gross debt (public and private) debt ratio is not 375% instead of 300%. Similar issues will arise in India too.

So, let us stay clear of economic growth as a goal for district administrators.