Monday, June 30, 2014

John Le Carre interview with 'Democracy Now'

China training its future leaders

(Via Steven Hsu) Can China best the west in Statecraft? "Celap's students are China's future leaders. The egalitarian-looking sleeping quarters mask a strict pecking order, with suites for senior visitors from Beijing. The syllabus eschews ideology in favor of technocratic solutions. The two most common questions, says one teacher, are: What works best? And can it be applied here?.....
Western policy makers should look at this effort the same way that Western businessmen looked at Chinese factories in the 1990s: with a mixture of awe and fear. Just as China deliberately set out to remaster the art of capitalism, it is now trying to remaster the art of government. The only difference is a chilling one: Many Chinese think there is far less to be gained from studying Western government than they did from studying Western capitalism. They visit Silicon Valley and Wall Street, not Washington, D.C."

Sunday, June 29, 2014

Mian and Sufi's book

The House of Debt is drawing good reviews. From Sumners' review "So their story of the crisis blames excessive mortgage lending, which first inflated bubbles in the housing market and then left households with unmanageable debt burdens. These burdens in turn led to spending reductions and created an adverse economic and financial spiral that ultimately led financial institutions to the brink."
P.S. Part of an interview with he authors

Saturday, June 28, 2014

Rajiv Sethi and Glenn Lowry discuss Piketty
via a comment in
In the first fifteen minutes Sethi reviews and covers some technical criticisms. Here is Rajiv Sethi's review from June,3. In the discussion Sethi covers more of the criticisms.

Friday, June 27, 2014


May be I should not have stopped driving. Uber seems good for making ends meet in lean times. It would have been handy in the eighties when I had job problems. In places like Melbourne, it is not the taxi drivers who are making money from taxis but the license owners and the state government : "n 31st May 2012, the day the Taxi Inquiry’s Draft Report was released, the value of a Melbourne taxi licence dropped from $470,000 to somewhere between $300,000 and $250,000 as assignment (lease) fees fell from around $35,000 p.a. to $20,000 p.a.." from


"As soon as Bridges entered the school, white parents pulled their own children out; all the teachers refused to teach while a black child was enrolled. Only one person agreed to teach Ruby and that was Barbara Henry, from BostonMassachusetts, and for over a year Henry taught her alone, "as if she were teaching a whole class."" from

Thursday, June 26, 2014

Benjamin Kunkel on Piketty

Benjamin Kunkel, novelist and 'Marxist public intellectual' reviews Piketty. He seems to be mixing up second and third laws; otherwise at first glance it seems good to me. 
P.S. It seems to me that there is another possibility which technology and overcapacity allows that the reviewers are ignoring. One is a luxury and positional goods economy to which about 20 percent are so can aspire to (Cynthia Freeland has been writing about such an economy for the oligarchs). The bottom fifty percent will be slowly pushed down to subsistence level working for the global supply chains and forms of hard labour. And others in between aspiring to do well and voting making the process appear democratic.


Chris Blattman Social Engineering in the Congo  "One takeaway: social engineering usually fails.
A better takeaway: social engineering sometimes works and sometimes fails, and most of the time we have no idea what to expect."
Ed Yong on bacteria resistance  Sleeping through the blitz "These bacteria weren’t resistant. They turned out to be just as sensitive to ampicillin as their first-generation ancestors. Instead, they had evolvedtolerance. They spent more time in a dormant state before starting to grow and divide again, allowing them to sleep through the ampicillin blitz. And they adjusted this dormant interval—the lag time—with astonishing precision."
The Guardian on the Open Source Seeds Initiative Check also article

Wednesday, June 25, 2014

Some cheering news

Since 2006-2007, I have been sending little money, about five to eight thousand Australian dollars an year to various developmental organizations in the areas of coastal Andhra where I grew up. The amounts are very small (since I am at the border level and my superannuation is supplemented by the government). Lot of the money goes to micro loans. I do not know how well it is working since I stopped asking for accounts; I felt that was a burden for people with limited time and is making clerks out of them. But on my visits, I meet some beneficiaries and they seem to be working to some extent. On the last trip, some wanted loans for farming. apparently, one needs about 12-15 thousand rupees an acre and three farm labourers wanted to farm about an acre each. I sent about fifty thousand rupees last month. When I phoned to find our whether the money was distributed, I found that the three wanted to share it other farm labourers and altogether eight shared it. That means that we have to raise some more money before the end of the year which should be possible since some money from the micro loans will be coming back.  But it is cheering that they decided to share with others, It is not clear to me whether the money should be gifted or should be given as loans. There is a related video

The blameless Blair

seems to me making a lot of money. From Daily Mail September 2012  "Increasingly, however, it is hard to tell where Mr Blair’s business dealings - which are said to have earned him as much as £60 million - end, and his charitable role and unpaid work in the Middle East begin."
And from  January 2013 "Sources in China said he was handed about $200,000 (around £125,000) to deliver the lecture on philanthropy.....
Meanwhile, young executives from J.P. Morgan, the bailed-out U.S. bank paying him a reported £2.5 million a year, are put to work at the heart of African governments advised by one of his charities "
More recent news in Financial Tines on June 23 "Mr Blair has maintained close contact with the Arab elite as an envoy for the Middle East “Quartet” – the UN, the European Union, the US and Russia. His job is to help mediate in the Middle East peace process and support the Palestinian economy.
That role has been a valuable calling card – he is sometimes in Abu Dhabi on Quartet business. But he also wears other business and philanthropic hats."

Tuesday, June 24, 2014

From Hyderabad Ki Nazneen 1952

David Cay Johnnston on the secrecy surroundin TISA

"If this is the first you have heard of this agreement, it is not surprising. Not one of the five big American newspapers — The New York Times, The Los Angeles Times, The Wall Street Journal, The Washington Post and USA Today — wrote a word about the document. Ditto the major TV networks.
Why the secrecy? Why shut down the marketplace of ideas?
The answer becomes obvious upon reading the draft: It is intended to subvert the creation, by governments, of rules that benefit all of society and instead make sure the rules enhance the power of the financial services industry and reduce its accountability."

Investment treaties and arbitrators

From Wikileaks brings much-needed scrutiny to secret trade talks (all the links are from Naked Capitalism) "TISA has some way to run. Whether the original parties can broker a deal, and then get enough sign on from others to force it back into the WTO, are imponderables. But there is no doubt that this first major leak of the text will bring unwelcome attention to the plan. Negotiating TISA in daylight, and subjecting it to public scrutiny, will enhance the prospect that they fail."
'Trade Treaties and Coming Rule of Global Corporatocracy' explains how many earlier trade treaties have been working. It links earlier articles about investment treaties, arbitration procedures and arbitrators.
From 'Profiting from injustice' " International investment treaties are agreements made between states that determine the rights of investors in each other’s territories. They are used by powerful companies to sue governments if policy changes – even ones to protect public health or the environment – are deemed to affect their profits. By the end of 2011, over 3,000 international investment treaties had been signed, leading to a surge in legal claims at international arbitration tribunals......Some countries have started to realise the injustices and inconsistencies of international investment arbitration and have initiated a retreat from the system. In spring 2011, the Australian government announced that it would no longer include investor-state dispute settlement provisions in its trade agreements. Bolivia, Ecuador and Venezuela have terminated several investment treaties and have withdrawn from ICSID. Argentina, which has been swamped with investor-claims related to emergency legislation in the context of its 2001-2002 economic crisis, refuses to pay arbitration awards. South Africa is engaged in a thorough overhaul of its investment policy to better align it with development considerations and has just announced that it will neither enter into new investment agreements nor renew old ones due to expire."
More details about arbitrators in  'Corporate Europe'
"Most arbitration panels are composed of three people. One arbitrator is selected by each of the parties and a third, the president, is usually selected by the two party-appointed arbitrators. Sometimes a previously agreed appointing power, such as the World Bank or International Chamber of Commerce, selects the arbitrators. Arbitrators do not need to be registered anywhere in order to qualify. Both parties can appoint anyone they consider suitable."
"Proportion of arbitrators from Western Europe and North America: 69% for all cases held at the World Bank’s International Centre for Settlement of Investment Disputes (ICSID)13 and 83% if taking into account arbitrators who have sat in more than 10 cases ".

The article goes on to discuss the treaties which are being currently negotiated with conflict resolutions probably following similar procedures to the above ones:
" what gives trade treaties such as TTIP and TISA their “claws and teeth” is the inclusion of an innocuous-sounding provision called the “investor-state dispute settlement.” This effectively allows private companies to sue entire nations if they feel that a law lost them money on their investment."

Saturday, June 21, 2014

Michael Perelman on the ideological fraud of Adam Smith

here " Smith was not unworldly at all. He was engaged in the construction of a sophisticated ideological structure. Nothing is more revealing about this project than his famous pin factory." Loner article here.
Gavin Kennedy promises a response.

Mainstream media coverage of TISA

"It is distressing to see how the media is pointedly ignoring this damning Wikileaks revelation. As of this hour, my Google News search does not show a single mainstream media outlet reporting on this story. The usual left-leaning stalwarts like Huffington Post, TruthOut, Firedoglake, and CommonDreams have articles up, along with Business Insider and RT. The only country where major news organizations have taken the story up are in Australia, and that appears to be due to the fact that approval of this deal would end Australia’s restrictions on foreign ownership of banks." says Yves Smith.

In Australia Fairfax media are covering it. From Peter Martin "The most shocking thing about the leaked draft of the Trade in Services Agreement is the innocuously named ''dispute settlement'' provision.
The authors, the European Union and the US, want Australia to let an outside arbitrator re-adjudicate decisions made by government ministers and the High Court.
So-called investor-state dispute settlement procedures are common in international agreements. Australia has one in a treaty with Hong Kong. Tobacco giant Philip Morris fought Australia's health minister all the way to the High Court over plain packaging and lost in 2012. It is trying again under the provisions of the Australia-Hong Kong treaty. The specially-constituted tribunal sitting in Singapore has become a sort-of super High Court, on this one issue higher than Australia's highest."

Read more:

PSI Special Report on TISA

From TISA vs Public Services
"There is a virtual alphabet soup of new trade and investment agreements under negotiation – the TPP, TTIP, CETA, PA, TISA and more. Despite the bewildering array of acronyms, all of these negotiations tend to pursue a similar, corporate-driven agenda. Each agreement becomes the floor for the next, in a state of perpetual negotiation and re-negotiation. Hard-won exceptions to protect public services or insulate financial services regulations from investor-state challenge, for example, become targets for elimination in the next set of talks. Moreover, this frenzy of negotiating activity remains cloaked in a veil of secrecy......With a stroke of pen, a single neo-liberal government can essentially lock all future governments into a policy straight-jacket " 
More on TISA from Yves Smith

Friday, June 20, 2014


From Wilileaks press release "Despite the failures in financial regulation evident during the 2007-2008 Global Financial Crisis and calls for improvement of relevant regulatory structures2, proponents of TISA aim to further deregulate global financial services markets. The draft Financial Services Annex sets rules which would assist the expansion of financial multi-nationals – mainly headquartered in New York, London, Paris and Frankfurt – into other nations by preventing regulatory barriers. The leaked draft also shows that the US is particularly keen on boosting cross-border data flow, which would allow uninhibited exchange of personal and financial data.
TISA negotiations are currently taking place outside of the General Agreement on Trade in Services (GATS) and the World Trade Organization (WTO) framework. However, the Agreement is being crafted to be compatible with GATS so that a critical mass of participants will be able to pressure remaining WTO members to sign on in the future. Conspicuously absent from the 50 countries covered by the negotiations are the BRICS countries of Brazil, Russia, India and China. The exclusive nature of TISA will weaken their position in future services negotiations."

Thursday, June 19, 2014

A Jogini in a Pakistan film?

It still seems prevalent in some southern states of India and Nepal. Some gruesome videos on YouTube.

Shift from growth paradigm?

May be a bit. 'Does culture matter for economic growth': Discussion in Economist's View.

Aljazeera article on marriage inGarasia tribe

Marriage an alien notion for Indian tribe :"Members of the indigenous Garasia tribe in the northwestern state of Rajasthan have been cohabiting in live-in relationships outside wedlock since time immemorial.
Social scientists studying the arrangement - called dapa and recognised through formal rituals - point to a low incidence of rape and dowry deaths in these communities where women retain a high status.
"These tribals, whose livelihood depends on farming and working as labour, marry their live-in partners only when they have sufficient money," said Shahid Pathan, a journalist who has gained an understanding of indigenous customs in the Kotra area.
"Needless to say, that happens much later in their lives, and in absence of money they continue living together for several years and even become parents without the fear of bearing a child out of wedlock."
Joint wedding
It was surprising for many visitors to the wedding of 70-year-old tribal Naniya Garasia to his 60-year-old live-in partner Kaali to discover that not only were his grandchildren present but also his three sons - Mugla, 50, Gana, 40, and Shankar, 35."
May be one way out of sexual violence problems is freer intermingling of sexes. An eye witness account earlier Alternate sexuality traditions 4: Garasia tribe

Pranab Bardhan reviews Piketty

and discusses the Indian case which is not much discussed in the book: Capitalist Dynamics and Plutocrats (EPW articles are available free on line for four weeks after publication)

Wednesday, June 18, 2014

The role of housing in the capital to income ratio

From The Economist Housing in the twenty-first century: "In my view, for example, one of the main contributions of the book is a mental framework, scrutable to the layman, for assessing how particular economic changes might influence the distribution of wealth......Part of the attraction of Mr Piketty's framework is that it leaves one free to make up one's own mind about what is likely to happen.....
The question I have raised is whether the importance of housing to Mr Piketty's story is a strength or, as some critics suggest, a weakness, possibly fatal. The housing critique, if I've understood it correctly, is as follows. Quite a lot of the recent rise in the ratio of national capital to national income can be attributed to growth in housing wealth; in some economies, like France, housing is basically the whole story. What's more, quite a lot of the rise in housing wealth is down to growth in housing values, and quite a lot of the growth in housing values can be attributed to restrictions on housing supply growth. What we're left with, then, is a mechanism for rising wealth inequality that does not seem to have much to do with the rate of return on capital r holding steady as the economic growth rate g falls.....Over the last few decades technological changes have greatly increased the return to locating in large cities filled with skilled people. Being in such places makes workers more productive and raises the income they are able to earn. But skilled cities have not allowed housing supply to expand to meet rising demand. Housing has therefore been rationed by price, pushing less productive workers toward cities where housing supply growth is higher and housing cost growth is lower. As a result, fewer people live in the most productive places, and quite a lot of the gain from employment in productive places is captured by landowners earning rents thanks to artificial housing scarcity. This may mean lower overall productivity, more income inequality, and more income flowing to capital rather than labour....I think economists want to read the book, and particularly its analytical framework, much more narrowly than is appropriate. They want the mechanics to be pinned down by a particular set of equations that can be understood to contain the entirety of the book's argument. But the book is a sweeping narrative about the relationship between wealth and labour over very long periods of time! There is a reason he didn't just scratch out a few equations and submit it to a journal for publication. "
And more.

Trading one capital for another

"Piketty may be right about the long-run evolution of the capital-income ratio β. Since 1970, the slow growth relative to savings in rich countries may have led to substantial accumulation of capital relative to income. But as my estimates for the trend in s*/g* show, this wealth has been amassed over the past 40 years through considerable depreciation of valuable energy, mineral and forest resources. In a sense, these economies have traded one form of capital—the earth’s riches—for another—human riches." - See more at:"

Forgotten singers: Rohini Roy and Mohantara Talpade

Joshua Gans on disruptive innovations

Joshua Gans on disruptive innovations "Instead, the focus on the doomed incumbent leads Christensen away from the obvious alternative. The incumbent should ‘wait and see.’ They will see all manner of potentially disruptive technologies being deployed and instead of removing them from their radar as irrelevant, they should continue to monitor them to see what happens. Because, when the one in ten or a hundred or whatever turns out to be successful, they can then move to acquire them and realise a more ‘orderly transition’ to the new technology. Indeed, as I read Lepore, I got the sense that even with Christensen’s iconic examples, the end result was incumbent preservation through acquisition."
P.S. More recent article (behind a firewall) by Clayton Christensen discussed in Daily Kos

Sunday, June 15, 2014

More links

Telsa blog All our patents belong to you
Chile rejects $8 billion dam project in Patagonia
The French are right: tear up our public debt- most of it illegal anyway
(A 2006 discussion about public debt Economics and Democracy: key quote:
 "Given the simplicity and power of this argument, one reads the epilogue of this great book with surprise and sorrow. In MacDonald’s view, it’s all over. In the nuclear age, deficits and bond drives on the world-war scale are history, and the American citizenry has lost its pride of place as creditor of the American state. Today, financial intermediaries hold about 37 percent of U.S. public debt; Japan and China, along with other countries, now hold about 30 percent. The proportion of U.S. debt owned directly by Americans has fallen to below 10 percent; in 1945 (when the debt was more than twice as large in relation to GDP as now) citizen-creditors just about held it all. He concludes that the link is broken and "for all practical purposes, the venerable marriage between public credit and democratic government, so vital a factor in the history of the world, has been dissolved." ..."
We'll all be dying in debtor's prisons soon
South-east England, offshore financial centre


Barry Ritholtz on June 4th  Top economists say that war is bad for economy
Tyler Cowen The lack of wars may be hurting economic growth
Dean Bakeron June 14th Does the right hold economy hostage to advance economic agenda? and discussion at Economist's View
Ismael Hossein-Zadeh A world war between classes not countries "A brief look at recent schemes of regime change in countries like Iraq and Libya, on the one hand, and Ukraine and Iran, on the other, can help an understanding of when or where the imperialist powers resort to direct military action to bring about regime change (as in Iraq and Libya), and where or when they resort to "soft-power" tactics to achieve the same goal, as in Ukraine and Iran."
Tony Cartalucci America's covert re-invasion of Iraq "It is a defacto re-invasion of Iraq by Western interests – but this time without Western forces directly participating – rather a proxy force the West is desperately attempting to disavow any knowledge of or any connection to. However, no other explanation can account for the size and prowess of ISIS beyond state sponsorship. And since ISIS is the clear benefactor of state sponsorship, the question is, which states are sponsoring it? With Iraq, Syria, and Iran along with Lebanese-based Hezbollah locked in armed struggle with ISIS and other Al Qaeda franchises across the region, the only blocs left are NATO and the GCC (Saudi Arabia and Qatar in particular)."
Haroon Khalid says "Yet the link in parts of Pakistan between the practice of Sufism and feudalism’s great injustices remains unacknowledged. Most of the Pirs in this part of Pakistan are also the feudal lords of their area. Many have capitalised on the international sentiment against puritanical Islam and positioned themselves as a counterpoint to its growth, even promoting their business interests in this manner." He is the author a book " A White Trail" about minorities in Pakistan. More on his timeline.
In a cricket article 'Murder in Multan' I find this " "In early days of the city, Multan had supposedly been home to the famed Prahladpuri temple, dedicated to Prahlad of Hindu mythology. According to the legend, Prahlad’s father, the asura king Hiranyakashipu, had been killed by Vishnu who had from inside a pillar, in his man-lion avatar known as Narasimha." See also Sehwag scoring his first 300.
Scientists have discovered vast water reserves near Earth’s mantle, a finding that could reshape our understanding of where Earth’s water came from.
The psychology of your future self by Dan Gilbert

Nur Jahan and Lata Mangeshkar

In an interesting article on Nur Jahan, Professor Ashraf Aziz says "Following Independence in 1947 – on both sides of the Indo-Pak border – two great female vocalists, Noor Jahan and Lata Mangeshkar, would sing of the broken promise of greater freedom for women (and most men) in their respective countries. In Pakistan Noor Jahan was singing Jigar ki aag mein is dil ko jalta dekhte jao (Dupatta, 1955) while in India Lata Mangeshkar asked Ab mera kaun sahaara? (Barsat, 1949)." The article has a nice photograph of Nur Jahan with Bade Ghulam Ali Khan, where Nur Jahan actually looks slim. I think Professor Aziz is probably reading too much into the events to link them with various type of liberation. But both the songs are quite nice. The first by Nur Jahan
And Lata's song

Friday, June 13, 2014

Three versions

Telugu version by T.S. Bhagavathi and P.Susheela

Tamil version (probably the original) by M.S.Rajeswari and T.S.Bhagavathi
Hindi version by Geeta Dutt and Lata Maneshkar
Hindi version seems a bit different. I think Lata Mangeshkar and T.S.Bhaavathi sang for Vyjayanthimala.

Thursday, June 12, 2014

Modi's first international task?

From The Hindu WTO: Modi banks on BRICS:
"The Modi government’s first major international crisis is brewing at the World Trade Organisation (WTO) talks in Geneva, where even six months after the Bali ministerial conference, the United States has not allowed progress on talks to ensure permanent protection to India’s food subsidies from WTO caps."
C.P. Chandrasekhar in No help from abroad
 " With India’s integration with the global economy through trade and investment flows having increased significantly over the last quarter of a century, the days when domestic economic performance was relatively insulated from global trends are over. " 

Keynes in Globalization and self-sufficiency (1933):

"Ideas, knowledge, science, hospitality, travel – these are the things which should of their nature be international. But let goods be homespun whenever it is reasonably and conveniently possible, and, above all, let finance be primarily national.
For these strong reasons, therefore, I am inclined to the belief that a greater measure of national self-sufficiency and economic isolation among countries may tend to serve the cause of peace, rather than otherwise."

Wednesday, June 11, 2014

Real Economy

There is real economy somewhere Too few brickies

One more reason to preserve coral reefs.

 "But corals are actually more similar to humans in multiple ways, and flies and worms turn out to be very strange animals.” says Ed Yong 

Russia, China have their sights set on undercutting dollar’s dominance as reserve currency,

but economists are sceptical says Michael Pizzi in Aljazeera America. Patrick Young earlier:
"The singular superpower era has been fuelled by an American economy benefitting from “dollarization”. Global reserve currency status has hugely fuelled America’s ongoing experiment in "government by irrational exuberance." Washington has grown addicted to borrowing cheaply, exploiting its reserve currency to spend liberally on all vestiges of government. Thus the powerhouse private economy of the United States runs parallel to a massively inefficient government spending machine. Being a reserve currency has multiple benefits - other nations habitually trade in dollars thanks to global benchmarks. Hence, oil, gas and indeed illicit narcotics are all traditionally priced in the dear old greenback. Surplus dollars often find their way back to the USA and end up holding US Treasury Bonds - the debt which feeds big government.
While the US dollar epitaph has been written many times, it still isn’t imminent. However, a dollar centric era is clearly coming to an end. Despite the ongoing failure of the political euro to be recognised as a valid reserve currency, US dollar threats are emerging rapidly - free floating bitcoin, rubles and yuan can all become significant competitors to the greenback.
QE is akin to another reserve currency trait, known in the economics fraternity as “exorbitant privilege.”For the US to pay bills, it can just print more cash and satisfy any debt denominated in dollars. The increasingly integrated global economy has enabled Washington to abuse exorbitant privilege at a scale unknown to previous reserve currency nations such as Imperial Britain."
P.S. C.K.Liu in 2008 "Workers all over the world are oppressed victims of dollar hegemony, which turns the labor theory of value up-side-down. "

Another quote from Ha-Joon Chang

".. if you read only things like 'The Economist' and 'The Wall Street Journal', you would only hear about Singapore's free trade policy and its welcoming attitude towards foreign investment. This may make you conclude that Singapore's economic success proves that free trade and the free market are the best for economic development- until you also learn that almost all the land in Singapore is owned by the government, 85 percent of housing is supplied by government-owned housing agency (the international standard is about 10 percent). There is no single type of economic theory- Neoclassical, Marxian,Keynesian, you name it- that can explain the success of this kind of combination of free market and socialism."

Tuesday, June 10, 2014

Reading Ha-Joon Chang

"In his 1724 book ''A Tour Through the Whole Island of Britain' Daniel Defoe, the author of 'Robinson Crusoe', expressed delight in the fact that in Norwich, then a centre for cotton textiles, 'the very children after 4 or 5 years of age could everyone earn their own bread' thanks to the 1700 ban on the import of calicoes, the then prized Indian textile." from Chapter 2 of Ha-Joon Chang's introduction to economics. Only difficulty so far: he suddenly started using TWON without any explanation. I think that he is referring to 'The Wealth of Nations'. Interview here.
P.S. A friend suggests that it may be Vali-Sugriva story

Which Hanuman story is this?

Monday, June 09, 2014

Sunday, June 08, 2014

From Babul (1950) with English subtitles

A common mistake in reading Piketty

Many seem to use the rate of return on capital to calculate the next year's wealth. I made the same mistake until I came to page 351 in Piketty. From Piketty and Zucman's paper, it is calculated as follows.
Wealth next year W_(t+1) is calculated from wealth this year W_t by the formula W_(t+1)=W_t (1+s/β) assuming that there is no capital gain or loss, where s is the savings rate and β the capital to income ratio. So wealth does not grow exponentially as some have been saying.  Suppose β=7 (sometimes Piketty writes this as 700%), current income 200 units so that , W_t is 1400,  s is 10%, and growth rate g=2%. We have the current income which  is 200 which goes to 204, the next year. Savings 20 is added so that W_(t+1) is 1420=1400(1+10/100times1/7)=1400(1+1/70)=1420 as it should be. So the next year  β goes down. On the other hand,  if  β=3 with others s,g the same, then income still goes from 200 to 204, W_t goes from 600 to 620, so now β  is slightly bigger than 3. In both cases, income grows at the rate of 1/50, but in the first case wealth grows at the rate 1/70 where as in the second case, it grows at the rate of 1/30. If s, g remain the same, in the long run  β converges to 5, assuming various conditions are satisfied through out. In any case, it is only a rule of thumb to see the direction of β under various restrictions. see also Dan Kervick's post (he says that he will have an update along the lines of his comment here. See also Seth Ackerman's comments on aggregate production functions and elasticity of substitution 
P.S. I made this comment (upto the links) in Naked Capitalism. Here is a response from one Paul Boisvert which explains better.
Hi, Gaddeswarup,
No need for corrections, you have it precisely correct!
The mistake you refer to (that of confusing the rate of return to capital with the rate of growth of capital), from which you no happily longer suffer, is (obviously) easy to make, since some very bright people have made it. To avoid it, one need only remember that owners of capital spend much of their return from that capital on consumption–they don’t save all of it as new capital. Moreover, those with no capital in January may save some of their labor income during the year, and thus own some (new) capital when December rolls around.
Thus, capital increases each year due to various people (owners of capital and owners of labor power alike) saving some (not all) of their income–but “r”, which refers only to the rate of return on previous capital, doesn’t indicate by itself how capital is growing. To know the latter fact, one also needs to know how much new income was created by labor and how much of all income was saved (became new capital.) These two additional factors, represented by g and s, together with r, determine the trend (towards some stable ratio of income from capital to total income) that Piketty analyzes mathematically, and which you have correctly captured in your comment.
Again, this doesn’t mean Piketty’s overall take is valid, or even relevant–it just means that there is no reason to believe that he made an elementary math mistake in his model, or that the fact that r could be greater than g for a long time leads to absurdities or infinities. Neither belief is warranted in the slightest. If one wants to critique Piketty, one has to do it on grounds other than that r > g leads trivially to mathematical fallacies.

Two recent articles of Glenn Davis Stone

I was not aware of this aspect, the role of Ayurveda and Kerala Chief Minister in blockin BT brinjal
The Trials of Genetically Modified Foods by C. Kudlu and G.D.Stone. Abstract:
"Although planting of genetically modified (GM) crops has topped 148 million ha. worldwide, direct consumption ofGMfoods remains extremely rare. The obstacles toGM foods are highly varied and they can provide windows into important cultural dynamics. India’s heated controversy over its would-be first GM food—Bt brinjal (eggplant)—is driven not only by common concerns overtesting and corporate control of food, but by its clash with the Ayurvedic medical establishment. GM brinjal may outcross with wild relatives commonly used in Ayurvedic medicine, and claims that outcrossing would not affect medical efficacy miss the point. Ayurveda emphasizes polyherbal treatments and has developed an epistemology oriented towards complex combinations of compounds. As such it does not recognize the authority of specific studies of transgene effects. The conflictis notwith genetic modification per se, but with the reductionism that is central
to the biotechnology approvals process. This opposition has played a significant role in the government moratorium on the plant."
But now, it has entered Bangladesh through USAID.
The second about the herd behaviour of Warangal BT cotton farmers in seed selection in the face of unknown technology Rhythms of the herd: Long term dynamics in seed choice by Indian farmers by Stone, Flacks and Diepenbrock. But as the authors note, there is an exceptional case in Gujarat described earlier by Stone(See also the Salon article Andrew Leonard The Napster pirates of trangetic Biotech). More article by Glenn Davis Stone on these topics at

Saturday, June 07, 2014

Gaming Democracy

Gaming Democracy: Elite Dominance during Transition and the Prospects for Redistributionis summarized here by the authors. From the summary
 "Democracy can, under the right conditions, be the great equalizer. We find that democratization induces greater redistribution when transition occurs in the wake of revolution or, alternatively, when elites are unable to impose a constitution that persists after transition. In short, this occurs when elites are weak on the eve of democratization. "
Towards the end of the summary:
"These forms of elite influence can choke off egalitarian policies even in well-established democracies such as the United States and Great Britain that democratized gradually and were never quite able to tame the disproportionate power of elites. Recent work by Gilens and Page makes this point abundantly clear – even going so far as suggesting that the United States looks more like an oligarchy in democratic clothing."
This seems fine as far as it goes. But we have now news that inequality in Sweden is increasing. The problem seems to be in a globalized world, every country will be buffeted by the dominant global forces. Competition, global supply chains, dollar as reserve currency, economic sanctions etc force other nations to tow the line. But thanks to Piketty, the literature on inequality seems to be getting noticed. Hopefully, the fact that the American middle classes are not doing as well as before, the rapprochement of Russia and China may slowly lessen the US influence and the currently dominant ideas of growth and exports. It is possible that elites in some countries may try to milk both sides like before but that may be difficult since both sides seem somewhat broke now.


Bad Science "Not only do patents push higher prices onto consumers, they burden the research world with the increased costs of paying for the intellectual property needed to do further research. Research labs have to pay thousands of dollars for the strains and processes needed to build upon current developments, adding more costs to cutting-edge research."
2008 crash rescued Marx from the dustbin?
On higher education and inequality by Matt Bruenig. Lant Pritchett earlier in the context of developing countries.
Eulogy for NHS
Ed Yong on microbiological age
GM eggplants in Bangla Desh
An earlier post on BT brinjal