Reading Piketty: some doubts

This is probably a foolish attempt, trying to discuss Piketty without knowing any traditional economics and I have read only the first seven chapters so far out of a total of sixteen. I will depend on Branko Milanovic review for overall view of the book. But it seems better to spell out doubts so that somebody may clarify them so that eventually I can understand it better. So far, Piketty uses traditional economics at only one place in Chaper 5, to get an asymptotic (long run) estimate for the rate of return r. I will ignore this and just discuss some of the stuff I read so far in terms of identities and their relation to data.

β is C/I where C is capital and I is income. To consider the long term changes, I will denote these quantities at a given time by subscripts β_t etc and after an year by β_(t+1) and growth rate for that year by g_t etc.

So C_(t+1)=C_t+r_t*C_t and I_(t+1)=I_t+g_t*I_t (here * denotes multiplication which I will omit it later and just use juxtaposition); If the population is not stagnant, growth rate in the population is added in g_t. Dividing both sides by I_(t+1) and simplifying, we have
 β_(t+1)/β_t=(1+r_t)/(1+g_t) (call this Equation A) 
from which we can estimate β_(t+k)/β_0 for k years as  a product of successive ratios:
β_(t+k)/β_t=((1+r(t+k-1)/(1+g_(t+k-1)).....((1+r_0/(1+g_0)) (Equation  B)

By rearranging we also get another identity comparing r_t ,g_t:

r_t-g_t=((β_(t+1)/β_t)-1)(1+g_t) (call this Equation C)

Piketty's observation is that this difference r-g has been generally positive except for a  period 1913-1970 in the twentieth century. Generally β has been less than 8 or so. Assuming that growth rate is bigger than -1 during  the period under consideration, we see from Equation C that for r_t-g_t to be positive we also should have (β_(t+1)/β_t)-1)>0 or β_(t+1)>β_t. That is, β_t increases during that period. If it does not go to infinity, we should have β_t converging to some β in the long run during the period when r_t>g_t. This convergence implies from Equation A that 1+r_t gets close to 1+g_t or that r_t and g_t are nearly equal. If we assume that g_t converges to some g, then r_t also converges to the same number g.

So the conclusion is that if β_t does not explode, whatever the growth rate is (as long as it is bigger than -1) r_t modifies to mimic the behaviour of g_t.

But what are the numbers involved? Milanovic says on page 8 of his review "... g cannot exceed 2.5% per year. If r remains, as Piketty thinks, at its historical rate of 4-5% p.a., all the negative developments from the 19th century will be repeated."

If the above 'identities' are correct. some of the current data can be checked using, for example, Identity B. It seems from this, r cannot be that high compared to g without β getting much larger. So, I am not sure what is happening.

Milanovic asks "But, the reader will ask, if the capital/output ratio increases so much, 

would not the marginal return to capital diminish? Would not r go down? This is obviously a soft point of Piketty’s machinery." The above analysis says that if β is bounded above, then r has to go to the level of g. What is this bound?

Last word from Milanovic and Piketty "A remarkable graph, reproduced below, shows a huge positive gap between r and g from Antiquity to the early 20th century, its disappearance (or rather, the inversion, g>r) for the most of the 20th century, and then recent reemergence. Moreover, Piketty sees, interestingly, today’s processes of expanding financial sophistication and international competition for capital as helping keep r high. While many people question financial intermediation and blame it for the onset of the Great Recession, Piketty sees it as helping uncover new and more productive uses for financial capital and maintaining the rate of return high. But far from making this high r a good thing for the economy, he regards it, unless checked by higher taxation, as a portender of disaster..............The validity of Piketty’s “model” thus depends on the key proposition of relative stability of the rate of return on capital. But in a methodological approach that he both pioneered and clearly prefers, the answer to that question cannot be given in the abstract but only by the empirical evidence that is still in the future. In other words, we shall have to wait for the judgement of history. "
P.S. Jack Morava has kindly texed it and sent me the pdf file https://www.dropbox.com/s/m0yycewv9vlx18j/SwaruponPiketty.pdf
P.P.S. The above is wrong. Corrections here http://gaddeswarup.blogspot.com.au/2014/03/trying-again-to-understand-piketty.html
P.P.S.2 Calculations of this type I was attempting are in a paper of Thomas Piketty and Gabriel Zucman  http://behl.berkeley.edu/files/2013/02/Piketty-Zucman_WP2013-10.pdf

Last taboo

From Tackling the last taboo by Christopher Williams:
"The lack of access to safe, hygienic and private menstruation also has major societal consequences. In India, up to a quarter of girls drop out of school when they reach puberty; in part because schools lack private or gender-segregated toilets. Women frequently miss work because they have no place to change the cloths they use. In Bangladesh, most employed women miss about six days of work each month, stifling productivity and advancement.

So, if safe, hygienic and private menstruation is so critical to women’s lives and livelihoods, why don’t we hear about it more often? Why isn’t it higher on the international development or women’s rights agenda? The answer involves the difficulty of tackling deep-rooted customs, women’s position in society and the inherent discomfort in talking about normal but messy bodily functions.....

 Today, for example, only 12 per cent of India’s menstruating women have access to commercial sanitary products, while many of the rest use dirty rags, newspaper or cotton. Innovative companies and organisations developing inexpensive, reusable sanitary products like the AFRIpad can help close this gap and must be supported."

Another  ,about reusable pads from ecofemme.

Chris Blattman initiates a discussion on Crimea

which seems more polite than usual and he summarizes in this post ( I have not been really following the issues,. Some discussions et too heated and too long)

Responses to “Someone please explain to me why I should accept that the annexation of Crimea is a terrible thing”

Puppet inspired dances fro Hindi films

from Chori Chori and another from Kathputli

BoE document making waves

Money creation in modern economy and Money creation in modern economy: an introduction
A commentary by Raul Ilargi Meijer with links to commentaries by Steve Keen and David Graeber:
The Bank of England lights a fuse under the field of economicshttp://www.theautomaticearth.com/the-bank-of-england-lights-a-fuse-under-the-field-of-economics/
I am still reading the documents which are not too long, but the interest seems to from the opening statementfrom the first document :

"• This article explains how the majority of money in the modern economy is created by commercial banks making loans.

• Money creation in practice differs from some popular misconceptions — banks do not act simply as intermediaries, lending out deposits that savers place with them, and nor do they ‘multiply up’ central bank money to create new loans and deposits.

• The amount of money created in the economy ultimately depends on the monetary policy of the central bank. In normal times, this is carried out by setting interest rates. The central bank can also affect the amount of money directly through purchasing assets or ‘quantitative easing’."

whereas as Keen quotes from Krugman 

“Banks are just another kind of financial intermediary, and the size of the banking sector — and hence the quantity of outside money — is determined by the same kinds of considerations that determine the size of, say, the mutual fund industry.”

I hope to read these documents more closely and see how they relate to 

China's "Minsky Moment" is here, Morgan Stanley finds.

P.S. I have not read the documents yet (busy with Piketty) but this point has been botherin me "Thus, in the theortetical framework described by the authors, QE cannot possibly have any effect on any macroeconomic variable. Now that’s a problem." from http://uneasymoney.com/2014/03/21/the-irrelevance-of-qe-as-explained-by-three-bank-of-england-economists/

Piketty's Capital, Chapter 6

This chapter is somewhat diffuse, discussing the previous data, introducing more standard economic concepts, probably setting up the basics for the rest of the book. He notes that capital to income ratio β, or capital's share of the national income α have not shown stability , only short or medium term trends so far. Detailed table of contents is available here. A concrete part is discussion of Marx, already described by Matt Bruenig http://mattbruenig.com/2014/03/14/piketty-on-marx/ . It is taking longer to read as I go on. With ten more chapters to go, it may take a month or so to read the rest and understand some bits of it.

One from Baiju Bawra with subtitles

(via Richard Singer)

Another interesting article on itch

The itch nobody can scratch by Will Storr on Morgellons disease (via Ed Yong). It does not quite reach the depths of Atul Gawande's The Itch.

The perpetual conflicts

"The present crisis is the latest iteration of what has become a permanent feature of life in the United States. Just last summer the American people were subjected to a manufactured war fever that nearly led to a bombing campaign against Syria. Before that it was Libya, with the people being told that immediate military action was required to prevent a “human rights” catastrophe. Threats against Iran and China are permanent, with the possibility of military action always “on the table.”" from http://www.wsws.org/en/articles/2014/03/19/pers-m19.html (via Richard Singer). But there are conflicts on other fronts too US opposition to ambitious Indian program is a direct attack on the right to food (an alternative view) and trade agreements New study shows dangers of trade areements that help corporations sue governments.

Evolution of corn rootworms resistant to BT corn

From Voracious worm evolves eat Biotech corn engineered to kill it by Brandon Keim:
"There’s a lesson to be learned for future crop traits, Shields said. Rootworm resistance was expected from the outset, but the Bt seed industry, seeking to maximize short-term profits, ignored outside scientists. The next pest-fighting trait “will fall under the same pressure,” said Shields, “and the insect will win. Always bet on the insect if there is not a smart deployment of the trait.”"

Piketty's Capital, Chapter 5

I spent a few days mulling about Chapter 5 on capital to income ratio β. Thus β is C/I where C is capital and I is income. Note that his definitions may be slightly different from the usual ones.I tried to do an exercise to help understand it better. He says that in the long run, it is s/g where s is the savings rate and g the growth rate. He also has an identity on the return from capital 
α = r*β where * denotes multiplication and r is the rate of return on capital. To consider the long term changes, I will denote these quantities at a given time by subscripts β_t etc and after an year by β_(t+1) and growth rate for that year by g_t etc.
So C_(t+1)=C_t+r_t*C_t . Now divide both sides by I_(t+1). the right hand side is (C_t/I_t)*(I_t/I_(t+1)) +r_t*(C_t/I(t+1)). Now divide the numerator and denominator of the second factors on the right hand side by I_t. I assume that the population growth rate is zero when writing I_(t+1) in terms of I_t and g_t. Simplifying, we get the equation β_(t+1)= (β_t/(1+g_t))* (1+r_t).
Now assume that the growth rate also stabilizes. Since we know that β_t stabilizes, we must also have r_t stabilizing. Denoting the limits by β, r, t etc and taking limits on both sides and assuming that none goes to infinity, we have β=β(1+r)/(1+g) or we should have r=g in the long run, if we assume stability.

All this may be nonsense. If anybody who knows some economics (I do not) has corrections and suggestions, it will help me to understand the book a little better.

Two on development

The rise of Anti-Capitalism by Jeremy Rifkin:
"Despite this impressive growth, many economists argue that the nonprofit sector is not a self-sufficient economic force but rather a parasite, dependent on government entitlements and private philanthropy. Quite the contrary. A recent study revealed that approximately 50 percent of the aggregate revenue of the nonprofit sectors of 34 countries comes from fees, while government support accounts for 36 percent of the revenues and private philanthropy for 14 percent.
As for the capitalist system, it is likely to remain with us far into the future, albeit in a more streamlined role, primarily as an aggregator of network services and solutions, allowing it to thrive as a powerful niche player in the coming era. We are, however, entering a world partly beyond markets, where we are learning how to live together in an increasingly interdependent, collaborative, global commons.'
Piketty on Marx by Matt Bruenig 
Matt Bruenig explains Piketty and Marx. Note that the second fundamental law (below the first) is an asymptotic law (in the long run) and Piketty says that it is only valid if one assumes that asset prices behave the same way as consumer prices. Secondly, it does not take into account the changes which may be coming pointed out in the NY Times article above. 
"Piketty plugs Marx’s somewhat vague prosaic presentation of this theory into the two formulas Piketty relies upon to describe the dynamics of capital.

• β = s/g
• α = r*β
• ...............

The case where r decreases to compensate is the “tendency of the rate or profit to fall” scenario. The rate of return on capital trends towards zero and that causes all sorts of political instability because of capitalists tearing each other apart to try to scratch out a return. The case where α increases to compensate is a world where capital slowly gobbles up more and more of the national income until it gobbles up all of it, a scenario which will surely generate worker revolution.

So, if we assume growth or near-zero growth will eventually result after capital deepening has essentially run its course (Piketty’s account of what Marx may have had in mind), capitalism does appear to self-destruct from internal contradictions. It is only the existence of TFP-driven growth elements that allows us to stave off this particular conclusion, something Marx would not have been aware of."

Fernando Ibarra

"In rural, northern Argentina, profound economic isolation and severe environmental conditions are the order of the day. It is a region of the country called 'The Impenetrable' where there are few resources and fewer opportunities to change the day-to-day grind of rugged circumstances and disenfranchisement.

For Fernando Ibarra, an engineer and starry-eyed inventor, the region is his own personal laboratory, and this hardscrabble reality presents a fresh challenge - a place to develop and test drive solutions for almost every situation.

This film is a journey that takes us into this world. The story unfolds as Fernando travels through the region, in his funky 1947 truck named "Gasogene", identifying both the projects he hopes to take on and the people he can work with to develop long-term solutions to local problems.

Fernando's goal is not to be a "visiting angel" but to develop a core group of locally based leaders that can contribute to solving their own issues using sustainable and available resources.

He is committed to infusing the next generation with a passion for respecting resources and encouraging them to build home "grown" projects that they can develop, manage and operate themselves. " from Al Jazeera Viewfinder. The video can also be viewd on YouTube

Holi song from Navrang 1059

(via Richard Singer)

From Do Behnen 1959

Corruption related

A bad boom from The Economist (via Akshay Regulaedda)
Interview with Pranab Bardan (via Chris Blattman)
FDI: India and  Mauritius

Reading Piketty

Reading "Capital" by Piketty without knowing standard economics, I stumbled into the first hurdle in chapters 5 and 6. So far it is very readable like a good novel. In chapter 5 he starts discussing the long run behaviour of 'beta' β, the capital to income ratio. In this some model seems to be needed and hence some assumptions in his Harrod-Domar-Solow formula. Expositions of Solow model and the formula are available on YouTube and the other sources, Piketty's technical appendix is in French. While reading other sources, one has to be careful about the definitions, for example, Piketty also includes depreciation in his definition of income. In any case, Branko Milasovic says that the limiting behaviour only plays a subsidiary role in the book. May be it is better to see a few examples and go ahead. And use Milasovic review as a guide: http://mpra.ub.uni-muenchen.de/52384/1/MPRA_paper_52384.pdf

grandkids

More Piketty reviews

linked in In Praise of Utopian Political Imagination by Kathleen Geier

Contrasting news

Stanford bioengineer develops a 50-cent paper microscope:

 "Prakash’s dream is that this ultra-low-cost microscope will someday be distributed widely to detect dangerous blood-borne diseases like malaria, African sleeping sickness, schistosomiasis and Chagas."

NASA funded study: Industrial civilization headed for 'irreversible collapse;?:

"The study challenges those who argue that technology will resolve these challenges by increasing efficiency:

"Technological change can raise the efficiency of resource use, but it also tends to raise both per capita resource consumption and the scale of resource extraction, so that, absent policy effects, the increases in consumption often compensate for the increased efficiency of resource use."

.......

Applying this lesson to our contemporary predicament, the study warns that:

"While some members of society might raise the alarm that the system is moving towards an impending collapse and therefore advocate structural changes to society in order to avoid it, Elites and their supporters, who opposed making these changes, could point to the long sustainable trajectory 'so far' in support of doing nothing."

However, the scientists point out that the worst-case scenarios are by no means inevitable, and suggest that appropriate policy and structural changes could avoid collapse, if not pave the way toward a more stable civilisation. "

Monsanto going organic?

seems to be high tech organic Monsanto going organic in a quest for the perfect veggie (via Steven Hsu at Information Processing): "Furthermore, genetically modifying consumer crops proved to be inefficient and expensive. Stark estimates that adding a new gene takes roughly 10 years and $100 million to go from a product concept to regulatory approval. And inserting genes one at a time doesn’t necessarily produce the kinds of traits that rely on the inter­actions of several genes. Well before their veggie business went kaput, Monsanto knew it couldn’t just genetically modify its way to better produce; it had to breed great vegetables to begin with. As Stark phrases a company mantra: “The best gene in the world doesn’t fix dogshit germplasm.”

What does? Crossbreeding. Stark had an advantage here: In the process of learning how to engineer chemical and pest resistance into corn, researchers at Monsanto had learned to read and understand plant genomes—to tell the difference between the dogshit germplasm and the gold. And they had some nifty technology that allowed them to predict whether a given cross would yield the traits they wanted.

The key was a technique called genetic marking. It maps the parts of a genome that might be associated with a given trait, even if that trait arises from multiple genes working in concert. Researchers identify and cross plants with traits they like and then run millions of samples from the hybrid—just bits of leaf, really—through a machine that can read more than 200,000 samples per week and map all the genes in a particular region of the plant’s chromosomes."

"Make fruit taste better and people will eat more of it. “That’s good for society and, let’s face it, good for business,” Stark says.

Monsanto is still Monsanto. The company enforces stringent contracts for farmers who buy its produce seeds. Just as with Roundup Ready soybeans, Monsanto prohibits regrowing seeds from the new crops. The company maintains exclusion clauses with growers if harvests don’t meet the standards of firmness, sweetness, or scent—pending strict quality-assurance checks."

From AAH 1953

Tamil version

Faith can be efficient

From BBC news The coconut temple courier service (via Akshay Reulagedda): "Even if the bus is on a different route, the driver will make sure to drop the coconuts in a collection box en route or pass them on to a bus headed for Ghatgaon.

"If I refuse to carry coconuts to the goddess, I may face various odds on my way," says Arun Sahoo, a bus driver."

Another from 2004 Hindu priests administer poliodrops as blessings

History behind China's economic boom

For those interested in China's economic development Chris Blattman recommends this article but I do not have time now since I am reading other stuff http://groups.chass.utoronto.ca/brandt/wp-content/uploads/Revised_JEL-Final_Brandt_Ma_Rawski_4-10-131.pdf

Reading "Capital" with The Economist

I seem to be reading at the same pace ( I like to read serious books slowly since sleeping over the topics seems to help)http://www.economist.com/blogs/freeexchange/2014/03/book-clubs-0
P.S. See also the review by Dean Baker. He seems to disagree with the conclusion., seems to say that capitalism will reinvent itself.

From https://www.facebook.com/oneindiatamil

Arundhati Roy creates waves again

 Shivam Vij commentary in Scroll.in "Roy's new essay about B.R. Ambedkar is being assailed by some Dalit radicals. They are doing him a disservice."
I am not a fan of either Arundhati Roy or Shivam Vij (Shivam probably tries to be contrarian sometimes; see his article on Kashmiri students Meerut is not Srinagar) but agree with Shivam on this. Amdekar seems to have become a deity for some and only they can speak about him. Some object to talking about Gandhi in a book about Ambedkar. D.R. Naaraj remarked " Irony of ironies: to understand the nature of Babasaheb's political career one has to place it along with Ganhiji's, for the apparent diverence between the two will highlight the unique problems of the other".(From the essay "Self-purification vs self-respect:On the Roots of Dalit Movement", in The Flaming Feet). It seems to me that Ambedkar's contributions have been neglected and are gradually being recognized by wider audience recently through Ramachandra Guha and others. Arundhati Roy's efforts should add to that.

Criminals in politics: India

Apparently a collection of articles compiled for the excellence of their content.
From one
"Rs.1.37cr: Average assets of 62,847 candidates who have contested MP and MLA elections since 2004

Rs.3.83cr: Average assets of victorious candidates

Rs.4.30 cr: Average wealth of MPs and MLAs who face criminal charges

4.38 cr: Average wealth of legislators facing serious charges like murder, kidnapping & rape

18%: Number of candidates facing criminal cases

8%: Number of candidates facing serious criminal cases"

From another article in TOI, the percentages seem to be higher for parliament candidates(may be there is some difference about the classification of serious crimes):

"Data provided by these politicos in their election affidavits show that 30% have criminal cases pending against them and 14% are fighting cases that fall under serious criminal offences, most with potential sentences of over five years. We aren’t talking here of any minor crimes, these MPs are accused of murder, rape, forgery, inciting hate and dubious deals: fraud and cheating."

And more detailed information party wise, state wise rtv.

Some good news from Apple

Tim cook tells climate sceptics to ditch Apple shares: "Cook became visibly angry at Danhof’s questions and categorically rejected the NCPPR’s climate scepticism, according to the Mac Observer’s Bryan Chaffin, who attended the event. He told shareholders that securing a return on investment was not the only reason for investing in environmental measures.

“When we work on making our devices accessible by the blind, I don’t consider the bloody ROI,” Cook said, adding that the same sentiment applied to environmental and health and safety issues.

He told Danhof that if he did not believe in climate change, he should sell his Apple shares. “If you want me to do things only for ROI reasons, you should get out of this stock,” he said.

Cook’s comments and visible passion over the issue are one of the strongest signals yet of his commitment to reducing Apple’s environmental footprint. He told shareholders that he wanted to “leave the world better than we found it”."

Now ROI is questioned by powerful folks, I hope that there will also some questions on growth paradigm. In a review of book on GDP, Samuel Brittan says "After all qualifications, it is better to be rich than to be poor. This applies at a national as well as a personal level. There is also a qualification to be made about the less immaterial forms of growth. We cannot go on producing more and more “stuff” until there is standing room only on the planet. But if I recite poetry to you and you play the harp to me, the performances could in principle continue to improve without any threat to the environment, the planet or any higher good. The cult of GDP has given economic growth a bad name."

Good times for capital

says James Kwak "... rising asset values help you if you are a supplier of capital more than a supplier of labor.
Is there anything we can do about this? The conventional wisdom from the political center all the way out to the right fringe is that we shouldn’t tinker too much with the wealth distribution—otherwise people won’t work as hard, which is bad for everyone. But perhaps it isn’t true.
In a new paper (Vox summary; hat tip Mark Thoma), three IMF economists look at the relationship between redistribution—measured by differences between the pre-tax-and-transfer income distribution and the post-tax-and-transfer income distribution—and overall economic growth over five-year periods, across countries and across time. They find (from the summary) “remarkably little evidence in the historical data used in our paper of adverse effects of fiscal redistribution on growth.” In general, that is, average levels of redistribution tend to be associated with higher levels of growth that are sustained for longer......
Indeed, there’s a strong argument to be made that a capitalist society needs systematic redistribution to survive. Thomas Piketty’s new book—which I plan to read the next time I have time to read a 700-page economics book—free markets generally produce higher returns on capital than on labor, which means, to a first approximation, that people with capital will get richer faster than people with only labor. In a world where the political system is open to money, this means that the capitalists will also accumulate a disproportionate share of political power, leading to the type of extractive society described by Acemoglu and Robinson in Why Nations Fail. Which is not a world that most of us would want to live in."

Thomas Piketty's "Capital in the twenty-first century" is available on kindle since yesterday and I started reading it. It is readable so far and also hints at the phenomenon noted by Gregory Clark in "The son also rises".

From "What scientific idea is ready for retirement"

From The Edge
 'Science is self-correcting' by Alex Holcombe "Publication bias is the tendency to not publish "negative" or non-confirmatory results. Its effect, the suppression of corrections, can prevail even when much work has gone into obtaining the negative results. Ideally, such findings would move quickly and easily from individual scientists' laboratories to public availability. But the path can be so difficult, and is so infrequently used, that many areas of science do not deserve the self-correcting moniker."
'Unlimted and eternal growth' by Hans Ulrich Obrist "Another way of interpreting Binswanger's ideas is as follows: for most of human history, a fundamental problem has been the scarcity of material goods and resources, and so we have become ever more efficient in our methods of production and created rituals to enshrine the importance of objects in our culture. Less than a century ago, human beings made a world-changing transition through their rapacious industry. We now inhabit a world in which the overproduction of goods, rather than their scarcity, is one of our most fundamental problems. Yet our economy functions by inciting us to produce more and more with each passing year. In turn, we require cultural forms to enable us to sort through the glut, and our rituals are once again being directed towards the immaterial, towards quality and not quantity. This requires a shift in our values, from producing objects to selecting amongst those that already exist."
And many more.

New cold war?

From Possible New Cold War? High Fives in the Halls of Pentagon
" Amlie was a brilliant weapons engineer and did not hesitate to speak his mind. With an understated but intense demeanor that sometimes came across like the Doc Emmitt Brown character in the Back to the Future movies, Amlie committed truth in this interview based on his decades of knowing how the DOD worked. The interview, which stopped me in my tracks at the time, was memorialized by his boss and friend Ernest Fitzgerald in his book The Pentagonists:

The morning after the April 1986 bombing of Libya by the USAF, my associate Tom Amlie appeared live on Cable News Network and explained that the raid was necessary: “It was that time of year.” In other words, military budget time. “The budget is in trouble, aid to the Contras is in trouble,” Tom said. And Khadafi was an ideal enemy. As Tom pointed out, he was “not a Christian, he talks funny and he’s probably guilty of most of the things we accuse him of.” Tom then got the hook from CNN, but he had made his point.

I remember the CNN anchor’s look of horror as they quickly went to a commercial. "

A strike that failed

How Asian women made trade union history and shattered stereotypes . Interesting article but it also has this statement from Jayaben Desai "You have to remember that, back in India, we came from an aristocratic background," Desai says. "My ancestors used to be ministers and dignitaries under the Raj. Desai is the name of a title, like lord, and my ancestors were very wealthy compared to the rest of the population. We were landowners and we were respected because of our position."
That was 1976; I still see this in Melbourne. Many housewives from 'upper' castes work in factory jobs but complain of labour problems back home. Many marriages seem to have about four to five celebrations, two in Australia, two in India in both party's places and often one in Tirupati.

Robert Parry on Ukraine

here. More about Robert Parry in the wikipedia.

Interesting article by Patrick Higgins

The Intercept's Interference: Notes on Media, Capitalism and Imperialism (via Naked Capitalism links). There are bits about Glenn Greenwald's predicament, Ukraine where the conflict seems quite different that in Thailand in terms of long term interests of capitalism. These all sound plausible and well worth a read. Somewhat long and the blog looks interesting

Reading Capital via The Economist

continued here (registration may be needed). The kindle edition of Piketty's book should be available by March 10 or so. As Yves Smith noted about a a recent paper by Gabriel Zucman on tax havens, "It means income inequality is even worse than indicated by the already-grim analyses of experts like Thomas Piketty and Edmund Saez; they don’t attempt to allow for tax haven income and assets."

Interesting discussion on fraudulent research

from Andrew Gelman. Comment from Kaiser:
"With blogging, TEDtalks, popular science books, etc., we now have a bypass of the traditional peer review process and the traditional way of diffusing new research. So it is more important for bloggers and others to participate in putting such materials to the smell test. Some of these efforts are tied to PR efforts in which the sole objective is to generate attention, clicks, etc. and those are particular cases in which the science is bent and misappropriated.
The other thing is bear in mind is that people reading this blog might think the fraud is obvious but the average person does not have the training to notice the fraud – in fact, the average person is often sold that “conventional wisdom” is wrong."

Tim Taylor on Ukraine's economic problems

From Primer on Ukraine's Economic Troubles "Ukraine's economy has some strengths. Inflation is under control. Unemployment at about 8% is not  super-high. The accumulated public debt, at about 41% of GDP, is not especially high.  But Ukraine is also a highly open and not very diversified economy, and thus highly vulnerable to movements of a few key prices on world markets--steel exports, energy imports, its own exchange rate. Add undisciplined government spending that hands out copious energy and wage subsidies, together with an unstable financial sector and a lack of productivity growth, and Ukraine's economy is primed to melt down, as it did in 2008 and again in 2013. With the current turmoil, it's obviously not a convenient time for Ukraine to be building stronger economic and political institutions. But without such reforms and institutions, Ukraine's economy will remain highly unstable."
According to Wikipedia "The nation has many of the components of a major European economy - rich farmlands, a well-developed industrial base, highly trained labour, and a good education system. At present, however, the economy remains in poor condition."

On sample sizes

Freeman Dyson "In 1866, the year Mendel’s paper was published, but without any knowledge of Mendel, Darwin did exactly the same experiment. Darwin used snapdragons instead of sweet peas, and tested the inheritance of flower shape instead of pod color. Like Mendel, he bred three generations of plants and observed the ratio of normal-shaped to star-shaped flowers in the third generation. Unlike Mendel, he had no understanding of statistical fluctuations. He used a total of only 125 third-generation plants and obtained a value of 2.4 for the crucial ratio. This value is within the expected statistical uncertainty, either for a true value of 2 or for a true value of 3, with such a small sample of plants. Darwin did not understand that he would need a much larger sample to obtain a meaningful result." in The case for blunders   Professor Karandikar talks about sample sizes here which is not clear to me "This held good even if the sample size was as small as 4,000 irrespective of whether a constituency had one lakh voters or 20 lakh voters, he said.

“This is something which is counterintuitive but it is not a matter of faith but of calculation…the point is that it is only the percentages and not the absolute numbers that determine the accuracy,” Prof. Karandikar said." The two parts seem to point to different things; may be the clue is in 'the percentages'.

Dark matter in global imbalances

Tax Havens Make US and Europe Look Poorer than They Are, Exaggerate Size of “Global Imbalances” by Yves Smith

P.S. This probably means that the top one percent have even more wealth than we thought and this effort  UK seeking to ensure Russia sanctions do not harm City of London

For a quick overview of Shaxson's book, see David Runciman review

Small farmers seem to have future

From Bio inputs give better yields to brinjal growers in Chittoor, A.P.:
"Mr. Muniratnam owns about two acres and in the last two years he has been able to construct a new pucca house from the income he got from his land by growing brinjals (common variety available in the market)."
He used 
"Jivamrita is a growth enhancer which is used for almost all crops like paddy, vegetables and flowers.

It is made by adding 10 kg of desi cow dung and 10 litres of urine dissolved in 200 litres of water. To this two kg of jaggery (or four litres of sugarcane juice) and pulse flour each (any pulse) is added and stirred well.

The solution is kept under a shade for a week to ferment well and then allowed to mix with the running irrigation water. For the fruit borer pest farmers have been trained to use agniastra or neemastra.

Agniastra

Agniastra is made by soaking one kg of crushed tobacco leaves in 10 litres of desi cow urine.

To this, 500 grams of chilli and garlic pulp (ground into a paste) each and 5kg of crushed neem leaves are added. This is diluted in 100 litres of water and sprayed.

Neemastra is made by mixing five litres of cow urine, two 2kg of dung and five kgs of crushed neem leaves in 100 litres of water and allowed to ferment for 24 hours. Later after filtering it is diluted in water and sprayed on brinjal to control the pests."

Interview with Sydney Brenner

(via Rahul Siddhathan) How Academia and Publishing are Destroying Scientific Innovation: A Conversation with Sydney Brenner. Wide ranging interview with this connection to some of the recent posts:
" Today the Americans have developed a new culture in science based on the slavery of graduate students. Now graduate students of American institutions are afraid. He just performs. He’s got to perform. The post-doc is an indentured labourer.""

Skidelsky on Keynes and Marx

Robert Skidelsky, a biorapher of Keynes has a short article in 2012 Keynes, Hobson and Marx. From the conclusion of the article:
"Recent events have persuaded me that there is something intuitively right about the Marxist analysis. It is especially illuminating about globalisation. It seems to me quite reasonable to interpret the off-shoring of US production to China and East Asia as an attempt to restore the profitability of American capital by locating production in regions where labour was cheap and trade unions did not exist. This raises the crucial question of to what extent globalization as now practised is in the interests of the citizens of developed countries.

 

This brings me to my main criticism of Keynes. The idea that economic outcomes could be impacted by class power was beyond his ken. Essentially, unmanaged capitalist systems failed to maintain full employment because classical economics gave the wrong message. It assumed away uncertainty, and thereby mandated a high degree of laissez-faire. Light-touch regulation of the financial system was all that was needed because banks were optimally self-regulating.

 

In short, the flaw was theoretical, not structural. What was needed was a more accurate theory, not a redistribution of power. As Keynes famously put it at the end of the GT, 'ideas' are more powerful than 'vested interests' (GT, 283). The almost contemptuous dismissal of the non-ideational elements of the economic system as 'vested interests' shows that he lacked proper cognizance of them.

 

Keynes's re-definition of the economic problem of his day as a technical problem in economics was politically very convenient. Practical businessmen are quite receptive to new ideas providing they allow them to keep their profits and managerial prerogatives. In the interwar years deficient demand leading to mass unemployment was a threat to both, not least because it aroused social hostility to capitalism. Keynes was definitely preferable to Marx. So they were happy for the state to look after demand and protect them from the unions, even to acquiesce in modest measures of redistribution to keep the people happy.

 

However, the state proved unable to protect the Keynesian revolution itself from the consequences of the continuing full employment it guaranteed. Full employment strengthened union power; unions used their position to push wages ahead of productivity; wages started to encroach on profits. So the business class demanded an end to the full employment commitment, lower taxes, and freedom to export capitalism.

 

I think this analysis explains many features of the post-Reagan, post Thatcher economy: the much higher levels of unemployment, the weakening of the trade unions, the curtailment of the social safety net, the stagnation in real wages and concomitant surge in household indebtedness, the increased pressure on working hours, the capital-friendly changes in taxes, the de-regulation of finance, and much else.

 

But the Reagan-Thatcher solution to the problem of capitalism has recreated the Hobsonian problem of underconsumption. Since the 1980s, the rich, in western countries, have been able to appropriate the lion's share of productivity growth. So future crises are inevitable.

 

To avoid them we need to rebalance our economic life: away from consumption towards leisure, away from financialisation towards sustainability, away from globalisation towards community, away from love of money towards ethics.

 

How to do this is a political question, to which post-Keynesians should now turn. Keynes should remain our inspiration. But we need to go beyond him in both thought and action."

 

Interesting discussion on three current conflcts

in Thailand, Venezuela and Ukraine in Naked Capitalism starting with a piece by Paul Mason Why It's Still Kicking off Everywhere. A summary of Paul Mason's thesis is at the beginning of the article.

Keynes had doubts

A strange article from 1933 on 'Globalization and self-sufficiency'. It starts by extolling free trade both materially and morally for the whole world (either he was unaware of opium wars or was catering to the audience) and then expresses his doubts:
"The decadent international but individualistic capitalism, in the hands of which we found ourselves, is not a success. It is not intelligent, it is not beautiful, it is not just, it is not virtuous – and it doesn't deliver the goods. In short, we dislike it, and we are beginning to despise it. But when we wonder what to put in its place, we are extremely perplexed."
Possibly what was worrying him was the rise of USA. Earlier "The investment of British savings in rails and rolling stock to be installed by British engineers to carry British emigrants to new fields and pastures, the fruits of which they would return in due proportion to those whose frugality had made these things possible, was not economic internationalism remotely resembling in its essence the part ownership of a German corporation by a speculator in Chicago, or of the municipal improvements of Rio Janeiro by an English spinster. Yet it was the type of organisation necessary to facilitate the former which has eventually ended up in the latter. In the second place,..."
Elsewhere in the same article:
"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."

Whatever his motives were (my suspicion is that he was worried about Britain loosing out to USA) many economists and others who supported globalization could not have been unaware of this or Kalecki's views on unemployment.

Writers worried about status and money

Excerpt from The Guardian article
"Creativity begins with a genuine compulsion, an active desire to write, compose, etc. And what follows is the question of how society rates the artist. Does society regard such enterprises as important and worthy of status, or, as with hyper-capitalism, something that should live or die by the market and nothing else? "
May be minimal universal income would be one solution. I am not sure about money and status.

Freedom from Woodstock

Chillies

Apparently the new hot thing in medicine from Moheb Constandi in New Scientist. I eat a lot of chillies and so I am receptive to such advice. They seem to have found:
"Most of our sensory perception depends on specific "channels" on the surface of certain cells, each responding to a different kind of stimulation. When the channel is activated, its pores open up, allowing electrical charge in the form of ions – charged particles – to flow in. These ion channels are often found on nerves, where this influx of ions triggers an electrical impulse.

There were many candidates for the channel that responds to capsaicin, but with some nifty genetics work, Julius was able to pin it down. It is called TRPV1. Crucially, he then showed that the channel also responds to uncomfortably hot temperatures – about 43 °C or higher – that would be enough to damage tissue. This neatly explains why chillies feel like they are burning the mouth."

Some possible uses "Although the exact reason for this response is still under discussion, human trials so far have been promising. Subjects asked to take a regular dose of capsaicin every day, for instance, showed a modest increase in the calories they burn – enough for a steady weight loss over the course of months."

And more interesting hints in the article. Similar advice from Huffington Post. Apparently some can achieve such things through meditation.