Zoo Station

It's been a while since I blogged, but I could not resist posting this hilarious map I came across yesterday.



According to Jonathan Adams, this (click on thumbnail to enlarge) is what the NYC subway map ought to look like to a white person. Notice how the newly trendy parts of Brooklyn are marked as well, as are Yankee Stadium, Coney Island, and Forest Hills, for obvious reasons.

This map, though intended for white folks, can be used by people of color who live in the unmarked areas because the last stops on these lines should be where white people exit and seats are available for you to sit down. If they don’t get off, maybe you should remind them that they missed their last stop.

Truth be told though, I have seen white people above 86th Street on the west side, including at that university up there somewhere.

Ethan Zuckerman has a must-read post on Facebook's new privacy violation. So, if you're on Facebook often and actually do care about your privacy, please do read the post. Ethan also points to a very useful tool that lets you opt-out of ad-tracking networks, rather than quit Facebook altogether (I cannot comment yet on its efficacy). I do understand why Facebook has come up with this idea (tracking your commercial transactions), but I find it a serious violation of privacy and I would urge all of you to read Ethan's post in full. David Weinberger also has an excellent piece up on Huffington Post on the same issue.

Occasionally, one comes across a story so brilliant it needs to be blogged simply because noone would believe it otherwise. I remember a story about a dog named "Bullet" being married somewhere near Calcutta, but I obviously did not blog it. This dog is called "Selvi" and here's proof.

[pic courtesy BBC News]

An Indian man has married a female dog, believing the union will help him atone for stoning two other dogs to death. P Selvakumar, 33, said he had been cursed since the killings, suffering paralysis and a loss of hearing. The wedding took place at a Hindu temple in Tamil Nadu state. The "bride" wore an orange sari with a flower garland and was fed a bun to celebrate.
[...]
The "bride", who is called Selvi, was led to the temple in Manamudurai wearing a sari before vows were exchanged in a traditional Hindu ceremony.

A bun? WTF? That's all Selvi gets?

A relative of the groom who attended the wedding said he hoped Mr Selvakumar would now be cured. "Fifteen years back Selvakumar was physically fit. But, once he attacked a pair of dogs and thereafter Kumar could not move his limbs freely," the relative, Ramu, told the BBC. "He tried every cure for his ailment but could not be rid of his disability. "On the advice of an astrologer and others, he decided to marry a bitch to get cured. Then we arranged Selvakumar's marriage with a bitch."

Life's a bitch, and then you marry one, I guess?

Last night, I attended the Bastiat Awards dinner with fellow bloggers, Prashant Kothari, Yazad Jal and Manish Vij. As regular readers know, our colleague and friend, Amit Varma, was one of the finalists for the Bastiat prize. Given that he was facing the likes of Clive Crook and Jonah Goldberg, it's fair to say the odds were against Amit.

So, imagine all of our collective surprise when Amit in fact won the Bastiat. We were all thrilled to bits for him. Amit won the award for his libertarian essays in Mint. True to form, Amit delivered a really funny acceptance speech extempore (pic above, courtesy Manish Vij). He was also gracious in acknowledging the Libertarian Cartel, and Niranjan Rajyadhaksha for his superb stewardship of the Mint op-ed pages.

Congratulations once again, Amit! Boy, you deserve it, and here's to a continued defence of Bastiat's ideas in the Indian media and blogosphere.

If you're wondering who won the prize last year, it was none other than Tim Harford. And Tim's out there somewhere raising a toast to Amit as well.

On this blog and elsewhere, I have hammered away at the importance of the small and medium enterprise sector in job creation and employment, especially in fast-growing developing countries. A large proportion of new job creation in developed countries (let alone developing ones) has been in the SME sector. I was reminded of just how large this number is while reading the innovation special in the last issue of the Economist.

From 1980 to 2001, all of the net growth in American employment came from firms younger than five years old. Established firms lost many jobs over that period and dozens fell off the Fortune 500 list.

This is very short notice, but hopefully many of you IPEG members will be able to make it to this short-notice happy hour.

Many IPEG members are in the process of successfully raising emerging markets focused funds, the latest example of which is Mike Hokenson’s successful closure of the $40 million fund with CDC. There are a bunch of other South Asia and Africa focused funds that are also in the process of being raised or being closed.

Come hear all about it and discuss other issues of interest, over drinks, with your colleagues this coming Thursday, on October 25th from 7:30 pm to 11 pm at Amsterdam Cafe on Amsterdam Avenue at 119th St. Amsterdam Cafe also has a decent food menu, so you can also have dinner there, if need be.

Yes, I know it looks eerily like a Jackson Pollock painting. Not. However, you took can indulge your Jack the Dripper fantasies by heading over to www.jacksonpollock.org.

The Global Social Venture Competition (GSVC) is the largest student-run business plan contest in the world, which provides mentoring, exposure and prizes for social ventures from around the world. GSVC started off at the Haas School of Business at Berkeley, and since then, Columbia Business School, Yale School of Management, London Business School and the Indian School of Business have joined as partner schools.

This year's Asia round for the GSVC will be held at the Indian School of Business (ISB) in Hyderabad, with the preliminary deadline for submission of plans being Nov 15, 2007. The Asia round finals will be held at the ISB this between the 8th and 10th of March 2008, and the global finals will be held at Berkeley on the 18th and 19th of April. So, if you're sitting on a business idea, model, concept or even an existing business which has a double or triple bottomline, and would like exposure and perhaps even seed/growth capital, head over to the ISB's GSVC Asia Round website, where you can find all the instructions necessary for submission of business plans and participation, including vital information and FAQ's for entrants.

I served as a judge for the 2007 finals, so i can give prospective participants some idea on what to expect. First of all, don't be flaky and keep in mind that there is no business that can meet a second or third bottom line without meeting the financial bottom line. The judges at the Asia Round tend to be very hard nosed and you can therefore expect the same questions that you'd expect if you were to pitch the plan to a venture capitalist. The higher the social impact without sacrificing your commercial viability, the higher your chances of getting through to the finals. Last year's top prize at the Asia finals went to a bio-technology company from China that had patented a technology to drastically improve crop productivity while the second place went to a Thai team that had developed a new dental technology (the Thai team went to place second at the global finals). One team was also chosen on the basis of their Social Return on Investment (SROI) Analysis.

I know there are several ZS readers out there who are budding entrepreneurs while being socially conscious, so here's your opportunity to make a difference and potentially get your business up and running. Questions, if any, should directed to the organizers. Needless to say, if you know of someone who might be interested, feel free to forward the information.

This post is a mea culpa. For most of my life in India, I, like most of my friends, listened to nothing but classic rock. That would be defined as music largely created before the time I was born. Typical of this category would be Pink Floyd, Led Zeppelin, The Beatles etc etc. Now, these bands are truly non-pareil in the annals of music and I still get an amazing rush from listening to Led Zep II for instance. However, the trouble with the classic rock business in India was/is that in the fervour of the classicism of rock bordering on puritanism, I missed out on a whole load of fantastic music. I, like everyone else I knew, also used to be extremely sarcastic towards anyone who stepped out of line with what was considered to be "good" music. I guess a good indication of this bias towards a certain kind of music could be seen at quiz contests where the audio round would consist of nothing but arcane facts about Floyd or the Stones or some such.

Now, what did I miss in the meanwhile? Well, top of the list would be Radiohead. I was literally bludgeoned by my buddy, Jaideep, to listen to Radiohead and when I did, I was almost instantly a convert. I also missed out on the most creative (IMHO) phase that U2 went through, post-Achtung Baby, because I thought they were veering from the true path. Of course, I missed the entire electronica scene in the 90's, so that would include everything from Aphex Twin to Orbital to Thunderball to Fatboy Slim. I have spent the last 8-9 years repenting and catching up on all the music I missed out in the late 80's and 90's.

So, why am I writing this? Well, I was reminded of everything I've said above when I first listened to the lush minimalism of the new Radiohead album, a sound that I would never even have heard if I had kept my classic rock blinkers on. Secondly, I suppose this post is aimed at ZS readers in India who continue to wear these blinkers (you just need to go to Pecos on any night to understand). The whole classic rock puritanism works the way any other kind of narrow mindedness does, which basically denies you the joy of discovering something amazing and new. So, if you're still hooked on classic rock, I'd say stop listening to "Roadhouse Blues" for the millionth time and try Kid A, or O.K.Computer or anything by Aphex Twin, or Zooropa or anything by the Flaming Lips or Vegas or Sounds from the Thievery Hi-Fi or anything by Kruder and Dorfmeister. You could also listen to sounds from the Asian Underground, like Saad Chisty (check out Manzoor in particular) and by now, everyone has at least heard of Karsh Kale, Midival Punditz, Jalebee Cartel etc. I am not saying you will like any/all of this, but at least give it a shot.

The Financial Times is hosting a 5-part video lecture series called Exploring New Markets: The Base of the Pyramid. The introductory video lecture is done by me, followed by my colleague Ravi Bapna on mobile telephony in BOP markets, Shamika Ravi on the myths behind the microfinance industry, Harish Bijoor on marketing to the BOP and Mudit Kapoor on the sustainability of the Indian economic growth story. Only Ravi and I are online currently, but the other lectures will follow during the course of the week.

As for the nervousness and squinting in my segment, blame it on extempore lecturing, 3 hours of sleep, jetlag and bright sun and reflectors in the eye. Excuses, excuses, I know :)

Back in 1999, at the Columbia Institute of Tele-Information, we did some research to unpack the economics of the music industry and especially of album sales. We found that typically the artist would get 1-15%, while overheads ate up the rest. It also became obvious why the recording industry preferred one-hit wonders, because they could squeeze the one-hit wonders on royalties much more than they could do to Elton John, Pink Floyd etc. Anyways, having been a Grateful Dead fan and knowing how much money could be made the Grateful Dead way (touring, merchandise etc), I wrote a paper saying that recording artists should use new technologies like the Internet to bypass intermediaries and reach out directly to fans. Since then, Napster happened, RIAA lawsuits happened, Napster shut down, Itunes happened. Etc. Etc.

I was therefore absolutely thrilled and stunned to hear of Radiohead's brilliant idea to sell their new album, In Rainbows, directly to fans since they were not tied to any record label. What was even more innovative was that they asked fans to pay whatever they liked for DRM-free music. I did some calculations on how much a label-free digital format would cost and paid $6 for the album. Radiohead was obviously betting on the fact that most of their fans would pay something for the music, rather than download it for free.

Initial reports suggest that Radiohead was spot on. 1.2 million downloads have been reported in the first day alone and the average fan was forking out $10 (I don't know what the median amount looks like). That's pretty damn amazing for an experiment. Mind you, other artists have tried giving music away, but not using Radiohead's pay-what-you-like strategy. More importantly, Radiohead is a massively influential band if not the most influential rock band today, much more so than Prince, Nine Inch Nails etc. News has already been filtering out that Nine Inch Nails, Madonna, Jamiroquai, Oasis are all re-considering their marketing model after the success of the Radiohead experiment.

Does this spell the end of the recording industry? Almost certainly not, but it will seriously cause a lot of bands to think twice about signing royalty agreements which enrich the fat cats and leave them with very little. In particular, one has to wonder whether a Radiohead fan is fundamentally different from those of other bands. For instance, do they belong to a higher income strata and therefore do not mind paying money, despite not being forced to? I have no answer to these questions, but there is no doubt the release of "In Rainbows" is a seminal event in the history of recorded music.
As for the album itself, I absolutely loved it. It's a very downtempo, electronica influenced album (not quite as much as Kid A though). I had heard most of the tracks through the live bootlegs that emerged from the Radiohead tour last year. Even so, I am amazed by what a beautifully crafted album "In Rainbows" is, so make sure you listen to it in whole, rather than as parts. "15 steps" has elements of trip-hop, but evolves into something that only Radiohead could do. "Bodysnatchers," which was my fave track from the live bootlegs is a really rocking track that you cannot but tap your feet to. However, the album really takes off from this point. "Nude" gives way to one of my favourite tracks, "Weird Fishes/Arpeggi" which is an absolutely gorgeous take on our being returned to the fishes, via the worms. "Reckoner" features the best percussion ever by Phil Selway, who probably has the most prominent role on the album besides Thom Yorke. My favourite songs after 48 hours of endless listening are "House of Cards" and "Videotape" (which I preferred the live version of, by a teeny bit). Videotape, of course, is just a beautiful little song about, what else, suicide! And above all of this hangs some really extraordinary piano and organ and Thom Yorke's signature whine. I think it would be apt to describe this album as somewhere between "O.K.Computer" and "Kid A."

I cannot possibly recommend this album enough. So, go to www.inrainbows.com and buy your copy now. If you're confused about how much to pay, my guess is that anything between $5 and $10 will be ideal. You could also download it for free and buy the CD at a higher bitrate as and when they hit the record stores.

While trawling the New Yorker's Cartoon Bank, I came across this gem by Mick Stevens. It made me laugh even harder than yesterday's cartoon.



If you cannot see the lines, here's what is says: "What immortal hand or eye could frame thy fearful symmetry?"

One of the funniest cartoons I've seen in the New Yorker in recent times.

Hello all. Just a quick post to let my New Yorker friends know I am back in town, primarily to attend the Clinton Global Initiative. CGI will be done tomorrow, so I am up for catching up with people etc. I hope to resume blogging as well after this weekend. See you soon.

I've been reading a lot about the military exercises involving India, the U.S., Japan and Australia, code-named "Malabar" in the Bay of Bengal. When one reads about the Kitty Hawk and the Seventh Fleet in the Bay of Bengal, one cannot but be amused. The last time the Seventh Fleet was in the Bay of Bengal was when Nixon ordered the fleet to steam in to try and intimidate Mrs. Gandhi (he really did pick the wrong person to try to intimidate) over the 1971 war. That move led to disastrous India-U.S. relations for the next 20 years. The same seventh fleet in now involved in war games with the Indian Navy, signaling the strengthening of a relationship that could potentially keep the straits of Malacca open, in addition to being a counter-weight to Chinese naval ambitions. The symbolism, however, is not lost on anyone.

(Via Salil) A lot of left-leaning folks in India who justify the actions of the communists, be it about economic reform or nuclear deals, typically have no clue about the history of Indian communists. If they did, I doubt they would be as enthusiastic about the left. So, I was really glad when Salil posted this brief, yet reasonably comprehensive history of the Indian Communist movement.

I think it is important to mention here, as Salil did in his email, that the historian/writer, Rudrangshu Mukherjee, has absolutely nothing to do with the right-wing movement. So it's not as easy for left-leaners to dismiss his arguments the way an Arun Shourie, for instance, could be dismissed, because of Shourie's ties to the BJP. I hope the Telegraph (direct link to story) will forgive me for publishing the op-ed in full. I believe the whole thing needs to be read to really understand the hypocrisy that forms the backbone of Indian communism.

If nationalism, as the historian Jack Gallagher was fond of quipping, devours its parents, communism consumes its own ideology. Communism was born under the sign of internationalism. The project of world revolution did not recognize national boundaries. Thus, it is funny to see Indian communists today positioning themselves as great protectors of national sovereignty.

Indian communists have always had a very uncomfortable relationship with nationalism. Some of the major debates and divisions within the Communist Party of India have revolved around the question of nationalism and the national movement. And, if the truth be told, these debates do not exactly hold up the comrades in an edifying light. On the scorecard of nationalism, the performance of Indian communists is poor to say the least. (On internationalism, their score is irrelevant, since a world communist revolution is not even a pipe dream after the collapse of socialism and the exposure of the many crimes of the socialist regimes in Soviet Russia, in Eastern Europe, in China, in Albania, under Pol Pot in Cambodia and so on.)

To begin with the most notorious example that communists have never been able to live down: 1942. The CPI was officially against the Quit India movement. What needs to be emphasized here is that this decision of the CPI was not based on any understanding of the Indian situation by Indian communists. The opposition to the clarion call of 1942 was the outcome of a diktat emanating from Moscow. When Hitler attacked his erstwhile ally, the Soviet Union, in 1941, the fight against Nazism overnight became a People’s War for all communists. The directive from Moscow was carried by Achhar Singh Chinna, alias Larkin, who travelled from the Soviet Union to India with the full knowledge of the British authorities. In India, it meant communists had to isolate themselves from the mainstream of national life and politics and see British rule as a friendly force since the communists’ “fatherland”, Soviet Russia, was an ally of Britain. A critical decision affecting the strategic and the tactical line of the party was thus taken defying national interests at the behest of a foreign power, whose orders determined the positions and actions of the CPI.

In 1948, within a few months of India becoming independent, the CPI under the leadership of B.T. Randive launched the line that this freedom was fake (yeh azadi jhooti hai), and argued that the situation in India was ripe for an armed revolution. The Randive line led to the expulsion of P.C. Joshi, who believed that freedom from British rule was a substantial achievement and that, tactically, the communist movement would gain by supporting leaders like Jawaharlal Nehru who, Joshi said, represented a “progressive” trend within the Congress. Apart from the inner-party struggle, what needs to be noted here is that the Randive line, which completely misread the national mood, was the direct outgrowth of a policy formulated by the Comintern (or the Cominform, as it had renamed itself), in other words, Moscow. The directive of Moscow to the Indian communists was that Congress should be opposed since it was no more than a satellite of imperialism. The retreat from this line was also sounded from Moscow in the form of an editorial entitled, “For a Lasting Peace”, in the mouthpiece of the Cominform.

The defeat of Joshi in the inner- party struggle camouflaged an important and lasting tension within the CPI. This concerned the party’s ideological and tactical position regarding the Congress. Joshi represented a trend within the party that believed in closer ties with the Congress, especially Nehru. It argued that, given the incipient nature of the proletarian movement in India in the Forties and Fifties, it was necessary to seek an alliance with the Congress since it was the party that was closest to the masses and it had leaders who were favourably inclined to socialism and its global future. It was Joshi’s firm belief that the democratic revolution in India could be completed only through an alliance between the national bourgeoisie represented within the Congress and the CPI. While the opposite trend saw the Congress as a bourgeois party and therefore hostile to the interests of the working class and the communist movement. The Congress could not be trusted, a suspicion that was strengthened when the first communist government in Kerala led by E.M.S. Namboodiripad was dismissed by Nehru in the summer of 1959.

Three years later, in 1962, when the Sino-Indian border conflict occurred, a section of communists, among whom Namboodiripad was prominent, chose to uphold the cause of China and portrayed India as the aggressor. This was yet another occasion when the communist movement found itself isolated from the national mainstream. It led eventually to a split in the CPI with the pro-Chinese faction leaving the parent party to form the Communist Party of India (Marxist). A rump remained as the CPI — a party totally subservient to the Communist Party of the Soviet Union, and some would say even fully funded by it.

To these dates — 1942, 1948, and 1962 — when the communists chose not to serve Indian interests but to act at the behest of either Moscow or Peking (as it was then) can now be added another date: 2007. The communists are poised at the moment to withdraw support from the government led by Manmohan Singh unless the latter agrees to renegotiate the Indo-US nuclear treaty. The opposition of the communists is based not on substantial objections to the terms of the treaty, but to the fact that it brings India closer to the US. Prakash Karat, the general secretary of the CPI(M), made this clear in an article in People’s Democracy. He wrote, “The Left parties have been watching with disquiet the way the UPA government has gone about forging close strategic and military ties with the United States….The Left is clear that going ahead with the agreement will bind India to the United States in a manner that will seriously impair an independent foreign policy and our strategic autonomy.”

These, as anyone will recognize, are a series of ideological assertions and not rational arguments. The Left, since the Nineties, has lost all its ideological moorings: socialism is gone and China has turned to market capitalism; within India it has no political base anywhere save in West Bengal and Kerala. With no policies of its own, it has accepted economic reforms and begun to woo capital with some gusto in West Bengal. With everything gone, the Left clings to its anti-Americanism as a last ideological anchor. In the present context, however, the Left’s anti-US position echoes what the Chinese Communist Party is saying on the Indo-US nuclear deal. Karat, whether he likes it or not, is only parroting, like his predecessors did in 1942, 1947 and 1962, a political line coming out of a foreign country, in this case one that is hostile to India. The intensity of his opposition is a reflection of the enduring discomfort of the communists with a pro-Congress stance.

Given its track record, the Left’s attempt to see itself as a protector of India’s national sovereignty and autonomy is a disgrace. Communists in India have acted, at critical periods, at the behest of the Soviet Union or China. In so doing, communists have sacrificed India’s national interests. They are about to do the same now.

The history of Indian communism is the story of a series of historic blunders. The red flag has never fluttered because those who hold it aloft know only how to blunder. What is pathetic is that even the blunders of the communists are not their own!

Summer is just a wonderful time to be in Switzerland, unlike say summer in India. Anyone who doubts my theories about why seasons (especially extremes) are a bad idea need only come here in summer to see why. The days are sunny, the air is crisp, the alpine meadows are lush green, and the streams and lakes are just crystal clear. In short, the perfect weather to laze outside, have lots of cheese (raclette, fondue etc) and drink lots of wine. If you haven't done it yet, I recommend it very strongly, given the salutary effects on one's system. In the meanwhile, how about an, ermmm, blanket ban on winter in places like Switzerland? It just is so much better when the sun is out and it's warm.

Georgia is a fascinating country, which has been at the cross-roads of history for centuries. First came the Romans, then the Persians, Arabs, Turks and then the great waves of Mongols. The country then fell under the Ottomans and the Persians before finally being absorbed into the Russian empire and Soviet Union subsequently. Georgia became independent in 1991 and was then ruled by Gorbachev's foreign minister, Edouard Sheverdnadze and his incredibly corrupt government.

Georgia has had a great turnaround since the Rose Revolution of 2003 brought Mikhail Saakashvili's United National Movement to power. Since Saakashvili took over, Georgia's GDP has grown from $3 billion in 2003 to $8 billion today and is expected to double again in the next 3 years. Nonetheless, Georgia's GDP per capita in PPP terms remains on par with India at $3,800 which gives you an idea of the scope for growth, despite all the troubles the country faces, none more so than persistent Russian bullying.

I have been interested in Saakashvili since I read about him disbanding the entire Georgian police force to deal with persistent corruption. Since then, the new police force have winning plaudits from international observers for their non-corrupt ways. This interview with him appeared earlier this week in the Wall Street Journal and goes to show why Saakashvili is a remarkable politician of the sort that we do not find very often, and definitely not anymore in India. Here are a couple of excerpts from the interview:

A day or two later, at a dinner for Georgian businessmen, the president delivers a speech hammering home his well-honed message of self-help. "The government is going to help you in the best way possible, by doing nothing for you, by getting out of your way. Well, I exaggerate but you understand. Of course we will provide you with infrastructure, and help by getting rid of corruption, but you have all succeeded by your own initiative and enterprise, so you should congratulate yourselves."

Mr. Saakashvili's style of leadership feels like a permanent political campaign -- which it is, in a way. He seems determined to show citizens how it's being done, visibly to demonstrate accountability, transparency and political process, so they grow accustomed to the sight of politicians answering to them -- in short, to Western political habits. All the while, he's exhorting and explaining, striving to change attitudes ingrained through decades of Soviet rule and 15 years of stagnation, strife and corruption. "I keep telling people that this is not a process like some silver-backed gorilla leading them to new pastures. They must do it themselves, and they are."

Now if only more politicians would simply express the obvious and in plain language, like Saakashvili does.

(Via Thomas) History, especially scientific history, is littered with under-statements. I guess the most famous of the lot was Watson and Crick writing at the end of their paper, "it has not escaped our notice that the specific pairing we have postulated immediately suggests a possible copying mechanism for the genetic material."

This image below is destined to join the ranks of famous understatements. A certain Tim Berners-Lee submitted a proposal for an information management system to Mike Sendall, his boss at CERN. Sendall read the proposal and wrote, "vague but exciting." Berners-Lee continued his research, became a saint, and the world as we knew it was changed forever.

Greetings to all from Lyon. I am on the road again, which is why the terribly delayed blog posts. In the next few weeks, I will be in London, Paris, Lyon, Geneva, possibly Zurich, Lausanne, Bombay, and Hyderabad before returning to New York in the end of September. If any of you are in these cities and would like to grab a drink, drop me a line. I hope regular posts can resume later in the week once I get to Switzerland and dependable Internet connections.

Aaron Schiff has put together a list of the world's top economics blogs, based on Technorati rankings. Not much of a surprise that Freakonomics and Marginal Revolution are at No:1 and No:2 respectively. However, I must say I was really surprised to see that the Indian Economy Blog, which I co-founded with a couple of prominent Indian bloggers/libertarians has made it to the top 20, at No: 17, meaning that we're ranked above quite a few prominent global blogs. We're also the only Indian blog in the top 30. I think this is really cool, so congrats goes out to all my colleagues and co-writers at Indian Economy Blog.

In case you missed it, Nick Kristof wrote yet another op-ed in the NYTimes that is either utterly confusing or reflective of the confusion that he himself feels about the aid issue. On the one hand, he admits that there is mounting evidence that aid either doesn't work, or worst case, it leads to negative outcomes. On the other hand, he wants more aid, not less.

A handful of recent books and studies suggest that aid is sometimes oversold, including the superb new work called “The Bottom Billion,” by Paul Collier, the World Bank’s former research economist (it’s the best nonfiction book so far this year). A forthcoming book, “Farewell to Alms,” by Gregory Clark, a University of California economist, even argues that conventional aid can leave African countries worse off than ever.

And a study by two economists formerly of the I.M.F., Raghuram Rajan and Arvind Subramanian, forthcoming in The Review of Economics and Statistics, concludes:

“We find little robust evidence of a positive (or negative) relationship between aid inflows into a country and its economic growth. We also find no evidence that aid works better in better policy or geographical environments, or that certain forms of aid work better than others. Our findings suggest that for aid to be effective in the future, the aid apparatus will have to be rethought.”

So does this mean we should give up on foreign aid?

No, not at all. On the contrary, I believe there is an urgent need for more aid. But this is an important discussion worth having, and the critics (though a minority of the experts) make some fair points. Plus, there’s no doubt that aid can be made more effective.

Is it just me that simply cannot understand Kristof in this piece? Paul Collier is no Milton Friedman and yet, the The Bottom Billion states the obvious in very polite terms. As for the call for aid to me made "more effective," I can't help get that deja vu feeling all over again (to paraphrase Yogi the Berra) given this is what every advocate of aid says every time more evidence emerges of the inefficacy of aid.

To me, it seems like Kristof is having a very hard time reconciling his very strong good-guy instincts with what is mounting evidence that contradicts his fundamental beliefs. Dan Drezner is a lot harsher than I am, when he poses this question: Is Nick Kristof insane?

Some amazing news from the Indian blogosphere. My buddy, uber-blogger, and Indian Economy Blog co-blogger, Amit Varma, has been nominated for the 2007 Bastiat Prize for Journalism, named for the famed French liberal thinker, Claude Frédéric Bastiat. The Prize is awarded to writers for their promotion of free societies and defence of fundamental economics and social freedoms. Amit has been nominated for his work with Mint, India's finest business newspaper. Amit joins a fab set of nominees which includes Clive Crook of the Atlantic Monthly, Jonah Goldberg of the L.A.Times, and Dominic Lawson of The Independent. Previous winners include Tim Harford, Amity Shlaes (both from the FT) and Robert Guest of the Economist.

As you can tell, this is high honour, so congratulations Amit. You deserve it, and here's wishing you the very best for the final round.

Very few economics papers have influenced my thinking as much as F.A.Hayek's brilliant, "The Use of Knowledge in Society." A friend of mine had asked for it earlier today, and while searching for it, I found that the entire paper is now available online for free at the Library for Economics and Liberty. I would still recommend that you read the print version at the American Economic Review (Sept 1945), if you can, and if not, read the paper online. To give you a taste of what to expect in the paper, here's a little bit extracted from my doctoral dissertation about the centrality of the price system to a market economy.

In his seminal paper, “The Use of Knowledge in Society,” Hayek (1945, 526, 527) writes that “in a system where the knowledge of the relevant facts is dispersed among many people, prices can act to coordinate the separate actions of different people in the same way as subjective values help the individual to coordinate the parts of his plan.” He goes on, “the most significant fact about this system is the economy of knowledge with which it operates, or how little the individual participants need to know to be able to take the right action. In abbreviated form, by a kind of symbol, only the most essential information is passed on, and passed on only to those concerned. It is more than a metaphor to describe the price system as a kind of machinery for registering change.”

Hayek (1945, 528) drives home the point about the signaling and coordinating role of prices by quoting the great mathematician Alfred North Whitehead from his book “An introduction to Mathematics”:

It is a profoundly erroneous truism, repeated by all copy-books and by eminent people when they make speeches, that we should cultivate the habit of thinking what we are doing. The precise opposite is the case. Civilization advances by extending the number or important operations which we can perform without thinking about them.

I wonder what it means when 419 emails begin in this fashion.

DEAR FRIEND,
APPARENTLY, YOU MAY BE JUDGING THIS MAIL AS ONE OF THOSE SCAM MAILS THAT INUNDATE YOUR BULK MAILS, AND AS SUCH MAY NOT WANT TO ACCORD IT ITS DESERVED ATTENTION. PLEASE IT IS NOT, AT ALL.

On another note, why is it that GMail is so much better at sending this crap straight to spam than Yahoo Mail (we're not going to discuss Hotmail, AOL etc)?

On his blog, Dani Rodrik dives into why economists differ so much about so much. He thinks the answer lies in the fact that there are two genres of economists, economists who believe in a first-best world and economists who believe in a second-best world.

The gut instinct of the members of the first group is to apply a simple supply-demand framework to the question at hand. In this world, every tax has an economic deadweight loss, every restriction on individual behavior reduces the size of the economic pie, distribution and efficiency can be neatly separated, market failures are presumed non-existent unless proved otherwise (and to be addressed only by the appropriate Pigovian tax or subsidy), people are rational and forward-looking to the first order of approximation, demand curves always slope down (and supply curves up), and general-equilibrium interactions do not overturn partial-equilibrium logic. The First Fundamental Theorem of Welfare Economics is proof that unfettered markets work best. No matter how technical, complex, and full of surprises these economists' own research might be, their take on the issues of the day are driven by a straightforward, almost knee-jerk logic.
[...]
Those in the second group are inclined to see all kinds of complications, which make the textbook answers inappropriate. In their world, the economy is full of market imperfections (going well beyond environmental spillovers), distribution and efficiency cannot be neatly separated, people do not always behave rationally and they over-discount the future, some otherwise undesirable policy interventions can generate positive outcomes, and general-equilibrium complications render partial-equilibrium reasoning suspect. The First Fundamental Theorem of Welfare Economics is proof, in view of its long list of prerequisites, that market outcome can be improved by well-designed interventions. Since they have given up on the textbook model, members of this group have an almost-infinite variety of "models" to choose from as they think of public-policy issues.

The first group's instinct is always to apply the first-best reasoning to the case, ignoring market imperfections in related markets, while the second group almost always presumes some market imperfections in the system. I am over-simplifying a bit, but not a whole lot.

Who belongs in what category, you ask? Here is the surprising bit. According to Prof Rodrik, Gary Becker, Greg Mankiw, Brad deLong, Jagdish Bhagwati, and Tyler Cowen fall into the first category, while George Akerlof, Joe Stiglitz, Paul Krugman, Alan Blinder etc fall into the second category. Now, I can understand why he would think that way about Becker, Mankiw and Bhagwati, but I have always thought of Tyler Cowen and Brad as economists who really do take imperfections into account. It's an interesting read, though I very rarely agree with Prof Rodrik these days.

Adlai Stevenson is one of my favourite politicians. I first came across him while reading about JFK's last visit to Dallas, but since then I've read much more about Adlai and the more I read about him, the more I like him.

To celebrate the current turmoil in the capital markets, here's a gem from Adlai.

"There was a time when a fool and his money were soon parted, but now it happens to everybody."

Here's what just appeared on my web page via Google Ads. Part outrage. Part irony. The first ad from Christian relief organization, World Vision, asks for your money claiming that there's a famine in India and that your $20 will help children escape lives of horror. Now, where this famine in India is, heaven only knows. To the best of my knowledge, India hasn't had a famine in quite a while, so clearly whoever is responsible for buying keywords for World Vision is being deceptive. Google Ad Sense also manages to serve a generous dose of irony in the same ad space. Watch the other ad in the picture. It says "Invest in India stocks." Not bad, Google.

The Economist has a comparison of productivity figures from around the world. I was surprised to learn that Norway topped the table for GDP per hour worked, and by quite a wide margin at that. My American friends should also take note that the French manage higher productivity despite the 35-hour work week. Fascinating.

Kruger National Park. South Africa. A pride of lions attacks a young buffalo calf. Gets the calf. Falls into the river in the process. A huge crocodile wants a piece of the action. Crocodile drags calf one way. Lions drag the other way. Lions win the battle with the crocodile. Drag the calf ashore. Lunch is almost ready. The buffalo herd returns to attack the lions. A buffalo gores a lion and tosses it in the air. The buffalo attack saves the calf somehow. The calf gets up and walks away. A great win for family. Watch The Battle of Kruger!

As someone fresh from a safari, I can tell you how difficult it is to actually see a kill in the wild, leave alone a titanic battle like this. Dave Budzinski, who shot this video, can consider himself very, very lucky to have witnessed something even dedicated National Geographic movie-makers have seldom managed to capture on film.