Populist Nationalism And Crony-Capitalism

wealthymattersI love elite theories. Ultimately we all have to deal with the power structures in society, even as we try to make a living.

Raghuram Rajan is always fun to follow and leaves you with penetrating insights. Let him help you understand the world, then decide what you wish to do with your understanding.

The following is reconstructed from a speech he gave at the Stigler Centre. Unfortunately I can’t find the full text anywhere online.

Have Fun ! Read more of this post

A Colony Once Again

wealthymattersA well-kept open secret: Washington is behind India’s brutal experiment of abolishing most cash – Norbert Häring

In early November, without warning, the Indian government declared the two largest denomination bills invalid, abolishing over 80 percent of circulating cash by value. Amidst all the commotion and outrage this caused, nobody seems to have taken note of the decisive role that Washington played in this. That is surprising, as Washington’s role has been disguised only very superficially. Read more of this post

Raghuram Rajan On Demonetization

“In the past demonetisation has been thought off as a way of getting black money out of circulation. Because people then have to come and say “how do I have this ten crores in cash sitting in my safe” and they have to explain where they got the money from. It is often cited as a solution. Unfortunately, my sense is the clever find ways around it.They find ways to divide up their hoard in to many smaller pieces. You do find that people who haven’t thought of a way to convert black to white, throw it into the Hundi in some temples. I think there are ways around demonetization. It is not that easy to flush out the black money. Of course, a fair amount may be in the form of gold, therefore even harder to catch. I would focus more on the incentives to generate and retain black money. A lot of the incentives are on taxes.”

A Hypothesis On The Persistence Of Crony Capitalism

wealthymatters“One widely held hypothesis is that our country suffers from want of a “few good men” in politics. This view is unfair to the many upstanding people in politics. But even assuming it is true, every so often we see the emergence of a group, usually upper middle class professionals, who want to clean up politics. But when these “good” people stand for election, they tend to lose their deposits. Does the electorate really not want squeaky clean government?

Apart from the conceit that high morals lie only with the upper middle class, the error in this hypothesis may be in believing that problems stem from individual ethics rather than the system we have. In a speech I made before the Bombay Chamber of Commerce in 2008, I argued that the tolerance for the venal politician is because he is the crutch that helps the poor and underprivileged navigate a system that gives them so little access.This may be why he survives. Read more of this post

Raghuram Rajan: Democracy, inclusion, and prosperity

wealthymattersRaghuram Rajan: Democracy, inclusion, and prosperity

Speech by Dr Raghuram Rajan, Governor of the Reserve Bank of India, at the D D Kosambi Ideas Festival, Goa, 20 February 2015.

Thank you for inviting me to this Festival of Ideas. Since this festival is about ideas, I am not going to tax you with the Reserve Bank’s views on monetary policy, which are, by now, well known. Instead, I want to talk about something I have been studying for many years, the development of a liberal market democracy. In doing this, I will wear my hat as a professor in the field known as political economy, and discard my RBI hat for the time being. If you came here expecting more insights on the path of interest rates, as I expect many of you did, let me apologize for disappointing you. Read more of this post

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