India and Australia

There can be no doubt that Australia is looming larger and larger on the Indian horizon. Speaking personally, thanks to my participation with the LAFIA2008 — Leading Australia’s Future in Asia-Pacific — delegation in July, I have gained an increased appreciation of the issues that will draw Australia and India into a deeper strategic and economic relationship.

Of Freedom, Markets, and the Future of India

Markets Work, Incentives Matter

The two broadest generalizations one arrives at from a study of economics are that markets work and that incentives matter. People respond to incentives because that is at the core of what it means to be rational. To the extent that humans are rational, their behavior is predictably in the direction that existing incentives point to. Trade between humans is rational because both parties in any voluntary trade benefit. The abstract mechanism which enables trade is called the market. Markets work in the sense that they maximize the gains from trade among an arbitrary number of entities. There are other methods of enforcing trade among people, such as the command and control mechanism often employed by communist governments. But they are at a distinct disadvantage relative to the market because the latter is based on the premise that rational actors respond to incentives.

The Price of Oil and the Wages of Stupidity

I have argued in the past that India is poor by choice — not by necessity, nor by a heavenly compulsion, or a divine thrusting upon, or an enforced obedience of planetary influences [1].

“Of course, that does not mean that every poor Indian has chosen to be poor. Someone else in a position of power made choices whose consequences are evident. India’s leaders – past and present – have consistently made choices that have had, and are having, a disastrous effect on the lives of hundreds of millions of human beings.” [From a post made in June five years ago.]

Liberalize the Indian Education Sector

This is a true story. The faculty member involved emailed me yesterday. Scene: an IIT professor interviewing a potential candidate for PhD in a technical subject.

Gradualism of Indian Reforms

B-Span is “an internet-based broadcasting station that presents World Bank seminars, workshops, and conferences on a variety of sustainable development and poverty reduction issues.”

A recent video Some Lessons from Economic Reforms in India features Montek Singh Alhuwalia, and has Brad DeLong, Richard Eckaus, and Nurul Islam as discussants. From the site, here is what I gather.