Economic lessons

Prof. Bradford DeLong seems to be in a mood for entertaining questions and to answer them in a nice teaching mode. He answers two different correspondents (undergraduate students from different places) who ask him the following questions in economics:

• The first correspondent asks "whether or not Keynes was correct about deficit spending during depressions. By that, I mean whether deficits will provide at least a temporary boost in output and employment". Brad provides " a nice answer; it begins with "It all depends", and goes on to give the criteria that one can use to judge the probability of success of any Keynesian intervention.
• The second correspondent asks, "However, reading Das Kapital and other things, I am seeing a different interpretation of how an item is valued, and the value of labor verses what I have been taught in traditional classes and I need more understanding. What is the “value” of a product, or of labor? Brad provides the answer using an extended example with which he concludes that the labor theory of value is "simply not a useful tool for either moral philosophy or political action".

Both the posts are crisp and clear, and written in a simple enough language that even a non-economist like me can get something out of them. In particular, the second one on Marx's theory contains some absolutely delicious piece of writing.

Why do academics blog?

Over at Crooked Timber, Henry Farrell talks about blogging in academia, and more specifically about why he is into blogging and what new things blogging allows him to do. He predicts that while full-time blogging is not going to take any academics away from their profession, part time blogging will continue to attract more and more academics its way.

Let me just say that I agree entirely ...

---

PS: It has been a rather dry fortnight; things got a bit too wild at home -- almost all of us were ill, a couple of them really badly. Now that things are back to normal, I am happy to be back.

Annals of academic angst

Well, it has been a while since I posted here. Things were very hectic at home, with everyone deciding to fall sick, almost as if on cue, at the same time. However, everyone is back to their normal business, and it feels good to be back.

Today, I provide links to just a couple of posts; while the posts are by academics in liberal arts / humanities, everyone should be able to identify with the deeply felt views expressed by them.

The first one is from Adam Kotsko (probably a budding academic), who is grappling with what he needs to do to pass academic muster in his chosen field of philosophy. Though he likes conversing with great minds (by reading their texts), he seems exasperated by the "need to make these texts into something, turn them toward the goal of producing my own piece of writing so that I will continue to meet the requirements of scholarly productivity which graduate study is socializing into me". He finds himself trying to "figure out some way to squeeze out a paper on Zizek's use of Kierkegaard, so that I can send it off and people will publish it, so that I can write down on a piece of paper that it has been published".

Look at how an experienced academic -- Prof. Bradford DeLong, a Berkeley economist -- poses the same problem. Academia should really be about conversing with great minds and finding a compelling voice for yourself -- all the while having a great deal of fun. Academic pursuit's resemblance to a game whose goal is to build a CV of professional achievements, if it is taken seriously, will only lead to cynicism that makes you feel let down.

Best thing about both these posts is how beautifully they are able to express -- through just, plain words -- the deepest feelings of their authors. I wish I could do that ...

Note: This was originally posted over at the blog of small things on 5 April 2005.

Update: Over at Uncertain Principles, Chad Orzel displays a different type of angst. This time, his musings are about "really important work" vs. "good enough" work, with the former being defined as that worthy of Physical Review Letters (we know what the latter is, don't we? ;-). Thankfully, his inner voice has put him back on track:

[...] every little bit helps. Small papers count almost as much as important ones, when it comes to demonstrating a research track record for a tenure review. By continuing to think big, I'm shooting myself in the foot ...

Chidambaram, Budget-05, IISc, 100 Crores

In this year's budget speech presented to the Parliament on 28 February 2005, our Finance Minister, Mr. P. Chidambaram devoted an entire paragraph to IISc! Here it is, in the the subsection titled "Institutions of Excellence":

92. On January 6, 2005, the Prime Minister spoke about his intention to set up a Knowledge Commission to look into the issue of building quality human capital. Government believes that investments in institutions of higher education and Research and Development organizations are as important as investments in physical capital and physical infrastructure. What we need are world class universities, and we must make a beginning with one institution. We must have a university that will be ranked alongside Oxford and Cambridge or Harvard and Stanford. I am happy to inform the House that we have selected the Indian Institute of Science (IISc), Bangalore, which enjoys a high reputation as a centre of excellence in research and development. We shall work to make IISc, in a few years, a world class university. I propose to provide an additional sum of Rs.100 crore as a grant for this purpose.

Here are my views as an IISc insider (I do plan to post my views as a citizen a little later). Needless to say, I am thrilled that IISc has been given extra money, because I do feel that there are important things that need to be done in our Institute that cost money -- for example, infrastructure: quality of electric power, internet connectivity and bandwidth, and housing for faculty and students. A second and rather indirect benefit is that this recognition of our academic excellence by our pay-masters will also help us in attracting good students and good faculty. This will start a virtuous cycle that could take the Institute higher and higher still.

After listing some of the benefits for our Institute from this 100 Crore grant, I must point out here that I resent the comparisons to Cambridge, Oxford, Harvard and Stanford. Don't get me wrong: I have nothing against these great universities. IMHO, every institution -- ours is no exception -- should constantly strive for greater levels of excellence, without worrying too much about where it is in some pecking order. To evaluate academic performance based on a silly worldwide comparison is just that - silly. Similarly, I think the sentence about making IISc "a world class university" is also silly. To me, what really matters is, not whether we are world class, but whether we make concerted efforts to become better than what we are today (See [1] below).

Finally, let us turn to this question of how the media and the common folks have responded to this special treatment of the IISc? I have not done any exhaustive search, but the print media have been either gushing or gently positive about our Institute. This Outlook story really gushes. This story at ZDNet India (originally from Business Standard) says some good things, and draws important connections between attracting good students, and the emergence of MNC research centres in India (GE, GM, Daimler Chrysler, etc). Times of India, on the other hand, has carried a series of generally positive short reports about various facets of our Institute (Sorry, I have only two links! Their website is so poorly organized, I have not been able to get the links to the others). However, these Times reports contain egregious factual errors! For example, one of them said we don't have an electron microscope and the 100 Crore grant will help us get one! Another gave generously inflated numbers for (a) our annual expenditures and (b) our research publications! See footnote [2] below.

What about the others, including the common man and woman? I suggest that you check out this blog post by Amit Chakrabarty (and the readers' comments) over at the Zoo Station and the comments at the end of the Outlook story. There are quite a few negative remarks there. For example, Amit ends the post with this:

A more meaningful criticism of the IISc is what I alluded to earlier: it's been far less successful at building its brand name than the much younger IITs. As a very young prof working far away from India I can hardly lay claim to knowing the solution but it's clear to me that the 100 crore gift can only help. For starters, perhaps the IISc would consider hiring someone to create a professional website for the institute that actually announces this generous gift? Come on, IIsc! It doesn't take Nobel prize winners to get your website up to Oxbridge standards.

For some (justifiable) envy and disdain among our brethren in our country's grossly underfunded universities, take a look at this Indian Express story (which probably appeared in its Pune edition). Here is a rather understated quote from this story:

While most agree that it is but befitting that IISc get the first crack at upgradation, the reluctance in putting a finger on university-strengthening measures hasn't gone unnoticed.

Let us be clear: all our actions, not to mention our academic performance, will be keenly watched. Any misstep on our part will be used as a stick to beat us (and the parties of the present Government) with.

Finally, I hope our Government will get its act together and start making serious efforts to improve our education system at all levels: primary, secondary, higher secondary, college and research. Particularly in the last two categories with which I am most familiar, our Government should really ensure that institutions, and undergraduate institutions and universities in particular, get adequate funding to make education at these levels modern and truly "world class". Now, that is a goal that our Government should really like!

[1] This editorial Economic Times (7 March 2005; unfortunately, you have to keep clicking next page, until you get to page 3 that has the third editorial titled "Style over substance". See footnote [3] below.) is another example of such silliness. According to it, the recent achievements of Sania Mirza and Narain Karthikeyan are all really not worth celebrating. These editorialist worthies do not seem to realize that these people have achieved what no other Indian has achieved so far, and that, by itself, is a great cause for celebration. I would really pity the sons and daughters of these editors: if they adopt the same standards in their personal lives, their children are probably getting pained by them for not doing anything "world class".

[2] For the record, according to our own internal documents, our budget for the financial year 2004-05 was about 82 Crores of non-plan and 27 Crores of plan expenditures, and about 40 Crores of externally funded research projects. Similarly, our publications number about 1200 per year, and is about 10 % of the national figure for all of India in the fields of science and engineering.

[3] Can you imagine a newspaper website that cannot even separate individual articles in a day's editorial? Indiatimes does it: it puts all the editorial articles in one single page; and asks you to keep clicking "next page". These guys don't know a professional website from a horse's behind; I promise you that I will not buy their shares when they do their IPO!

Something is really strange here ...

I have been wondering about the tactics that Chidambaram, our Finance Minister, employed in his budget. (A) He gives all kinds of tax breaks to both individuals and corporates. (B) He adds two provisions that introduce new taxes: the fringe benefit taxes on companies, and a tax of Rs. 10 for every 10K withdrawal from banks in cash.

Assuming that this year's economy stays the same as last year's, let us consider the following:

• under the tax breaks in (A), he loses X rupees, and
• under the new tax measures in (B), he gains a certain fraction f of X rupees (i.e., fX rupees).

Now, our society, like every other society on earth, loves its tax breaks. However, it does not much care for the exact magnitude of the tax breaks. In other words, if each corporate stands to gain Rs. 2 crore under plan (A), the corporates would be equally happy with 1 crore! This is because they would not even know what it is really like to have a tax break worth 2 crores or 1.5 crores or 4 crores or even 0.2 crores. The same argument applies to individuals as well. A tax break of 5K would make me about as happy as a tax break of 10K. You may say, "Come on, you dumbo, certainly 5K should make you less happy (even sadder, perhaps) than 10K!". You would be right, only when I am given a choice (post facto) between 10K and 5K; but before the budget speech, I have no idea about how much I am going to gain, so any tax break that he announces would first lead to a sigh of relief, and then to some happiness.

So, here is the bottomline: the very reality of a tax break seems to heighten the ecstacy levels of corporates as well as individuals. If you accept this reasoning, don't you think Chidambaram would have been better off to (C) give us a break worth only (1-f) X rupees, rather than giving us X under (A) and taking fX under (B)?

Now what has his choice of (A) + (B) given him? Does anyone praise him for (A) and then complain a little about (B)? Hell, no! He gets castigated for doing (B) everywhere, and very little praise for (A)!

If he had done (C) instead, do you think there would be any of this great noise about imposition of an unfair tax on 'legitimate business expenses'?

P.S.: (1) However, there is a distinct possibility that he probably knows much more than any of us (including me!) about his tax measures. My guess is that he is hoping to mop up much more than X through his measures under (B)!

(2) Another possibility is that he did not intend to incorporate (B) at all, except to deflect fire from the Left parties! This sounds more plausible if you look at the current fervour among the corporate types in giving Chidambaram a hard time; as a result, the Left cannot really complain that the budget is too business-friendly. Also, it is quite likely that the businesspeople have already been clued in on this, and they are playing their assigned role of complaining incessantly about the inherent unfairness in the budget!

(3) Perhaps, I have been reading too much of American press and blogs that make me see deep conspiracies everywhere I turn ... ;-)

More on Summers

This is just a set of pointers to a whole bunch of posts that were made by bloggers after the release of the full text of the speech by Larry Summers that caused such an uproar when the story broke first.

Prof. B**** : More on Summers
Elizabeth Anderson : What is troubling Harvard?
Matthew Yglesias : Summers Redux and Why so mad?
Brad DeLong : Academic filters and The Eighty-hour week
Kieran Healy : Mending the kids, again and Summers lovin'
Mark Kleiman : Larry Summers redux
P. Z. Myers (Pharyngula) : It's more than just math
and finally,
Matthey Yglesias, again : The Case for Shrill

Happy Women's Day!

Atanu and Islam

I read this post by Atanu Dey the other day [if that link doesn't work, this one might]. It is all an entirely reasonable post on the topic of "hunger banquet", and actually, quite interesting. What really got to me in this post is the following:

"Sympathy is all you need my friend, and sympathy is all you need
And sympathy is all you need my friend
For there is not enough love to go around."

Thus sang Cat Stevens. (That is before he converted to Islam and became known as Yusuf Islam, and in keeping with his adopted creed, decided that murdering people was the best way to effect change in the world.)

As soon as I saw this, I said to myself: "Whoa!". At the end of this post, there were a few commenters pointing out that this smart-alecky aside on Islam is (a) unnecessary, and hence, gratuitous, and (b) totally out of character. However, his replies to his comments appear to betray, shall we say, certain pre-dispositions. Well, read the whole post, the comments thread and Atanu's response to some of the comments; then make up your own mind!

A few days later I found a post by Brad Delong with these opening words: "The highly-thoughtful Atanu Dey's Deeshaa wins the Best Indiblog Award". Now, I really couldn't take it. I posted a comment on Brad's post, to which I found a reply by Atanu, to which I replied. Since it has been nearly 40 days since the original post by Brad, I said finally that I am moving all further discussion to my blog.

I expect to post further thoughts on this episode later. So, let me gather everything in one place here .... The comments that we made on Brad's website are:

Me :

Yeah, Deesha is certainly an interesting blog. It was on my regular reading list, until I found this:

"... Thus sang Cat Stevens. (That is before he converted to Islam and became known as Yusuf Islam, and in keeping with his adopted creed, decided that murdering people was the best way to effect change in the world)."

I don't know about Cat Stevens deciding on anything, but I am sure you would agree that this is an insult to an entire "creed". It appears in a post on "hunger banquet", so this insult is truly gratuitous!

How can a thoughtful person -- who wishes to help his country by spreading some economic wisdom -- spew out such hateful words about an entire people, 120 million of whom are also his fellow-citizens?

It is such a shame ...

Atanu :

Did Cat Stevens convert to Islam? Yes. Did he call for the murder of Salman Rushdie for his book after his conversion? Yes. Does Islam require the murder of apostates and those who oppose Islam? Yes.

[You would get some argument about that...]

Is his action consistent with the tenets of his adopted faith? Yes.

Which part of what I wrote is not true?

If what I wrote is misconstrued as "spewing hateful words about an entire people", I suggest a course in remedial reading and critical thinking.

Me again :

Atanu,

I haven't had any course in remedial reading yet! However, I believe one needs only a small dose of critical thinking to realize the following:

(a) Ancient scriptures of any religion would show, upon closer inspection, certain things that its own adherents would find either embarrassing or abhorrent. In other words, there may be some crazy stuff in the scriptures, but the followers, quite sensibly, don't take them seriously.

Today, more than a billion Muslims reject the idea of death sentence for blasphemy. They would recoil in horror at the murder of someone because of a blasphemy alleged in a fatwa issued by a head of state. These modern Muslims, who form an overwhelming majority, deserve our support in their struggle against fundamentalist forces. What they don't deserve are cheap shots that try to tar their religion as 'bad', based on one man's bad thoughts and behaviour.

(b) Horrible atrocities and vicious crimes have been committed in the name of religion almost throughout history, and every religion has also been (at some point or the other) at the receiving end. If patriotism is the last resort of every scoundrel, religion would seem to be the first! Given the universality of this phenomenon across all major religions, why single out Islam for harsh treatment?

Well, while dealing with one's own private prejudices is bad enough, thinking about other people's publicly expressed prejudice and bigotry is truly depressing...

Toolbar tricks in Google

Google has released the beta version of its Toolbar 3.0. Many people have used its earlier versions (I have one embedded in my firefox browser, I do find it useful for search). So, the newer, better version of the toolbar should be great, right? Well, yes and no.

See, the problem with Toolbar 3 (which the earlier versions did not have) is the autolink feature. What it could do is this: say you are reading a page that talks about a book, and in order to help you find it, the author of this page very helpfully provides its ISBN in the page itself. Now, while you are viewing this page, if you click the autolink button, it would highlight the ISBN with a link, and if you click on the link, it could take you to some online bookstore of Google's choice (which happens to be Amazon.com). Similarly, if the toolbar program recognizes an address in the page that you are viewing, clicking on it will take you to -- guess what -- Google maps!

I can still hear you saying what is the problem with the toolbar? It all sounds so useful, and helpful. Well, read the posts by Robert Scobler, the Geek Blogger from Microsoft, here, and here. See also Steve Rubel and Dave Winer.

The basic point that they all make is that everything in a webpage (including links, or lack of them) belongs to its author. Some stupid browser tool cannot be allowed to mess with the content without the author's permission. If, for example (Google's toolbar doesn't do this; however, it may be implemented by some other company, which does not believe in Google's philosophy that says "don't do evil"), the webpage author links to some other online bookstore, but Google overrides this link, and provides an autolink to Amazon.com; I am sure you would agree that it is unethical. Even more bizarre would be when the toolbar overrides (at the browser) all the links in, say, the Barnes and Noble website to provide autolinks to Amazon! Well, I could give you many more examples, but I think you get the point.

Well, there are people on the other side, too! See Fred von Lohmann and Cory Doctorow. They make some interesting points, to which Scoble provides good answers here. In this last post, he seems to concede defeat, but goes on to suggest some ways in which both the user and the content provider can exercise some control over the webpage, so that Google's control over these links can be overridden in a more transparent way.

Clearly, the last word is yet to be spoken.

Some lessons in economics

Brad Delong has a post today, that describes his toy model to explain why capital gains in the stock market lag the real economy (or something like that). I am not able to get the link to his post right now, so you will have to get it yourself!

The second link for today is is to a post by Daniel Davies over at Crooked Timber, who discusses Peter Griffiths's book "An Economist's Tale". Just a quick quote from the post:

The book is a detailed case study of what Griffiths did when he was working for the government of Sierra Leone during a period when the World Bank suddenly got the free market religion. It’s a fantastic read, and by reading it you will get two valuable pieces of information; you’ll understand what economic consultants (those people whose jobs are advertised in the front bits of the Economist) actually do for a living, and you’ll understand the exact why and wherefore of what it is that people are complaining about when they protest against the Bretton Woods institutions and the Washington Consensus.

Someone tells the good Doctor to heal himself

Today's Business Standard makes a valid point.

Prime Minister Manmohan Singh’s call to Indian CEOs to emulate the Chinese model, made at a summit last week, should raise some eyebrows amongst those who have been observing the striking contrasts between the performance of the two economies over the last couple of decades.

For, any reasonable assessment would squarely pin the responsibility for the widening gap between the two, as between India’s own potential and actual achievement, on the Indian government itself.

The glaring divergence in India between the increasing availability and affordability of goods and services produced by the private sector and the deterioration in public services (including infrastructure) is one important manifestation of government failure in India.

I am not much into this "compete with China, or perish" meme; I think it is a load of bull, but I concede that it is a bull with a purpose. Businesspeople use it quite well as a tactic for, among other things, getting the Government to do what they want it to do. As long as it serves this purpose in a socially useful way (such as improving the "public services -- including infrastructure"), I have no problem with it.

Amartya Sen

Amartya Sen's interview appeared recently in the Hindu; the interviewer is Siddharth Varadarajan. Go read it!

Foot-and-mouth disease at Harvard

Larry Summers, President of Harvard University, put his foot in his mouth at a conference on science and engineering careers of women and minorities. He cites the following as possible "factors" for why so few women were on math and engineering faculties at top research universities: (a) Women are not as likely as men to spend long hours (80 hours a week!) to advance their career, and (b) Boys tend to do better in math and science in upper classes at high school.

First, take a look at a rather irreverent take on this by Matt Yglesias, a Harvard alumnus. Then, read this sharp tear down of Larry Summers and his arguments by P.Z. Myers.

I just love these quotes from Myers:

• Guess what, Summers? Boys don’t have an “innate” tendency towards science and math. Leave them alone, and they don’t grow up into natural engineers: they become animals who like to eat and screw and scratch themselves. The most important contributor to that predilection for tinkering and building and learning is education. Any possible inherited differences are miniscule compared to the power of education and cultural biases.
• And don’t try to pretend that socialization is minimal, when the president of Harvard can stand up and seriously suggest that many people are incapable of doing great science because they have ovaries. We don’t do research with our gonads, or our skin pigments, for that matter.
• Grrr. Apparently, congenital idiocy is not a barrier to becoming a Harvard administrator.

The Honourable President of Harvard puts up a defence [Note: This link doesn't work anymore! See the final update, below]. In the first paragraph, he simply asserts that he has been misunderstood: "My remarks have been misconstrued as suggesting that women lack the ability to succeed at the highest levels of math and science. I did not say that, nor do I believe it". In the middle of the next paragraph, he says, "In the spirit of academic inquiry, my aim at the conference was to underscore that the situation is likely the product of a variety of factors, and that further research can help us better understand their interplay". I would say it is a very weak defence.

When you hear "further research can help us", you take it to mean "we really need to understand this problem before a solution can be found". It is this that upsets a lot of people, and I think their outrage is justified.

Update: Matt Yglesias and Bitch, Ph.D. have more to say on the Summers affair.

Update (23 Jan 2005): Here are some more hard hitting posts, with more links to commentary of from either side of the political spectrum.

Update (25 Jan 2005): Sean Carroll at Preposterous Universe has a round up, together with his own long essay on this issue.

Update (27 Jan 2005): I promise that this is the last update. Summers has taken the earlier weak apology off from his site (that's why the link to it, above, does not work); it has now been replaced by this letter, where he actually sounds a bit contrite. The final link is to a balanced post by a mathematics professor who calls herself moebius stripper....

Outsourcing

20 February 2004; Updates: 6 April 2004, 7 April 2004, 26 April 2004; Re-written on 13 January 2005.

Take a close look at the comments section of this blog post by Brad DeLong way back in February of 2004. The main post is just a link to an article in the magazine Wired on the phenomenon of software outsourcing, without any commentary (except for the lead-off statement that it is an excellent article). Evidently, so many people (more than 100 at last count!) went to the article in Wired, came back to DeLong's blog, and decided to rant!

As many pundits, bloggers and editorialists have pointed out, outsourcing is essentially an economic issue, in which there are winners and there are losers. What we expect from the society (the Government, the Big Brother, the Party) is to choose those policies that lead to more winners than losers.

The losers in the present wave of outsourcing, clearly, are not liking it. Fair enough. However, two recurring themes in the comments section are worth pointing out.

The first is that many feel that their Government must intervene. Some have suggested making it more difficult for firms to outsource; some others have gone even further by strongly advocating an outright ban on outsourcing. From an American point of view, a ban is probably a bad deal, since it would hamper their companies, while their competitors in other countries would not face such hurdles: think Oracle vs. SAP. What would you rather want: an Oracle which survives with outsourcing, or an Oracle which is gobbled up by SAP?

The second interesting thread is that many commenters have asked for things which they would oppose (quite strongly, I would presume) if a different part of the society is affected by a similar, largely economic, phenomenon. Take the case of outsourcing of manufacturing, a wave that hit the US in the seventies and eighties and led to sharp job losses in many sectors of the American economy. Clearly, not many people (certainly not those in the software industry) cared much for the people who lost out in that wave. As one of the ommenters pointed out, the winners -- and there were so many of them -- were very happy to be consumers of high-quality and low-cost cars and other gizmos from the East Asian nations (notably, Japan).

If only the US were a welfare state (like much of Europe), the pain from outsourcing would not have been so bad and so sharp. The largely white collar software people are ruing now.

The sharp rightward turn of the US Government has almost become, since the recent elections, a near U-turn that could take that country all the way back to the early part of the twentieth century, an era that has been termed the Gilded Age by Paul Krugman, a Princeton economist and NY Times columnist. This near U-turn implies two things: (a) issues that the rich want (and they want outsourcing) will be preferred over what the poor (or the 'relatively less well off) want, and (b) welfare protections that would mitigate the hardships will be further dented, making life more difficult for the less well off.

---

Some updates from April 2004:

1. Stephen Cohen and Brad DeLong have "a first rough cut on what we think about outsourcing" . In particular, they say that the political debate will die soon (within a year or so), but the economic "problem", though small right at this moment, will continue to grow. A time will come when the US will have to deal with the big Outsourcing Problem; according to them, this eventuality is is still sometime away. In other words, there is time for the US to "...build the social safety net, the education and retraining programs...". As usual, don't forget to check out the comments section. It too contains some interesting links.

2. Brad DeLong plays class warfare! In this post , he presents a cute little economic model that shows (admittedly in a limited way) why he is right in asserting in an earlier post that "outsourcing [is] more benign if it put downward pressure on the incomes of the yuppie rich than if it put downward pressure on the incomes of the working class". As usual, don't forget to read the comments.

3. Brink Lindsey of Cato Institute has an article on outsourcing. Hat tip, once again, to Brad DeLong.

If you are into software development ...

On the other hand, even if you are not into (but generally interested in) software, you would enjoy some of the links on this page, which contains readers' nominations for the best essays on computer software published in 2004. Joel Spolsky, the author of the blog "Joel on Software", has been commissioned to put some 30 of these essays together for a book, tentatively titled "//comments".

Thanks to Joel, I found "S5", a really cool presentation software that runs on your browser.

Joel has been enormously prolific: check out his writing at this archive.

For example, in one of the articles, Joel says that software developers *really* need to know the internals of how their programs work (Hat tip to Brad Delong). Using string processing as an example, he finally concludes thus:

...I am actually physically disgusted that so many computer science programs think that Java is a good introductory language, because it's "easy" and you don't get confused with all that boring string/malloc stuff but you can learn cool OOP stuff which will make your big programs ever so modular. This is a pedagogical disaster waiting to happen. Generations of graduates are descending on us and creating Shlemiel The Painter algorithms right and left and they don't even realize it, since they fundamentally have no idea that strings are, at a very deep level, difficult, even if you can't quite see that in your perl script. If you want to teach somebody something well, you have to start at the very lowest level. It's like Karate Kid. Wax On, Wax Off. Wax On, Wax Off. Do that for three weeks. Then Knocking The Other Kid's Head off is easy.

Read the article to find out more about the algorithm of Shlemiel The Painter!

Another article is about pricing of software. Here is his concluding paragraph:

Take my advice, offered about 20 pages back: charge $0.05 for your software. Unless it does bug tracking, in which case the correct price is $30,000,000. Thank you for your time, and I apologize for leaving you even less able to price software than you were when you started reading this.

Though his conclusion sort of leaves you in a confused state, you should read this article simply because it is by Joel!

Also check out Joel's post on Google Suggest, a really cool feature from Google; don't forget to follow his link to where the real goodies exist: slashdot!

Update: Joel has more on Google Suggest here.

Employment Guarantee Act

The Employment Guarantee Act (EGA) that the present UPA government has tabled in the Parliament has been the subject of a number of comments, op-ed pieces, blog posts. Let me try to get them in one place here.

First, the links:

M.K. Venu has an op-ed in Economic Times about the bankruptcy of some of the arguments against the Employment Guarantee Act (EGA). Let me just say that I agree with pretty much everything he says.

Another op-ed in Economic Times (20 December 2004) recounts some nice arguments for EGA.

Amit Bhaduri, in an op-ed in the Hindu (27 December 2004), points out an interesting link between EGS and the right to information bill that has also been tabled in Parliament: since EGS-related work will have to be carried out by local bodies (Panchayats), the local people should have full access to what is done and to how the money is spent. Therefore, EGS itself would be rendered rather meaningless if the locals are not supported by a strong right-to-information bill. Bhaduri chides the government for not being bold and going far with both the EGS bill and the RTI bill; he feels that both are badly watered down. T.S. Srinivasan (Yale University) has responded; Prabhat Patnaik (Jawaharlal Nehru University) has written an op-ed questioning some of Srinivasan's views.

What do I think?

My initial reaction was: though it is a good scheme, can we afford it? First, let us start with some (necessarily approximate) numbers: EGA will require (about 5 crore families x 100 days x 100 Rupees per day per family) Rs. 50,000 crores (Rs. 500 billion, or about 10 billion dollars, or about 2 percent of our GDP). Admittedly, his amount is staggering; if we further consider the possibility that 5 crore might be an underestimate of the actual number of needy (really poor) families, it is truly forbidding. My initial worries about whether we can afford such a massive expenditure appeared valid.

Here is how this large amount comes down to a more reasonable figure: (a) we could club all the previous schemes for poverty alleviation, and bring them under the EGA umbrella, we probably are going to save Rs. 15,000 crores. (b) the cash component of EGA is only 60 percent of the expenditure (with foodgrains contributing the rest). Both these considerations bring the "really new" (read additional) spending down to Rs. 21,000 crores, or just under 1 percent of GDP.

There are the usual questions: will this money actually be put to good use, will our politicians play ball in a fair manner (or are they already smacking their lips at the prospect of appropriating all this money?), are there better uses for this money, etc. If we still want to rein in our fiscal deficit, where should we try to get the additional revenue from? They are all good questions, and I hope economists and other social scientists who are grappling with them will find the right (or optimal) answers.

From a humanitarian angle alone, it is clear that EGA has its merits. Its potential benefits are truly immense: so many poor families are helped, so many children will not need to go to work, so much of foodgrains (that are otherwise rotting or eaten by rats) will be put to good use, and so on. In addition, so much of rural infrastructure will get a boost (rural roads, irrigation facilities, sanitation facilities, etc). Migration from rural regions to urban centers will come down. etc, etc.

I have not seen good arguments against the scheme, only some rants about how it will not work, how our politicians cannot be trusted with it, how we cannot afford it, etc. Atanu Dey even "[goes] out on a limb and predict that if ever this EGA is implemented, it will actually increase the level of poverty and the number of poor in India". However, he hasn't (so far, at least) given any economic / political arguments to show that his dire predictions have a greater likelihood of coming true.

Even to a conservative economist, it must be clear that EGA rests not (entirely) on economics, but on politics. Given the political driving force behind it, conservatives are probably better off by conceding this one to the lefties, and put up a fight at two levels: one is a fight in which they trade EGA for something that is very dear to them (such as, (a) getting rid of subsidies for kerosene and LPG, and in one stroke, getting rid of administrative pricing of oil and oil products completely, (b) reforms of the power sector, (c) privatization of PSU's, etc.), and the other is a more serious fight to create a good system of delivering on EGA's promises with as little a wastage as possible. For example, which level of government is best suited for implementing EGA? What are the ways in which EGA programs can be made self-selecting (i.e., only those whom EGA is meant to help will actually come forward to work under EGA)?

One final thought: many of the arguments about EGA were trotted out when the (rather limited, or should I say "targeted") mid-day meal scheme that existed in Tamil Nadu in the seventies was expanded to a near-universal status by the then Chief Minister M.G. Ramachandran. Tamil Nadu is not exactly a heavenly place now, but much of the progress (particularly in educating its girl children) it has made in terms of development indicators has been attributed to that one program.

Update (23 Jan 2005): Rajiv Dawan supports a scheme that guarantees employment to the rural folk. He argues, quite convincingly too, that the current Bill dilutes this goal in many ways. He concludes the article with this:

National guarantees for the poor cost money, for which the poor agree to work on public projects at minimal wages. If designed properly, the NEG Bill will be a landmark. Otherwise, at the next election, the UPA Government will learn the consequences of making false promises to the voting poor.