The Tale of the Gandhi Cap

A nice piece by M.S.S. Pandian of JNU in recent EPW edition.

He points how the humble Gandhi cap has made a comeback due to Anna movement and AAP surgence to power. But then given AAP’s performance, the rebirth time might be much smaller.

There are two interesting tales on Gandhi cap from history:

Let me share two Gandhi cap stories – both from Maha­rashtra, the home of Anna Hazare. In a prelude to the 1946 provincial election, B R Ambedkar visited Nagpur. Following his visit, a conference was organised to highlight the injustice faced by dalits. As Namdeo Nimgade, an Ambedkarite and a well-known agricultural scientist educated in the US, reminiscences in his autobiography, the dalit leader P N Rajbhoj told the audience, “The Congress Party is systematically trying to divide and rule the various Scheduled Caste groups… In recognition of their deceit, I declare that I will burn the sign of the Congress, the Gandhi cap.”

The gathering made a bonfire of their caps and Nimgade fanned the flames by throwing his father’s cap into the fire.

The election day too was eventful. It witnessed widespread caste violence. Nimgade tells us: “Several unfortunate individuals of all castes were trapped in the wrong place at the wrong time during the riots.”

One of them was an upper-caste man, Bhivapurkar Kosshti. He sought Nimgade’s help to survive the riot and bartered his cap for his life. Nimgade writes: “I felt sorry for him. I said, ‘Brother, if you wear your Gandhi topi here, you will not survive. Please give it to me.’ I took his Gandhi cap and escorted him to Baburao Meshram’s house and hid him there until the riot calmed down…”

From Nagpur, the scene shifts to Bombay, and the period from the 1940s to the 1950s. On the night of 20 November 1955, S K Patil, the president of the Bombay Pradesh Congress Committee, and Morarji Desai, the chief minister of Maharashtra, addressed a public meeting on the sprawling sands of Chowpatty beach. The gathering had no fewer than 1,50,000 people. The next day Bombay witnessed a general strike in demand of a united Maharashtra, egged on by both speakers who were arch enemies of the Samyukta Maharashtra movement.

The meeting was torn asunder, as stones were pelted and the uproar drowned the voices of the speakers. Around 100 people were injured, and half of them sent to hospitals. The next day – the day of the general strike – anyone wearing a Gandhi cap, the sartorial hallmark of Morarji Desai, was attacked.

So clearly in the two examples, those wearing Gandhi cap became the targets of dislike and attack. So there were moments when the humble cap wearers had just the opposite experiences.

The first one is really interesting as Gandhi cap was seen as a symbol of Congress. How AAP made this its own symbol (because Congress forgot it) is an interesting tale..

Other Than Economics !

Sometimes I feel like rejecting all economics related stuff and get onto figuring technology. After all much depends on how the latter can generate economic growth and future opportunities. The action always has been in new emerging technologies and how they can change things..

Edward Jung (earlier at Microsoft and now at Intellectual Ventures) argues why it is time to look at new metrics for economic growth. The problem is much of economic activity is getting centred around digital technology but latter is not being measured properly in traditional indicators:

“If you can’t measure it, you can’t manage it.” That is the wisdom behind metrics like gross domestic product and other aggregate indicators that signal the health of national economies around the world. Policymakers and planners have used these numbers for decades to help them understand how to guide domestic economic growth.

But reliance on GDP and other traditional indicators may be sabotaging a keenly sought goal: the development of thriving innovation economies. Today, some vital parts of the information-technology sector barely register in the national accounts. While GDP measures the market value of all goods and services produced within a country, many stars of the digital age (think Wikipedia, Facebook, Twitter, Mozilla, Netscape, and so on) produce no goods and provide free services.

These same star players also tend to undercut the productivity of traditional businesses. Free navigation apps have shrunk sales for Garmin, the GPS pioneer that was once one of the fastest-growing companies in the United States. Skype is killing the international phone call “one minute at a time.”

These developments point to the need for new growth metrics that recognize new kinds of enterprise. And, because these metrics concern innovation, they should be forward-looking as well. Policymakers need to understand how to establish, manage, and thus measure the conditions that encourage innovators to flock to a region and forge a prosperous future there. Innovation metrics must capture the value of new ideas years before those ideas become profitable in traditionally measured ways.

He says FDI too is a wrong measure as it does not push home country to innovate:

The need for such metrics is especially urgent in the developing world. Emerging economies commonly use foreign direct investment (FDI) as a yardstick to measure progress. That metric makes sense in the early stages of development: poor economies need foreign capital to build factories, train workers, and put money in the pockets of ordinary citizens.

But foreign investment most often goes to low-risk, low-margin projects: iron foundries, cement plants, and so forth. Innovation, by contrast, is a high-risk, high-reward effort. Even big multinationals do not put a lot of money into a new idea at first. Tomorrow’s most disruptive innovation may have no effect on FDI or GDP today.

Thus, for countries like China, India, and Brazil that are trying to jump-start their domestic innovation cultures, FDI targets actually prevent government planners from reaching out to the people and companies that are most likely to take creative approaches to problems.

We need a change in thinking:

So what does valuable innovation look like, in terms of macroeconomic data, years before it gives rise to the next Google, Bayer, Porsche, or Alibaba? What numbers best characterize a thriving innovation ecosystem in its birth stages?

We already know some of the essential ingredients. They include top-level talent, serial entrepreneurs with good track records, start-ups backed by reputable capital, and breakthrough products protected by intellectual-property rights. Analysts at my company recently investigated whether these ingredients could be quantified. Our preliminary results suggest that they can.

hFor example, we learned that five of today’s most successful start-ups in the information-technology sector had two attributes in common by the end of their third year in business: they had filed more than one patent and been funded by more than one top venture-capital firm. In subsequent years, these five companies’ cumulative revenue was six times higher than that of start-ups chosen at random.

Economists could extend such analyses to develop a set of key performance indicators for young innovation economies. Governments could then use these innovation metrics to identify start-ups, talent, and products with the strongest potential for future success. This approach could be applied to any high-tech incubator project – within or beyond the developing world – that currently measures success only in dollars.

Some countries are trying to include technology into the traditional world:

Changing how we think about economic value will not be easy. Yet countries where GDP has been flagging – an ever-increasing cohort – might welcome new metrics that can show signs of real progress. And there is a growing awareness among policymakers and planners that virtual assets like creative talent and entrepreneurial skill make up an increasing portion of a country’s wealth.

The US Bureau of Economic Analysis acknowledged as much last summer when it changed the definition of GDP to represent better the contributions of intellectual property and research and development to productivity and economic vitality. Broader efforts to reform GDP, including initiatives sponsored by the Organization for Economic Cooperation and Development and the European Commission, seek to encompass sustainability, living standards, and other important aspects of a country’s wellbeing. Groups like the Institute for New Economic Thinking are championing the study of innovation economics to provide data and analyses for these efforts.

In fact, metrics that help countries drive innovation could change our very understanding of economic growth. Governments want them, economies need them, and the global community will benefit from them. It is time for macroeconomics to measure up to the ambitions of twenty-first-century innovators.

Not sure whether flagging economies can be innovative.

But yes one gets the broad point. It is ironic that GDP includes things like financial activity which hardly count as real production but fails to incorporate technology which boosts much of it. Infact much of finance is now about technology these days..

I guess the broader question is always this – Why has economics developed into a way where we are pursuing so narrowly defined goals. I mean one did talk about things like technology and innovation earlier via likes of Schumpeter and so on.

Interesting viewpoint..

What Can We Learn From Honey Bees ? (Economics ?)

What a brilliant paper by Vesa Kanniainen of University of Helsinki, Tuula Lehtonen  of Finnish Beekeepers’ Association and Ilkka Mellin  of Aalto University.

      It tells you about so many things about economics using honeybees and their activity at the centre.       It tells you about economic systems, leadership, externalities (positive ones), work ethics and what       not:

For thousands of years, humans have known the value of honeybees in agriculture. Their pollination services are crucial for the mankind, the Global ecosystem and food production. The recently documented decline of the honeybee colonies in the world is alarming and may threaten the whole living nature. To develop a proper policy intervention, the economic analysis can be employed to develop Honeybee Economics. Such an endeavour reveals striking efficiencies of honeybee societies in terms of division of labor, the pleasure of work, career development, information sharing, and extreme altruism. A communist society, however, comes at a cost. Strict policing in management of the genetic interest conflicts is unavoidable in terms of workers’ dictatorship with a rather limited power allocated to the Monarch.

In our paper, the economy of honeybees is analyzed in terms of an implicit labor contract with a farmer. It is a two-output economy: the honeybees not only produce honey but are engaged in Pareto-efficient exchange with flowering plants including procurer and provision of pollination services. This benefits the whole nature. Markets for pollination services exist only in limited areas, for example in the Western United States. The missing market makes the pollination an externality. In their principal-agent relationship with the farmer, the working effort of honeybees appears a virtue in the spirit of the Calvinist Ethics. The industry is subject of substantial risks. The risk aversion creates a wedge between the expected market price and the production cost. The risks are reflected in volatility in the pollination services reducing the consumers’ welfare. Data on honey production, a complement to the pollution services, is used to examine the magnitude of risks and the potential cycles. Both the externality, the industry risks and the risk aversion speak for taxing consumers and subsidizing producers as the solution for the optimal tax problem.

Though the paper is on technical side. However, students could be given this paper in the class to work simultaneously on econ and math lessons. The paper moves interestingly from one aspect of honeybee economics to other ….I would love to be part of such a class and sort some math..

(excerpt from Amol Gupta's Article)