Economics, Politics and Other Earthly Matters

Decoupling…What Decoupling!

ameyashenoy — Tue, 22 Jan 2008 14:47:05 +0000

Last 7 days mayhem in the Indian stock markets prove that we live in a truly globalised environment …and a sneeze in US leads to pnuemonia in India…..Oh things will not be that bad….not beware that the environment maynot be rosy as well…..considering the Nifty we are back to levels seen in Aug-2007…and at that time decoupling hypothesis was in full flow and the global real economy scenario was fairly ok…..Now things are different….decoupling hpyothesis will be trashed by every economists and the global economic scenario is much worse to put at the best…..hence my take…Nifty needs to correct further to reflect fair valuations.

Thats me!

ameyashenoy — Fri, 17 Feb 2006 10:04:00 +0000

IMG_0610
Originally uploaded by Ameya Shenoy.

That’s me in front of the KLCC!

Just Moved to WordPress.org

ameyashenoy — Fri, 17 Feb 2006 09:03:00 +0000

Hi Guys, I have just moved to WordPress….and it rocks…..! Cheers

Using Elicit – Looks Cool

ameyashenoy — Fri, 17 Feb 2006 08:00:00 +0000

I am writing this on the Elicit client tool. It looks exceedingly cool and easy to navigate and use. Chill out !

Dollar In Dumps – Or Is It?

ameyashenoy — Wed, 04 Jan 2006 15:10:12 +0000

To all those who fear that dollar will go into dumps….sooner or later… Milton Friedman gives a cool behavioral twist to it……here

No doubt, that dollar is in a weak position due to the unsustainable BOP situation. But certainly all those who cry about dollar being potentially weak – due to the dollar holdings of central banks and a possibility of them dumping those dollars - may be wrong. What Friedman is saying is that dollar is going to be the reserve currency of the world – it better be, otherwise those who are long on the dollar (world central banks) will suffer, of course along with US.

But then everyone will go long on the dollar using this logic – someone should lose – the question is who?

Salaried Class: The Easy Prey

ameyashenoy — Fri, 23 Dec 2005 16:09:33 +0000

When there is an income tax, the just man will pay more and unjust less on the same amount of income. ~ Thus went Plato, commenting in The Republic. The statement holds true in the current millennia – as credible as it was 3 millenniums ago.

Taxation is an issue which is close to my heart. Here is a government in India, who taxes its people – honest, law abiding victims – just because its easy to tax them. Yes, I am talking here about the vast majority of the salaried class in India – the same people who bring up their children in an environment of family values and principles, the same people who slog for an entire lifetime to pay for education of their progeny, the same people who contribute towards the scientific and technological frontiers, the same people who follow laws and pay all their taxes in time. Yet we are the same people who over and over again milked by successive governments – to finance their own over-spending and of course cross subsidize in the process the people who do not pay tax.

Why us – why tax us all the time, the farmers are scot free! Even the large farmers – who claim a large part of the subsidies which our taxes finance – are not touched by the tax man. The business man claims too little income – never mind the fact that he charges most of his personal expense to the business and of course undervalues his business volume.

Why us – because we are the easiest to tax – remember TDS (Tax Deducted at Source). We are an easy prey, the sitting duck. We can’t even hold onto the full income even for a moment. The tax is deducted even before salary is paid to us. What about the other participants – the business class pays it at the end of year – or in quarterly installments and the farmers of course go scot free. And not to mention the class who thrives on black money - the parallel economy where there are no taxes.

Of course I sympathize with the plight of the marginal farmers and landless laborers. But that not the excuse of keeping the entire segment of the national economy out of the bounds of taxation. The popular excuse is that farmers through their own hard work,sweat and blood, help to feed us. Here I quote Adam Smith ~ It is not from the benevolence of the butcher, the brewer, or the baker, that we can expect our dinner, but from their regard to their own interest. One more popular excuse to keep agriculture out of bound of taxation is that food security is important part of our national security policy – if that was the case, Singapore should have put all their land to agricultural production lest some one refuses to supply them food grains. Yes! Yes I know that agricultural income is a State subject – yet no state government has the guts to tax that class ~ some may pay lip service by charging a nominal tax. And in any case the work we do as salaried class – is it any less productive than the effort of a rich farmer?

Of course, the press is full of reports of business class who underdeclare their incom, or regularly bribe the officials – a luxury that the salaried class does not have. I will not talk about them.

And why tax us – I quote here, Milton Freidman ~ Congress can raise taxes because it can persuade a sizable fraction (here the Parliament) of the populace that somebody else will pay. Our politicians consider us a dispersed lobby group without any lung power – its easier to ask such a group to sacrifice. What about the business man - he has the CII/FICCI or the SSI bandwagon – who present themselves before the finance ministry on eve of every budget.

According to the Budget Estimates 2003-2004, the direct tax revenue was expected to be to the tune of INR 101,306 crores – in the year in which our Net National Product at Current Prices was expected to be INR 2,252,070 crores. What is NNP – in simple terms – it is the total income of a nation.

This means our direct tax to NNP ratio was a measly 4.49% – strange when almost all of the salaried class pays around 15% effective tax on income. (15% is a guess – No data is available for this, hence had to use a guesstimate – but I think it is a pretty good fix, you can use anecdotal data – my father’s effective tax rate is close to 20%. In case of doubt do a random check on your family’s effective tax rate – and it will be close to 15%). Who else contributes to the National Product, of course the businessman, the trader, the industrialist, the farmers. The math is clear – are they paying a fair share of the tax – of course not. If that was the case, we would have seen the direct tax to NNP ratio close to 15%. If not 15% atleast close to 10%.

Some spin doctor will tell you that I have not taken the indirect taxes in this calculation – ask him to go take a hike – indirect taxes are paid by everyone anyways.

A conclusion – its simple – the salaried class pays the most of the tax – when the vast majority of the population goes largely taxed.

And I ask, inspite of paying tax – the full and honest tax, what do we get in return - we have to beg government officials to do their duty, the police regularly infringes on our rights. The grouse is unending – our transport sucks, the electricity doesn’t work half the time, the air is unclean, justice systems works at a snail’s pace. Ha! Taxes are not levied for the benefit of the taxed ~ Robert Heinlein in The Notebooks of Lazarus Long.

Can we suggest a solution – of course reduce the tax rate from 30% to a more realistic and compliable 15% or say 18% a flat rate. Using income tax as tool of the socialistic goal of income redistribution is a well acknowledged failure. And if the tax is used to balance the budget – then we better tighten our belts, especially those rotund politicians. A quote again, this time from Ronald Reagan ~We don’t have a trillion-dollar debt because we haven’t taxed enough; we have a trillion-dollar debt because we spend too much.

And of course a supplement to the solution suggested is: tax everyone – leave no one! After all we are all equal before law and Constitution!

A New Era in Employer-Employee Relationship

ameyashenoy — Thu, 22 Dec 2005 15:09:40 +0000

http://www.thehindu.com/2005/12/22/stories/2005122204091300.htm

This case is about a lecturer who was throw out of the college for gross indiscipline. In any earlier Court era, the lecturer would have been re-instated with back wages fully paid. That was the time for labor mutiny – the right of the labor to strike, act in an undisciplined manner and most of all take law unto their own hands. Court regiliously protected this right – over the past 40 years.

One of first cases in which Supreme Court has taken cognizance of the changed economic policy and ruled accordingly.

This case will bring a fresh set of precedents in support of the larger economic goals – where indiscipline can no longer be tolerated.

We can expect the Court now to take a harsh view of strikes, lopsided bargaining by the unions – hurrah to a more balanced approach to th union-corporate scenario.

To quote from the judgment ‘In view of the change in economic policy, it may not now be proper to allow employees to break discipline with impunity.’

MPLADS: Who are the cuplrits, us or them?

ameyashenoy — Wed, 21 Dec 2005 14:39:00 +0000

We normally hear the cliche ‘Government is not transparent’ in both press as well as in our coffee table discussions. Yet when we are provided information, we hardly bother to question our MPs about it.

This is an excellent site , which has kept information about all the MPLADs schemes proposed, sanctioned, completed, delayed etc. Reports can be generated MP/ Constituency wise. Go take a look – we are already empowered, what we need is the guts to question the elected officials. Or do we really lack the guts!

Of course, the information on the site, is provided with a time-lag, but then we all operate on IST, don’t we. Makes me wonder, who are the bigger criminals: the politicians or the citizens who inspite of having the information do not act upon it.

FREE ROADS AND COST OF TIME

ameyashenoy — Tue, 20 Dec 2005 15:38:32 +0000

http://cafehayek.typepad.com/hayek/2005/12/the_toll_of_eco.html

Most of us crib when it comes to paying for some service even if it means paying for a good quality road.

A model that is generally proposed by most economist is â€“ a two tier service model in which the first tier is free and accessible to all, and the second tier is where value added services are provided but at a cost. Or in the case of road, providing a free road but with a possibility of traffic bottlenecks as well as a toll road on which their in low probability of bottlenecks.

Even this kind of a model is opposed by all, including the poor. But as Don Boudreaux, in this blog post, rightly points out â€“ â€œproviding free access subsidizes those able and willing to pay.Âï¿½ Why do they [opponents of toll roads] like subsidizing the rich?”Âï¿½

Makes me ponder! What about you?

He makes very important point in the article. Even our so-called free road has a cost attached to it â€“ the cost of time wasted in the traffic bottlenecks. A toll paid gives a choice to persons who time value is more than the cost of toll to reach their destination faster.

Protectionism – A Petition of Candlemaker’s

ameyashenoy — Tue, 13 Dec 2005 11:28:00 +0000

This is an article of Frederic Bastiat – who was considered one of foremost economist-cum-journalist of the 19th century. A fitting rebutal of the protectionist cries of the 19th Century – it very much holds true even in today’s times…. Bombay Club… remember any one! Enjoy reading here .