It’s Time to Tax Us More: An open letter in support of wealth Tax

JUNE 24, 2019

Note: The following nonpartisan letter is written in support of a policy solution, and cosigning this letter does not represent an endorsement of any presidential candidate.


2020 Presidential Candidates

We are writing to call on all candidates for President, whether they are Republicans or Democrats, to support a moderate wealth tax on the fortunes of the richest 1/10 of the richest 1% of Americans — on us. The next dollar of new tax revenue should come from the most financially fortunate, not from middle-income and lower-income Americans.

America has a moral, ethical and economic responsibility to tax our wealth more. A wealth tax could help address the climate crisis, improve the economy, improve health outcomes, fairly create opportunity, and strengthen our democratic freedoms. Instituting a wealth tax is in the interest of our republic.

Polls show that a moderate tax on the wealthiest Americans enjoys the support of a majority of Americans — Republicans, Independents, and Democrats.[i] We hope that candidates for President will also recognize the force of the idea and join with most Americans in supporting it. Some ideas are too important for America to be part of only a few candidates’ platforms.

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Macro-Economic Update February 13, 2020 

Macro-Economic Updates
Feb 13, 2020

Industrial output slumps to -0.30% in Dec’19

Industrial Production: After turning positive in Dec’19 to 1.82%, industrial output decelerated once again to -0.30% Y-o-Y in Dec’19 led by negative growth in manufacturing and electricity sectors. Output had grown by 2.53% in Dec’18. This is the fourth month of FY19-20 when industrial output has turned negative. However, the rate of deceleration is much slower than the previous contractions. Cumulative growth for the period Apr-Dec 2019 slowed to 0.55% as against 4.69% growth over the corresponding period of the previous year.

Manufacturing, Mining and Electricity:

Manufacturing sector which witnessed turnaround in output growth – 2.68% – third highest for FY19-20 – in Dec’19, contracted by 1.18% in Dec’19. It grew at 2.88% during the corresponding month previous year. Out of the 23 manufacturing sub-sectors, 16 sub-sectors recorded a negative output growth primarily led by contraction in output of Computer, electronic and optical products (-24.9% Y-o-Y); Machinery and equipment n.e.c. (-20.3% Y-o-Y) and Printing and reproduction of recorded media (-15.5% Y-o-Y), among others. Cumulative growth for the period Apr-Dec 2019 was at 0.53% compared to 4.71% growth in the period of Apr-Dec 2018.

Mining output was the saving grace as it expanded by 5.42% in Dec’19 compared to a contraction of -0.95% in Dec’18. It grew by 1.81% in the previous month. Cumulative growth for the period Apr-Dec 2019 was mere 0.58% compared to 3.09% in the period Apr-Dec 2018.

Electricity sector output continued to decline, though at a reduced rate, for the fifth consecutive month. It contracted by 0.13% in Dec’19 against -5.02% in Nov’19. Cumulative growth for the period Apr-Dec 2019 moderated to 0.70% compared to 6.41% growth in the period of Apr-Dec 2018.
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The World Economic Forum

The World Economic Forum is the International Organization for Public-Private Cooperation.

The Forum engages the foremost political, business, cultural and other leaders of society to shape global, regional and industry agendas.

It was established in 1971 as a not-for-profit foundation and is headquartered in Geneva, Switzerland. It is independent, impartial and not tied to any special interests. The Forum strives in all its efforts to demonstrate entrepreneurship in the global public interest while upholding the highest standards of governance. Moral and intellectual integrity is at the heart of everything it does.

The Forum is best known for its Annual Meeting in Davos-Klosters. Through the years, numerous business, government and civil society leaders have made their way to the high Alps to consider the major global issues of the day and to brainstorm on solutions to address these challenges.

Founder :

Professor Klaus Schwab was born in Ravensburg, Germany in 1938. He is Founder and Executive Chairman of the World Economic Forum, the International Organization for Public-Private Cooperation. An engineer and economist by training, Professor Klaus Schwab holds doctorates in Economics (summa cum laude) from the University of Fribourg, in Engineering from the Swiss Federal Institute of Technology, and a Masters of Public Administration from the Kennedy School of Government at Harvard University. In 1972 he became one of the youngest professors on the faculty of the University of Geneva.

Professor Klaus Schwab founded what was originally called the European Management Forum, as a non-profit foundation based in Geneva, Switzerland. It drew business leaders from Europe, and beyond, to Davos for an Annual Meeting each January.


Business Propaganda: Ludwig von Mises

Business Propaganda

The consumer is not omniscient. He does not know where he can obtain at the cheapest price what he is looking for. Very often he does not even know what kind of commodity or service is suitable to remove most efficaciously the particular uneasiness he wants to remove. At best he is familiar with the market conditions of the immediate past and arranges his plans on the basis of this information. To convey to him information about the actual state of the market is the task of business propaganda.

Business propaganda must be obtrusive and blatant. It is its aim to attract the attention of slow people, to rouse latent wishes, to entice men to substitute innovation for inert clinging to traditional routine. In order to succeed, advertising must be adjusted to the mentality of the people courted. It must suit their tastes and speak their idiom. Advertising is shrill, noisy, coarse, puffing, because the public does not react to dignified allusions. It is the bad taste of the public that forces the advertisers to display bad taste in their publicity campaigns. The art of advertising has evolved into a branch of applied psychology, a sister discipline of pedagogy.

Like all things designed to suit the taste of the masses, advertising is repellent to people of delicate feeling. This abhorrence influences the appraisal of business propaganda. Advertising and all other methods of business propaganda are condemned as one of the most outrageous outgrowths of unlimited competition. It should be forbidden. The consumers should be instructed by impartial experts; the public schools, the “nonpartisan” press, and cooperatives should perform this task.

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India’s External Debt Management – Major Policy Developments during 2018-19 and 2019-20 so far

External Commercial Borrowings (ECB) November 2018:

The Reserve Bank, in consultation with the Government of India, decided to reduce the mandatory hedge coverage from 100 percent to 70 percent for ECB raised under Track I of the ECB framework by eligible borrowers for a maturity period between 3 and 5 years.

January 2019: In order to rationalise the extant framework for ECB and Rupee Denominated Bonds (RDBs), the Reserve Bank, in consultation with the Government of India, decided to merge Tracks I and II as “Foreign currency denominated ECB” and Track III and RDBs framework as “Rupee Denominated ECB”. It was decided to include all entities eligible to receive FDI as eligible borrowers. Additionally, Port Trusts, Units in special economic zone (SEZ), Small Industries Development Bank of India (SIDBI), EXIM Bank, registered entities engaged in micro-finance activities, viz., registered not for-profit companies, registered societies/trusts/cooperatives and non-government organisations were also allowed to borrow under this framework.

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The Sveriges Riksbank Prize in Economic Sciences 2019

EXECUTIVE SUMMARY: Why poor families invest so little in preventive measures? One example is that staff at the health centres that are responsible for vaccinations are often absent from work. Banerjee, Duflo et al. investigated whether mobile vaccination clinics where the care staff were always on site – could fix this problem.  The result– Vaccination rates tripled in the villages.

14 October 2019

The Royal Swedish Academy of Sciences has decided to award the Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel 2019

to the following candidates

Abhijit Banerjee
Massachusetts Institute of Technology, Cambridge, USA

Esther Duflo
Massachusetts Institute of Technology, Cambridge, USA

Michael Kremer
Harvard University, Cambridge, USA

“for their experimental approach to alleviating global poverty”

Their research is helping us fight poverty:-

The research conducted by this year’s Laureates has considerably improved our ability to fight global poverty. In just two decades, their new experiment-based approach has transformed development economics, which is now a flourishing field of research.

Despite recent dramatic improvements, one of humanity’s most urgent issues is the reduction of global poverty, in all its forms. More than 700 million people still subsist on extremely low incomes. Every year, around five million children under the age of five still die of diseases that could often have been prevented or cured with inexpensive treatments. Half of the world’s children still leave school without basic literacy and numeracy skills.

This year’s Laureates have introduced a new approach to obtaining reliable answers about the best ways to fight global poverty. In brief, it involves dividing this issue into smaller, more manageable, questions – for example, the most effective interventions for improving educational outcomes or child health. They have shown that these smaller, more precise, questions are often best answered via carefully designed experiments among the people who are most affected.

In the mid-1990s, Michael Kremer and his colleagues demonstrated how powerful this approach can be, using field experiments to test a range of interventions that could improve school results in western Kenya.

Abhijit Banerjee and Esther Duflo, often with Michael Kremer, soon performed similar studies of other issues and in other countries. Their experimental research methods now entirely dominate development economics.

The Laureates’ research findings – and those of the researchers following in their footsteps – have dramatically improved our ability to fight poverty in practice. As a direct result of one of their studies, more than five million Indian children have benefitted from effective programmes of remedial tutoring in schools. Another example is the heavy subsidies for preventive healthcare that have been introduced in many countries.

These are just two examples of how this new research has already helped to alleviate global poverty. It also has great potential to further improve the lives of the worst-off people around the world.

Illustration: Difference productivity


Illustration: Improved educational outcomes


Illustration: Vaccination rates 



Popular science background: Research to help the world’s poor

Scientific Background: Understanding development and poverty alleviation

Abhijit Banerjee, born 1961 in Mumbai, India. Ph.D. 1988 from Harvard University, Cambridge, USA. Ford Foundation International Professor of Economics at Massachusetts Institute of Technology, Cambridge, USA.

Esther Duflo, born 1972 in Paris, France. Ph.D. 1999 from Massachusetts Institute of Technology, Cambridge, USA. Abdul Latif Jameel Professor of Poverty Alleviation and Development Economics at Massachusetts Institute of Technology, Cambridge, USA.

Michael Kremer, born 1964. Ph.D. 1992 from Harvard University, Cambridge, USA. Gates Professor of Developing Societies at Harvard University, Cambridge, USA.

The Prize amount: 9 million Swedish krona, to be shared equally between the Laureates

Today’s Nobel citation explains:

“More textbooks per student did not improve average test scores, but did improve test scores of the most able students. Giving flip charts to schools had no effect on student learning. The two health interventions reduced school absenteeism, but did not improve test scores. In theory, the incentive program could lead teachers either to increase effort to stimulate longterm learning or, alternatively, to teach to the test.

The latter effect dominated. Teachers increased their efforts in test preparation, which raised test scores on exams linked to the incentives, but left test scores in unrelated exams unaffected.

A field experiment by Kremer and co-author investigated how the demand for deworming pills for parasitic infections was affected by price. They found that 75 per cent of parents gave their children these pills when the medicine was free, compared to 18 per cent when they cost less than a US dollar, which is still heavily subsidised. Subsequently, many similar experiments have found the same thing: poor people are extremely price-sensitive regarding investments in preventive healthcare.

Low service quality is another explanation why poor families invest so little in preventive measures. One example is that staff at the health centres that are responsible for vaccinations are often absent from work. Banerjee, Duflo et al. investigated whether mobile vaccination clinics – where the care staff were always on site – could fix this problem. Vaccination rates tripled in the villages that were randomly selected to have access to these clinics, at 18% compared to 6%.”

Indian Economy and Market [Current Status]

Policy Repo Rate : 6.00%
Reverse Repo Rate : 5.75%
Marginal Standing Facility Rate : 6.25%
Bank Rate : 6.25%
CRR : 4%
SLR : 19.00%
Base Rate : 8.95% – 9.40%
MCLR (Overnight) : 8.05% – 8.50%
Savings Deposit Rate : 3.50% – 4.00%
Term Deposit Rate > 1 Year : 6.25% – 7.50%
Money Market
Call Rates : -% *
* as on previous day
Government Securities Market
7.17% GS 2028 :7.5621%
91 day T-bills : 6.3149%*
182 day T-bills : 6.4159%*
364 day T-bills : 6.4459%*
* cut-off at the last auction
Capital Market
S&P BSE Sensex : 39275.64 *
Nifty 50 : 11787.15 *
* as on previous day

Source : RBI

India’s External Debt as at the end of March 2018

Date : Jun 29, 2018

As per the standard practice, India’s external debt statistics for the quarters ending March and June are released by the Reserve Bank of India with a lag of one quarter and those for the quarters ending September and December by the Ministry of Finance, Government of India. The external debt data as at end-March 2018 in rupees and US dollars as well as revised data for earlier quarters are set out in Statements 1 and 2, respectively. The major developments relating to India’s external debt as at end-March 2018 are presented below.Continue Reading

Components of The National Wealth

Gross domestic product (GDP) as an indicator of a countries economic progress, but not wealth—the assets such as infrastructure, forests, minerals, and human capital that produce GDP.

The wealth of a country or a Nation can be estimated as the sum of three major components:

Natural capital or Resources- It is calculated as the sum of the stock value of the renewable and non – renewable resources (pasture land, agricultural land, protected areas, oil, coal, natural gas, minerals). Renewable resources—agricultural land and forests and protected areas—can produce benefits in perpetuity if managed sustainably.
In low- and middle-income countries, the monetary value of renewable assets more than doubled, keeping up with population growth on average, which is good news, with greater gains in value of agricultural land than forests.

Produced assets – It represents the sum of the value of a country’s stock of machinery and equipment, structures and urban land.
Human resources- They consist of “raw labor,” determined mainly by the number of people in a country’s labor force; human capital and an important element known as social capital. The concept of human capital wealth differs from that of human development or human capabilities. The term “capital” denotes a resource that can be used for economic production. A good education has an intrinsic value apart from the fact that it helps workers be better paid. Good health also is beneficial in itself, independent of its impact on production and wages. The estimation of the human capital wealth of countries is based on wage regressions used to compute expected earnings for individuals over their lifetimes by gender, age, and education level. Labor force and household surveys are used to measure the number of workers according to age, sex, and education level, as well as their earnings.

World Bank published a project to measure economies by wealth, to get a more complete picture of a nation’s health, both in the present and the future. The Changing Wealth of Nations analyzes the wealth of 141 countries, from 1995 to 2014. “A country’s level of economic development is strongly related to the composition of its national wealth,” the report states.

It is said, for most countries GDP is strongly correlated to wealth.

Between 1995 and 2014, global wealth grew by two-thirds (66 percent), but population grew by 27 percent, so that the net increase in per capita wealth was only 31 percent (figure 2.7 and map 2.1).

It is observed that a business is always evaluated by both its income statement and its balance sheet1 (assets and liabilities, or wealth). Similarly, a prospective homeowner can obtain a mortgage only by demonstrating both his or her income and net assets— income in any given year can always be made to look good by selling off assets, but liquidating assets undermines the ability to generate income in the future; the true picture of economic health requires looking at both income and wealth. The economic performance of countries, however, is only evaluated based on national income; wealth has typically been ignored. Indeed, one of the primary motivations for the early natural capital accounting efforts in the mid-1980s was concern that rapid GDP growth in resource-rich countries was achieved through liquidation of natural capital—a temporary boost to consumption that created no basis for sustained advances in wealth and human well-being (for example, Repetto et al. 1989). Monitoring wealth, including natural capital, was part of the solution to the challenge of long-term sustainability.