India scraps its two largest rupee notes in shocking anti-corruption move

As we had often come back to discussing economic benefits/impact of sports I thought it was about time for an economic discussion forum.
User avatar
prasen9
Member
Member
Posts: 12165
Joined: Thu Jan 02, 2003 8:49 pm
Please enter the middle number: 1
Location: State College, PA
Contact:

Re: India scraps its two largest rupee notes in shocking anti-corruption move

Post by prasen9 » Sun Sep 03, 2017 9:51 pm

Atithee wrote:
Sun Sep 03, 2017 9:30 pm
And, the bhakts will continue to show their bhakti.

I think people's political biases do not change through dialogue.
I hope this forum is better than that!
I really don't think so. We are human beings with all their flaws and virtues. I do not know why we are exceptional on this forum even allowing for our self-selection biases. Behavior and beliefs are very had to change --- psychologists have found that time and again. I will find a good summary of the findings sometime later and post. In the meantime, here are two articles which says how we may be able to change people's thinking. I don't think simple dialog will work. I have seen nobody's political position change over the years except in small, natural ways on this forum. You can predict who will hate and who will show bhakti in the next big political argument.

Shifting opinion.
Surprising way to change political opinions.
Regardless, not even knowing if I'm considered a Bhakt, my position is focused on the action and results, not whodunnit. I would have felt the same no matter which government executed it. And I was there in the peak days. So, I speak with some experience as far as the pain of the common person is concerned.
I think this is the same with the haters. Regardless of whether the haters are considered haters, their position is also focused on the action and results, not whodunit. Notice, the articles all talk about demonetisation being a failure and not about Modi being a failure. And, most of who wrote these articles would have done it irrespective of the government who executed it. Steve Forbes is not a Congress party sycophant, I believe. Neither are most of the economists who think that demonetisation is not a good policy because the crooked always find a way to whitewash their money. The argument saying, "Look the money is white now" is bizarre. You can achieve that by providing full amnesty. If you say, "Okay, in the next three months, anyone can come and deposit any amount of money and they will not be prosecuted or asked to pay any tax", you bet that there will be no black money left. But, the point is not to launder the money. The point is to collect taxes on it and to catch the criminals. Did we achieve that in this case? I believe the answer is no. They used other people to launder it and gave those people a very small % --- say a few hundred rupees in some case. Much much smaller than their tax liabilities.

It is hard for me to believe that the shock to the system where the money was sucked out and the money-based economy came to a standstill somehow did not affect economic activities. It is like a partial bandh.
And I was there in the peak days. So, I speak with some experience as far as the pain of the common person is concerned.
So, were several of the authors who wrote critical articles.

I do not ever believe some action is a total failure or a total success even if I may write against or for it. Every action results in pros and cons. The question is whether it has done more good than bad in the balance. Whether we are better off or worse is also difficult to tell even after a century. That is because the variables are so intertwined that you never know what caused what and what caused a cascading effect, etc. This is why I like mathematics and not the messy real world :-)

User avatar
Atithee
Member
Member
Posts: 3188
Joined: Tue Feb 20, 2007 9:14 pm

Re: India scraps its two largest rupee notes in shocking anti-corruption move

Post by Atithee » Sun Sep 03, 2017 10:21 pm

Is statistics and probability a part of mathematics?

User avatar
prasen9
Member
Member
Posts: 12165
Joined: Thu Jan 02, 2003 8:49 pm
Please enter the middle number: 1
Location: State College, PA
Contact:

Re: India scraps its two largest rupee notes in shocking anti-corruption move

Post by prasen9 » Sun Sep 03, 2017 10:58 pm

I would say probability theory is mathematics. Statistics is possibly not math. In the sense that it has some "engineering" aspects to it especially when we are making some simplifying assumptions to come up with a mathematical framework.

User avatar
jayakris
Moderators
Moderators
Posts: 23584
Joined: Mon Dec 16, 2002 7:24 am
Please enter the middle number: 1
Location: Irvine, CA, USA
Contact:

Re: India scraps its two largest rupee notes in shocking anti-corruption move

Post by jayakris » Sun Sep 03, 2017 11:22 pm

prasen9 wrote:
Sun Sep 03, 2017 9:24 pm
jayakris wrote:
Sun Sep 03, 2017 8:11 pm
people would riot out on the street. At least the students would. And nobody did. Instead they voted Modi's party in the largest state election in the world. So, I think this "people's pain" argument just does not wash.
By this logic, the Congress was voted into power for the greater part of 60-70 years. So, they must have done great! [Not, imho.] Elections are not always a true measure of progress, especially right away.
No, that was not my logic. I didn't say that you had to do anything great to get voted to power. If you did something to upset people, they would not vote you to power - and that would often be a proof that what you did was something bad. That has been true in the Congress' case too, as at the time of the emergency. Elections are not a measure of a progress, but serious negative actions do get punished by the Indian electorate. Otherwise they vote on the emotions of the time, knowing very well that none of the parties will seriously change bring any progress.

User avatar
prasen9
Member
Member
Posts: 12165
Joined: Thu Jan 02, 2003 8:49 pm
Please enter the middle number: 1
Location: State College, PA
Contact:

Re: India scraps its two largest rupee notes in shocking anti-corruption move

Post by prasen9 » Sun Sep 03, 2017 11:46 pm

jayakris wrote:
Sun Sep 03, 2017 11:22 pm
Elections are not a measure of a progress, but serious negative actions do get punished by the Indian electorate.
So, the Godhra massacre was not serious?

User avatar
Atithee
Member
Member
Posts: 3188
Joined: Tue Feb 20, 2007 9:14 pm

Re: India scraps its two largest rupee notes in shocking anti-corruption move

Post by Atithee » Mon Sep 04, 2017 12:08 am

prasen9 wrote:
Sun Sep 03, 2017 11:46 pm
So, the Godhra massacre was not serious?
Do you have anything else to cite?

User avatar
jayakris
Moderators
Moderators
Posts: 23584
Joined: Mon Dec 16, 2002 7:24 am
Please enter the middle number: 1
Location: Irvine, CA, USA
Contact:

Re: India scraps its two largest rupee notes in shocking anti-corruption move

Post by jayakris » Mon Sep 04, 2017 12:14 am

Atithee wrote:
Sun Sep 03, 2017 8:34 pm
As if on cue, I found this piece. There you have it "haters."

http://www.moneycontrol.com/news/busine ... picks=true
Thanks for finding that. That pretty much says what I was trying to articulate. Interesting to note that excise and other taxes have gone up significantly (shockingly?) even when everything was supposed to be on standstill. So maybe it is not just my hunch. A whole bunch of people got a bunch of money to spend and it is showing?

Anyway, what I don't understand is the urge to prove that this demonetization "failed". That too by saying that it didn't achieve much, and not by saying that it made things worse (the latter kind of criticism would've been acceptable to me, and would not be from just an anti-PM bias). Even those who opposed and continue to oppose it, are not saying that it did anything bad except for 6 weeks of serious inconvenience (and deaths). I can understand some - like Mugu, for instance - whose opposition was perhaps more due to being affected by the deaths and hardship. But the opponents never really said that it would leave us worse off in the long run, and are still not saying it. They are only saying that the achievement is not much, and that the PM could have done something else smarter and less painful. So, why the hurry in saying that it failed, when we know that it will take a while to know of any true positive effects?

The point is this. If what we have seen so far are pretty much the majority of the negatives we were in for, and we are seeing no indication that anything more negative is happening, then can't we just be hopeful that the positives from now onward will be substantial? Some folks are just pessimistic by nature, which I can understand, but some here are more than just pessimistic - they are even hoping for not much positive now and later. Or so it would seem...

By the same token, I am hoping for substantial rewards from all the money that turned white, and got accounted for, in the long run. Not because I care for Modi to get credit, but for the country's sake. And really, if we see income tax revenues go up due to an enlarged tax base and more economic activity down the line because of this, I probably wouldn't give Modi much credit for it, because he didn't really articulate it all too well, beforehand.

User avatar
prasen9
Member
Member
Posts: 12165
Joined: Thu Jan 02, 2003 8:49 pm
Please enter the middle number: 1
Location: State College, PA
Contact:

Re: India scraps its two largest rupee notes in shocking anti-corruption move

Post by prasen9 » Mon Sep 04, 2017 12:26 am

jayakris wrote:
Mon Sep 04, 2017 12:14 am
Interesting to note that excise and other taxes have gone up significantly (shockingly?) even when everything was supposed to be on standstill.
What is the year-to-year growth? And, what was it in the last 5-10 years on a year-to-year basis?

User avatar
jayakris
Moderators
Moderators
Posts: 23584
Joined: Mon Dec 16, 2002 7:24 am
Please enter the middle number: 1
Location: Irvine, CA, USA
Contact:

Re: India scraps its two largest rupee notes in shocking anti-corruption move

Post by jayakris » Mon Sep 04, 2017 12:30 am

prasen9 wrote:
Sun Sep 03, 2017 11:46 pm
jayakris wrote:
Sun Sep 03, 2017 11:22 pm
Elections are not a measure of a progress, but serious negative actions do get punished by the Indian electorate.
So, the Godhra massacre was not serious?
No, it wasn't. Not my personal opinion, but so it seems based on the voting behavior of the totality of Gujarat electorate, and maybe that of the whole country. Sad,when it comes to the aggrieved minority group, but so was the case. Democracy, after all....

So, it is true that there could often be serious negative repercussions of government actions on a smaller group of the electorate, and they cannot do anything about it at the ballot box. What I said really applies to serious negative effects felt by a majority of the electorate. That was the case after Emergency. In the case of demonetization, though, the argument was that poorer people were the ones who suffered. But then, they are indeed a huge majority of the voters, so if they were unduly negatively affected, it would indeed have shown in their voting. It didn't. So they probably were not affected too badly, I reckon. Thus my logic applies perfectly to the demonetization case.

User avatar
jayakris
Moderators
Moderators
Posts: 23584
Joined: Mon Dec 16, 2002 7:24 am
Please enter the middle number: 1
Location: Irvine, CA, USA
Contact:

Re: India scraps its two largest rupee notes in shocking anti-corruption move

Post by jayakris » Mon Sep 04, 2017 12:34 am

prasen9 wrote:
Mon Sep 04, 2017 12:26 am
jayakris wrote:
Mon Sep 04, 2017 12:14 am
Interesting to note that excise and other taxes have gone up significantly (shockingly?) even when everything was supposed to be on standstill.
What is the year-to-year growth? And, what was it in the last 5-10 years on a year-to-year basis?
I don't know. I had not looked into this, and was only reacting to the article that Atithee linked which said, "Tax revenue by the central government rose by 18 percent in the year to March 31, 2017 but central excise shot up by 33.9 percent and service tax collection was up by 20.2 percent at a time when the economy had come to a virtual standstill."

That sounded shocking to me. How?? I need to investigate more on this. It may be just the effect of significantly higher no-cash (credit card) transactions during the period, and may not mean anything much deeper.

User avatar
prasen9
Member
Member
Posts: 12165
Joined: Thu Jan 02, 2003 8:49 pm
Please enter the middle number: 1
Location: State College, PA
Contact:

Re: India scraps its two largest rupee notes in shocking anti-corruption move

Post by prasen9 » Mon Sep 04, 2017 2:45 am

Ok, but, even before that I want to know if this is surprising or a factor of higher tax rates, broadening the base, etc. And, the economy did grow by 5.7% --- which is not really standstill. So, I don't know how much to believe this guy who seems to have the agenda to prove the point from the other side. I usually do not call people names such as "hater", "leftist", etc. except in retaliation, but, I just don't know how valid his point is. I think calling people names and attacking the messenger is usually done by people who do not have a solid basis to argue. But, in this case, we need to investigate this claim. If indeed this claim is true, that *may* bolster the argument that it was not a useless exercise.
Last edited by prasen9 on Mon Sep 04, 2017 2:52 am, edited 1 time in total.

User avatar
prasen9
Member
Member
Posts: 12165
Joined: Thu Jan 02, 2003 8:49 pm
Please enter the middle number: 1
Location: State College, PA
Contact:

Re: India scraps its two largest rupee notes in shocking anti-corruption move

Post by prasen9 » Mon Sep 04, 2017 2:48 am

Atithee wrote:
Mon Sep 04, 2017 12:08 am
prasen9 wrote:
Sun Sep 03, 2017 11:46 pm
So, the Godhra massacre was not serious?
Do you have anything else to cite?
Didn't get that. Besides, to disprove a point, you need only one counter-example. I am not citing anything. I am arguing the assertion that elections punish seriously negative events. They do not. I have made my point and seen no argument yet against it.

User avatar
prasen9
Member
Member
Posts: 12165
Joined: Thu Jan 02, 2003 8:49 pm
Please enter the middle number: 1
Location: State College, PA
Contact:

Re: India scraps its two largest rupee notes in shocking anti-corruption move

Post by prasen9 » Mon Sep 04, 2017 2:50 am

jayakris wrote:
Mon Sep 04, 2017 12:30 am
prasen9 wrote:
Sun Sep 03, 2017 11:46 pm
jayakris wrote:
Sun Sep 03, 2017 11:22 pm
Elections are not a measure of a progress, but serious negative actions do get punished by the Indian electorate.
So, the Godhra massacre was not serious?
No, it wasn't. Not my personal opinion, but so it seems based on the voting behavior of the totality of Gujarat electorate, and maybe that of the whole country. Sad,when it comes to the aggrieved minority group, but so was the case. Democracy, after all....
I asked for your binary (yes/no) opinion. I know the history about the elections. Based on your answer, I will have to argue differently.
Last edited by prasen9 on Mon Sep 04, 2017 2:57 am, edited 1 time in total.

User avatar
prasen9
Member
Member
Posts: 12165
Joined: Thu Jan 02, 2003 8:49 pm
Please enter the middle number: 1
Location: State College, PA
Contact:

Re: India scraps its two largest rupee notes in shocking anti-corruption move

Post by prasen9 » Mon Sep 04, 2017 2:57 am

jayakris wrote:
Mon Sep 04, 2017 12:14 am
A whole bunch of people got a bunch of money to spend and it is showing?
Who got money to spend? I don't understand this assertion either. People who had black money gave some others a small amount of money to launder it. But, even after they have the new notes, it still remains black money. If they take it to the bank and deposit it, it will still be black money and they will be caught for having disproportionate assets in comparison to their stated income. On that money, they still have not paid the taxes. Demonetisation is not amnesty. How is the money white now?

User avatar
jayakris
Moderators
Moderators
Posts: 23584
Joined: Mon Dec 16, 2002 7:24 am
Please enter the middle number: 1
Location: Irvine, CA, USA
Contact:

Re: India scraps its two largest rupee notes in shocking anti-corruption move

Post by jayakris » Mon Sep 04, 2017 4:48 am

prasen9 wrote:
Mon Sep 04, 2017 2:45 am
Ok, but, even before that I want to know if this is surprising or a factor of higher tax rates, broadening the base, etc. And, the economy did grow by 5.7% --- which is not really standstill. So, I don't know how much to believe this guy who seems to have the agenda to prove the point from the other side. But, in this case, we need to investigate this claim. If indeed this claim is true, that *may* bolster the argument that it was not a useless exercise.
I really don't see much of an agenda in what he wrote. He seems to say both sides of the equation and generally give some facts. There have been a few articles like this lately, as I saw on a search I did just now. It seems there is now some awareness on some of these things about long-term benefits that was not covered well earlier. In fact, the economists from around the world attacking the demonetization seemed to entirely miss mentioning any of this, earlier. But then I have, from experience in my own field of study, come to not retain much of any respect for economists' big picture thinking; as looking at sub-systems with their pet theories and speaking in fake authoritativeness while being wholly clueless on the system-wide dynamics seems to be many an economist's specialty! But now, some people are indeed talking finally of the key point that money being accounted for and in the system could have an impact, regardless of whether the cheats were caught or not. "Well, duh!" was my response, as this is something that caught my fancy right from the beginning.

Here is an article from a couple of days ago that shows some views and counter-views on this. Good, bad, what the hell was that: Economists are still scratching their heads over demonetisation

I think the smart ones like PKB, who probably saw that things were not too simple in the big picture, generally didn't say a whole lot about it at first. I am curious what PKB thinks now, though.

Post Reply