[vrprabhu]

Originally Posted by SmartCat

..Debt to GDP ratio of up to 100% is fine (we have always been at 60 to 70% I think)..

Errr... any idea who will foot the higher 'interest cost' of the increased borrowings???

[AZT]

Originally Posted by SmartCat

- Higher inflation is an acceptable price to pay for growth

Posting something I read elsewhere. This is regarding the US but is also relevant for us. All else aside, Inflation ends up becoming a flat tax for everyone, which unfairly affects those at the bottom of the pyramid and senior citizens relying on their bank FDs for income.

Earlier, wages were able to increase nearly as much as the inflation rate. If the posted inflation rate was 6%, unions would demand 6% wage increases. A year later, with inflation running 8%, they demanded 8% wage increases. And so on. This increase in wages helped to keep the inflation game rolling along.

Today, wages are incapable of increasing because of a lack of unions, even more automation, and a global pool of workers all competing for jobs. As a result, there will be very little wage push inflation. Only those with highly desired skill sets will be able to command higher wages.

The monetary stimulus barely trickles down to the average person, so there is very little demand push inflation. Most of the monetary stimulus ends up in financial and housing markets, which are not reflected in the official inflation rate.
For the foreseeable future, there will be very little official inflation, even though prices of many things the average person actually purchases, will go up a little faster than the official inflation rate. Sadly, the average worker will likely not be able to keep up with those price increases because of an inability to get equivalent wage increases.

[warrioraks]

https://m.economictimes.com/news/eco...w/80679980.cms

Another decent article from ET. Talks about why the current budget might be a double edged sword.

[vrprabhu]

May be off topic, but still relevant to the discussions here, I think -

RTI reveals no officer of RBI has been ever been held accountable for any dereliction of duty in case of any fraud reported by any bank.

Plea filed by Subramanian Swamy in Supreme Court

Link to the news - https://www.barandbench.com/news/lit...e-rbi-officers

IL&FS saga is a mammoth 96,000 crore of funds borrowed from banks / FIs - ten times that of Kingfisher!! These unpaid borrowings will directly or indirectly hit the tax payer who will ultimately foot the bill (PSU banks will have to eventually write off the un-recovered debt out of their earnings, need more capital which will be funded by Government out of resources raised through taxation; Pvt. Sector banks also will write it off - they will try to protect their bottom line through lower interest rate on deposits, higher interest on loans, lower dividend - any or all of these combinations)

And, now, in this budget there is a report of starting DFIs - which is where what IDBI and ICICI originated!

[vrprabhu]

Originally Posted by vrprabhu

Errr... any idea who will foot the higher 'interest cost' of the increased borrowings???

^ Sorry for the back-to-back posts as well as quoting myself.

Here's what I meant -

Interest payments to be made during FY 2021-22 is expected to go UP by Rs. 12,00,00,00,00,000 = One lakh twenty thousand crore.... (are the numbers of zeroes correct? )



The capital expenditure is budgeted to grow by Rs. 11,00,00,00,00,000 = One lakh ten thousand crore....

[SmartCat]

Came across this new index called 'Social Mobility Index'. Apparently, this index tells you about the prospects of an individual who is born poor to come up in life. In other words, it gives a ranking of countries that offer equal opportunities for growth, irrespective of economic status of an individual.
https://en.wikipedia.org/wiki/Global...Mobility_Index

The index is based on these fundamentals for each country:



The three scandinavian nations top the list while the three South Asian countries are at the bottom.

[Jeroen]

Originally Posted by SmartCat

The three scandinavian nations top the list while the three South Asian countries are at the bottom.

It is an interesting index and very telling too.

Anorak fact: Geographically, there are 3 Scandinavian countries (Denmark, Sweden, and Norway).

Culturally, there are 6 Scandinavian countries Denmark, Sweden, Norway, Iceland, Finland and The Faroe Islands.

So geographically two Scandinavian countries made it it not the top three, where culturally five Scandinavian countries make up the top five.

Number 6; the Netherlands. The Dutch always got on well with the Scandinavian countries. There are many similarities in our general approach to how a society should look like/be organised.

USA on number 27! and China on number 45. Only 82 countries included. Look at the world map shown also, Africa in particular is hardly present, middle east too.




Personally I think this index stand for the level of equality in a country. Equality in just about anything will get you to to the top of the list. This is a good view of how prosperity or rather difference/bandwith spread of prosperity in a country.

Who will make the correlation to what kind of political regime these nations enjoyed over the last 4-5 decades?

Jeroen


Jeroen

[Samurai]

Originally Posted by Jeroen

Who will make the correlation to what kind of political regime these nations enjoyed over the last 4-5 decades?

There is no correlation. Communist/Oligarchy/Monarchy countries like China/Russia/Saudi are doing better than Democratic India, While most on top are again democratic.

[Jeroen]

Originally Posted by Samurai

There is no correlation. Communist/Oligarchy/Monarchy countries like China/Russia/Saudi are doing better than Democratic India, While most on top are again democratic.

Thanks, I was actually thinking more along the lines of social, social democratic, typical right / left wing, capitalism etc.

More importantly, this is just a status quo.

Its also relevant to understand how countries move up (in absolute sense, rather than relative position), because one could call that progress. What kind of political regime, approach to this topic is likely to get you the most progress over a period of time.

Its a shame so few African countries are listed. Some of them have made remarkable progress on some of these topics in a relatively short period of time.

Jeroen

[SmartCat]

Originally Posted by Jeroen

Its also relevant to understand how countries move up (in absolute sense, rather than relative position), because one could call that progress.

Do people in these "top" nations grumble about high taxes? I'd assume all the social security, health & education is funded via relatively high direct (income tax) and indirect taxes (VAT).

Its a shame so few African countries are listed. Some of them have made remarkable progress on some of these topics in a relatively short period of time.

There is no data on these countries. That's what the infographic says.

[Jeroen]

Originally Posted by SmartCat

Do people in these "top" nations grumble about high taxes? I'd assume all the social security, health & education is funded via relatively high direct (income tax) and indirect taxes (VAT).

Anorak fact: USA income tax is higher than Norway (top bracket!)

Here is an interesting comparison of Scandinavian tax systems versus USA

https://taxfoundation.org/how-scandi...ment-spending/

VAT is high in all of west Europe (effectively EU) with most goods it is around 21%! whereas in the USA it is very low, but it varies by state. I believe 5,5 -8% range on most products.

Grumbling about tax is pretty universal, irrespective of your actual tax rate I would say. I don’t have statistics or articles at hand. Based on my own experience I would say, not really though. In fact, this whole bitching about tax was quite the thing when we lived in the USA. A lot of friends were talking about tax. It was always amusing to tell them how little tax they actually pay compared to many other countries.

Also, to complicate it even further, most of these western/scandanavian countries have endless list of subsidies. So your nett tax rate can end substantially lower!. E.g. mortgage interest is fully deductible from income text. You get rental subsidy based on your income. You get child allowance, based on the number of children. There are allowances for different kind of family circumstances (e.g. single parent family), there are allowances for having mental of physical handicaps. The list goes on and on.

It would be interesting to see the same nations mapped out on topics such as happiness/wellbeing. A nation where most people are relatively happy, prosperous, where there is a feeling of equality across society is probably less likely to bitch about tax, because it is par for the course to a large extend.

Originally Posted by SmartCat

There is no data on these countries. That's what the infographic says.

Correct, it is just that I think there several African countries that have really done extremely well in the last couple of decades and it would be interesting to see that reflected. But alas, it is not to be.

Jeroen

[Hayek]

Originally Posted by Jeroen

It is an interesting index and very telling too.

So geographically two Scandinavian countries made it it not the top three, where culturally five Scandinavian countries make up the top five.

Number 6; the Netherlands. The Dutch always got on well with the Scandinavian countries. There are many similarities in our general approach to how a society should look like/be organised.

USA on number 27!
Personally I think this index stand for the level of equality in a country. Equality in just about anything will get you to to the top of the list.

No offence intended to the Dutch or Scandinavians, but having high social mobility and equality in tiny, ethnically homogeneous, nations is no big deal. The combined population of the Nordic countries is 27 mm - roughly the same as the NCR in India. Holland adds a lot to that - but is still smaller than even New Delhi city. We could always find a sub-set of 27 mm or 44 mm Indians - and find high social mobility there. The better way to look at social mobility is across the European Union as a whole - am sure they do much better than India (which is terrible from an overall mobility perspective) but they would probably be worse than the USA.

The fact is that the USA offers maximum social mobility - does anyone think Elon Musk (a South African immigrant) or Satya Nadella or Sundar Pichai could have made it as big anywhere in Europe bar the UK?

[Jeroen]

Originally Posted by Hayek

No offence intended to the Dutch or Scandinavians, but having high social mobility and equality in tiny, ethnically homogeneous, nations is no big deal. The combined population of the Nordic countries is 27 mm - roughly the same as the NCR in India. Holland adds a lot to that - but is still smaller than even New Delhi city. We could always find a sub-set of 27 mm or 44 mm Indians - and find high social mobility there. The better way to look at social mobility is across the European Union as a whole - am sure they do much better than India (which is terrible from an overall mobility perspective) but they would probably be worse than the USA.

Size is probably a factor to your point. But these numbers are collated based on countries. In many ways the country, its history, culture, political regime is what determines and controls this. EU or Europe is a hugely diverse set of countries (and the number of countries in the EU has changed over the course of the year.
Clubbing them together and see what the result is makes no sense to me.

These (country) index are a result of what happened in individual countries, large or small. What makes it interesting is to see what you can learn from those individual countries? What make it work for them.

Originally Posted by Hayek

The fact is that the USA offers maximum social mobility - does anyone think Elon Musk (a South African immigrant) or Satya Nadella or Sundar Pichai could have made it as big anywhere in Europe bar the UK?

You use social mobility in a different context here. Elon is a good example of how an individual can still make it big time. That is true in all of these nations. What the index is about is about the prospects of an individual who is born poor to come up in life. In other words, it gives a ranking of countries that offer equal opportunities for growth, irrespective of economic status of an individual.

If you are born in a poor black family you are at a disadvantage to a poor white, immigrant or otherwise. It is not about how many Elon’s a nation produces. It is about how many individuals get a decent chance to prosper.

There are those that will say it is all down to the individual. Personally I think differently.

Jeroen

[Samurai]

Originally Posted by Hayek

The fact is that the USA offers maximum social mobility - does anyone think Elon Musk (a South African immigrant) or Satya Nadella or Sundar Pichai could have made it as big anywhere in Europe bar the UK?

No, these are outliers. You can't make up indexes using outliers.

Once upon a time, US did have a high social mobility. In fact, the term American dream was coined because of it. That started eroding when Reagan started deregulating US financial system, and it kept getting worse. Before that college tuition & housing was affordable, middle class was very strong. Productivity went up, but real wage is going down.

https://www.weforum.org/agenda/2020/...ica-economics/

Now, more and more middle class have moved to poor class, and poor are becoming homeless. Most people come out college weighed down by severe education loan, which is very difficult to escape even bankruptcy. Home ownership has also become very expensive. In other words, someone from lower income family has high chance of becoming homeless and not going to college. What kind of upward mobility is that?

I was actually surprised to see US index still higher compared to India.

[Samurai]

Excess Energy deregulation led to the current disaster in Texas, and politicians want to blame every else.

https://www.youtube.com/watch?v=UAf4rHOTqtc