Wednesday, May 7, 2014

Whence Kshama

It was popular in the 1970s to say that America had given Britain the worst of its culture--Rock 'n Roll, Kentucky Fried Chicken--in exchange for the worst of its economics--Marx-Engels, Keynes. Today America imports its bad economics ideas from India (via North Carolina State University). And they are truly bad ideas, as this Financial Times piece by Victor Mallett and James Crabtree details;
Onerous labour laws have been a particular burden. The much-feared postwar Industrial Disputes Act requires companies with more than 100 employees to ask permission to lay off workers – permission that is almost never given, making hiring and firing all but impossible for larger enterprises. “It is India’s great paradox,” says Mr Subramanian, who once co-wrote a paper examining the phenomenon with Raghuram Rajan, now head of the Reserve Bank of India. “Essentially, India managed to make the relative price of skilled labour cheaper, and unskilled more expensive, which is highly unusual.”
Pretty much where Seattle is headed with its proposal to outlaw labor that is not productive enough to generate a wage of $15 per hour.

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