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June 22, 2017

Nearly 20% of McDonald’s will have electronic kiosks by the end of 2017

Filed under: Economics — Razib Khan @ 9:56 pm


McDonald’s hits all-time high as Wall Street cheers replacement of cashiers with kiosks:

Andrew Charles from Cowen cited plans for the restaurant chain to roll out mobile ordering across 14,000 U.S. locations by the end of 2017. The technology upgrades, part of what McDonald’s calls “Experience of the Future,” includes digital ordering kiosks that will be offered in 2,500 restaurants by the end of the year and table delivery.

There are 14,500 locations. Right now 500 stores have kiosks.

June 17, 2017

Amazon purchases whole foods and the distribution channel comes to you

Filed under: Amazon,Economics,Whole Foods — Razib Khan @ 8:07 am

The purchase of Whole Foods by Amazon has sent grocery store stocks into tailspin. Could Amazon do to Safeway and Korger what it did to Borders and Barnes & Noble?

Some people have observed that the purchase impacts the nascent grocery delivery sector more than the established supermarkets. That was my first thought. For me Saturday used to involve a trip to Whole Foods. But not anymore. Basically I use Instacart. (I can’t use Amazon Fresh because it doesn’t delivery to where I live. For now….)

Because Amazon is such a monster of a company people are talking about grocery stores as the underdog in this new war. But the reality is that what we think of “grocery store” is something far different from what someone in 1900 would have imagined. Americans today assume that the supermarket is synonymous with groceries. But supermarkets as institutions are economic innovations which date to the 20th century. The rise of the sector by showcasing its pioneering firm is detailed in The Great A&P and the Struggle for Small Business in America. As the title makes clear the rise of supermarkets resulted in a massive creative destruction in the American economy and culture.

Before A&P reimagined the profession being a grocer was a way for working class men to have a job that could support a family and give them some independence. But as the supermarkets cannibalized small grocers, men who had run their own businesses became employees in large corporations. Entrepreneurs became clerks. Creative destruction also worked so that eventually A&P was marginalized by new-model supermarkets that catered to suburban families. Today Walmart and Whole Foods have been attacking the low and top ends of the market and squeezing out smaller players.

Walmart’s battle from the bottom-up seems to have beaten Whole Foods’ premium strategy. Amazon’s purchase makes sense since Whole Foods has some assets major it can bring to the battle, but Walmart scale just too much for them to tackle.

As we all know the retail sector is changing. Half of millennials now buy groceries online at least some of the time. Malls are closing as their anchor department stores struggle. Where would a modern day Tiffany do her tour? Obviously it’s YouTube.

But that doesn’t mean that people won’t venture out. Upscale retail plazas are replacing the role of malls. Independent bookstores are still around, while Borders is gone and Barnes & Noble is a shadow of what it was. The positive aspect of the death of bricks and mortar retail is that we spend less time out and about on errands. Rather, we go out to eat at a restaurant, or meet friends in the park or at a bar. The downside is a smaller and smaller set of firms are dominating the supply chains between producers and consumers. I think Amazon will be targeted by antitrust considerations in the 2020s.

May 30, 2017

The material over the ideological

Filed under: Economic History,Economics,History,Max Weber — Razib Khan @ 11:42 pm

I come not to praise or bury Max Weber. Rather, I come to commend where warranted, and dismiss where necessary.

The problem as I see it is that though a meticulous scholar, Max Weber is the father of erudite sophistry which passes as punditry. Though he was arguably a fox, his genealogy has given rise to many hedgehogs.

Weber is famous for his work on relating the Protestant ethic and capitalism (more precisely, Calvinism). In general I think Weber is less right than he is wrong on this issue. But the bigger problem is that Weber’s style of interpretative historical analysis also has spawned many inferior and positively muddled imitators, whether consciously or not.

To my mind the problems with Weber’s sweeping generalizations, interpretations, and inferences, are clearest on the topic of China. His assertions on the nature of the Chinese mind informed by Confucianism, and how it would relate to (and hinder) modern economic development are very hit or miss.

By the end of the 20th century things had changed in terms of the perception of how Confucianism might relate to capitalism. In the 1990s Paul Krugman famously argued that the East Asian economic miracle did not have to do with a particular model or cultural genius, but simply increases in capital investment and labor force participation (factor inputs). This was too stylized a fact. Though growth has slowed, I think it is undeniable that East Asian economic modernity is here to stay.

And some of that may be attributable to Confucianism in a distant causal sense, because the cultural sensibility does encourage the development of broad-based literacy through self-cultivation. In Strange Parallels Victor Lieberman notes the contrast between Vietnam, with its more Sinic cultural orientation, and the rest of Southeast Asia, with their Indic Theravada Buddhist cultures.

The Vietnamese elites’ orientation toward Confucianism meant that there was stratification in society, as there were constant upward and downward movements across class. The chasm between the Confucian literati and the peasantry was large. In contrast in Cambodia popular religion was relatively unifying due to its accessibility. But it is notable to me that Vietnam in particular is often perceived by those who travel in Southeast Asia to be an industrious and striving nation.

So yes, culture may matter. But simple economic forces, and material conditions, are incredibly important, and our understanding of their origins are more mysterious than we’d like to think.

This is on my mind because of the recent evidence of the power of the slave trade in the Islamic world. Islam gets a bad rap in relation to slavery. This is justified, as Muslim nations have been, and are, the most prominent perpetuators of institutional chattel slavery* in the modern and near-modern world. But it is also correct that in many ways de jure Islamic law gave slaves a degree of dignity and human rights which would not have been called for in Classical antiquity. Though the reality is slaves were often part of the Roman familia in many cases, ultimately they were still human tools, to be abused and disposed as one would domestic animals.

But the genetic data seem clear that African slavery increased greatly during the Islamic period, resulting in a much more human agony, as so many of the slaves died en route (males who were to be eunuchs had a high mortality rate as they had to be castrated before entering Muslim lands). This had nothing to do with the cruelty of Islam per se, but the overall development and advancement of the Eurasian oikoumene, and the role of African slave labor in its post 1000 A.D. economy.

In fact one might argue that the unity of the Islamic world, and its relatively uniform legal and cultural superstructure after the collapse of its political unity, was a factor in fostering the rise of the global slave trade. That is, Islam generated asabiya, social solidarity, within the group, but this ultimately was to the detriment of those who were outside of the group.

A similar story can be told about the New World slave trade. It flourished in the wake of the Reformation and the Renaissance, and just as European society was undergoing a cultural revolution which would usher in modernity. If one looked at the nature of European society in the 17th century, and its increasing moralism, and focus on personal piety, probity, and humanity, would we predict the expansion and scaling up of the European slave trade? No.

That dynamic was driven by economics (in the American case, the triangle trade).

Similarly, the mortality rates of slaves varied greatly by locale and the what they cultivated. The sugar islands were death traps. The rice farmers of coastal South Carolina lived relatively stable lives, even comparable to serfs. Those who grew tobacco were somewhere in the middle. All were under English jurisdiction. The mortality of Brazilian slaves was high, but nominally Roman Catholic jurisdictions were subject to more humanitarian codes. But the primary determinants of mortality, of humanity, were economic. Material, even if ideological variables had an impact on the margin (Rodney Stark has argued that the French legal system was more humanitarian in Louisiana, and one can see this in various vital statistics).

Obviously ideological and material forces interact and influence each other. My point here is to observe that too often public commentary gets caught up on the idea of the great idea driving history. But once we have some distance it is often obvious that on the proximate scale many of the patterns we see are constrained, driven, and conditioned, on material forces and parameters.

And yet ultimately those material forces through gains in productivity relax tight the pressures which constrain ideologically driven change and revolution. Slavery for example was long considered an institution that would always be with us in some form, but over the past few thousand years most societies have frowned upon it. Slave societies, whether ancient Roman or in the antebellum South, develop an unhealthy paranoia. With modern technologically driven economic growth the possibility of a post-slave economy seemed plausible, and opened the window for a practical abolition.

And here we are!

* I said “institutional chattel slavery” specifically to head off annoying nit-picking comments. Please don’t.

May 6, 2017

Economic downturn in 2018?

Filed under: Economics,Recession — Razib Khan @ 12:49 am


We’re Getting Awfully Close to Full Employment:

The headline numbers for April are terrific. The economy added 211,000 jobs in April, and the unemployment rate fell to 4.4 percent. That is not just the lowest jobless rate in a decade; it also matches the lowest level reached during the mid-2000s expansion. The last time it was lower was May 2001, 16 full years ago.

A caveat is warranted, as labor force participation of prime age works (25-54) is still a few percentage down from its 2001 peak. This is not surprising, as I take the end of work seriously as a thesis. But, I have to admit that in 2008 we’d probably be surprised that nearly a decade of very modest economic growth on a yearly basis has led us here.

I remember listening to commentators in the dark years right after the financial downtown explaining how many quarters of job growth would be needed for us to reach ~4 percent employment. It just seemed implausible to them at that time, and I have to say that I probably agreed with them on some level. But here we are.

But whenever there is exuberance about full employment and trillion dollar companies I start to wonder if perhaps we’re living before the fall. Are we going to go into a recession soon? I suspected something was off in the spring of 2007…though my pessimism in 2012 didn’t seem to pan out.

April 16, 2017

In a hopeless world hope is better than resignation

Filed under: Economics,Economy — Razib Khan @ 11:59 pm

There’s really nothing one can say anymore about what Hugo Chavez did to his country, No Food, No Medicine, No Respite: A Starving Boy’s Death in Venezuela. But now in France a left-wing politician is on the rise who praises Chavez, Left-Wing Politician Shakes Up France’s Presidential Race:

That man is Jean-Luc Mélenchon, admirer of Fidel Castro and Hugo Chávez, sworn enemy of NATO and high finance, and candidate of his own “France Unsubjugated” movement, who has been drawing tens of thousands to his rallies, especially the young, as he did here Sunday at Toulouse on the banks of the Garonne River. They came to hear a veteran French politician give them a dousing of old-fashioned Robin Hood-revolutionary rhetoric, with promises to tax the rich hard, give to the poor and start a “citizen revolution.”

There is a serious chance that this will be the next president of the French republic. This man, who has no problems being called a Communist. If there is one political system where the experiment has been done, it is command economy socialism. There may be cases of market failure where the state needs to intervene, but by and large an economy dominated by the state has not done good for the common man.

And yet the reality is what alternatives are the people being given? They are looking Left and looking Right, because they want hope that the future will have some of the promise that the past had. Sober realistic centrists with broadly liberal views only offer them only hard truths.

Truths such as this: Evidence That Robots Are Winning the Race for American Jobs. The far Left anti-capitalist program in economics really doesn’t offer a long run path to prosperity. But capitalism itself only leads to individual and broad-based prosperity as a side effect of market logic. If returns to capital could accrue without labor inputs, then that would be even “better.”

September 8, 2012

The Europes

Filed under: Culture,Economics,Europe,geography — Razib Khan @ 9:48 pm

Planet Money recently did a report on the difficulty of maintaining high economic productivity in southern Italy. I won’t rehash the specifics of the story, but, I think it is important to get a visual sense of just how large the contrast between the south and north of Italy is. Too often we speak of nation-states. Nation-states are real, and they are important, but they are often not comparable. Just like comparing the USA to Sweden is only marginally informative, so comparing a small nation like Ireland to a more substantial one like Italy is deceptive. Here is a 2008 regional GDP map with sub-national breakdowns. Though some of the values are certainly lower now (basically, everything outside of Germany and Sweden), the relationships still hold.

There has been a gap between the north and south of Spain and England, as well as the west and east of Germany, but none of these are of the same magnitude of what you see in Italy (for one, southern Italy is much more populous than eastern Germany).  Sicily and the southern provinces are the poorest regions of western Europe. In contrast, the area ...

August 18, 2012

The economic correction

Filed under: Economics — Razib Khan @ 9:50 pm

Finally the social bubble seems to be bursting. Do remember that in 2000 there was backlash against Amazon as well, and it’s still around. Still, global oil demand level is low. Most people seem to agree that some of the “fixes” to the 2008 financial crisis were only band-aids, and the fundamental structural problems were put off for another day. Is that day now? Pessimism is cheap, but if you feel it, why not share it? I mused about a possible recession in May of 2007, and some of the comments were kind of funny and tragic. I’ll quote, with names removed to protect the guilty:

They’re practically glorified hiccups nowadays. I don’t get what the big deal is.

In a word, no. Unless you’re talking houses here in the Bay Area, but the “recession” is more like a return to a normal, vanilla market. All the economic signs I see look good. Krugman’s cat must be hurting.

The economy has been generally good, unemployment has been relatively low throughout. And so no, I don’t see the looming failure ecomomically.

I doubt it. People often react to one aspect of the economy without looking at the larger picture. Yes, there was an overextension ...

August 16, 2012

The trash index

Filed under: Economics,Economy — Razib Khan @ 11:04 pm

I heard about the chart above on Marketplace. Track enough variables, and you’ll find some which correlate well with GDP…until they don’t. So this is a neat story, but is it true? Well, I do accept the underlying logic here. So I’m hoping this is a statistical artifact of some sort….

July 1, 2012

Thinking like a behavioral economist (dentist edition)

Filed under: Behavioral Economics,Economics — Razib Khan @ 10:41 am

This clip with Dan Ariely telling off a dentist who tried to sell him on a more expensive item is classic. Would that we all behaved in such a manner, no? The problem when you interact with a particular set of professionals, in particular in healthcare, the information asymmetry is such that it is very difficult for you to make an informed choice as a consumer. I’ve had an experience very similar to Ariely with dentists.


The problem here though that is that dentists are professionals. In other words, they should be motivated by something other than the profit motive. Ergo, we (the public) confer upon the profession licensing for exclusive services. The problem is that professionals are not immune from incentives. On the conscious level it seems that professionals generally do perform services without the profit motive in mind (e.g., dentists and doctors encourage your toward good health).* The problem is that on the unconscious and implicit level is where subtle biases and preferences come to the fore.

Naturally professionals don’t want to admit that they have biases. I’ve listened to Dr. Thomas P. Stossel dismiss the possibility that gifts and perks by pharmaceutical companies might have an ...

January 3, 2012

Economic forecasters should put their $ where their mouth is

Filed under: Economics,Human Evolution — Razib Khan @ 1:24 pm

Happy Days Are Here Again! Don’t believe the naysayers: An economic recovery is right around the corner.:

Economic forecasting is a mug’s game. There are simply too many unknowable factors that affect “the economy” for anyone to make accurate predictions. The Fukushima earthquake and nuclear disaster, for instance, had a noticeably negative macroeconomic impact around the world, and nobody knows what lurks inside the hearts of central bankers. Plus, if I did possess the secrets to the future, I’d be making a fortune as a speculator, not telling you about it.

There are plenty of financial types who have funds where investment is contingent upon expectation of macroeconomic conditions. You know what they think because you know how they invest, and they’ll tell you what they think as well. What’s the point of journalists and academics even offering predictions if they don’t have “skin the game”? You can basically just say anything to be contrary, perhaps like in a publication such as Slate.


Here’s another anti-pessimism piece from Slate, No Pessimists Allowed! America’s economic recovery will be twice as big as experts predict. Date: January 2nd, 2010. With hindsight this was obviously unwarranted optimism. But how sure was the author, Dan Gross, about his prediction? It would be nice to get a sense if Gross had some put real money down on his predictions and made the values transparent. The amount of money would have given you a sense of the individual’s confidence in their proposition.

Of course, as Matt Yglesias says above why would he even publish his predictions instead of investing them? As Yglesias has said explicitly and implicitly he’s not a blogger for the money, he likes his job a great deal. He likes making predictions and performing rapid analyses. So that’s one reason why a Harvard grad with a degree in philosophy didn’t go to law school or into finance to make more money. But another issue here is that most journalists are probably not big enough individually to move the market. Therefore, their “small bets” would be a good gauge at least of how seriously to take any given prediction for their readers. Though obviously most readers aren’t interested in this stuff for truth. They just want to be entertained….

August 31, 2011

India vs. China

Filed under: Economics,India vs. China — Razib Khan @ 8:56 am

India Measures Itself Against a China That Doesn’t Notice:

“Indians are obsessed with China, but the Chinese are paying too little attention to India,” said Minxin Pei, an economist who was born in China and who writes a monthly column for The Indian Express, a national daily newspaper. (No Indian economists are known to have a regular column in mainland Chinese publications.)

Most Chinese are unconcerned with how India is growing and changing, because they prefer to compare their country with the United States and Europe, said Mr. Pei, a professor at Claremont McKenna College near Los Angeles. He says he has tried to organize conferences about India in China but has struggled to find enough Chinese India experts.

Liu Yi, a clothing store owner in Beijing, echoed the sentiments of a dozen Chinese people interviewed in Beijing and Shanghai, in dismissing the idea that the two countries could be compared. Yes, he said India was a “world leader” in information technology but it also had many “backward, undeveloped places.”

“China’s economy is special,” Mr. Liu said. “If China’s development has a model, you could say it’s the U.S. or England.”

The sentiments are real. But the Indian assumption that the difference is the governance style of China is false. It’s the aggregate difference in human capital.


The Indian elites have presided over a situation where their nation is the world capital of cretinism.

July 26, 2011

Ingenuity’s flight toward rents

Filed under: Culture,Economics,Intellectual property,Myhrvold,progress,science — Razib Khan @ 10:53 am

Andrew Oh-Willeke, Esq., observes:

One example of cyclicality that continues to today is the practice of law. The basic principles of Roman private law and the complaints that people made about lawyers and litigation were remarkably similar in the 300s to what they are today.

In the 6th century Justinian the Great sponsored a compilation of the body of law which was being widely practiced in the Roman Empire at the time, what is now known as the Corpus Juris Civilis. This is not an abstract or obscure point in the history of modern law:

The present name of Justinian’s codification was only adopted in the 16th century, when it was printed in 1583 by Dionysius Gothofredus under the title “Corpus Juris Civilis”. The legal thinking behind the Corpus Juris Civilis served as the backbone of the single largest law reform of the modern age, the Napoleonic Code, which marked the abolition of feudalism.

Imagine that the astronomical models of Ptolemy served as a basis for modern astrophysics! There’s only a vague family resemblance in this case. The difference is that law is fundamentally a regulation of human interaction, and the broad outlines of human nature remain the same as they ...

July 14, 2011

Geography is dead, long live geography!

Filed under: Economics — Razib Khan @ 9:24 am

Silicon Valley: Not Enough Of A Good Thing:

The right questions to be asking aren’t “why does Silicon Valley create so few jobs;” it’s “why doesn’t everyone move to the Bay Area” (the rent is too damn high) or “how come there’s only one high-tech cluster.” After all, if industrial age capitalism had just created the prosperity of the Detroit area in its heyday, we’d look on it as a huge bust. But we had lots of industrial production clusters, of which the Detroit automobile industry was just the most famous.

I think there’s a standard geographical reason why capital intensive production of material goods exhibits polycentrism: the cost of transport matters. Many of the early industrial nuclei were located relatively close to the inputs for manufacturing. Additionally, once the goods were produced they had to be distributed as cheaply as possible, so location was another essential fixed parameter. Big eastern industrial centers loom large in the public imagination, but the same logic applies in other regions of the nation. Cheap electricity and abundant clean water is why many tech-oriented manufacturers are based out of the Pacific Northwest. It isn’t as if you could just relocate the Columbia river.


July 6, 2011

The 2,500 year experiment with solid currency

Filed under: Cash,Currency,Economics,Finance — Razib Khan @ 8:30 am

This article in The New York Times focuses on cash in terms of paper currency, but the lessons are generalizable to coinage as well, which pre-dates paper currency by 1,500 years. Some fascinating numbers:

…In 1970, at the dawn of plastic payment, the value of United States currency in domestic circulation equaled about 5 percent of the nation’s economic activity. Last year, the value of currency in domestic circulation equaled about 2.5 percent of economic activity.

…Indeed, cash remains so pervasive, and the pace of change so slow, that Ron Shevlin, an analyst with the Boston research firm Aite Group, recently calculated that Americans would still be using paper currency in 200 years….

… Thanks to technological advances, the average dollar bill now circulates for 40 months, up from 18 months two decades ago, according to Federal Reserve estimates….

…. In 1989, the Fed replaced 46 percent of returned dollar bills. Last year it replaced 21 percent….


We don’t know if the United States of America will be around 200 years from now, so the question about the persistence of cash is rather moot in my opinion. But in any case, the marginalization of (relatively) untraceable cash for abstract monetary units of value ...

June 10, 2011

The future as India?

Filed under: Economics — Razib Khan @ 7:13 pm

I had the same reaction as Kevin Drum to this story, In India, Dynamism Wrestles With Dysfunction. Drum says:

Basically, Gurgaon has turned into something from a dystopian science fiction novel: an archipelago of self-contained corporate mini-cities that provide their own power, water, sewage, transit, postal service, schools, medical care, and security force. Meanwhile, everything in between is no man’s land. And growth has been spectacular.

I my pessimistic moments I wonder if the world will transform into what India seems to be becoming. Yes, developed societies have created relatively homogeneous pockets of middle class baselines, but we’re in the age of migration today. It seems possible that at some point cosmopolitan elites will simply force free labor movements as the new norm, resulting in massive spikes in inequality as the world reequilibrates, with labor moving where there’s demand.

It’ll be nice if my pessimism is totally unfounded. I think it might be. But if the cyberpunk future comes into being hopefully I’ll be well connected enough that my offspring can find a place in a safe private community.

May 28, 2011

The housing bubble vs. the financial crisis

Filed under: Economics,Google Trends — Razib Khan @ 8:26 pm

In the mid-2000s many regular folks knew that something was weird in housing. Of course everyone was aware that there was a short term windfall to be made if you could flip. But there were normal discussions about the bubble, and when it would burst, or if the weird arguments by some economists and the real estate industry that there wasn’t a bubble were true. In contrast regular people weren’t aware of the possibility of a financial crisis. I recall saying stupid things about the “Great Moderation,” parroting what I’d heard smarter people who I assumed knew better say, in the summer of 2008. Or take a look at some of the comments when I mooted the possibility of a recession in mid-2007: “They’re practically glorified hiccups nowadays. I don’t get what the big deal is.”

With that in mind I looked at Google Trends for two queries, “housing bubble” and “financial crisis.” The top panel is search query, and the bottom panel is news query. The financial crisis query is what you’d expect:

The housing bubble query is more interesting:

People ...

May 26, 2011

“Gross national happiness” in numbers

Filed under: Bhutan,data,Data Analysis,Economics — Razib Khan @ 11:34 pm

Bhutan famously espouses “gross national happiness”:

The term “gross national happiness” was coined in 1972 by Bhutan’s former King Jigme Singye Wangchuck, who has opened Bhutan to the age of modernization, soon after the demise of his father, King Jigme Dorji Wangchuk. He used the phrase to signal his commitment to building an economy that would serve Bhutan’s unique culture based on Buddhist spiritual values….

Apparently the nation has recent switched from absolute to constitutional monarchy:

Bhutan’s political system has developed from an absolute monarchy into a constitutional monarchy. In 1999, the fourth king of Bhutan created a body called the Lhengye Zhungtshog (Council of Ministers). The Druk Gyalpo (King of Druk Yul) is head of state. Executive power is exercised by the Lhengye Zhungtshog, the council of ministers. Legislative power was vested in both the government and the former Grand National Assembly.

On the 17th of December 2005, the 4th King, Jigme Singye Wangchuck, announced to a stunned nation that the first general elections would be held in 2008, and that he would abdicate the throne in favor of his eldest son, the crown prince….

From what I can tell the royal house of Bhutan seems genuinely sincere. More plainly paternalist ...

May 25, 2011

Against the “Thinking Machines”

Filed under: Economics,Finance — Razib Khan @ 12:08 am

Steve Hsu points me to this essay which discusses ‘high-frequency trading’, How to Make Money in Microseconds. This might elicit a takfir from my friends at the Singularity Institute, but that piece makes me less ill-disposed to a Butlerian Jihad. A lot of this stuff on the margins and frontiers of finance reminds me of intragenomic conflict or cancer; entities and phenomena which are generally proposed to serve as means toward particular ends develop their own internal logic and ends through a co-evolutionary “arms race” in their own domains.

Against the “Thinking Machines”

Filed under: Economics,Finance — Razib Khan @ 12:08 am

Steve Hsu points me to this essay which discusses ‘high-frequency trading’, How to Make Money in Microseconds. This might elicit a takfir from my friends at the Singularity Institute, but that piece makes me less ill-disposed to a Butlerian Jihad. A lot of this stuff on the margins and frontiers of finance reminds me of intragenomic conflict or cancer; entities and phenomena which are generally proposed to serve as means toward particular ends develop their own internal logic and ends through a co-evolutionary “arms race” in their own domains.

May 3, 2011

India, for the long haul

Filed under: Culture,Economics — Razib Khan @ 11:24 am

India Raises Interest Rates to Battle Inflation:

In a bid to rein in persistently high inflation, India’s central bank raised interest rates Tuesday more than analysts had expected and signaled that it would be willing to raise borrowing costs even further.

The action, which caused the country’s stock market to close 2.4 percent lower, will make it harder for India to achieve the 9 percent growth target set by the government for the current financial year, which ends in March 2012.

Growth is good, but sustainable growth is better. We know that well in the USA, where growth driven by property bubble and an ballooning financial sector has left us with a terrible hangover.

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