3 pm, Jan 07 Jan 07, 2013
On his book 'The Wisdom of Ants - A Short History of Economics'
As the fable goes, in the summer when the ants were busy gathering food, grasshoppers lived a carefree life. Come winter, the ants lived off their store, while the grasshoppers were left starving. It appears that this lesson was eventually learnt by humans, who shifted from hunting and gathering to agriculture. The wisdom of ants that they borrowed did not end here but helped to lay the foundation of economics as a distinct discipline. This book takes the reader through the history of economics through the ages and the four major world civilisations: European, Islamic, Indian and Chinese, pointing out the ways in which we think of economics today were formed. In the process, Shankar Jaganathan asks us to question our ideas of the importance of these ideas and their ability to drive the world. Written in a lucid, easy style, with many historical examples, 'The Wisdom of Ants' views economic ideas through an ethical, social and political lens, allowing readers to understand the relevance of this history to their own daily lives.
13 questions answered | No question pending
- Does economic history help in explaining mass uprisings like the Arab spring? Asked by: Thinker
- Shankar Jagannathan Dear Thinker, I believe life has multiple stands of which economic thread is only one. When the economic conditions of a section of society is broken, the entire rope is cut resulting in mass uprisings. The Occupy Wall Street Movement has its origin in M16, a Spanish movement which is the result of high unemployment rates. This may be the reason why in bull markets we do not see uprisings but see it only in bear markets.
- Does our government are following any foot prints of your book. if no can you explain why they have failed. Asked by: sudheendra_sr
- Shankar Jagannathan Dear Sudheendra, GOI is not following any of my recommendations, which to name are three: 1. Inheritance tax to reduce economic inequality in society, 2. Universal social security net for all members of our society providing them good healthcare and education 3. Focusing on quality of life and not only on GDP growth. The success of these measures are visible in the Nordic countries who have adopted them. The Global Happiness Surveys put the Nordic countries at the top of their list. Not only that, they have better growth rates than the Anglo-American countries since the 1990s. I wonder why we are chasing the Anglo-American models when we have better alternatives to choose from.
- Does the current economic situation in US or Europe or India have any resemblance to historical events ? What lessons can today's leaders draw from the past to solve it ? Asked by: Pavan Rao
- Shankar Jagannathan Rapid growth in the global GDP started only around the 18th century. In the three centuries that followed, we have faced recession, that has led to renewed debates in economics. In the 19th century it was between Jean Baptiste Say and Simone de Sismondi. In 20th century between Keynes and Hayek and in the 21st century following the 2008 economic crisis between the Salt water economists and the sweet water economists. I believe rapid growth in an economy can come only by feeding of the society. The growth will continue as along as there is someone to pay for it. Once a section of the society is impoverished to the extent that their life is threatned the entire economy collapses. This requires subsidies, incentives and stimulus for the society to revive before the economy can flourish. The relationship between an economy and its society is that of a parasite and host. For a parasite to thrive, the host must live. I have dealt with this aspect in the book in detail in chapter 8. Please do go though it and share your thinking.
- what is the price of this book? Asked by: Harish Nayak
- Shankar Jagannathan Dear Harish, My book is priced at Rs.295. On the internet you can get the book at a much lesser price. But price is only half of the equation. The second half is what you get in return for the price you pay. I would like you to read the book and tell me if it was worth it. Many have told me it is. One gentleman has written in the facebook that he got his return after the first three chapters itself. You decide.
- What inspired you to pick this subject for your second book? Asked by: Pravin
- Shankar Jagannathan Dear Pravin, I decided to retire at 40 and retired at 43 years. 6 years later, i was not sure if this was a prudent decision. Though i was enjoying the present, i did not know what the future will hold for me. Hence i decided to read all the classics in economics and re-validate my decision. I am fortunate that my last four years efforts have validated my question. I believe that in the trade off between quality of life and standard of living, there is no endorsement for blindly increasing the standard of living. I think only when you limit your material needs that you can really enjoy the quality of life. Hope this answers your question.
- If you were made leader of the free world, how would you address the growing problem of rising inequalities? Asked by: Aravind
- Shankar Jagannathan Thanks Aravind for the insightful question. I believe no leader can solve social problems. It is the thinking in society that has to evolve. As an active member of the society i would promote decisions that enable the following: 1. Promote intra-generational inequality as it is an incentive for work. People who work harder deserve better. On the other hand i will curb inter-generational wealth transfers through inheritance tax, as no one deserves a silver spoon. Each one must earn their lifestyle. 2. Promote universal social security system. Primarily in two areas -education and healthcare. Once we provide each individual in the society a chance to realize their potential, we will live in a much more prosperous and happy society. 3. Focus on quality of life, not standard of living. I believe driving 10 KMs to work in a BMW at 10 KM/ hour speed is a poorer life than walking to work that takes 10 minutes.
- From the title it would appear that there is a behavioral dimension to managing limited resources. Has human capacity been overestimated, that, as we know of human development today, wisdom eludes us in economic matters? Asked by: Joseph George A
- Shankar Jagannathan Dear Joseph, If i have understood your question right, i think you are asking if the current economic though is based on human wisdom, and you seem to think it may not be. I tend to agree with you when i see the dominant economic thought of the day which is based on market economics. I believe there is an excess focus on self, and reliance on speed reflected in the rate of growth. The dominant view is seeing human life as a 100 meters dash, whereas the contrary view sees it as a marathon, where not only speed but endurance is also the key. If this view is taken growth along with sustainability becomes essential. An important element of sustainability is the social sustainability, which is anchored on a more equitable distribution of wealth and income. Hence i can see why you may believe the current economic wisdom, as expressed today is an oxymoron.
- why are you so fascinated by history... both your books are on tracking the history - one of finance and the other economics. Asked by: Tanya Bhandary
- Shankar Jagannathan Dear Tanya, This is an excellent question that i often get asked. In the area of science, where practices are repeatable and predictable, history has less of a relevance. But in matters of human endeavor, history plays a major role. For instance to know the outcome of the India-England ODI series we cannot look to science for answer. Whereas by looking at history we can say that the probability of India winning the series in high as the matches are played in India. As most of the subject of my study is human behavior i look at history with keenness.
- Are you working on another book? if so, on what? Asked by: Chandan More
- Shankar Jagannathan Dear Chandan, I have just started work on my third book. The subject is Virtuous Corporations. i.e. businesses that are owned by either employees, customers, society or suppliers. I believe that these companies are run by principles other than Profit maximization. Hence i want to trace the management practices of these companies. There are many such companies which have a history of more than 100 years. I have tentatively titled it as If Mahatma Ran India Inc. The Story of Virtuous Corporations.
- Can this be adopted by Govt and can this be implemented? Asked by: Harish Nayak
- Shankar Jagannathan Dear Harish, In the book the Wisdom of Ants, I make three policy recommendations: a. Introduction of inheritance tax: India is the only if not one of the few democracies where inheritance tax is not levied. It was withdrawn in 1985. Today India is a land of billionaries and Millionaries and malnutrition kids. India also has the lowest tax to GDP ratio of around 16% compared to the Nordic countries where the tax to GDP ratio is around 50%. So i see no reason why this cannot be implemented. b. Universal social security nets: In India we have two government sponsored systems that are universal, i.e. where the benificary is not decided by any other criteria. They are supply of fuel like petrol and polio drops. Both these are well administered. In the Nordic countries basic social security measures like healthcare and education are also universal. I would like Indian citizens to evaluate the benefits of introducing universal social security nets for all citizens in India. This should be a matter of debate before it is implemented. c. The third suggestion is to look away from GDP growth as a measure of performance. Instead i propose that we measure the effectiveness of government by looking at the income that accrues to the bottom 20% of the population. This way we will focus not only on growth but also eliminate poverty hand in hand. All the three suggestions are i think implementable.
- Why Wisdom of ants as the title for the book? Asked by: Venkatesh S R
- Shankar Jagannathan Dear Venkatesh, When i started searching for the first economic advice, i came across King Solomon's fable of the Ant and the Grasshopper, where the value of foresight, prudence and deligence is praised. That was the economic wisdom of that era. In the 20th century, the wisdom of ants was seen in their community living, altruistic behavior of one for all and resilience. Hence i thought the appropriate title for the book on history of economics could be The Wisdom of Ants.
- What is the relevance of this book to a layman? Asked by: Radha Radhakrishnan
- Shankar Jagannathan Dear Radha, Economics has become relevant to all members of our society. Just as in a democracy every citizen plays a political role by voting and participates in politics, in today's society too, every member is by force participating in the economy. Once we understand the principles on which economic decisions are taken, we will be in a position to understand its implications much better. Hence i believe that every one who understands economics better will stand to live a better quality of life.
- Are you evaluating options to make this book part of academic reading for students of economics? Asked by: Nalini V
- Shankar Jagannathan Dear Nalini, This book is intended for non-economists. Hence anyone who is not studying economics as a academic subject will find this book useful. therefore this book can be used in the field of management, other social sciences and for engineering graduates who want to understand the concepts in economics. Does this answer your question.
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