Rakesh Khurana's Weblog

Nobel Prize in Economics

I am only slight familiar with the winners of this year's Nobel Prize in Economics, Robert Engle and Clive Granger. Both are econometricians who developed methods for separating long-term trends from random fluctuations. However, I am not so sure the committee picked the right person.

An economist who is not well known in the States, but I think should be considered is Peruvian economist Hernando de Soto. I recently read de Soto's book, The Mystery of Capital: Why Capitalism Truimphs in the West and Fails Everywhere Else. This is a fanatastic book. Unlike the esoteric work of contemporary economics which seems to be largely self-referential and has little concern for society, De Soto's work is a response to the call James Buchanan made for a more classical kind of economics, what used to be called political economy. Buchanan writes:

Most fundamentally, I am disturbed by an apparent public failure to appreciate and to understand the relationships between the constitutional structure that defines the parameters of social-economic-political life and the patterns of outcomes that we observe. In the new century, more than ever, we must attend to the rules of the game.

He argues that economics has lost its way and substituted reason and humanity with a disguised attempt of looking like a natural science with mathematical abstraction. de Soto's work is one which is both reasoned and humane. Going to the field, de Soto analyzes how property rights work for the average individual. He studies the squatting settlements that ring every major city in the developing world. Because these squatters lack property rights, they cannot use their homes--many of which their families have live in for mulitiple generations--as sources of collaterized capital to make investments, educate their children, or build a business. He starts from the ground and then builds a theory about how successful liberal democracies are built. Perhaps, those who are engaged in nation-building should retain the services of this indiivdual.

Presidential Gaffe's

Slate put up some hilarious presidential gaffes. I thought I'd share some of them:

Quote: "Rarely is the question asked: Is our children learning?" (Jan. 11, 2000).

Quote: "I know how hard it is for you to put food on your family" (Jan. 27, 2000).

Quote: "This is Preservation Month. I appreciate preservation. It's what you do when you run for president. You gotta preserve" (remarks during "Perseverance Month," Los Angeles Times, Jan. 28, 2000).

Quote: "The most important job is not to be governor, or first lady in my case" (San Antonio Express-News, Jan. 30, 2000).

Quote: "The legislature's job is to write law. It's the executive branch's job to interpret law" (Nov. 22, 2000).

Quote: "You teach a child to read, and he or her will be able to pass a literacy test'' (Feb. 21, 2001).

Quote: "I've coined new words, like misunderstanding and Hispanically" (March 29, 2001).

Quote: "Neither in French nor in English nor in Mexican" (declining to answer reporters' questions, April 21, 2001).

Quote: "I promise you I will listen to what has been said here, even though I wasn't here" (Aug. 13, 2002).

Phew

I had a busy week: four classes to teach, a paper to finish and a talk to give at Columbia.

One thing I should mention for those of you with young children and are involved in their education. (As an Indian parent, I think it is in my DNA to obsess about my kids' education). We enrolled my oldest daughter at the Russian School of Mathematics in Newton. This is a pretty amazing program. It was started by Russian immigrants who were scientists and engineers back in the old USSR, but had trouble finding similar positions in the U.S.

Unlike the "approximation" or "intuition" math that is being taught in schools these days, the RSM focuses on teaching the basic principles. I think it is important to have an intuition and guesstimate e.g. how heavy is a car?, but the beauty of math is its precision. For example, in 1st grade they teach that a line is a line. At RSM, a line is defined as a segment connecting two points in space. Once you get the basic principles of mathematics, you can deduce solutions to many other problems.