Friday, October 26, 2007

The need for governance

Many of the fights that I had picked with my arm-chair economist friends who support the extreme form of free market economics was due to their utter disrespect to the role of governance in facilitating market solutions. Some of these folks seem to confuse governance with government and without blinking an eye would oppose the view that markets need to be overseen by regulatory bodies. I guess their peeves are more with the government than with governance per se, but what I fail to comprehend is the fact that they somehow think "governance" would be endogenous to market solutions while history has proved time and again that it is not. The entire scenario has played out so according to scheme in the recent sub-prime mortgage crisis.


 

Banks and mortgage lenders competed with each other in figuring out exotic loan instruments that enabled the poorest to own homes – the American dream being fulfilled. The extremists free-market guys assumed that the market would somehow police itself (the free hand remember) and those firms that went overboard would be punished appropriately. A Krugman points out so eloquently in his column, the powers-be decided that the government should stay away from this, and as a result millions of consumers will end up losing their houses. These millions are the ones who belong to the low-income category, and thus proving once again that without proper oversight – read as lack of governance, consumer surplus would be reduced. However, lessons will not be learnt and such scenarios will be more eloquently played out in developing countries like India where an even bigger real estate bubble is seething to just go "plop" one day. The government fails to oversee housing loans, not due to its free-market inclinations, but due to its inefficiency. Even it did, there would be ineffectiveness in such oversight.


 

The case against government's meddling role in economic growth has been made eloquently. However, considerable evidence exists "for" the role of governance in certain contexts. Its is high-time we all figure out the difference between the two.

Love and Marriage: Horse and Carriage

Frank Sinatra said those words so beautifully!

The general populace (movie-going) of my home state has a lot to learn from that phrase. Somehow, I get a feeling that they are all being very hypocritical about what they think of love and marriage. Do they support the concept of love or do they merely think it is for drama in movies and not to be played out in real life?

Let me give a brief background. Chiranjeevi, one of the most popular movie stars of my home state, is facing a dilemma of his lifetime. His daughter decided to run away from home and marry her sweetheart for four years, against the wishes of her family. She claimed that she had been in love for four years and that her family had kept her under house arrest to avoid the scenario that eventually played out a few weeks ago. Mainstream media reported that Chiranjeevi was deeply hurt by her actions and that he was in a state of shock. Sympathy poured in for the star!

I could not believe what was happening! Wait a minute! Didn't her father play a thousand roles all in which he falls in love with a girl, marries her against the wishes of her father (usually thespian actors such as Allu Ramalingiah or Ravu Gopala Rao). Much of the Chiranjeevi fan base loved him because he played the upright, truth-conscious young man who stood up for beliefs, almost to perfection. When it came down to his own life, the cinematic message did not seem to apply. He was shocked, rather than being supportive of his daughter's love.


If I were to think of this in terms of Arnie's movie – Last Action Hero, then all the on screen villains of Chiranjeevi would be laughing their asses off in their graves. He was the ones who usually buried them under tons of mud or in a bog, at the end of the movie and get married to their daughters. Now, he faces a crisis in his own life. Is he the villain? The father of a daughter who falls in love with a young man he does not approve.

On a different note, I hope he comes out and reconciles with his daughter rather than keep quiet. The problem is with the millions of people who are mindless fanatics and worship him. A message that he sends out does impact how his fans think, although I have to say I feel so sorry that movie starts have a larger than life impact on our movie-crazy society.

Talk of poetic justice.