My Conversation with Abhijit Banerjee

I had an excellent time in this one, here is the audio and transcript.  Here is the opening summary:

Abhijit joined Tyler to discuss his unique approach to economics, including thoughts on premature deindustrialization, the intrinsic weakness of any charter city, where the best classical Indian music is being made today, why he prefers making Indian sweets to French sweets, the influence of English intellectual life in India, the history behind Bengali leftism, the best Indian regional cuisine, why experimental economics is underrated, the reforms he’d make to traditional graduate economics training, how his mother’s passion inspires his research, how many consumer loyalty programs he’s joined, and more.

Yes there was plenty of economics, but I feel like excerpting this bit:

COWEN: Why does Kolkata have the best sweet shops in India?

BANERJEE: It’s a bit circular because, of course, I tend to believe Kolkata has —

COWEN: So do I, however, and I have no loyalty per se.

BANERJEE: I think largely because Kolkata actually also — which is less known — has absolutely amazing food. In general, the food is amazing. Relative to the rest of India, Kolkata had a very large middle class with a fair amount of surplus and who were willing to spend money on. I think there were caste and other reasons why restaurants didn’t flourish. It’s not an accident that a lot of Indian restaurants were born out of truck stops. These are called dhabas.

COWEN: Sure.

BANERJEE: Caste has a lot to do with it. But sweets are just too difficult to make at home, even though lots of people used to make some of them. And I think there was some line that was just permitted that you can have sweets made out of — in these specific places, made by these castes.

There’s all kinds of conversations about this in the early-to-mid 19th century on what you can eat out, what is eating out, what can you buy in a shop, et cetera. I think in the late 19th century you see that, basically, sweet shops actually provide not just sweets, but for travelers, you can actually eat a lunch there for 50 cents, even now, an excellent lunch. They’re some savories and a sweet — maybe for 40 rupees, you get all of that.

And it was actually the core mechanism for reconciling Brahminical cultures of different kinds with a certain amount of social mobility. People came from outside. They were working in Kolkata. Kolkata was a big city in India. All the immigrants came. What would they eat? I think a lot of these sweet shops were a place where you actually don’t just get sweets — you get savories as well. And savories are excellent.

In Kolkata, if you go out for the day, the safest place to eat is in a sweet shop. It’s always freshly made savories available. You eat the freshly made savories, and you get some sweets at the end.

COWEN: Are higher wage rates bad for the highest-quality sweets? Because rich countries don’t seem to have them.

BANERJEE: Oh no, rich countries have fabulous sweets. I mean, at France —

COWEN: Not like in Kolkata.

BANERJEE: France has fabulous sweets. I think the US is exceptional in the quality of the . . . let me say, the fact that you don’t get actually excellent sweets in most places —

And this on music:

BANERJEE: Well, I think Bengal was never the place for vocal. As a real, I would say a real addict of vocal Indian classical music, I would say Bengal is not, never the center of . . . If you look at the list of the top performers in vocal Indian classical music, no one really is a Bengali.

In instrumental, Bengal was always very strong. Right now, one of the best vocalists in India is a man who lives in Kolkata. His name is Rashid Khan. He’s absolutely fabulous in my view, maybe the best. On a good day, he’s the best that there is. He’s not a Bengali. He’s from Bihar, I think, and he comes and settles in Kolkata. I think a Hindi speaker by birth, other than a Bengali. So I don’t think Bengal ever had top vocalists.

It had top instrumentalists, and Ravi Shankar, Ali Akbar Khan, Nikhil Banerjee — these were all Bengali instrumentalists. Even now, I would say the best instrumentalists, a lot of them are either Bengali or a few of them are second . . . Vilayat Khan and Imrat Khan were the two great non-Bengali instrumentalists of that period, I would say, of the strings especially. And they both settled in Kolkata, so that their children grew up in Kolkata.

And the other great instrumentalists are these Kolkata-born. They went to the same high school as I did. There were these Kolkata-born, not of Bengali families, but from very much the same culture. So I think Kolkata still is the place which produces the best instrumentalists — sitarists, sarod players, et cetera.

COWEN: Why is the better vocal music so often from the South?

Definitely recommended, Abhijit was scintillating throughout.


And who can afford those sweets? Only those economists and economically affluent peoples. Affluence takes it all, isn't it? And it matters. Affluence breeds affluence, no matter how hard the how-brow economists do try to up the ante - status quo just wags its tail.

I find it puzzling that he rightly finds politics the main existential threat to charter cities, and he does not mention it as the main reason while small entrepreneurs in undeveloped countries do not grow.

The regulatory environment in undeveloped countries is usually, at least in theory, as heavy as in the most advanced countries. It is so because 1) poor countries’ politicians find useful to parrot richer countries and 2) because of the ubiquitous, exhaustingly politically-correct presence of international organizations like IMF, World Bank or all the train of parasites that comes with the U.N. flag.

But of course in practice these laws and regulations are not followed, because virtually nobody could actually work if he had to follow them completely. To remain small is therefore the coping mechanism that allows you to stay under the radar, and limit the cost of compliance to the occasional bribe to some low-level state enforcer. The extortionist knows he cannot ask too much, otherwise the business simply shuts down and moves elsewhere. Even worse, if the bosses of the enforcers (usually police), that always take a cut of the bribe, let them pressure too much, the economy stops and the politicians intervene to remove those bosses.

The result is that the large companies in undeveloped countries are 1) those protected by barriers to entry because in industries super-regulated, like banking or cellular services, or 2) protected by the political contacts (and bribes) of the owners. These are the usual a few families that owns conglomerate operating in the most disparate industries, but seldom going outside the original country. Their competitive advantages are the local contacts, not the knowledge of any particular industry.

Of course the two types often coincide.

Sounds interesting...Do you have a good mathematical model of this?

No, but I have 20 years of experience as entrepreneur in Central America, starting from a country in the Northern Triangle. My company is perhaps the largest one of the few specialized in a single industry and with presence in all the countries of the region, apart from some large multinationals.

Regulatory constraints on exports for developing countries is somewhat because well, rich countries are the importers and insist on safe and durable products, and also somewhat because rich nation workers insist on genuine productivity competition, not to "race to the bottom" of working conditions ("sweatshops") and restrict trade on this basis (as is fair and proper).

Now is regulatory burden on domestic producers in developing countries (from copying) decisive in preventing competition with imports by developing country entreprenuers? Usually seems to be sheer productivity disadvantage right?

So it's skepticism from me that the difference between developing nations that converged (Japan, Taiwan, South Korea) and those that did not (Middle Income Trap) is that the non-convergers copied more regulation.

Often the regulations are anti-competitive and serve no purpose except lining someone's pocket, serving special interests, facilitating demagoguery

Maybe they do, but I guess the issue I'm trying to get at is whether complying with out of country Western regulations A) helps sell into developed markets or in converging on positive practices (following a regulation in itself makes a relationship of technology importing more likely etc), and so boosts competition and development, B) whether it actually presents a burden (as Massimo states), or C) just isn't that important either way. The historical development examples probably will tell us.

I'd bet that it either helps in some form, or doesn't matter, and the real reasons for lagging development have nothing to do with importing regulation.

The "It's the excessive regulation, stupid!" crowd have been notching up continuous failures to predict pretty much my know 30+ life span (with most of their deregulations, opening up of markets failing to yield particularly significant growth), so I tend to work from the assumption they're usually wrong.

These factors play a role but they are hardly the only factors at work. Lack of effective anti-trust law, access to finance, a legal system and credit bureau capable of making access to finance a reality, and poor infrastructure also play their part.

Indeed, the World Bank and IMF mostly embraced the anti-regulation and anti-corruption message you espouse but they are reviled on the left for precisely this reason and are disliked by the libertarian right because they presumably haven't gone far enough.

Hi prior.

Standard Cowen, actually.

Delighted to see that Dr. Cowen acknowledges that Pakistani and Bangladeshi food are Indian food. I will sleep better now.

Almost all food that has been available at restaurants in our lifetimes falls short of the Platonic ideal of food.

As usual, this comment will be deleted, but if you read it before it is deleted, think about it.


except where people care about each other.

And either you care about other people or you don't.

And trust me, you probably don't. which is why I am here on the watchtower and you are there dreaming of eating tomorrow at some overrated restaurant.

Especially beef dishes like Bhunna Gosht or Seekh kebab.

Well, you reading this quite possibly care about other people, so there's that, but here we are in 2019 and in most contexts it is fair to say to people that "either you care about other people or you don't, and you probably don't"


and no I am not on the watchtower YOU ARE ON THE WATCHTOWER

Happy New Year my brave friends !!!!

I have a really good recipe for Boeuf Bourguignon but more importantly I know whether or not, in Heaven, anyone will share with me my love for that classic dish ..... and if they do, why they do .... and if they don't, why they don't. Not saying I don't wish I didn't know what I know, just saying I know it .....

I could go on and on, my recipe for pasta a limone is better than any you have ever read, and my Szechuan sweet and sour soup is as good as that of any Szechuan grandma or great grandma, and the first time I made Salade Nicoise for my friends .... well, you had to be there.

just my way of saying ALL THE VOCALISTS are equal

good conversation

After reading the Times of India link, why would it be surprising that someone from Calcutta would find a French paterissie fabulous?

A division between vocal and instrumental talent and styles seems common in classical music across cultures. In the West it takes the form of the continuum from homophony/vocal music to polyphony/instrumental music

The talk about the quality of Indian vegetables is great. And yes, the short supply chain really does matter! I grew up in the San Joaquin Valley of California. It's one of the poorest parts of the country, because it's deeply rooted in agriculture and migrant workers employed on a temporary basis but expected to be available whenever. However, since essentially all the produce is being grown nearly literally in their neighbor's back yard, the food quality is actually incredible. You've never truly tasted an apricot unless you travel there and buy one at a roadside stand. So much food in New York City claims to be the best, but honestly, it can't hold a candle to the freshness available in the Valley.

And don't ask about Mexican food in the Northeast. Really, the less said, the better.

Turning American to get a Nobel sounds a cakewalk! Get your Indian states right - in the Medium transcript, Andhra Pradesh is confused with Uttar Pradesh. Perhaps the biryani got into the head - Lucknowi or Hyderabadi?

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