Indian Economy, Shiller’s Tale Risk & Narendra Modi – FT vs. NYT


A parasite is defined as a person who habitually relies on or exploits others and gives nothing in return. Unlike the physical kind, the “intellectual” parasites have some value as India’s colonial occupiers discovered. Because their selfishness, their ultimate self-interested obsession could be used as a weapon against native Indians. This is the role India’s self-proclaimed “intellectuals” have served for the past 700+ years.  

Today, they serve foreign press in India like the New York Times, BBC et al. And they, time permitting, also serve India’s ignorant English language media which abhors free markets and adores Cambridge-Oxford degrees. These “intellectuals” haven’t done any productive work for decades and their education has become obsolete at best and useless at worst. But they can always be relied on for quotes that NYT et al need.

Such a buyer-seller gang surfaced recently in a NYT article partially titled “… Modi’s Quiet Beginning Dims India’s Hopes … “. Pratap Bhanu Mehta, a stalwart of this “intellectual” cohort, provided a quote that read “Mr. Modi’s government had frittered away its honeymoon period on “an odd combination of trifles, bureaucratic cross hairs, alibis, risk averseness and a shadowy politics of stealth.“” Bibeka Debroya, a Cambridge-educated economist with Mehta’s organization, was quoted as “Here is a government that came in with a lot of hope, riding a tide of high expectations, promising change; Ennui has already set in“. 

Mehta is not worth paying attention to, in our opinion. But Debroya used to be a competent economist, we are told. But, if you look at his bio on wikipedia, you will see that he has done nothing in his career except work in cushy jobs in government or semi-government organizations. There is no evidence he understands either free markets or the enormous strides macroeconomics has made in recent years. 

In contrast, you have Robert Shiller, this year’s winner of the Nobel Prize in economics. We have seen and heard a number of Nobel laureates in economics. You can’t walk the campuses of NYC universities without bumping into a few of them. We regard Shiller more highly than some of his fellow laureates because he keeps providing new ways of looking at economies.

This past March, Shiller wrote about the role of “Tale Risk” in economic success of countries:

  • Fluctuations in the world’s economies are largely due to the stories we hear and tell about them. … Nationalism, after all, is intrinsically bound up with individual identity. It creates a story for each member of the nation, a story about what he or she can do as part of a successful country.”

We applied Shiller’s “Tale Risk” concept to Narendra Modi’s campaign in an article on March 29, 2014:

  • “There is a deep yearning in Indians to succeed, to be a part of a successful India. The campaign of Narendra Modi, the son of tea-seller from one of the lowest social segments in India, embodies this yearning. And people all over India are saying do for us what you did in Gujarat. That is the power of a “Tale”.”

Has Shiller’s concept & NaMo’s tale worked for India? The factual answer was provided this Friday by the Indian economy and reported by the Financial Times in their article titled “India’s economy expands at fastest rate in two years“. The FT reports:

  • “During India’s recent election, Prime Minister Narendra Modi campaigned on the slogan “Good days are coming”. On Friday, he appeared to deliver early, as Asia’s third-largest economy posted its best quarterly economic figures in more than two years.”
  • “It grew 5.7 per cent year on year in the three months to June. The figures exceeded analysts’ expectations and the reading from the same period in 2013, when India produced its worst quarterly growth performance in four years, expanding at just 4.4 per cent.”
  • “India’s performance in the quarter to June was helped by a strong rebound in industrial production, following nearly two years of stagnant output, helped by robust exports and increases in manufacturing and construction.”

What happened? What has PM Modi done in the past 100 days to deliver such performance? Nothing in theory & Everything in reality. What he has done & how the Indian economy has performed is exactly what Shiller termed as “Tale Risk”. Smart investors see how purposefully PM Modi is taking steps and understand what that could mean to the Indian economy going forward. Remember what Jim Grant, the well-respected editor of Grant’s Interest Rate Observer, said back in March 2014:

  • I think the world is always looking for the next growth story and I would nominate India. India has been in thrall to statism under every guise, Socialism, Gandhism, Nehruism. Narendra Modi, a.k.a. NaMo, has vowed to put his vast, poor and comprehensively mismanaged country on the road to modernity. Now under way is a financial travelogue whose terminus is optimism. China is yesterday’s growth story, India might be tomorrow’s.

This week, some five months later, the FT article makes a similar point:

  • “The growth numbers arrive at a moment of renewed optimism over India’s prospects, however, with the country’s stock market hitting record highs this week as global investors bet that Mr Modi will push forward with long-awaited economic reforms.”
  • “With China’s economy slowing and Brazil barely growing, the prospect that India is set to accelerate during the next two years may also make it a rare bright spot among the world’s largest developing economies.”

This teaches all of us to trust investors who put real money to work, to trust practicing economists like Robert Shiller who keep creating new concepts rather than pretentious Indian “intellectuals” who have done nothing since getting their now obsolete degrees decades ago.

A supporter of India's main opposition Bharatiya Janata Party (BJP) attends a rally being addressed by Gujarat's Chief Minister and Hindu nationalist Narendra Modi, the prime ministerial candidate for BJP, ahead of the 2014 general elections, at Meerut in the northern Indian state of Uttar Pradesh February 2, 2014. REUTERS/Ahmad Masood (INDIA - Tags: POLITICS ELECTIONS) - RTX1853X

(src & courtesy– Generational Shift – Financial Times)

And it teaches us to trust NaMo. Note the above FT article talks about India accelerating during the next two years. That’s how long it took President Reagan to put his program in place. Then the results put America on a growth trajectory for the next 30 years. PM Modi is a man on a mission for the country he loves passionately, for his Bhaarat-Mata. He is doing the right things, beginning with foreign policy where “Tale Risk” can deliver major benefits to India & to India’s economy. 


Editor’s PS: The negative article that quoted Pratap Bhanu Mehta & Bibeka Debroya was by Ellen Barry of The New York Times. The factual article about fast growth in the Indian economy  was published by the Financial Times. This serves to demonstrate the difference between a psuedo-intellectual NYT and a financial markets oriented FT


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