A huge leap of logic, says Koo. “This is because the bank’s purchases of government debt do not generate inflation; rather, the resumption of borrowing and spending by firms that have finished repairing their balance-sheets do.” When this happens, a massive round of credit creation will commence if the banking system is awash in liquidity, which in turn can lead to severe inflation, he reasons.

Persuasive read.

Undoubtedly, one of the ‘books that shook the world,’ was by Karl Marx. Revisiting the masterpiece by the challenger of capitalism is Francis Wheen’s Marx’s Das Kapital: A Biography ( www.manjulindia.com ). “Although Das Kapital is usually categorised as a work of economics, Karl Marx turned to the study of political economy only after many years of spadework in philosophy and literature,” he writes.

How was Marx’s book received? It took four years for the 1,000 copies of the first edition to sell out, informs Wheen. “Sheer incomprehension, rather than political enmity, may explain the muted reaction to Das Kapital,” he postulates. A Russian translation appeared in 1872, “passed by the Tsar’s censors on the grounds that it had no application to Russia and therefore couldn’t be subversive (though they did remove a picture of the author, fearing that it might inspire a personality cult). They judged the text so impenetrable that ‘few would read it and still fewer understand it,’ but most of the 3,000 print run was sold within a year.”

Unputdownable.

Universal food subsidies, such as through ration shops, are not very effective in transferring resources to the poor, writes David Coady in ‘Social safety nets,’ an essay included in Public Expenditures, Growth, and Poverty: Lessons from Developing Countries, edited by Shenggen Fan ( www.oup.com ). It can cost as much as $3.30 to transfer $1.00 to the poor, informs the essay. “Including efficiency costs will obviously increase this amount further.”

Leakage costs alone, of a typical scheme, can go up to $2.40, for every dollar transferred to the poor. Which is why, says Coady, “universal food subsidies are often viewed as stop-gap policies until more cost-effective transfer instruments can be developed.”

An innovation in programmes, particularly in Latin America, is targeted human capital transfers (i.e. transfers conditioned on households’ investing in their children’s nutrition, health, and education), the author observes. These subsidies have been found to cost $1.80 per dollar transferred to the poor, thus outperforming the best public works programmes.

Important addition to the shelves of the development-conscious.

In spite of many reforms relating to international trade, South Africa’s tariff schedule remains complex and can create uncertainty, frets Trinity of the South: Potential of India-Brazil-South Africa (IBSA) Partnership ( www.academicfoundation.com ). “Traders are subjected to exchange control approval, administered by the South African Reserve Bank. The Department of Trade and Industry (DTI) is empowered to regulate, prohibit or ration imports to South Africa in the national interest but most goods may be imported into South Africa without any restrictions.”

The publication speaks of how Indian companies are faced with anti-dumping duties from South Africa. “For example, anti-dumping duty on exports of Amoxicillin and Ampicillin by Indian pharmaceutical companies, including Ranbaxy, was imposed in 1997, basically on the grounds of the low cost of these medicines, facilitated by incentives provided by the Government of India.”

Good documentation.

D. MURALI

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