Some economics lessons from Angry Birds

That, too, but more generally, from the sociological phenomenon that the gaming app represents. More broadly, I’m talking of how the economic discourse — in India and elsewhere — today resembles nothing so much as the squawk of a flock of very angry avians hurling themselves like projectiles at established institutions, like in the game.

Swamy is just one perpetually petulant hawk whose public campaign to send Rajan packing rests on some very batty notions. (What does “mentally not fully Indian”, which is what he accused Rajan of being, even mean?) Now, Swamy has a PhD in economics, and so must presumably have a keen understanding (more than most others) of the precise nature of India’s macroeconomic failings, even if they are filtered by his ideological biases. His targeting of Rajan’s pursuit of monetary policies and the clean-up of banks’ loan books is on flawed ground; it’s so off-base as to be completely cuckoo.

But it’s not just about Swamy; there are many more ‘angry birds’ among us, who get all incensed over the wrong things.

Economist Stephanie Kelton explains this in the context of the ongoing hysteria-infused debate in the US about deficits and debts, but it’s just as applicable here. In a lecture that you can watch on YouTube, Kelton invokes the Angry Birds metaphor to say that much of the shrill declamations about US fiscal and monetary policy are, in fact, iterations of economic theories that are as dead as the dodo.

According to the school of Modern Monetary Theory (to which Kelton belongs), a monetarily sovereign government has an unlimited capacity to pay for the things it wishes to purchase and to fulfil promised future payments; such a government can never go bankrupt or insolvent — unlike households and corporates that “live beyond their means”.

Not at all — so long as such “money creation” and public spending is channelled towards generating productive resources for the future. That is to say, if governments invest in public education and skills upgrade, and create an ecosystem for entrepreneurial energies to be unleashed, which in turn will generate employment, they’re doing the right thing. What we’ve seen nearer home, on the other hand, are public resources being squandered in “freebie” handouts (and not just at election time), which amounts to perverse fiscal profligacy without increased productivity.

Curiously enough, the Angry Birds game itself is a metaphor for the kind of innovation that can re-energise economies.

In 2009, the Finnish game developer Rovio Entertainment was on the brink of bankruptcy when it launched Angry Birds. The game became a runaway success, and to date, the series’ games have been downloaded some three billion times globally.

Last year, a Citi GPS report on the speed of technology diffusion noted that while it took 75 years for telephones to reach 50 million users, Angry Birds did that in just 35 days! By 2013, Angry Birds was contributing more to the Finnish economy than even iconic gadget maker Nokia. The Angry Birds franchise now includes theme parks and, now, the movie.

Angry Birds is what’s called a “killer app”: our economies need more such metaphorical ‘killer apps’ that leverage innovation and enhance productivity. What we don’t need are the destructive angry birds among us who peddle polemics as economics and bring down institutions.

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