Friday, 14 August 2020
Wednesday, 12 August 2020
Tuesday, 11 August 2020
Economics for Non Economists 5 – Inflation - Why is the government’s inflation rate lower than my personal experience?
Some of you would have realised that in the China virus season the supermarkets have raised prices and stopped offering discounts on many goods. As a result you would have experienced rising food bills which according to layman knowledge should translate into inflation*. At the same time, you may have read many economists predict a period of recession, deflation** and high levels of unemployment. So how is it that when you are experiencing inflation personally, economists predict the existence of deflation?
It all depends on the way the inflation rate is calculated.
The UK government uses the Consumer Price Index (CPI) to estimate the inflation rate in the British economy. It works like this:
1. Every year a few thousand families are asked to record their expenditure for a month. From this data the indexers estimate the types of goods and services bought by an average household and the quantity of their income spent on these goods.
2. With this information, surveyors are sent out each month to record prices for the above mix of goods. Prices are recorded in different areas of the country as well as in different types of retail outlets. These results are averaged out to find the average price of goods and this is converted into index numbers.
3. Changes in the price of some goods are considered more important than others based on the proportion of the income spent by the average household. This means that the above numbers have to be weighted before the final index is calculated.
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Consider this example:
Assume that there are only two goods in the economy, food and cars. The average household spends 75% of their income on food and 25 % on cars. Suppose there is an increase in the price of food by 8% and of cars by 4% annually.
In a normal average calculation, the 8% and 4% would be added together and divided by 2 to arrive at an average inflation of 6%
However, this provides an inaccurate figure because spending on food is more important in the household than spending on cars. Food is given a weight of 75% and cars are given a weight of 25%. So the price increase of food is multiplied by ¾ (8*3/4 = 6) and added to the price increase of cars which is multiplied by ¼ (4*1/4 =1) which will result in an inflation of 7%.
Therefore if the inflation index was 100 at the start of the year then it will read 107 at the end of the year.
The accuracy of inflation calculations
Monday, 10 August 2020
The Supreme Court must remember: It is supreme because it’s final not because it’s infallible
Are judges special or is justice special? It’s an interesting question and not because it’s a tricky one. Actually, it’s the issue at the heart of the debate around the Law of Contempt. It’s been discussed before but two cases of contempt against the human rights lawyer Prashant Bhushan in the Supreme Court have brought it back into sharp focus.
The first contempt case, called the Tehelka case, dates back to 2009 and hasn’t been heard for the last eight years. Why in the middle of a COVID crisis, when the Supreme Court is only functioning virtually and many cases are rejected because there is “no extreme urgency”, has this case been given priority? When the Court cannot find time for the Citizenship Amendment Act or habeas corpus petitions from Jammu and Kashmir, are we to believe this case is more important?
Of course, the Court’s concerns are allegations regarding the judiciary and corruption, made by Prashant Bhushan and published by Tehelka. But if this has really scandalised the Court how come it didn’t act for 11 years? The second contempt case is mystifying. It arises out of one of Bhushan’s tweets commenting on a photograph of the present Chief Justice. The Court claims his tweet “brought the administration of justice in disrepute … undermining the dignity and authority of the institution of Supreme Court in general and the office of the Chief Justice of India in particular”.
These two cases have brought contempt of court back into focus and that’s the reason why the question I started with is important. As regards the cases themselves, they were heard on consecutive days last week (the 4th and 5th) and in both cases a three-judge bench presided over by Justice Arun Mishra reserved judgement. It’s expected in a week or 10 days. If good sense prevails he ought not to be sentenced. I now want to turn to what ought to constitute good sense in this matter. The answer to the question at the very start hinges upon it.
The concept of contempt is a centuries old British law abolished in 2013. At the time the British Law Commission said the purpose was not just “preventing the public from getting the wrong idea of judges … but where there are shortcomings it’s equally important to prevent the public from getting the right idea”. In other words, one intention was to hide judicial corruption. The concept, therefore, clashed with the need for transparency but also freedom of speech.
As far back as 1968, Lord Denning, Britain’s former Master of the Rolls, had this to say of the Law of Contempt: “Let me say at once that we will never use this jurisdiction as a means to uphold our own dignity … nor will we use it to suppress those who speak against us. We do not fear criticism, nor do we resent it. For there is something far more important at stake. It is no less than freedom of speech itself. It’s the right of every man, in parliament or out of it, in the press or over the broadcast, to make fair comment, even outspoken comment, on matters of public interest … we must rely on our own conduct itself to be its own vindication.”
In 1987, after the Spycatcher judgement, when the Daily Mirror called British Law Lords “You Old Fools” or, in 2016, after the Brexit ruling, when the Daily Mail called three judges “Enemies of the People” the British judiciary consciously and sensibly ignored the headlines and did not consider contempt prosecution. In fact, Lord Templeton’s comment on the Spycatcher headline is worth recalling: “I cannot deny that I am old; it’s the truth. Whether I am a fool or not is a matter of perception of someone else … there is no need to invoke the powers of contempt.”
A similar position was adopted in a 2008 lecture by Justice Markandey Katju: “If a person calls me a fool, whether inside court or outside it, I for one would not take action as it does not prevent me from functioning, and I would simply ignore the comment or else say that everyone is entitled to his opinion. After all words break no bones”.
More importantly, Justice Katju added: “The test to determine whether an act amounts to contempt of court or not is this: Does it make the functioning of judges impossible or extremely difficult? If it does not, then it does not amount to contempt of court even if it’s harsh criticism … the only situation where I would have to take some action was if my functioning as a judge was made impossible … after all I have to function if I wish to justify my salary.”
I think that answers the question I began with. Whilst justice is important, judges must not take themselves too seriously. Even if their amour propre is offended, it does not mean the institution has been questioned or justice brought into disrepute. Judges deliver justice, they do not embody it. They should never forget their Court is supreme because it’s final not because it’s infallible. When they lapse they can be criticised, but of course, politely and fairly.
I hope the Supreme Court will bear this in mind when it pronounces on Bhushan’s two cases.
Wilburton walkout ends exciting game
by Girish Menon
CamKerala 3s (CK3) were around 162 runs for 6 chasing Wilburton’s 208 with 14 overs left. A partnership of over 6 overs and 40 runs had developed between Fabio and this writer when Fabio cross bats their spinner over midwicket. The ball is caught but the fielder was standing on the boundary line. Umpire Adarsh signals a six but Wilburton walkout ending an exciting game that appeared to be once again moving towards CK3.
For scorecard please click here
Wilburton turned up for this game at Comberton with a mood to right the wrongs they suffered against TAC in a friendly last week. Their 16-17 year old betrayed this view as he was the first arrival on the ground and told this writer that in the last match TAC had been liberal in calling wides and no balls. This lad righted TAC’s wrongs by being unduly harsh on CK3’s wides, no balls and lbw appeals. That set the tone for the game and this writer had to indicate to Saheer the harshness of the wides and the no balls. Another notable incident was during CK3’s run chase. The same lad denied CK3 a four by claiming the ball did not cross the line. Some CK3 players watching the incident began protesting this decision while a Wilburton spectator joined the argument on the other side. A pregnant Martha (Savio’s wife) was so convinced the ball had crossed the line that she was seen expressing her view.
The game began on a disappointing note for CK3 who were denied the chance to bat first (despite having a 75% probability of doing so according to captain Saheer). After a couple of early wickets Wilburton consolidated their innings with a couple of mature gentlemen, one of who later played as the wicketkeeper and was the agent provocateur of the walkout. This man swatted a few full tosses and egged on the lad to be harsh on no balls etc. This pair put on a good partnership and Wilburton edged towards a good score. The other partner scored a 70 and shepherded the rest of their batting which was not poor. In a late flourish CK3 took a flurry of wickets and Wilburton were all out in the 40th over. Debutant Herald bowled an excellent spell of offspin, with Saheer and Himanshu helping to wind up the innings.
CK3 started tennis ball style trying to hit boundaries. This was epitomised by Freddy who hit a six and trying to repeat the action was bowled in the next delivery. So, the run rate was high but wickets kept tumbling. Arun tried to calm things down and he had a good partnership with Saheer before Saheer was declared run out. Herald also declared Arun out lbw which brought Fabio and this writer to the crease. Fabio and this writer operated on the principle that if CK3 batted the full 40 overs then a win would follow. It was decided that one boundary and 1-2 singles was what would be attempted each over and good balls defended. What happened thereafter has already been highlighted in the introduction and will go down in CK3 folklore.
Wilburton players followed the script of the pigs in Animal Farm with their dictum " Our Umpires Good, Theirs Cheats". Also, revenging the TAC game against CK3 because of 'similar looking people' may be considered racist. They also ensured a continuous flow of sledges while CK3 were batting.
CK3, after last week's start with its main players declared lbw, may have seen the writing on the wall as far as lbws go in self umpired village cricket leagues. And Captain Saheer’s Cornwall holiday mood may have ended quickly due to above events at Comberton.