Mr Ramachandran spoke on the development of economics and the importance of reading for better executive development.
Starting off, Mr. Ramchandran stressed upon the importance of reading. He warned the audience not to get too occupied with career objectives and compromise on good selective reading. Having considered that fact that everyone understood the importance of reading, he went on to stress on what to read and what not to read. He filtered out certain books, newspapers and periodicals that were important in understanding the economic development of India and the world and also advised on how to filter books and opinions for ourselves. According to him, every few years there come a moment when economics takes a little turn and that we were currently at one of those turns for India. As a result it is very important for us to understand what the seminal books of economics are.
He reflected on how everyone coming out of a B-school decides on I-banking or Consulting without understanding what it exactly is. Therefore, to come to a rational decision, it would be very important to understand the subjects with proper readings.
He spoke about how each publication had a certain differentiating aspect and how we should grasp those aspects and filter out the garbled message. Offering examples, among the newspapers, each had a certain flavour, Mr Ramachandran said. As a result, if one needs information, particularly information that would relate to one as an individual, he/she would read the Economic Times. If one would want data, he/she would read the Hindu Business Line. If one wanted more thoughtful editorials, one would read the Mint or the Business Standard.
Considering new information tools, he spoke about Martin Wolf's blog on FT and Krugman's blog. Among the books, he suggested Minsky's "can it happen again", "Manics, Panics and Crashes" by Kindleberger, "Against the Gods" by Peter Bernstein and "Das Kapital" by Karl Marx among others.
In his addresses, Mr Ramachandran also spoke about the development of economics through Ricardo's "theory of comparative advantage" (explaining why China is the manufacturer for the world and India is the service industry for the world) and Malthus' "the world will run out of food" theory explaining the gap between the polynomial expansion of the population and the arithmetic expansion of food.
He spoke about the direction of the world economy where eventually the US would have a positive savings rate and the Chinese currency would re-adjust. Therefore, our next 10 or 20 years would be defined by exactly those phenomena taking place in the world. He explained how Japan was a trailer to the current movie. China and India would be following the same pattern. India had started its reforms 15 years after China. So what would happen was that India would go through the high growth phase and then would have to adapt to the slowing of economy. This would be helped by policy. China is exactly there as we speak. The problem with the Chinese currency would be a mistake on the part of the country. The fact that the currency is cheaper would imply that there would be a set-up of a Chinese shoe factory, but not a Chinese logistics factory. As a result, when the currency is adjusted, it would not be sensible to have a shoe factory but much more sensible to have a logistics factory.
