Nepali Times
Strictly Business
Economy 101


On the trekking trails and in the small towns in Nepal, if you talk to young people about what they think of the market as a concept, there is only one word that sums up their feeling: bad.

And they have good reason to feel that way. They see middlemen making more money than, say, hardworking small-scale milk producers. They see traders jacking up prices and paying only a fraction to farmers who spend months growing the vegetables. They see transport cartels shutting down highways to stamp out any hint of competition. The list goes on.

If the market as a concept is bad, what then is the solution? Almost all young people respond that the government must do something Öanything to keep a leash on middlemen, traders, cartels and the like.

But when you ask them to list the achievements of the government in which they invest their hopes, they are stumped. Beyond pointing to the highway, assuming that one exists near their village, most have a hard time coming up with just what the government, both national and local, has delivered. Confronted with this, many young people then have doubts about the wisdom of the government reining in the market. But they are unable to articulate why.

To help such young people understand the role of an open competitive market in a democratic society, the organisation Samriddhi: The Prosperity Foundation has been running six-day residential Arthalaya camps since January 2009. This January, Samriddhi completed its eleventh camp and turned out its 264th graduate.

The way Arthalaya works is like this: young college students, drawn from both inside and outside of Kathmandu, are selected from among hundreds of applicants. Twenty-four students attend debates and discussions led by entrepreneurs, policymakers and free-market thinkers on topics such as economic freedom, voluntary exchange, rule of law, morality of markets, enterprise building and economic policymaking. (Disclosure: the author is one of the lecturers).

Outside of classes, the participants are divided into groups of make-believe entrepreneurs, government officers, and the public. Over six days, each group plays its role: the entrepreneurs try to produce and sell goods to customers by competing with one another on price, quality and service; government officers come up with tax rates, policies and (arbitrary) regulations that the entrepreneurs may not like; and some vocal members of the public call for bandas, making life difficult for both entrepreneurs and the government.

By the end of the camp, what the participants get is a vivid feel for how market actors and the government interact, disagree, compete or even collude in the real world. They often emerge with a new appreciation for the market, where open and free competition is more likely to ensure lower prices and higher quality.

The participants come away with new respect for the rule of law as a system that ensures that the same set of laws is equally applicable to all. They also learn that bandas and cartels impose real costs on people struggling to make a living.

Thus challenged to think differently, young people in Nepal start looking at the world with a lot more subtlety and skepticism. For far too long, they've been exposed to narrow, ideological thinking. If only there were a way to scale up Arthalaya's reach, Nepal's economy might finally be allowed to prosper.

Online incline, PAAVAN MATHEMA

1. who cares
good debate/seminar,,,,, next time make a video and broadcast in tv. 

* so called commie philosophy sounds perfect, simple, attractive but it does not work, but easy to sell to mentally unfortunate.

* free economy is complex, if the lecturer is unable to define, explain things properly, it will get messy. . 

bases for success in free economy are- profit, rule of law, competition.

2. Chandra Gurung
Economy column in Nepali Times really looks more like economy news. Mr Tiwari has a good writing skill, but he needs to provide serious economic thoughts. The title "Economy 101" says it all; there is no scope for serious economic analysis within this.

Central Bank comes up with data and new rules almost every week. Nepal's economic scenario seems to have changed significantly in the last few years. But reading Nepali Times economy column, you wouldn't have known about it. It is unfortunate, because both of its columnists were good writers. Clearly, they prefer to laze their time away, write the same ghishipiti topic over and over the way Kollywood movies do it, and let the serious stuffs slip by. These writers, who I know read Krugman's column themselves and are well trained, prefer to treat Nepali Times as a stupid who deserves nothing but "economy 101"! Please respect your readers.

3. Arthur
In a make believe world the participants are entrepreneurs, government and the public.

In the real world the goods that "entrepreneurs" sell to "the public" (and governments tax) are produced by workers who sell their labor power to "entrepreneurs" and spend their wages on purchases as members of the public.

If only there were a way for the teachers of "Economy 101" to actually understand that products are produced by workers.

4. Soni
"For far too long, they've been exposed to narrow, ideological thinking. If only there were a way to scale up Arthalaya's reach, Nepal's economy might finally be allowed to prosper."

Politics is far too central to the life of average Nepali student. But that is not a problem, it is the result of the fact that a vast multitude of Nepali youth (even elders) do not appreciate the value of critical thinking. 

They do not appear to appreciate the idea that reaching a conclusion is a process, not an event.

Whether a believer in free market, or a believer in socialist economy, what is most important for people to understand is that there is no quick and easy way to achieve economic prosperity.

It is fine to believe in free market economy as long as you are not extrapolating that belief into an all encompassing philosophy of the answer to the life, the universe and everything. 

I do agree with Chandra Gurung though, I think you should respect us a little more when it comes to talking about these things, move on to more contemporary issues, as it were.

5. Soni
I am always surprised by the fact that given the vitriol over economic underdevelopment of Nepal, and the war resulting from it, issues related to prosperity are completely overshadowed by empty rhetoric and sloganeering.

Someone like Arthebeed, who had the talent and the ability, and Ashutosh Tiwary, same talent and ability, waste their effort over banalities in their respective columns.

This one is called Strictly Business, fine then, lets discuss business.

Ashutosh has the knowledge (aren't you a Harvard or something similar alumni?), skill to communicate, space dedicated to that communication, resources in the form of time available and the fact that he is paid to write this column (persumably) and naturally the inclination since he appears to volunteer is labour instead of being forced by Kunda or Kanak Dixit (I hope).

And yet, nothing of consequence. Let's see what the issues are. 

Inflation, unemployment, technology transfer, ease of doing business, government inaction, loss of growth, inability to tap into migrant talent pool, supply chain management, wastage of agricultural products because of that, land reforms, labour market reforms, not in that order, and many more.

And yet, each of these issues attracts an avalanche of rhetoric, and blames through conspiracy theories and attempts at blaming "the psychology" of someone or the other.

What I would have expected is this. Information, such as, at 10% inflation, if your income grows at 10% every year you are exactly at the same place as you were seven years ago in terms of your consumption power. Or worse given that Nepal's inflation basket does not represent the right goods consumed by Nepali's and is distorted. Reason, why is our inflation so high? Because of both cost and demand factors, what are they and so on.

Intelligent and clear application of facts as they are, to help us, lesser and insignificant mortals, understand what is happening. 

Moreover, if you throw in a few crumpets of wisdom on what could be done to deal with the situation in terms of action to be taken and the probability of it being taken.

For instance, a few months back I read a news story about food (essentially rice) shortage in Western Nepal and the fact that while 200 metric tonnes (or similar) was available in stores, but that it could not be supplied to the right place because the government had not released funds for transportation.

I am sure that crisis will be repeated this year. Why can't we have your opinion on what happened, why and what could be done about it. 

6. Ashutosh Tiwari
Thank you all for your comments. I hope there will be more comments/thoughts/opinions in days ahead. 

That said, I just want to clarify one thing about the title of the piece. As a writer, I do not supply the titles to my pieces: editors decide what heading to give to a certain piece. And I fully support editors' decision to title the articles as they see fit. 

Sure, not every heading (such as this one called 'economy 101') can be to every reader's liking, but let's leave the decision to supply headings to the editors.

Meantime, please keep the criticisms -- re: style, substance, arguments, writing quality, etc -- coming, as non-personal but issue-based negative feedbacks greatly help see and understand what changes, if any, are to be made, and where the rooms for improvement are. 

Thank you.


7. Soni
Hi Ashutosh, since you run a business column let me ask something that perplexes me.

Why is it that nearly 84% of the Nepse is in financial firms. For a country which is really low on everything there is a large number of financials in the stock market. This makes me wonder what they finance.

Do you or anybody else have any explanation (reasonable ones) for this? I know it is useless to expect you to answer because you simply would not waste your time. But then, does anybody else know?

8. Slarti
It is way too kind of you to make a comment in response to what people say. But, may I take the liberty to make a request?

I am really hoping that you would put your intellect to telling us about things that don't obviously meet the eye.

Take the example of the fact that 84% of the Nepse is financials, commercial banks, insurance, development banks and non-banking financials. 

The reasoning behind my placing that was quite simple. I think that it tells us an interesting story about Nepal's economy.

To my mind, there are so many banks because there are sufficient number of depositors, borrowers willing to pay higher interest rates to contribute to the banks margins, and also borrowers with sufficient capacity and credibility to repay the debt for so many banks to exist and be listed on the exchange. I say listing particularly because I assume that there would be disclosure requirements.

On my own, and not being educated in the niceties of careful analysis, I am susceptible to end up with an incorrect conclusion.

On the other hand, I think that you would have the tools, members of the staff to support and the knowledge to carefully look at all aspects of the issue.

If my assumptions are right, then I think you would likely end with the same conclusion that I have ended with. 

That is, while there is sufficient capital available in Nepal, a complete lack of regulations, and the rise of political uncertainty as well as an elite dependent on political power has hampered progress which would have occurred at its own pace. This development would have helped the country set itself up to attract more capital and expertise in the industrial space and allowed it to invest in education to further boost productivity.

You would find that over the past twenty years, if we can control for the fact of political instability, Nepal's growth rate would have been closer to around 8% and that the structure of the economy may have been different.

These are mere assumptions, unfounded if you do not come up with the required evidence.

Many Thanks and with many apologies,


9. jange

8. Slarti

Take the example of the fact that 84% of the Nepse is financials, commercial banks, insurance, development banks and non-banking financials.√Į¬Ņ¬Ĺ

This is part of the strategy to turn Nepal into "Switzerland".√Į¬Ņ¬Ĺ

"A bank on every street" should be our slogan. If we can supply "manpower" to the rest of the world there is no logical reason why we cannot supply "brainpower" to the rest of the world too, sitting right here in Nepal.√Į¬Ņ¬Ĺ

With a global economy of around 70 trillion USD this should be an area of concentration for Nepal. After all, if we can get just 0.01 percent of this we would be doing quite well. After all we are aiming to get .02 percent of the world population as tourists.√Į¬Ņ¬Ĺ

Always wondered about the stock exchange, though. If it disappeared now would we even notice? What impact would it have on Nepal and Nepalis??

10. Slarti
Thanks Jange. While I am not sure what would happen if the stock exchange were to disappear, I am certain that we can use the information provided by it as it is for a lot of good. 

I know I am almost always disjointed and often pointless and I do most sincerely wish I had the ability and the intelligence to express myself more clearly but I simply cannot help but be curious. 

My problem is that I loved and still love this country for whatever it was. Suddenly, things have changed, the people who are in control hated this country and now want to convert into someone else's dream.

I know that there is no way to "win back", but I am absolutely desperate to understand clearly and unequivocally why I am wrong. 

I have scourged through so many books, written by all sorts of people, I simply cannot find an answer to my questions. I put up my thoughts here, in a clear space and still what I find is mind numbing mediocrity. Not that I am great, but I know that I am a nobody. Ashutosh and Kunda Dixit's are somebody, they should know better, right?

Piece by piece and day by day I just hope to add up to a complete, honest story. I want to know why I am one of about a 100,000 people who think what has happened is horrendous.

I want to know why other people think differently, from every angle possible, on the basis of clearly discernible evidence. I am not going to be able to do anything with what I find, just as I cannot do anything with what I already know.

11. who cares
why most of the listed companies are from financial institutions?

i my view:

1: trend

2: transparency, goodwill: since listed companies are being watched more than non listed companies by media, member of public and there are more authorities who keep an eye on these companies. 

3: business decision: in the case of financial institutions, insurance, mutual fund- which one do i trust more with my money, investment, deposit among listed and non listed? i prefer listed, cause of no 2 reason.

4: size: generally in nepal, other than banks, companies are not that big so they do not list themselves. and even though there are in smaller no, big companies do issue share to public like hydro, some hotels. 

i think all big companies (nepalese standard) should issue shares to public for goodwill, security (to get public support) etc reason.

12. Deep
Nepal turned into Switzerland? I don't think major investors and holders of capital see it that way at all! Switzerland and its banking system is commonly acknowledged as the most stable of nation states - Nepal is seen as quite the opposite. I would think that, in the absence of an industrial base producing  value embodied in concrete commodities, the bank's assets are composed of  1; remittance deposits by hard working Nepalis abroad - 2; profits and loans of the bloated real estate market. (There is a relation between the two, as personal remittance is often invested in family housing etc.) Recent global economic history tells us; sustained inflated property prices over a long period means that what is actually debt owed on real estate is repeatedly repackaged and sold on as valuable assets to use as 'guarantee' to increase further borrowing and lending. Sooner or later a wave of insecurity or a scam emerges and 'assets' inflated by manic speculation are revealed as worthless debt. It all comes down like a pack of cards - Nepal looks set for a fall like this.    

13. Narusha
Maybe this happens everywhere. Why should it not here? 
I'm really frustrated for being a part of it.
This is human tragedy. Thus Nietzsche's Birth of Tragedy From the Spirit of Music.
....Give up....give up....
Give up your omniferous notions.

Don't give up writing, though.
Apologies .

14. chandra gurung
Hello Ashu,

Thanks for the response. I am glad Economy101 was not your title, because it was a stupid choice as a title.

I think you should write whatever you feel very confident to write about. But it should have depth and substance. Sometimes, I feel that your articles are too management related. I prefer it if you write things that are more related to economy and economic trend in general. I also hope that they are related to recent events, recently published economic data etc. You have a gift of good writing skill, and I am sure you are confident enough to ask incisive questions to policymakers every once in a while so that you can report to us something that we would otherwise not know.

15. Tori Lahure
1. Who cares
* so called commie philosophy sounds perfect, simple, attractive but it does not work, but easy to sell to mentally unfortunate.

you put it nicely. There are scores of people who have brilliant ideas but no guts to materialize one of them. They want those ideas to be executed and bring into life by someone else and want the credit of the idea.
Nepal needs people who can go to places and execute those ideas and bring it to life. Such lectures and "commie philosophy' my help mentally unfortunate and those who believe in ideas only. Grow up "Social entrepreneurs!"

(11 JAN 2013 - 17 JAN 2013)