My inner economist finds a strange beauty in the ingenuity of people noticing and availing themselves of this kind of arbitrage opportunity.
”Our one rupee coin is in fact worth 35 rupees, because we make five to seven blades out of them,” the grocer allegedly told the police. “Bangladeshi smugglers take delivery of the blades at regular intervals.”
Some readers might be aghast at such open admiration of what is essentially a smuggling operation. I understand the moral objections to smuggling. I might even share them. I say “might” because there will probably be a “depends” somewhere in my response to questions about my moral views of smuggling.
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June 29, 2007 at 5:24 am
Asif
Saif,
Really interesting post as usual. I like the new look, especially the header picture. One request however: please do restore the recent comments section, because that way we could easily see ongoing conversations and join in!
June 29, 2007 at 6:24 pm
addafication
Your wish is our command. The comments section is restored!
July 2, 2007 at 11:54 am
Anthony
I have no such qualms. All hail the power of arbitrage. These smugglers are defying artificial controls and improving general welfare. Arbitrage zindabad!
July 5, 2007 at 12:20 am
Saif
I agree completely about the artifical controls bit. If you focus on shaving blades only, your’re probably right about the general welfare bit as well. It’s not so simple though, methinks, because smuggling often is highly correlated with other kinds of criminal activity and the corruption of public officials in border states. I would still tend to come down on side of the coin-melters on this one, but not as a general proposition…
July 5, 2007 at 7:07 am
Anonymous
I was talking specifically about these bladerunners.
Yes, in general, corruption is linked with other crimes and corruption. But then, corruption thrives when there is government control. Put it this way, in most (though certainly not all) cases, corruption occurs because of the incentive incompatibility of government policy. If a policy wants you to do X, but the incentive structure is for you to do Y, you’ll find a way to bend the rule to get Y done. That bending of the rule is what we call corruption (in most cases, yes there are exceptions). You want to reduce corruption? Choices are, either come up with a better way of getting X done, or accept Y as the outcome.
July 5, 2007 at 11:52 am
Anthony
And strangely, I became anonyomus in the above post. Well, Bladerunners Zindabad!