December 15, 2011
Understand just this: The two iron laws of economics
There are many "laws" of economics (although rarely are they called by such a name).
The following two "laws", in my view, summarise the essence of the economic way of thinking:
Iron Law No. 1: THERE IS NO FREE LUNCH
Iron Law No. 2: INCENTIVES DRIVE BEHAVIOUR
If the people of India (and of the world) manage somehow to understand just these TWO "laws", India (and the world) will transform into a much happier and wealthier place.
I would even argue that these "laws" are FAR more powerful than the Golden Rule itself ("do unto others as you would have them do unto you"). The Golden Rule is frequently violated (including in the long run). These two laws, however, can never be violated during extended interaction.