Sunday, February 10, 2008

Online GD topic 4

Thought it was time for a vague topic. This is something that people are usually not comfortable with and hence I thought we should do a couple of them, so that we can learn better.

The topic is "Smile, it is a weekend"

It sure takes some time to come out of shock from a vague topic. And hence working on a couple of them prepares you well. I hope that you guys have read the previous years, fundae on vague topic. Here are the links for quick reference

Fundae to handle vague GD topics
GD Topic - A world with no sundays

And be as creative as you like, but try and give a structure to your thoughts. Dont follow too many rules, just go ahead and enjoy.

A small note - This is the 100th post on this blog. I happened to notice it a couple of days back and felt pretty happy that what started out as a small enthu project has become useful to many people. I have had difficulty in keeping pace and giving lot of time, but I am happy that when I have put my time, I have given something valuable. Thanks for all those who patiently come here.

Also the blog has crossed more than 21000 page hits. The fact that many people find it helpful has been a driving motivation and inspires me to chug on.

As always, suggestions, disagreements and brickbrats are welcome in the comments section of the blog or you can mail them to


Thursday, February 07, 2008

Women Empowerment and Divorce rate - Complete Analysis

I have given two of my approaches to this GD. Both are drastically different and given a choice I personally would go with Approach 2. But note that the approach you should take is what fits your thought process and where you think you will a natural.

Approach 1 : Traditional

Start: In the last decade, women have been empowered legally - the active judiciary and pro-women laws, socially - equal property rights, economically - increased
women workforce and even politically. the last decade also has seen an increase in divorce rates in the country. While it looks like an obvious side effect
of a great social change, we should look deeper and see if it is a bad effect at all

Middle overs:
  1. The increased rate could just be that the actual fractures in relationship are coming in open rather being hidden as before. Earlier the split may not have been official, but may have still existed. So just looking at the numbers may fool us and we should be careful before drawing conclusions
  2. There may have been cases where splits have occured because of the man not able to sink in the idea of the woman being stronger economically. But in this transition phase, as society starts accepting women in a broader and equal role, the husbands will accept too. This may actually even lead to healthier relationships
  3. Society has also slowly started accepting divorce as a possibility and has reduced the tabboo. This also has made many women come out of stifling
    relationships. If this has increased divorce rate, this may actually be a positive development. I have though that two people should work out relationship rather than take the easier route of walking out.
  4. Many breaks also have been because of in-laws not being able to handle the empowered daughter-in-law and unable to handle the changed social interactions. Since it has been less than a generation, they are bound to happen, but the society has been fast adapting.
Approach 2: Classic
If I was in great form on the day of the GD and If I was late to get in (being a lazy guy, I usually dont start a GD anyway) and a couple of strong men and women had stolen the limelights with all the obvious points, the following would have been my line of discussion.

  1. I believe that though this is termed as a man's society, women always had a stronger say in a family. They have almost always decided what happens at home. The new talk about empowerment is only limited to visible things like jobs
  2. Note that divorce has always been an urban phenomenon and still is. The increase rate could just be because of the increased urban migration and women empowerment could have had a very small contribution if at all. Most of the urban migration is also in the age below 40 years and hence the skew could be more.
  3. Empowerment leads to increased divorce rate is like saying that if employees are empowered and more knowledgeable about their rights, they will quit the organization. I dont see any correlation except that the oppression and exploitment reduces.
  4. People have more incentive to stay in a relationship because of empowerment. They have lesser fear their husband will beat up, husbands cant oppress so easily because the society scoffs at it and hence relationships are more harmonious.
The second approach was to show that it is not bad to bat at No 5 or 6. You may not get a chance to hit a century often, but you almost always have a chance of scoring the winning runs. So dont concentrate too much on starts. Think hard on getting the non-abvious strong arguments.

Comments welcome on the two approaches and counter arguments on any of my points

Monday, February 04, 2008

Online GD Topic 3

Good going on the GD preparation. I am happy to see good points on the second topic. Though you should not get complacent, because it was an easy topic. And I did not see anyone breaking ahead into the lead taking a strong surge

While I put my brains to work on the analysis, it is time for the new topic

"One superpower is better than two"

Discuss this in the confines of US being the superpower now and other such things.
This is a very balanced topic to have a good discussion. It is not a topic where you come in with previous opinions, like in the previous topic. This is where you think on the history and form opinion, give structure, put it across forcibly - all in a matter of minutes in a GD and in a competitive environment

So let us see the best in you come out. Let out the swords and the warcries


Sunday, February 03, 2008

Tax cuts and Recession - Complete Analysis

Click here for the topic

If the topic scared you, thats what it was meant to do. Time to brace yourself up and read. And read a lot. GD preparation does not come just by talking. It comes more by listening, reading and discussing. Shake the party mood of CAT victory and dive deep in

Note that logical topics should be dealt with in a very step by step approach. Many of you are straying from the topic try to put out everything you know. Note that in a GD, you will not be able to say everything and if you stray the group will cut you down... and if you keep doing it, they will ignore you.

Below is my take on the topic.
Start: Goverments have but few tools to steer their economies. Tax cuts is one of them. But in any marco-economic scenario the results take time to come in and it is very difficult to attribute one reason to the end result. Any analysis of a macro economic solution hence begins with a "it depends"...

Middle points:
1. Though it is true that tax cuts result in less money in the hands of govt in developed economies, in many developing economies, it has resulted in more money in the hands of the govt. People tend to pay taxes more honestly when the cost of compliance is low
--- This brings in a shift in thinking to many of the group's arguments. It is key in the GD to think broad

2. Tax cuts result in more money in the hands of the people. In a recession, when people are constantly getting hit by bad news, this may not always result in more spending but may just result in more savings. Hence tax cuts have to be necessarily followed by disincentives to save - which means lower interest rates and probably higher tax on interest income.
--- This is a show stealer. You make one such comprehensive comment and not only that the group will listen to you anytime you talk, but the profs would have ticked a 10 on 10

3. To pull an economy away from recession, apart from encouraging spending, it is important to incentivise Production too since GDP is the final measure of success. Tax cuts for corporates increases margins and gives them an opportunity to lower prices, hence curbing inflation and encouraging spending
--- Looking from the other angle. Bringing corporate tax and not just talking about personal tax.

End Game
Though tax cuts look positive for a receding economy, it has to be used carefully and with a host of other tools since it is very difficult to reverse if the need arises.
--- Strong one sided approach in macro economic theories never work. Same thoeries that work for one nation have spelled doom for others

Comments welcome. That is what makes the discussion interesting. I would like people countering the moderator, specially when I take a one sided stand. Come on guys

Points the team put, and my comments are below

Anonymous said... I think tax cuts will add to the burden of the govt and increase the deficit. Ofcourse the tax structure can be changed to benefit certain sections as well as to maximise the revenues.
--- Both sentences are right. But neither have you touched recession, nor the impact of tax cuts on it. Deficit is increased, but is that bad is the question? The key in GDs is not to make generic statements and leave them open ended.

Smriti Mehra said... Well, there is a very relevant topic of today and no country other than US can be a live example of this. Post the dot com bubble and the housing problem, the Govt. as well the Fed are trying to take steps to control the falling GDP growth rates in US using tax concessions as well as by decreasing the interest rates.
--- Good example and strong point. This is good in the middle of the GD though. But avoid starting on a narrow lane. If you begin with US, discussion will move in that direction. If you are starting the GD, set a broad platform and direction.

#1 With the fears of US heading towards recession, we need to take a look at why the tax rates are cut -- my understanding here is they would increase the consumer income and subsequently the consumer spending. US govt has been cutting tax rates over the years, atleast post the dot come bubble, then why hasn't consumption and GDP risen in US ? These are the questions we need to ask before heading towards any conclusions
--- Very good point. A strong point in the middle of the GD, showing the group that before we reach any conclusions, we need to know how tax cuts affected last time

# Post the sub-prime crisis, skeptisms have increased in Investments in US and this is already a detterent to the GDP growth rate. Besides as already pointed out by my friend above, they decrease the income of the Govt, and thus causing budget deficit in the country.
--- Deficit budgets are considered good for growing economy. If the govt has a surplus budget, that means it does not know how to spend the money it collected. Though deficits have to be controlled, they are not bad by themselves

# Even when in India, Mr. P. Chiddambram announced his dream budget in 1997 and announced the tax rate cut although it was hugely welcome by the general public , it failed to have the desired impact. The reasons, though many, but can also be attributed to the Asian crisis, the Harshad Mehta stock market scam and then the dotcom bubble.
--- Good try to get India in picture, but I think you are diverting from the topic, since tax cuts of Chid had nothing to do with recession.Hence, with all these points, I would like say to that merely tax concessions are not the only solution to any economy, and particularly the one heading towards recession.

A bigger combination of the macroeconomic picture along with the consumer sentiment need to be taken into account for deciding whether they will have the desired impact or not.
--- Conclusion not strong enough. Also generic ending does not help. When you conclude, you have to be very specific.

alapatt said... The lesser the tax the better is for the economy, especially for developing countries and countries like India, China, Brazil etc would be the most important benefactors.In India too the finance ministry and the economic advisory commitee to the PM have been showing signs of going in for a cut on taxes.It would fuel market growth and investment Opportunities.
--- Need to get to the point of recession a little quicker

Tax cuts on the higher sides are suited for developed countries because they are already self sufficient and they could afford paying taxes to ensure a good quality life. The best examples are Norway and countries in the scandinavian belt and as a result these countries also figure in the top ranks in the World,s most suited places for buisness.
--- Still not got into the topicIndian market

were the last to get affected by the US down turn(SUB prime and the Bad debt recovery problems), it also shows that Indian markets are evolving in its own way focussing on our domestic needs,so the tax cuts would definetly help in countering our infrastructural and power related challenges, people would be persuaded to spend more.
--- Coming along into the grove nicely now, but note that if you don’t make your points crisp and fast, the group will start talking before you finish.

The deficits in the market can be offset by diluting stakes in the public sector fund holding if at all crunch situations arise. The stakes in the government holding can be lowered till 51% and we have seen signs of this in the case with Maruti,BACLO etc.The stocks are more integrated and the new measures by the SEBI can eliminate fraudsters.The registration of Participatory note holders and short selling concepts with rigorous and concrete checks in place are the right way forward
--- you were coming into some good points above and you moved away completely into a different world altogether here. I am sure you have lot of comments to make on the tax cuts, why are you getting completely diverted?

Jason Bourne said... Let us first look why the US economy is on the verge of recession :1.Slump in House market-Huge Number of Unsold Houses are forcing Real estate prices to go down2.Oil Prices-With oil price approaching $100 a barrel, it is responsible for weaking the purchasing power for other goods.3.Credit Issues-After Subprime Crisis Investors and Lenders are bit cautious and therefore there is liquidity crunch in US economy.
-- Nailed the points clean. Though for a start, US economy is a little narrow.

Although recession has its own downsides like Unemployment,Low Profits,Slow Growth,Low Motivation among Investors but it has few upsides as well like it helps to dampen inflation,helps investors to make careful and strategic long term investments.And thus it is advtangeous for economy in long term
--- Great point. You steal the thunder when you bring in insights like this. The group should note that it is important to analyze the key words in the topic and look at it from all angles

Now let us look at Implications of Tax Cut:1.Some mite argue that Tax Cuts will allow Consumers to take more money home and thereby it will increase their spendings.However in the current scenario most of the consumers are afflicted with debts of different forms and thereby most of the spendings would be to ward off the debt.
--- Correct. But clearing debts help the health of the economy

2.Unnecessary tax Cuts and Interest Cuts will lead to Inflationary pressure and therby can induce a Recession much bigger than current one.
--- Correct and good point. Only that you should have not used the word unnecessary

3.Also they will reduce Money with the Government and theryby increase the deficits.
--- good point again

Utsav said... Tax Cuts are like a double edged sword. Although it increases the spending power of the people, it also increases the deficit. It seems, according to me, a quick fix solution to a reccesing economy.
-- if it is indeed a quick fix solution, then why not

There are other ways to increase the spending in an economy which would help to turn it around. Decreasing the intrest rates, As done by the US Federal reserve recently, would mean that loans become cheaper and more money is available for use by the public.
--- good point

Also it frees up a lot of money that can be invested in other emerging markets like India and China, thus earning high returns.
--- questionable, but good thought.

Another way is for the Government to increase spending. This will lead to increased consumption figures. However in this method, deficit increases.
--- why does everyone hate deficit

In case of Tax cuts, once the Government cuts rates, then it has to rely on the public to increase consumption. It loses control of its own money which can be harmful in the long term w.r.t. developmental projects as the Government has to contend with less spending.
--- good point

Click here for the topic