Former Governor of the Reserve Bank of India Raghuram Rajan takes a minute to explain what bananas reveal about markets and governments, the importance of communities in economics, and whether China or India has a more enviable economy.
What do bananas teach us about markets and government?
Well, the European Union wanted to create uniform rules across the Union, and one bureaucrat there decided that amongst the rules were the curvature of bananas that were allowed, as well as the curvature of cucumbers. A rule went out that you couldn't serve bananas and cucumbers which had more than a certain degree of curvature. It seemed nonsensical, but it tells us that as markets grow, government also grows with it.
What does a healthy community look like?
There are plenty of healthy communities. Typically, there's a leadership that people believe in. There's also engagement, people look out for one another without being forced to do that. And I think across the world, whether rich or poor, you can find these communities.
Is China's or India's economy in a more enviable position?
China has the perfect administration and economy for where it has come. So, it's done wonderfully well, but it has constraints going forward, amongst which are the lack of democracy. India has the perfect economy for what is to come, but it first has to get there.
Who is the most important economist of the last 100 years?
I think it's it's really a contest between John Maynard Keynes and Joseph Schumpeter. Both very exciting economists.