cafeconomics

In 1997, Clayton Christensen published The Innovator’s Dilemma, a book that became the Bible of Silicon Valley. His theory was elegant and terrifying: successful companies don't fail because they are stupid; they fail because they are rational.   Christensen argued that incumbents naturally focus on their most profitable customers, ignoring cheap, inferior, and "disruptive" technologies at the bottom of the market. By the time the disruption matures and improves, the incumbent is too slow to pivot. The history of business is littered with the corpses of companies that proved him right: Kodak, Blockbuster, Nokia, and Sears. But if you look at the landscape today, the prophecy has stopped coming true. The dominant tech giants of the last two decades—Google, Amazon, Facebook (Meta), Microsoft—are not being displaced. They are getting stronger. The "churn" that characterized the 20th-century economy has been replaced by an era of unprecedented dynastic stability. Wh...

Every year, as the Union Budget approaches, we brace ourselves for a barrage of heavy economic terminology—fiscal deficits, GDP targets, and sectoral allocations. But for the average urban Indian, the "health of the economy" is often measured by much simpler metrics: Does the street outside my house flood when it rains? Is the local government school adequately staffed? is the neighborhood clinic clean? ​For too long, the answer to those questions has been a frustrating "no." ​Our cities are the growth engines of India, yet they are groaning under the weight of crumbling infrastructure and under-resourced social services. Simultaneously, we face a persistent challenge of urban unemployment and underemployment, affecting everyone from manual laborers to fresh graduates. ​This Budget season, my primary wishlist item isn't a tax cut or a corporate sop. It is a structural reform that addresses both urban decay and urban joblessness simultaneously: A National Urba...

Why the Cost of Living Keeps Rising Even as CPI Hits Record Lows** India today presents an economic paradox. Headline inflation, as measured by the Consumer Price Index (CPI), is at multi-year lows. The Reserve Bank of India (RBI) cites this as evidence of macroeconomic stability and policy success. Yet for most households, especially the urban middle class, the cost of living has never felt higher. Healthcare bills, school fees, rent, and daily services continue to rise relentlessly. This disconnect raises a fundamental question: does CPI reflect the economy people actually live in? What CPI Measures — and What It Misses CPI tracks changes in retail prices of a fixed basket of goods and services. In India, this basket is heavily weighted towards food, which accounts for nearly half the index. As a result, when food prices remain stable—due to good monsoons, government procurement, or imports—headline inflation falls sharply. However, over the past two decades, household spending patte...

For decades, the global academic hierarchy has followed a consistent pattern. Countries across the Global East and emerging markets function as major producers of scientific and intellectual talent, while Western universities serve as the institutions where that talent is ultimately consolidated, recognized, and rewarded. This imbalance is most visible in the distribution of elite academic honors such as Nobel Prizes and Fields Medals. A review of laureates reveals a striking trend: surnames and personal histories that trace back to India, China, Iran, or the Arab world are frequently paired with institutional affiliations rooted in the Ivy League, Oxbridge, or elite European research institutes such as Max Planck. This asymmetry is not a function of talent distribution. It reflects the structural advantages embedded within Western research ecosystems. 1. The Architecture of an Award-Producing Research System Major scientific breakthroughs rarely emerge from isolated moments of individ...

As 2025 draws to a close, China’s trade surplus has crossed the extraordinary threshold of $1 trillion. This figure is both a testament to China’s unmatched manufacturing strength and a warning sign of deep global imbalance. Left unchecked, such surpluses risk fueling protectionism and escalating trade wars. But there’s a more constructive path forward—one that turns friction into partnership: redirecting China’s trade surplus into Foreign Direct Investment (FDI). The Idea: Proportional Capital Recycling Instead of draining demand from its trading partners, China could recycle a portion of its surplus earnings back into those economies as productive capital. The mechanism is simple but powerful: - Direct Proportionality: FDI flows would be tied to the size of each partner’s trade deficit with China.   - Targeted Sectors: Investments would focus on local manufacturing, green energy, and value-added industries.   - Local Value Creation: By building factories and supply...

A depreciating rupee is often viewed as a symbol of economic weakness, but this interpretation overlooks the broader strategic and structural advantages that can emerge over the long term. To begin with, the market conversation must gradually shift away from nominal exchange rates and toward the Real Effective Exchange Rate (REER), which adjusts for inflation differentials with trading partners. India’s REER has often remained overvalued even when the nominal rupee weakens, meaning a degree of depreciation is not only natural but necessary to maintain export competitiveness and macroeconomic balance. This competitiveness becomes even more valuable in today’s era of rising tariffs and protectionism. As global trade barriers increase, a weaker domestic currency effectively acts as a non-tariff buffer that supports Indian exporters without directly engaging in trade wars. For sectors like textiles, pharmaceuticals, engineering goods, autos, chemicals, and IT services, rupee depreciation b...