Demonetization - 3
Nobel Laureate Bengt Holmstrom (Economics -2016) made a compelling comment on all kind of bans, when he drew an analogy with Prostitution.
When asked to comment on the efficacy of demonetization as a tool to fight corruption he said (paraphrased and as reported in ET) " this debate on Demonetization is lime the prostitution debate: making it illegal makes it worse."
How do they create and where and what do these criminals use the stash of big bills; this is not thought thru deeply. And Govt with bans make it worse.
So this is the same as debate about prostitution: you decriminalize it and good outcome is that it comes out in the public. There is then some sort of protection for the workers and regulation of industry.
Similarly if you want to curb black money you need to make things legal, that result in creation of black money. But if you make it illegal the results will be worse, like less protection for women.
Are bans and prohibitions consistent with the march of civilizations in 21st century?
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