Quotes from Raghuram G. Rajan

Not taking risks one doesn't understand is often the best form of risk management.

it is not because of the benevolence of the baker that we eat fresh bread every morning but because of his desire to make money.

And more than the quality of its institutions, what distinguishes a developed country from a developing one is the degree of consensus in its politics, and thus its ability to take actions to secure a better future despite short-term pain.

Autobiographies are always written as if the author had it all mapped out with perfect foresight, ignoring the risks and uncertainties at that time. This misleads, as much as those beautiful photographs of a past holiday abstract from the heat, the mosquitoes, and the lack of connectivity.

Policy making invariably involves taking measured risks in the face of uncertainty, for one has neither a prior template nor the luxury of indecision.

A book is almost always a collective effort, even if it has only a single author.

A forced equalization of wages that disregards the marginal contributions of different workers will deaden incentives and lead to a misallocation of resources and effort.

India is becoming a large middle income country, too complex and varied to be controlled centrally. The government will need to withdraw from occupying the commanding heights of the economy, confining itself to providing public goods and the governing framework, and leaving economic activity to the people.

Finance is not just about lending, it is about recovering loans also.

We have all been hacked, the only question is whether you know it or you don't'.

I thought there might be some grand design I did not understand, but the government's policy clearly was not working, because India was still poor. I was determined to learn more, so I became interested in economics. This book is another unintended consequence of the government's policies.

Nationalism, coupled with great faith in the power of the government to enact domestic bargains between labor and capital, has been seen before: it was called fascism then.

the rule of thumb' referred historically to the maximum width of the stick with which a man could beat his wife without breaking the law.

Society suffers when any of the pillars weakens or strengthens overly relative to the others. Too weak the markets and society becomes unproductive, too weak a democratic community and society tends toward crony capitalism, too weak the state and society turns fearful and apathetic. Conversely, too much market and society becomes inequitable, too much community and society becomes static, and too much state and society becomes authoritarian. A balance is essential!

We have long understood that it is not income that matters but consumption. Stripped to its essentials, the argument is that if somehow the consumption of middle-class householders keeps up, if they can afford a new car every few years and the occasional exotic holiday, perhaps they will pay less attention to their stagnant monthly paychecks.

Cynical as it may seem, easy credit has been used as a palliative throughout history by governments that are unable to address the deeper anxieties of the middle class directly.

Excessive rural credit was one of the important causes of bank failure during the Great Depression.

they will naturally focus only on dealing with a few scapegoats, not just because the system is harder to change, but also because if politicians traced the fault lines, they would find a few running through themselves.

Should the Governor disappear from public view and not speak for fear of misinterpretation, or should he take the risk in order to discharge his responsibilities?

Government, even in a democracy, can be captured by a small, well-organized class that has little interest in seeing broad-based access to finance.

Do not believe that you can find a universal remedy for evil conditions or immoral practices in effecting a fundamental change in society (as by State Socialism). And do not pin too much faith in legislation. Remedial institutions are apt to fall under control of the enemy and to become instruments of oppression.6

The Indian public would benefit from more competition between banks, and banks would benefit from more freedom in decision making.

mind is a terrible thing to waste, and the United States is wasting too many of them.

No institution is bigger than the people who work for it.