Friday, December 31, 2010

Top Noam Chomsky Lies

Good ‘night’ at Vienna

The “intimate enmity” or Bapu’ and ‘Babasaheb”

  • DR’s stroke of genius is to see that the ‘self’ in Gandhi’s project of ‘self-purification’ is the upper-caste self; the ‘self’ in Ambedkar’s project of ‘self-respect’ is the lower-caste and untouchable self. The two political projects, thus, unfold upon different subjects, even as they appear to both address one and the same social evil, namely, untouchability. For Gandhi, it is the upper-caste person who must purify his being of the ‘sin’ of untouchability through a variety of spiritual practices; for Ambedkar, it is the untouchable who must reject the entire history of his humiliation at the hands of caste society and embrace equal citizenship. Gandhi’s motivation is his deep religiosity; Ambedkar’s is his thoroughly political understanding of human life and human dignity. Gandhi comes to the problem of untouchability from the side of tradition; Ambedkar’s approach is radically modern.  

  • DR knew how to index his appropriation, equally, of Gandhian and Ambedkarite politics, and he forced us to think: Why not? Why should we not learn from our two greatest modern thinkers how to make sense of caste and how best to critique it? Why should the Dalit Movement eschew the Mahatma’s legacy, which is India’s most potent ethical inheritance from the freedom struggle? Is it really worthwhile to ridicule and denigrate Gandhi’s sincere—and in its own way, successful—war on untouchability, just to assert Dalit pride? If you have to lose ahimsa in order to reject the category ‘Harijan,’ then that is just throwing the baby out with the bathwater. DR astutely used the language of intimacy, familiarity—and love—to show up the poverty of identity politics in Dalit discourse. He always said/wrote ‘Gandhiji,’ ‘Bapu’ and ‘Babasaheb’, as a reversal of the unthinking, self-defeating patricide that has marred and embittered so much of post-colonial India’s ideological life. 

  • In fact, in my view, DR was beginning to appreciate that Ambedkar’s own turn towards Buddhism at the end of his life was an effect of Ambedkar’s dissatisfaction with a purely political, constitutional and materialist solution to the inequity and injustice of the caste system, and also of Ambedkar’s realisation, after Gandhi’s death, that his greatest adversary had, in many crucial ways, been right. To forget and deny caste altogether would mean, for Dalits, to cut themselves off from their communities, unmoor themselves from their histories, and become mired in self-loathing. Ambedkar came to recognise that these costs were too high a price to pay for the emancipation of the low-caste subject.  

  • Untouchability for both Gandhi and Ambedkar, at the far side of their decades-long wrangling with one another as intimate enemies, converged as a problem that was not primarily one with material dimensions—land, agrarian relations, poverty and so on—but as a problem of value structure, having to do with the very soul, the psyche, the spirit, as it were, of Indian civilisation. At the end, Ambedkar left Marx and went to the Buddha; Gandhi began in Manuvada and came closer to the Bhagavad Gita. Bapu and Babasaheb, one a Bania, the other a Mahar, had changed one another irrevocably. To use DR’s words, “the beauty and the horror” of their respective positions on caste had been reconciled, synthesised, interchanged and brought into a truly dialectical relationship: beauty, from the idea of equal citizenship and the revolt against traditional inequality, and horror, from the nitty-gritty of positive discrimination and compensatory justice. As a matter of fact, Indian society could not progress without both the idealist and the materialist aspects of the struggle to undo the damage of caste. We needed as much the spiritual exercises, the disciplines of self, advocated by the Mahatma, as we needed the affirmative action of the new Constitution, drafted under Ambedkar’s supervision.  

From “Let Poetry Be a Sword!” by Ananya Vajpeyi

The trickle down theory of bureaucracy

Prof Jagdish Bhagwat writes

  •  Even a blind man will tell Transparency International: “I saw him take a bribe with my own eyes.” Indeed, a distinguished Indian bureaucrat, a man of unimpeachable character, once told me that his mother had told him: “I believe you are not corrupt only because you are my son!”  
  • ……..when the East-Asian financial crisis broke out, there followed a systematic attempt to pin the blame on the affected countries: ‘crony capitalism’ allegedly had somehow crippled their economies! In other words, the acquaintances and benefactors of the East-Asian leaders were ‘cronies’ , whereas those of US leaders were ‘friends’ ? 
  • In fact, it was clear that the culprits were the International Monetary Fund and the US Treasury, which had encouraged a shift to capital-account convertibility without understanding that the case for free capital flows was not symmetrical with the case for free trade.  
  • Once the system had taken root, corruption percolated downward , from senior bureaucrats and politicians, who could be bribed to do what they were not supposed to do, to lower-level bureaucrats , who would not do what there were supposed to do unless bribed. Clerks would not bring out files, or get you your birth certificate or land title, unless you greased their palms.

  • "There is widespread acceptance of graft in the society. No parent gives a damn about monthly salary, all they are concerned about is whether he [the groom] is at a position which allows him to take bribes," he said.

Thursday, December 30, 2010

English Affairs

"Lakhs of children studying in unrecognised English medium schools are not counted in most official data as that only includes recognised schools. So, the numbers could actually be much higher,"

But I do not know how many of you read the below passage.

Democracy and insurgents in modern India

That is how I could think of after reading T K Arun’s article in today’s ET. Some questions posed by him are really needs for deeper thinking. Some excerpts: 

  • In every nook and corner of India, some priest or preacher routinely extols verses from the Bhagavad Gita, in which none other than Lord Krishna urges Arjuna to perform violence in pursuit of dharma. Should this call to violence invite the wrath of the state?  
  • How should the state treat a Maoist sympathiser, one who does not take part in or abets any violent activity, but articulates empathy with the Maoist cause?  
  • Yet democracy had little meaning in large swathes of India, where extremely unequal distribution of assets and social power made a mockery of the Republic’s promise to remove poverty and ignorance and disease and inequality of opportunity.  
  • Members of India’s aboriginal tribes belong to this category , for the most part. And they have been mobilised by the Maoists, citing not just failure of the state to protect them from oppression but also the state’s role as primary oppressor , usurping their land and restricting their means of livelihood.  
  • All those who fail to act to secure movement towards the democratic ideals of the Constitution are, in reality, enemies of the people, and of the state, if the state is truly of, for and by the people. 
  • The aim of the state should be to resolve conflict, not wreak vengeance. So, the option of a negotiated settlement is always open for the state, should the Maoists give up violence. 

But for the court verdict one should give thought to professor Bibek’s article.

"Phiphty-phiphty, boss, phiphty-phiphty"

  1. All Gandhi's Children
  2. Two Indias

Sorry, we can't

 Liberals should accept defeat and get back to their goals

Nitish Raj

Tuesday, December 28, 2010

Who don't welcome 2011?

  1. Eleven things you shouldn’t do in 2011
  2.  Books and films I would like to see
  3.  News TV 2010

Market process reduces inequality

Chandra Bhan Prasad says:

“I know Dalit entrepreneurs who manufacture copper wires and cables for use by the Indian Railways and the Delhi Metro, which proves that these businesses are competitive, quality-oriented and efficient. This is what Dalits in business want to prove today: they are good as everyone else,”

Blame the hollowness of pity politics, not good economics

When we all see and read the words written on the walls of print media, electronic media, blogosphere etc in almost everyday; the unfettered drama and hollowness of pity politics and the mass murder of people in this republic is no less than the increasing of shamefulness on our face. I use the word “our face” meant to imply the liberals of India

Of courses there is a demand for movement for second independence, the economic freedom. The movement being called upon is visible yet only among few groups of people. But what reminds me always the words of thunderous silence of stones not being thrown in” at masses in this country to evoke against the pity politics which neither have good understanding of good economics nor have good intention to understand them first. Let it be clear about the movement of change that we all wanted to have in India in this twenty-first century. The movements are unfolding almost like scattered lights on the sky year after year! The journey of Centre for Civil Society (Delhi) is almost fourteen years old, the Sanjeev Sabhlok’s journey is more than a half dozen years old, the one man army of Sauvik Chakraverti’s movement is perhaps equal to the CCS’s journey or one of the longest journey if you take into account overtime works!!

What prompt me to say above lines is very simple that the blame game on India’s economic reform is mounting like anything. I am not referring the mass scams and corruptions which we all witnessing now. The process of pity politics has inflated the mass suicides of farmers in India and not by economic reforms. One can say more ‘if’ and ‘but’ taking many other issues of social and cultural aspects. I think I have conveyed the message I wanted to record here.

Politically motivated borders of Indian States

The economically motivated community like investors both public and private sector; the Indian State is a boon for their market, no matter what they produce and where they produce and sale. If they change their strategies as per the requirement of their local market they can sale anything! 

  • Taking again the example of pulses not traded in the futures market, and considering their daily price volatility over a two-month period in 2009, we find unexplainable abrupt jumps in spot prices. For example, the July 16 announcement by the State Trading Corporation to import pulses made tur spot price jump by close to 68% and urad by 37% in one day in the Delhi wholesale market!  
  • In the name of food security, the borders separating Indian states are as stringent in movement of agri-commodities at international borders. Within the political boundary of each state, trade in agri-commodities is subject to a plethora of regulations and taxation, not least of which are those under the APMC Acts. It also builds up costs of intermediation leading to cost-push food inflation, especially during food underproduction like that witnessed in 2008. 
  • While augmenting supplies is a goal achievable only in the long run, steps to remove the panoply of state level regulations binding agri-commodities trade would enable creation of a pan- India market, leading to faster and efficient movement of these goods. This would debottleneck the agriculture supply chain and bring down intermediation costs.  
  • There are no silver bullets to tackle the demon of food inflation. But targeting futures markets is not just barking up the wrong tree, but also counter-productive as evidenced in commodities such as pulses. An immediate step in managing food inflation would be to strengthen the market institutions that transmit market information in an effective manner so that agri-commodities are passed on to consumers with minimal risks which can be absorbed by the system.  
From Mystery behind food price spiral by Naveen P Singh

Monday, December 27, 2010

Blinking links

“Juvenile delusion” of using senses

Assam is the first State to Guarantee Right to Health in India. It is nothing but bizarre in the Indian society.

As GMU Professor Don Boudreaux put it rightly:

Talking about “rights” to scarce goods and services sounds right only to persons who are economically illiterate, politically naive, and suffering the juvenile delusion that reality is optional.

Vision of New India

......a short-sighted libertarian dogma which has nothing to do with liberalism. Human wealth is not created in serious liberal societies by lowering the benchmark of higher education in this manner. Liberal education is a sustained and controlled matter, where practicality is directly related to searching analyses and the fecundity of thought processes. The real leaders of the market know this, and often get their best recruits from the Classics and Rhetoric departments. It is a pity that the flag-bearers of liberal India have no clue about such a pedigree of liberalism which would actually raise the stakes of a poor and uneducated nation.

Saturday, December 25, 2010

So few make it

Shiv Visvanathan writes which is something I share:

I feel a sadness about it and wonder why integrity and goodness seem so helpless today. Is it because there are no large movements like nationalism or Marxism shaping a generation? Is it because of the lack of dissent and eccentricity where every successful man seems like another? But this much I believe. We need to honour the idealistic and the eccentric, the dissenters and the whistleblowers. We need to salute those who turn honesty into an art form.

Thanks 2010

Then the irresistible, enterprising Indian femme fatale, who irresponsibly exposed a few holy cows, besides doing the craft of lobbying considerable harm.

And since 1991 did not merely mark the beginning of India’s modern growth story, but also the final burial of old-style socialism, you can be forgiven for hoping that Sonia’s restoration of Narasimha Rao in the Congress pantheon might mark the first stirrings of a welcome rethink.

In 1985, some six years before the introduction of far-reaching economic reforms, looking out from the highest rooftop in Hong Kong, the area surveyed exported more than three times as much than all of India’s $12 billion. We excused our miserable performance by alleging that Hong Kong was a city state; China in the same year exported $30 billion, but it was a communist state, and so on. Twenty-five years later, the Jalan report makes the same wrong assertion that India is unique. the Jalan report is left with no legs, no arms, and most importantly, no soul.

Eventually, I decided to hear some of the tapes. I found bits of fairly serious stuff interspersed in mountains of trivia, gross unprofessionalism and a tragedy. First the trivia. A columnist writing a piece exactly the way that one of Radia’s client’s would have liked, and giving her a précis before it was put to bed. An über-rich spouse being irked by a write-up on her, and having someone ask Radia to fix it. The connected husband of an adopted daughter and Radia sharing well-known juice about the near-death bankruptcy of a major Delhi-based property developer-qua-nascent mobile player, whose bounced cheques were manifest missiles of the past. Some wickedly perspicacious comments by a retired IAS honcho, now a Rajya Sabha member, involving Shivji ki baraat (various creatures in the Union cabinet); the apparent demotion of the erstwhile commerce minister from glories of the WTO to fixing the nation’s potholes; and the unexpected rise of Anand Sharma and Jairam Ramesh in the post-2009 election dispensation. And conversations with Ratan Tata — including one where Radia spews nineteen to the dozen, while Tata says, “Yeah”, “Uh, huh” and “Um, hmm” 33 times.

Actually, all this is only done for the poor in India. For example, when telecom operators got the 2G spectrum at throwaway prices from the government and then traded them away to foreign partners at ten times the price, the non-poor 2G experts never asked for such foreign sales to be banned. It is true that the government acted like the irrational onion farmer who forgot to ask for a higher price but then our government is not poor. After all, how many poor can suffer the losses made during the Commonwealth Games! And, unlike onions, the poor do not buy 2G spectrum and so none of our millennium development goals is affected by 2G traders buying cheap from the government and selling high to users of such spectrum.

And finally read who read which books in 2010 among.

Thursday, December 23, 2010

Rereading M.K Gandhi on control, prices, etc

At this juncture one of the most often misquoted writings of M.K Gandhi is the following from collections Vol 97, p.224-225 (PDF). Since November 3rd, 1947 was a silence day and his written speech was read out after the prayers. 

  • Control gives rise to fraud, suppression of truth, intensification of the black market and to artificial scarcity. Above all it unmans the people and deprives them of initiative, it undoes the teaching of selfhelp they have been learning for a generation. It makes them spoonfed. This is a tragedy next only, if indeed not equal, to the fratricide on a vast scale and the insane exchange of population resulting in unnecessary  deaths,  starvation  and  want  of  proper  residence  and clothing the more poignant for the coming inclement weather. The second is certainly more spectacular.  We dare not forget the first because it is not spectacular.
  • There are enough cereals, pulses and oil-seeds in the villages of India. The artificial control of prices, the growers do not, cannot, understand.  They,  therefore,  refuse willingly to part with their stock at  a  price  much  lower  than  they command  in  the  open  market.  This naked  fact  needs  no demonstration. It does not  require  statistics  or  desk-work  civilians buried in their red-tape files to produce elaborate reports and essays to prove that there is scarcity.  It is  to  be  hoped  that  no  one  will frighten us by trotting out before us the bogey of over-population. 
  • In the place of controlled food, the Government can easily run the very stores for selling good grain which they will buy in the open market. They will thus bring about automatic regulation of prices and set free the hoarded cereals, pulses and oil-seeds. Will they not trust the grain dealers and growers? Democracy will break under the strain of apron strings. It can exist only on trust. If the people die because they will not labour or because they will defraud one another, it will be a welcome deliverance. The rest will then learn not to repeat the sin of being lazy, idle or cruelly selfish.

Don’t control exports

No one gave them much attention. Now that the government relaxed the export ban, prices of cotton have improved. But why not earlier? In fact, why control export of cotton anyway? We know the corruption possibilities with discretionary quantitative controls, with all the shenanigans being reported. There is hoarding of onions, we are told. But of course, yes. Some of us never advocated completely free markets. We got that lecture. I and some others like-minded in the government always wanted a strategic presence for the state with rule-based intervention systems. When we present those in practical terms in policy reports, the government rejects them. When they do that I know enough economics to say, be fair. At the least be consistently practical within our own reasoning systems.

Whatever we may say, onion prices are not coming down in a significant manner in the next six weeks. But for the future let us have some semblance of a rule-based policy. Allow trade with variable tariff policies, an option that has been wrongly rejected over my head and those of all the sensible chairmen of the Commission for Agricultural Costs and Prices. Don’t control exports. Let the tariffs take care of the difference between what the farmer should get and the unstable world price. Do try to intervene selectively to ride the cycle at home. 

From Tears for onion policies by Y K Alagh         

Ian Morris musings

R.K. Narayan and ‘shop talk’

Rotis, onions and chillies vs Zombie Economics

Have you ever read how both writers and readers have misunderstand the free market regime? It is here, but don’t jump after the first para and conclude by thinking that the writer is right!! Because that is where be begins. Also you must read the last para below and make your own view on the issues at hand. 

  • So inane, loud and meaningless was the TV debate on onions last night, it literally brought tears to my eyes. I didn’t cry because the rising prices are going to pinch my pocket, but it was the pathetic quality of the noisy show, with the Congress and BJP going at each other’s throat to prove that the other was more corrupt, that made me shed a few tears. Think about it. If the dirt and muck being chucked in television debates is any indication, either way – BJP or Congress – the country is not in safe hands.  
  • And the worst part of the problem is there is not a single person in the government who can explain the onion price crisis in clear, concise terms. The ministers have blamed everything from the weather to bugs to hoarders to trucks to exports for the crisis. They are yet to blame the ISI and appeal to people to pay more for onions for the sake of national security, but people, particularly the poor and deprived, are still confused as nobody knows what’s driving the price rise. 
  • Because the government is headed by an economist, it probably believes in what economists all over the world say: if you can’t convince them, confuse them. So, basically, we have to find the answer ourselves. Though the government will never admit it, its neo-liberal economic policies and market speculation and futures trading are responsible for this mess. In a new book, Zombie Economics, John Quiggin explains how certain “dead ideas” --  “deregulation has conquered the financial cycle; that markets are always the best judge of value; that policies designed to benefit the rich make everyone better off -- still walk among us. “The recent financial crisis laid bare many of the assumptions behind market liberalism -- the theory that market-based solutions are always best, regardless of the problem…  The crisis seemed to have killed off these ideas, but they still live on in the minds of many -- members of the public, commentators, politicians, economists, and even those charged with cleaning up the mess,” says Quiggin in the book.  
  • Tearing apart the dictum that “nearly any function now undertaken by government could be done better by private firms” and market is the solution of all problems, Quiggin says, “Even in its heyday, privatization failed to deliver on its promises. Public enterprises were sold at prices that failed to recompense governments for the loss of their earnings. Rather than introducing a new era of competition, privatization commonly replaced public monopolies with private monopolies, which have sought all kinds of regulatory arbitrage to maximize their profits…” 
  • Though the focus of the book is the developed economies and the recent financial crisis that crippled them, as you read Zombie Economics you feel that Quiggin is talking about India and its future. And here in this poor country, the economists – sitting in government and Planning Commission -- are still selling these expired ideas to us as some kind of revolution that will change the face of this country. That’s why when the prices spiral out of control, there is no one in the government who can explain what’s gone wrong. 

Wednesday, December 22, 2010

Make that inequality work mutually

"There is plenty of speculation on these possibilities, but a lot of it has been aimed at elevating one political agenda over another rather than elevating our understanding. As a result, there’s more confusion about this issue than just about any other in contemporary American political discourse. The reality is that most of the worries about income inequality are bogus, but some are probably better grounded and even more serious than even many of their heralds realize. 

It is pretty easy to convince a lot of Americans that unemployment and poverty are social problems because discrete examples of both are visible on the evening news, or maybe even in or at the periphery of one’s own life. It’s much harder to get those same people worked up about generalized measures of inequality." 

The Inequality That Matters 

Postscript: Don’t forget to read his other piece on Anti-Capitalist Rerun- The End of Poverty 

  • Slumdog Millionaire certainly sold tickets; it’s not entirely clear if one of the reasons it has done so well in the United States is that it also sold the Horatio Alger line. The film has come under substantial criticism, most of all from India, for the latter. Numerous and sometimes contradictory charges have been leveled against it, ranging from “we’re not all poor” to “the poor can’t rise to be rich” to “Indian cinema handled that theme a long time ago.”

Cates are too similar, but only for crook to benefit!!!

From Prof.Jagdish Bhagwati Blog!!

Yes, he now blogs @ The American Interest

First, while authoritarianism can accelerate reforms, it can also be a serious handicap. Years ago, when both Mao and Zhou Enlai were alive, Padma Desai, the Columbia University expert on Russia, was asked about China’s future growth prospects. She answered: it depends on whether Mao dies first or Zhao dies first – her point being that in a top-heavy system, growth paths can become unpredictable, and thus subject to volatility.

From his post on India or China?

Being an economist is worth like anything, but GOLD!!

In my friends group everybody has studied management or science related subject. I am the only one who has studied economics. So, most of the time, when we start debating this or that in social developmental issues and when it comes the functions of economic systems all them will say everything but not the truth. And that is where they all realize that they have wasted their time in their subject. Because the particular country’s economic system affects all spheres of economy. So what is the point here? Nothing directly, read It’s Better Being an Economist (But Don’t Tell Anyone) 

Struggle to make worth of life in youngage

  • As is evident in NYRS 2009, about 48% of all literate youth indicated that they supported it, while 35% were against caste-based reservations. While 54% of SC, 50% of ST and 47% of OBC are in favour of the current system, 43% of the general castes back it.
  • The youth are also often prone to violence. Frustration is a key driver of this increasingly marked attribute and it arises from unfulfilled aspirations. The major reasons for frustration in today’s youth are unemployment, injustice and corruption. What rubs salt on this wound is a sense of victimhood to the forces of unemployment, injustice and corruption. Their impressionable minds are hemmed in from all sides by glamorous objects and options that most cannot possess.

From Rajesh Shukla's Young, employed and Unhappy".

Eightfold “Scorching corruption like fire”

  • Reminiscent of the eightfold path of the Buddha (right thinking, right view, right intention, right speech, right action, right livelihood, right effort and right possessions), the President of the Indian National Congress, Ms Sonia Gandhi, has also come out with an eightfold path (fast-tracking of corruption cases against big shots in politics and administration, abolition of the Central and State Governments' discretionary powers of any kind, state funding of elections, transparency in public procurement, adoption of public interest as the sole criterion for leasing/auctioning of public assets, protection to whistleblowers, avoidance of vulgar displays of wealth and waste, and adherence to simplicity, restraint and austerity “as our chosen way”) to fight corruption to the finish. 
  • We, the people, delight in the fact that there is not one political establishment which, while seeking our votes during elections, has not solemnly promised to unearth and bring to book the corrupt and the crooked. Actually, the tradition goes back to the period before Independence, when the Congress vowed to hang the black marketers, profiteers and the fleecers of the people from the nearest lamp post.

Paper subsidy

Gulzar Natarajan on issuing of voucher for vocational training;

  • The government can issue vocational training vouchers to prospective students, selected through defined criteria, with some basic qualification. The course-independent vouchers will subsidize a part of the training expenses including tuition fees and boarding charges. A basic subsidy can be announced each year, which would be reimbursed to the institutes on production of the vouchers. The institutes could offer a variety of vocational courses, letting students choose on the market signals. They would compete to offer courses and attract students.
  • The vouchers issued can be linked with the recipient’s Aadhaar number to simplify administration and reimbursements, prevent leakages, and ensure portability. The trained students should then be linked to NEP. In other words, leveraging the potential of NSDC through vouchers, and linking it with NEP can be a big step towards addressing what is arguably India’s biggest economic challenge.

Tuesday, December 21, 2010

Hope never move, but change

According to the Pew Research Centre, some 87% of Chinese, 50% of Brazilians and 45% of Indians think their country is going in the right direction, whereas 31% of Britons, 30% of Americans and 26% of the French do. Companies, meanwhile, are investing in “emerging markets” and sidelining the developed world. “Go east, young man” looks set to become the rallying cry of the 21st century.


Thanks to my friend Ghanshyam for bringing in my knowledge about an article titled The Art of Remaining Poor by Avik Chattopadhyay. It’s a must read one.

Some excerpts: 

  • During the election campaigning in Bihar in October this year Rahul Gandhi, the heir apparent of the Indian National Congress proudly claimed, "Aapki Congress party gareebon ki party hai, aapki party hai." ["Your Congress party is the party of the poor, your party."] 
  • After 63 years of an independence that was hard fought, such a statement made with a sense of pride seemed pathetic to me. 
  • While it mirrors the reality we live in, it demonstrates the 63 years of deliberate, orchestrated and cruel deprivation of a sixth of the world's population. It reeks of the sheer apathy and shamelessness of those that the man and woman on the street look upon as redeemers. It talks of the thick skin all of us have developed…our leaders, administrators, planners, implementers and benefactors. Otherwise, someone in the crowd should have stood up and hurled a chappal in utter disgust. Or some editor would have used the pen [or keyboard] to prise open some very bare and basic questions. 
  • According to a report on Asian economic powers, in 1947 India's per capita income was at $439 while South Korea stood at $770. In 50 years India stood at $1,818 and South Korea at $13,317! So, what went wrong with us? What stunted our development and prosperity? Our population? The British rule? The multi-party democracy? The world powers conspiring against us? The 'socialist' operating principles? Over reliance on agriculture? Faulty planning? What, exactly what? Nothing. Actually nothing went wrong. Everything is according to plan. Right from the time Mr. Nehru justified that some of the poorest parts of country were the ones ruled longest by the British and systematically de-industrialised in the 190 years of subjugation, we have planned for poverty as integral to our socio-economic-political superstructure. 
  • We have used 'socialism' as a term under which we have perpetrated protectionism, patronage and favouritism. 
  • We conjure up programmes like the Mahatma Gandhi National Rural Employment Generation Act that make millions of villagers slaves of projects that are alien to them and displace them rather than help them lead improve upon what they do best — farming, animal husbandry, dairy and handicrafts....... 
  • Mr. Gandhi would have felt ashamed thinking of those words, leave alone gallantly using them, not once but 16 times while doing the rounds of Bihar!

One thing many PhD students have in common is dissatisfaction

That is a line from another piece in the Economist. A bit from the piece:

  • ...Martin Luther nailed 95 theses to the door of a church in Wittenberg. In those days a thesis was simply a position one wanted to argue. Luther, an Augustinian friar, asserted that Christians could not buy their way to heaven. Today a doctoral thesis is both an idea and an account of a period of original research. Writing one is the aim of the hundreds of thousands of students who embark on a doctorate of philosophy (PhD) every year. 
  • One thing many PhD students have in common is dissatisfaction. Some describe their work as “slave labour”. Seven-day weeks, ten-hour days, low pay and uncertain prospects are widespread. You know you are a graduate student, goes one quip, when your office is better decorated than your home and you have a favourite flavour of instant noodle. “It isn’t graduate school itself that is discouraging,” says one student, who confesses to rather enjoying the hunt for free pizza. “What’s discouraging is realising the end point has been yanked out of reach.” 
  • But universities have discovered that PhD students are cheap, highly motivated and disposable labour. 
  • Brilliant, well-trained minds can go to waste when fashions change.

Let’s change

The genius of The Nature of the Firm turns 100

As I have posted here the Economist now has a piece (Why do firms exist? Ronald Coase, the author of “The Nature of the Firm” (1937), turns 100 on December 29th) on the grand giant firm theory revolutionary figure: Professor Ronald Coase who is going to turn 100 year by next week.

Few excerpts from the piece:

  • Today most people live in a market economy, and central planning is remembered as the greatest economic disaster of the 20th century. Yet most people also spend their working lives in centrally planned bureaucracies called firms.
  • The man who restored the pin factory to its rightful place at the heart of economic theory celebrates his 100th birthday on December 29th. The economics profession was slow to recognise Ronald Coase’s genius. He first expounded his thinking about the firm in a lecture in Dundee in 1932, when he was just 21 years old. Nobody much listened. He published “The Nature of the Firm” five years later. It went largely unread. 
  • But Mr Coase laboured on regardless: a second seminal article on “The Problem of Social Cost” laid the intellectual foundations of the deregulation revolution of the 1980s. Eventually, Mr Coase acquired an army of followers, such as Oliver Williamson, who fleshed out his ideas. In 1991, aged 80, he was awarded a Nobel prize. Far from resting on his laurels, Mr Coase will publish a new book in 2011, with Ning Wang of Arizona State University, on “How China Became Capitalist”. 
  • How much light does “The Nature of the Firm” throw on today’s corporate landscape? The young Mr Coase first grew interested in the workings of firms when he travelled around America’s industrial heartland on a scholarship in 1931-32. He abandoned his textbooks and asked businessmen why they did what they did. He has long chided his fellow economists for scrawling hieroglyphics on blackboards rather than looking at what it actually takes to run a business. So it seems reasonable to test his ideas by the same empirical standards. 
  • Mr Coase’s theory continues to explain some of the most puzzling problems in modern business. Take the rise of vast and highly diversified business groups in the emerging world, such as India’s Tata group and Turkey’s Koc Holding. Many Western observers dismiss these as relics of a primitive form of capitalism. But they make perfect sense when you consider the transaction costs of going to the market. Where trust in established institutions is scarce, it makes sense for companies to stretch their brands over many industries. And where capital and labour markets are inefficient, it makes equal sense for companies to allocate their own capital and train their own loyalists.

It is also its cure

  • I fancy myself a humble person. One evening, I sought confirmation of my humility from my daughter and granddaughter. I asked them if they all thought that I was humble. My granddaughter, Naina, who is known for her brashness, replied: “You must be joking! You love flattery. All these ladies who send you kebabs, kheer, cakes and flowers, give you enormous pleasure and inflate your ego. And the man who lays it on thick and keeps giving you vintage Scotch, flatters you as if you were a minor prophet.” As if this were not enough, my daughter, Mala, added; “When you are dazzling your audience with your wit, you expect them to say nice things about you. And when they fall silent, you feel bored and ask them to go. How can you call yourself humble?”

Read the full article you will find even more interesting things.

Tips from Nobel laureate-Venkatraman Ramakrishnan

Top to bottom

  • “There is no magic formula for winning the Nobel Prize” 
  • “If India wins a single Nobel Prize it does not mean Indian science is okay” 
  • “Don’t work on anything that you’re not interested in — day-to-day science is extremely tedious,” 
  • “If you don’t gossip about the problem, then you’re not really interested in it. It’s (got to be) something you can’t help talking about. The problem has to be bugging you when you have a coffee 
  • “Also aim to go to the best place for your work,” 
  • “You can change fields with humility, 
  • “It’s a paradox that the biggest benefits of science to humanity have come from the fundamental science problems”

What one did not say has already been said about another Nobel Laureate in Economics science:

“And unlike that imposter Amartya Sen, this is the real deal. Ladies & Gentlemen, Professor Dixit”

Clean up or perish should be the message

 Mr.Rekhy is one of the finest human beings. I had brief opportunity to work with him some years ago.

From Good governance creates value By Richard Rekhy

  • While liberalisation paved the way for India’s success story, the cue was picked up by the corporate world and it is private enterprise and corporate leadership that has steered India towards this growth. Corporate India understands the importance of governance. Well-governed companies have always got better valuations and have inspired other entrepreneurs to follow in their footsteps. Maybe, it is time for corporate India to lead the way and infuse the country with good governance practices. Clean up or perish should be the message. Companies sho­uld make it clear through policy and action that there is zero tolerance to fraud and corruption. Let us not blame the eco system of this country for fraud and corruption to exist and thrive. There are many examples of ethical and well- governed companies in India that we can learn from.

  • Governance is a state of mind, it does not need rules and regulations. While regulation and law can assist governance, the place we in India have to get to is where we follow governance in every walk of life; and ethics penetrate the heart and soul of every action that we take. As we end the year 2010, let us hope that India will move towards a culture of good governance and that the government will recognise that it will fail in its mission to build India into an economic powerhouse unless it lays down a strong foundation of ethics and values and de­monstrates that through action. What we need is enforcement and examples of the guilty being given appropriate punishment for their crimes.

Middle ground is no ground

From Minding their own business by P. Vaidyanathan Iyer

  • It is an unfortunate fact that bureaucrats are not sector experts, and hence, not the right fit. They are instead trained to be good administrators. The brighter among them manage to grasp the issues within a few months, but in this age of rapid change and innovation, the government can no longer afford to give regulators the luxury of time. 

So what is the solution, yes there is no other solution in the short period say at least next 15 years. But think of the following:

  • It may not be that difficult to get academics, but they carry with them the baggage of too much theory and too little practical experience. For private sector stars, money is not the only driver. It is also the prestige attached to such seats. Besides offering decent compensation — which could be a middle ground between staid public sector salaries and lucrative private sector packages, the government must create an environment that allows them to function independently and effectively. The esteem value can go up only when the government goes that extra mile to give private sector achievers an impression that their expertise will be respected and made good use of. Perhaps we are not there yet.

Yatha praja thatha raja

Come out Chacha!!!!

This is what the Prime Minister Dr. Manmohan Singh said yesterday:

  • I wish to state categorically that I have nothing to hide from the public at large and as a proof of my bonafides I intend to write to the Chairman of the Public Accounts Committee that I shall be happy to appear before the PAC if it chooses to ask me to do so. As Prime Minister of this great country for six and a half years, I have tried to serve my country to the best of my ability. I sincerely believe that like Caesar's wife, the Prime Minister should be above suspicion and it is for this reason that I am prepared to appear before the PAC even though there is no precedent to this effect.

Then, PM goes on taking socialist Nehru's words:

 Fifty years ago, Pandit Nehru had told an AICC Session:
  • "we should remember that whatever we desire, it is for the 360 million people of the country and not for any small group or individuals. It does not mean that everybody will get everything but absolutely equal opportunity should be given to all the 360 million people. This cannot be achieved suddenly by magic or law. It will take time. But nevertheless we must move in that direction and must move fast."
But one thing is bluntly clear that the Congress is determined to maintain the 360 million people under the BPL of its own definition forever.

The following words ET has put Headline in today’s edition (Delhi) but I could not find the exact word in his speech particularly the line "I may have made mistakes but".

As Prime Minister of this great country for last six-and-a-half years, I may have made mistakes but I have tried to serve my country to the best of my ability... I sincerely believe that like Caesar’s wife, the Prime Minister should be above suspicion.

Moreover, there is a lot of horrible jokes in the speech, please read it fully. My favourate one is below!!
  • We will give particular attention to preserving our forests, mountains and rivers. We will make all efforts to mitigate air and water pollution.

The era of blunder of stability and predictability

Monday, December 20, 2010

Sympathy vs empathy

Democracy sucks

From T.C.A. Srinivasa Raghavan’s Last refuge of scoundrels
  • “Subject to some qualifications, the quality of governance in the worst equilibria typically improves when the Governor's compensation rises, but declines when anti-corruption enforcement becomes more vigorous.”
  • So we now know what to expect as the final outcome of the current drive against corruption: it will make matters worse! I recall reading a similar paper several years ago by two Italian economists. Indeed, Italian economists seem to have done a lot of the research into bad politicians and coalitions.
  • The key finding of that paper was that low-quality persons with a low opportunity cost drift towards politics because their market value is low. So voters get only the bad guys to choose from.
  • They then seek a mixture of good and bad guys which leads to a negative correlation between honesty and competence across political entities!
  • In India, this has come to be known as the winnablility quality: parties can't pick candidates because they are competent and honest if they will lose.

Saturday, December 18, 2010

Laws are to seek rents

Professor Deepak Lal writes:

  • continuing major source of “monopoly rents”. This is the colonial labour laws creating “monopoly rents” for the small aristocracy of organised labour. By limiting entry and exit, and artificially raising the price of India’s most abundant resource, they have damaged labour-intensive industrialisation in India. This situation will be made worse by the minimum wage and other purported labour rights being implemented in the unorganised sector. Much worse, the proposal to introduce minimum wages in the rural employment guarantee scheme will remove the main reason for the efficiency of this poverty-redressing policy: self-targeting. Though the immorality of rent-seeking associated with pure “economic” and “composite quasi” rents may be reprehensible, it is less damaging to growth than the continuing “monopoly rents” generated in the labour market.

Thursday, December 16, 2010

How Economics Saved Christmas

Awakening Giants

From the first chapter (free PDF) of Pranab Bardhan’s new book titled Awakening Giants, Feet of Clay: Assessing the Economic Rise of China and India

Many decades of socialist controls and regulations stiled enterprise in both countries and led them to a dead end. Their recent market re­forms and global integration have inally unleashed their entrepreneurial energies. Their energetic participation in globalized capitalism has brought about high economic growth in both countries, which in turn led to a large decline in their massive poverty. The two countries are now full of billions of “new capitalists” striving to ind their place in the sun. Although India’s performance in this respect has been substantial, it has been overshadowed by the really dramatic performance of China both in economic growth and poverty reduction. China has now become the manufacturing “work­shop of the world.” China’s explosive industrial growth in the past quarter century is hailed as historically unique, even better than the earlier East Asian “miracles.” Like those “miracles,” China’s is often regarded as an­other successful story of a “developmental state,” with an active industrial policy and a state­inanced and ­guided program of industrialization.

China’s better performance than India’s suggests that authoritarian­ ism may be more conducive to development at early stages, as we have seen earlier in South Korea, Taiwan, and Singapore. In the Chinese case, however, regional economic decentralization provided some dispersal of power and more autonomy and incentives to local people, and even with­ out democracy it led to broad­based local development (unlike in Russiawhere regional decentralization led to collusion between local governments and oligarchs, only recently curbed by a semiauthoritarian and centralized Putin administration). Global capitalism, however, has inevitably brought rising inequalities, more in China than in India, and this may portend some problems for the future political stability in China, as it does not have the capability of democratic India to let off the steam of inequality­ induced discontent. But all is not lost for democracy in China. The pros­pering middle classes will, slowly but surely, demand more democratic rights and usher in democratic progress in China, as they have in South Korea and Taiwan.

Do not ask for Nobel by setting China as a MODEL!!

He will not, she will not

Morality vs political economy

Pratap Bhanu Mehta discusses the current political juncture of Indi and the present government. Many of his questions asked below is relevant in both reforming of structural and institutional point of view.

  • Can there be any greater denigration of the office when the prime minister does not appear to be in charge of government? The Congress president engages in similar abstractions when she speaks of our shrinking moral universe in the context of corruption. 
  • It is a strikingly resonant phrase. But the leader of the ruling party does not have the luxury of an academic discourse on corruption. The shrinking moral universe is not a fact of nature; it is a consequence of decisions taken by leaders. 
  • The second rhetorical trope in this repertoire is something to the effect that “we will get to the bottom of this”. This invitation to plumb dark depths is a clear obfuscation. It is inviting us to stare at a bottomless pit of investigations when the basic political questions are clear. Simply put, it is this. Did the prime minister and the cabinet endorse Raja’s actions? If they did, what was the rationale? If they did not, what did they do for two years to curb actions that they knew to be wrong? Answering these questions does not require an inquiry. It will take the prime minister no more than 10 minutes to set the record straight on these questions. The Congress is asking us to look into the depths because it does not want to look us in the eye. The third rhetorical tactic is an appeal to institutions. 
  • The opposition may well be playing brinkmanship when it comes to a JPC. But the simple fact is that the prime minister’s demeanour has consistently undermined the authority of Parliament. Even during the well-conducted previous session the prime minister barely spoke in Parliament; he refused to engage in any serious debate or any serious crisis, except the civilian nuclear liability bill. He refused to invest Parliament with the gravitas it deserves. The CVC, P.J. Thomas, may be entirely innocent. But the Congress cannot get away from the fact that it brazenly ignored the one mechanism we have for ensuring that constitutional offices have bipartisan credibility
  • The fourth element in this rhetorical strategy is to hide behind the poor — or worse still, allow other Congress leaders to flirt with the communal card. The Congress leadership has to get over the idea that just because it has promulgated a few schemes for the poor, it can be absolved of the larger structural crisis they have produced in the economy. Even within the terms of their own paradigm, how do they explain that a pro-poor government is now embedded in a nexus of regulatory arbitrariness that has benefited some corporations at the expense often of honest and genuine small business? What pro-poor policy can explain that it has become nearly impossible to be an honest businessman in this country? The Congress president is insulting the country by implicitly suggesting that the sense of moral crisis and betrayal large numbers of citizens feel is entirely a product of opposition politics. 
  • As for the prime minister: his worst failing may not be corruption, it may not even be standing idly by. His worst failing will be that by not coming clean he has undermined any reason to trust so-called good men

Wednesday, December 15, 2010

Jalan and his ceiling

Think Tank Politics has its own history

Suman Bery recounts the NCAER but any one who has worked with NCAER would knows that its services are no less unique but what beyond its sophisticated model making business by simply not having word on the free market ideas like the liberalism.

Some excerpts from his article.

  • Today, 54 years later, many elements of this “business model” are increasingly unviable. While contract research for government remains an important part of our portfolio, it is becoming an increasingly unsatisfactory business. Output is delayed or suppressed by mid-level bureaucrats, payments are sometimes withheld even for completed work, and different officials or departments hold widely differing attitudes to public disclosure or publication of the contracted work. This is obviously not an environment conducive to professional development.
  • As Sanjaya Baru noted in a column in this paper earlier this year (“Indian minds, foreign funds”; Business Standard, August 9, 2010), the outcome has been to drive many such organisations to avoid contact with government if at all possible. While his concern was with foreign policy think tanks, the incentives facing economic think tanks are not very different. Meanwhile, a long-established consensus that the activities of such institutions should be tax-exempt has been upset by recent changes in the law, perhaps reflecting abuse of these provisions by newer players.
  • Finally, efforts by Indian think tanks to become regional centres of excellence are being frustrated by increasingly restrictive visa restrictions on visits by scholars for seminars or for research. I remember a leading American academician once remarking to me that, because of visa uncertainty, she recommended that only her students of Indian origin take up a career of research on India. A recent notification from the Ministry of Home Affairs has now clarified that even holders of OCI cards need to seek permission to undertake research on India.
  • International research on the role of think tanks suggests that they come into their own once the business sector begins to feel that it benefits more from rational policies rather than specific rent-seeking. Outsiders seem willing to bet that the time has come for this transition in India. It will be interesting to see if our own corporate and foundation sector follows suit.

Tuesday, December 14, 2010

Over my dead body will I allow my youth to study in India

Nehru, communists and the funding for their propagandas

From Reading the Russians by Inder Malhotra

  • Nehru’s decision to take the bull by the horns, so to speak, and take up with the Soviet leaders his problems with the Communist Party of India was the piece de resistance of the entire exchanges. Politely but candidly, the prime minister made three pertinent points. First, that the role of the CPI because “it was often coming in conflict with nationalist sentiment” bred ill-feeling in the country and even came in the way of Indo-Soviet relations.
  • Secondly, the communists who until a year earlier were saying that India was not independent and were engaged in insurrection in 1948-49 also stated openly that whenever in doubt about the “right line of action”, they took instructions from the Soviet Union. On one occasion in 1951-52, Nehru added, four communist leaders had gone to Moscow “illegally and without passports”, and on return had said they had got “directions from Mr Stalin”. Last September, one of their “principal leaders”, Ajoy Ghosh, went to Moscow and said he had come back with “fresh instructions” to “play down opposition to the government” but remain “ready to start insurrection again when necessary”. Thirdly, Nehru said, the communist party got “considerable sums of money from outside”, that Indian communists wrote “misleading” articles in Soviet magzines like New Times about their country, and so on. 

  • Nehru…….. write to Lady Mountbatten: “I have been wondering if there has been a basic change in the character of those who write in the newspapers in England. I associated some restraint and some balance of mind with them but evidently this is lacking now. I am distressed because this kind of thing has big reactions on our own people and, out of anger and bitterness, little good can come.”

“Marxists are not against the market”-Really?

The following is from a news report published in The Hindu:

  • Mr. Karat said that contrary to the misconception, “Marxists are not against the market,” or opposed to FDI. 
  • “Our experience of building socialism has led us to understand that the market has a function even in a socialist order… and that if you eschew the market, or fail to integrate the market into a planned economy, as the Soviet Union did, you are in trouble,” he said.
  • He cited the example of China, which had changed course in the 1970s to successfully build a socialist market economy that did not relinquish centralised planning. 
  • The CPI (M) never said that it was opposed to foreign capital, he said. In fact, the party programme made a clear distinction between the positive impact of FDI inflows into productive activities and opening up sectors such as banking and insurance to speculative financial flows, Mr. Karat said. 
  • “We must decide in which sectors we need the FDI and which sectors need to be regulated,” he said. 
  • While India had survived the recession and was on target to achieve a GDP growth of 8.5 per cent, the question to be asked was whether this was the ideal type of growth that the country required and whether it was beneficial to the entire people, he said. 
  • Focusing on GDP growth alone could provide a skewed and distorted picture of development when it benefited only the privileged few. “India, with the fastest rate of growth of dollar billionaires, now has some of the richest people in the world and also some of the poorest,” he said.

No doubt we all know from out own old days and the present day Chinese system of how the so called socialist market economy functions. The denial of basic right to express alone shows how shoddy the socialist market economic is. What Mr. Karat is trying to say is no surprise and in fact really they have no other option to escape other than the 2007-2009 financial crises examples.

Just see what he indeed said in another interview.

You also recently announced that Marxists are not against market and foreign direct investment (FDI). Does it not indicate a shift in the CPM’s policies towards capitalism?

  • This is too complicated a topic. I was speaking to business houses in Chennai and they had asked me about my views. I tried to explain that Marxists are against the market. We have never been opposed to foreign capital but we must decide in which sectors we need FDI and which sectors need to be regulated.

And Sitaram Yechury said in his interview with BS:

  • But our position is clear: restrictions must remain. We are in the favour of FDI only if it satisfies three conditions — augments existing production capacity, generates more employment and upgrades technologies. Apart from generating more employment, what other conditions will FDI in the retail trade be able to fulfil?

What want to summarize is simply a paragraph from an Internship paper of CCS, 2005.  

  • “Political parties (Congress, BJP, CPI (M)) have changed their stance when in power and when in opposition and opposition (as well as public debate) is driven by partisan considerations rather that and effort to assess the merit of the policies. This is evident is the public posturing of Hindu right, left and centrist political parties like the Congress. The growing recognition of the importance of FDI resulted in a substantive policy package but and also the delegation of the same to a set of eminently dispensable bodies. This is indicative of a mood of promotion counterbalanced by a clear deference of responsibility.”
But the above para is appearing exactly same in the recently published paper. Really it is another scam!! Because the authors are different. The Internship paper of CCS was published in 2005 and the article published the same paper in a different journal just recently only.
Also see 1 2