Saturday, November 24, 2007

As sick as it can get

I finally caught Sicko on DVD today. I have heard a lot of people complain about how broken american healthcare system is; its been a strong, emotional issue for the general public for more than two decades and right now after the war in Iraq ranks as the second most important issue in the public consciousness. However, it is all well and good to hear about how bad things are and it is quite another to actually see and hear the stories of the people who have experienced the dark side of the system in all its gory details. Those horror stories are eye-opening and make your heart bleed and as a citizen of a developing country make you wonder - how is this possible in the richest and most powerful country in the world? A country that can come up with hundreds of billions of dollars to fund a war it should not have raged in the first place but can't seem to have enough money to solve its healthcare problems. One statistic sums up the story, America is ranked 37th -yes, not 5th, 10th ,20th or even 30th, a lowly 37th- judged according to the quality of its health care system in the world. It is ranked the lowest in the developed world right beside Cuba at 39th. Costarica, Malta, Portugal, Chile are among the few countries ranked above the most developed nation in the world. A statistic such as this is mind boggling for a country like USA and it should be enough to convince all concerned that there is something very seriously wrong with the healthcare system over here.

How did this sad state of affairs come about? Can America not afford to provide Universal Health Care to all its citizens, most of the developed nations do, so why not America. The reason is that many americans love the idea of universal health care but there are many more that love the idea of low taxes. The Universal Health care systems all over the world have been financed by the higher tax rates in those countries, which means more government control, more government spending and a bigger pay cut for the average worker. Americans want to have their cake and eat it too, lower taxes but universal coverage which certainly does not seem plausible. The market based system in US does not seem to doing its job so is there a market failure in this case? Is it possible to put right incentive structures in place so that the market-based health care system would work as well or may be better than the universal health care for the majority of people or is the health care system is something akin to Police protection which can best be provided by only the government and nobody else. These are the questions, that the hidden economist inside me raises and on the answers a lot is at stake. I hope that somebody soon finds out these answers and put something in place so that sick Americans -and foreigners in America I may add- don't have to cross borders to Canada or worse commit crimes to get into Guantanamo Bay so that they could get decent affordable health care. On that note, Hillary Clinton's plan certainly looks promising.

Thursday, November 22, 2007

Nehru's India

I am currently reading Ramcharan Guha's India After Gandhi, a comprehensive historical account of the modern indian nation state. I have not finished reading it, for at 700+ pages this book is no sunday afternoon light read; it is a book quite ambitious in its scope and extremely detailed in its research. It will surely rank as one of the most important books on the history of modern india. I am still around the 200th page but so far what has caught my eye and the imagination is the detailed account of the early events immediately after independence. The partition of India and the consequent large scale violence are fairly well-documented episodes in history. What is less well-documented and consequetly less well-known is the enormity of the task that the leaders of the new-born nation faced in building a united india. There was the enormous task of convincing 500+ princely states to give up their hereditary privileges and be part of the secular, democratic india; there was the matter of drafting a new constitution; there was the dispute of Kashmir and then there was the task of uniting a nation that was perhaps the most culturally diverse nation-state mankind had ever known. The task was enormous, perhaps the most arduous nation-building exercise ever undertaken, but as Nehru- the principal nation-builder- put it ," We are small men and the cause in front of us is great, but since the cause is great, some of that greatness will fall upon as well."

Nehru was right about the magnitude of the task, but he was self-deprecating while referring to himself as a small man. Great causes need great people to achieve them, and Nehru was exactly the sort of a man this exercise needed. He was India's equivalent of Thomas Jefferson and possessed many of the same qualities the great founding father of democratic ideals did.
He was a master orator, staunch nationalist, committed to secularism, a tireless worker, a wonderful writer and a gifted statesman. During his 14 years as Prime Minister- he strengthened India's democratic institutions, founded modern India's great educational institutions, propelled India towards its irreversible march on the path of a modern, secular, democratic republic and most importantly strengthened the idea of India and democracy in the minds of poverty-stricken, illiterate millions prone to violent outbursts in the name of caste, religion and language. He was a worthy heir to the Great Mahatma and successfully realized many of the ideals that Bapu himself envisaged.

Nehru was a giant of a man and if it were not for men like him India may not have even existed for so long. The fact that India has managed to survive despite proclamations to the contrary among many a great experts- prominent among them being Sir Winston Churchill- and not only it has survived, but despite enormous odds, its march has steadily been forever upwards. India's successes in its short history have been impressive but given its potential not truly spectacular, it could certainly have achieved much more. Many among Indians have blamed Nehru and Gandhi for India's failures in achieving more, they have painted Nehru as a flawed politician who in his hunger for power plunged India into communal chaos and then with his failed economic policies kept India into the darkness of poverty whereas if they had followed American capitalist system India would have been much better off, they argue. To the proponents of the first assertion, I say read your history first but for the second their is much fodder for thought. Nehru got a lot of things right in his tenure as Prime Minister but what he got disastrously wrong was in following the socialist, central planning model to the latter. However, for the critics of Nehru , it would help to have a little historical perspective. Central planning and socialist economy were the zeitgeist of post World War II years. Certainly, indians were justified in distrusting capitalism as they were at the receiving ends of western capitalism for a century or two, but as it were unbridled capitalism was out of favour even among the western economies. Post Great Depression, Roosevelt's New Deal and World War II, 'everybody was a Keynesian' meaning a believer in the policy of active government intervention. Free markets were viewed with distrust even in the bastion of capitalism- America and most economists agreed that active state planning is necessary for better economic development. In fact, P.C. Mahalanobis , architect of India's five year plans, actively sought the advice of western economists for India's economic policy decisions. The only lone voice of some standing who still advocated free markets at that time were great economists and future Nobel Laureates- Friedrich Hayek and Milton Friedman. Of course, now we know who was right and who was wrong but this we only know with the benefit of hindsight. Nehru's policy actions at that moment were exactly those that any good economist would have recommended. The only lesson that we can draw from this is that even the greatest of men can not do everything right, they are human too. This is no reason to castigate Nehru for he truly was one of the greatest leaders of modern human history. The ones we should truly be blaming are the subsequent generation of leaders who failed to see the changing paradigms and failed to embrace free market capitalism even when the writing was on the wall. If a person of the stature of Nehru was still around during the 70s , I am convinced that India's economic history would have been very different.

Thursday, November 15, 2007

Meeting a Nobel Laureate

Oh, the joy of unexpected pleasures, what is life without them? Thursday night, the day before Diwali, was probably the only time I truly regretted not having a camera with me, but that regret was more than compensated by the accompanying overwhelming joy I experienced on having a dream fulfilled. Everybody who is remotely interested in finance or economics has certainly heard of the giant name in this field- Nobel Laureate Robert Merton, one of the co-discoverer of Black-Scholes option pricing formula and the founding father of modern finance. Yes, I had the honor of meeting the Robert Merton in a dinner party, standing along side him, hearing him speak and lo and behold having the courage to ask him for an autograph on the back of a ticket stub. That ticket stub is now one of my prize possessions, a better gift for Diwali could scarcely be imagined. Now if I could meet Warren Buffett for next Diwali..

Thursday, November 01, 2007

Return of the blogging days?

Its been a long time since I put a pen to paper for a blog post (No, a few short posts in the whole year do not count). A lot has happened since then - I got a dream job, moved to The City and got a PhD proposal out of the way. Predictably, the turmoil accompanying all these events has left little time or inclination for blogging. However, to the rejoicement of the admirers of this little nook of the cyberworld -which is not an empty set by the way!- this draught of blog posts is about to end now as I have geared myself to be a more frequent contributor to the vast and growing fast world of blogs of no particular importance or interest to anyone. Stay tuned.