An economic argument against reservation

Principle of free markets is the most enduring empirical law in the whole of Economics . This principle is the very essence of modern capitalism. It says that any economic system when left to evolve according to the independent actions of its participants produces the most efficient resource allocation for all concerned. Adam Smith has called this seemingly miraculous mechanism by which the economic systems consisting of selfish participants who have primarily their own interest at heart, produce a generally agreeable resource allocation - the invisible hand. Ofcourse, for this system to function in a socially harmonious way it is necessary that the participants do not engage in activities which are against the spirit of fairness, that they play by the rules which are established before hand. Ensuring fairplay and order is the job of the government. Governments are the super market participants, who should make sure that everybody else is playing by the rules. Their role is that of a watch dog not that of a resource allocator or selfish market pariticipant. Whenever governments forget this role and start acting like any other market participant working for their own selfish ends in the economic system, the results are generally disastrous. An extreme example is that of communism where government was the biggest market participant, who made the decision of resource allocation by themselves rather than let market mechanism decide it.

Union government of India with their reservation policy is going against this basic principle of capitalism. Indian government, blinded in one eye by the failed nehruvian ideology of socialist welfare state and with the other eye firmly on the huge vote banks of backward castes, is not able to envisage the essential roles of government. Governments are not supposed to decide who studies what and where, just as a mere doorkeeper is not supposed to decide who gets to live in the apartment he is watching. Government is a watchman , it does not own social infrastructure it is watching, it merely takes care of it on behalf of society, who is the true owner of its social infrastructure. Government of India is forgetting this essential role of a democratic government and is acting as if they are the true owner of social assets which they can distribute as they please. The current reservation proposal is an expression of this prevalent attitude in the government. Not only this will produce an inefficient resource allocation, for example inevitably it will create inferior engineers and doctors than otherwise would have been produced had there been no reservation policy , this is also an act of intrusion by the government onto the civil liberties of its citizens. A democratic and secular constitution holds that all citizens are equal in the eyes of the law, however reservation policy implicitly assumes inequality between different social groups. It creates different standards of achievements for different social groups in a society implying an overt discrimination and no society can function stably for long where discrimination is official policy.

It is a highly condescending and demeaning thought to suggest that people from a particular social group when given opportunity can not succeed in a meritocratic system. Surely, differences of castes, colour, class etc. exist in every society and in Indian society deeper than most advanced countries. These differences are what an economist would characterise as market distortions, inefficiencies which should be ironed out by the governement. A policy akin to reverse racism is not a solution, it is only going to replace those flaws in the society with different set of problems. The role of a government is that of a facilitator, if a social group like many OBCs in India are disadvantaged because of historical reasons, government needs to make sure that they are presented with opportunties which will help them overcome their disadvantages. Government should provide them with good schools, good teachers enabling them to achieve same standards of excellence which more fortunate groups of society are availing of. An aggressive affirmatory action policy without the mandatory quota system like the one practiced in the United States can be considered as well. The pro-active reservation policy will only dilute the academic standards of the institutions of higher learning which is the last thing a progressive modern society should do especially when it is facing competitive forces from countries like China. Whereas China is modernizing its universities aiming high to compete with intellectual giants like Harvard, Yale and MIT, India instead of creating a modern educational infrastrucure is destroying a few stalwarts it has in the higher education sector. If India chooses to ignore the principle of free markets and government's role in that market, it will do so only at its own peril.

Another politician out of the closet

I had always thought of P. Chidambaram as a gifted intellectual capable of providing India the kind of enlightened leadership which is sorely lacking in the rest of its political class. I am sorry to admit that even though it took a while, finally he has exposed himself as just another power hungry, sleazy politician nothing more than a Harvard educated version of Laloo Prasad Yadav.

India needs reservations pronounces the revered finance minister. No sir, what India really needs is sensible, prinicipled politicians who can make sound sensible policies to get rid of myriad of its problems. India needs roads, power, clean drinking water for millions of its denizens, corruption free government, a good education system, liberation from its caste based society, liberation from its religious conflicts. It needs more economic growth, more opportunities for its young population, more accountability from its governments, less red-tape, more freedom for businesses to operate, more investments in its social sectors and infrastructure. What India does not need is its power hungry political class to carve it up into million pieces based on caste and creed, institutionalise discrimination, bring down its few excellent educational institutions, stifle merit, reduce opportunities for millions of young and hard-working students all in the name of providing "social justice".

A good friend of mine pointed out that smart people with a dangerous ideology can do much more harm to a society than a bunch of jingoists. People like Chidambaram are those dangerous "educated" hawks who are bent upon destroying the very idea of India for their selfish short term political gains. India will be a better place without people like him.

Quota Raj all set to become reality

It seems that proposal of introducing 50% reservations in India's central universities is going to become a reality. With no political opposition in sight, India's "government" is all set to see through their nefarious designs. Our 'honourable" Human Resources Minister Mr. Arjun Singh has already said that quota decision is final. To say that Congress government is playing a dangerous game is the understatement of the year. Sadly, there doesn't seem to be any sense of rage against it in the Indian media, atleast not in the online editions. This coming proposal is the single most outrageous piece of legislation in the history of independent India and there is not even a whimper of protest against it. If this proposal becomes a reality, we will see a new and far worse India, where people are by law discriminated on the basis of caste and religion. If this doesn't call for a show of outrage then I can't imagine what will.

Update: Rashmi Bansal of JAM magazine has a scholarly article on the subject. It is a long, but enlightening read.

Quotafication of India

No matter who is in power in Indian Governments they can always be relied to do the wrong thing almost all the time. Coming close on the heels of a constitutional amendment to allow for reservations in private engineering and medical colleges comes the monstority of a proposal where government is "considering" almost 50% reservations for "backward castes and muslims" in IITs and IIMs. India's premier educational institutes are being sacrificed at the altar of caste politics. Architects of a free and united India Nehru, Gandhi, Ambedkar must be turning in their graves. What they envisioned was an India where caste, creed and religion doesn't matter, instead we are looking at a India where caste, creed and religious discrimination is going to be institutionalised. Whether one likes it or not in this new India, the surname matters and matters a lot.

Nobody can argue that the disadvantaged groups of the society do not need a helping hand. Affirmative action is a notion which is employed quite successfully in USA, without an explicit quota system. The disadvantaged sections of the society deserve help, but this should be done the right way, by making them competitive enough so that they can cross the bar on their own. What Indian government is doing is that they are lowering the bar for them, while keeping the bar same for those unfortunate(or fortunate) to be born with the wrong surname . By compromising on excellence and aptitude, the government is not only lowering the overall standards of quality, it is also doing those very sections of society a disservice whom they are claiming to help. Just an IIT or IIM name tag is not going to make anybody a successful engineer or manager. It sure would open some doors, atleast initially, but over the long term they have to have the skills and aptitude necessary to succeed in the real world. If they do not have the right training, no amount of spoon feeding is going to help them in their chosen professions.

A dangerous potential consequence of this retrogade and foolish decision is going to be rise in social tensions among different groups of society. With thousands of castes, sub-castes, religions already in place in India, our great nation has already been divided into many pieces based on "birth defects" of caste and religion . The last thing one needs is hostility between them. Government, instead of encouraging social harmony, is giving people another reason to hate each other by institutionalising discrimination. Imagine if somebody lets say Mr. Pandey gets 95th percentile in IIM exams and is denied admission whereas lets say Mr. Yadav with 75th percentile gets the coveted IIM-A seat, Mr. Pandey is surely going to forever nurse hostility against Mr. Yadav. Furthermore, there is going to be groupism in the campus itself, where people who have made to the campus through general exam will have one group and people with quota category will have another group. It is obvious which group is likely to perform better academically and which group would be looked down upon by faculty and capable students. The seeds of permanent hostility have been sown from an early age itself. Even in the campus recruitment, a company executive would be reluctant to hire somebody who is there mostly because of his caste and creed. Clearly, seeing the name Mr. Yadav in a resume would make him highly suspicious of Mr. Yadav's credentials even if that particular candidate is there because of his hard work and competence. In this globalized world, where companies fight for talent, no executive would knowingly want to hire somebody with questionable ability. It is also not doing any good to Mr. Yadav as well who would have benefited much more from the right training rather than from the act of charity by the government.

This kind of blatant casteism can lead to some very interesting situations. Imagine a situation, where parents of a newly born child in the "wrong caste" are afraid that their child is very disadvantaged. Being good parents, they want to give their child every possible advantage they can afford. One possibility for them is to give-up their child for adoption in the "right caste" or better still if they are well-off, buy the "right caste" for their child by paying someone to give their surname to their "wrong caste" child. Now, the child born to be Mr. Pandey is converted to Mr. Yadav, and has every advantage which any Mr. Yadav has. To take this argument even further, in our enterpreunarial times somebody can actually make a profitable business out of selling caste names. All that enterpreuner has to do is to find people willing to adopt babies on paper , give all "wrong caste" babies a surname with the "right caste", charge the "wrong caste" parents a whole lot of money, pay the "right caste" person some money and pocket the rest as commission or profit. He could probably advertise his company called 'Caste Away' with a tagline like "Cast away your Caste". There could be different rates for conversion to different castes, an OBC may demand the highest premium, a mere BC may have a little less and a marginally backward caste may be the cheapest. So if a "wrong caste" parent has 3 children, one is very dumb, other is marginally dumb and the last one is marginally smart, the parent may decide to convert the first one to OBC, the second one to BC and since he bought two castes, he gets to convert the third one to "only a marginally backward caste" for free. I wouldn't be surprised if the next generation of all kids are born with surnames Yadav and all Pandeys disappear, become extinct. That is one caste less for politicians to exploit.

Consider another scenario where the "wrong caste" people think (rightly so ) that they are being wronged. Now, we being a democratic nation, these "wrong caste" people also have a vote and hence political power. How can they exercise this power and avenge their wrong? By choosing "the right party", which promises that they would also get a slice of the reservation pie if "the right party" comes to power. Sure enough someday "the right party" would come to power and they will have to fulfill their promise. The "wrong castes" will be righted and they will gain their rightful place in society, by being added to the list of backward castes. Soon enough we will have a situation where all people in the country are officially backward. That would be the day when we will achieve true parity with each other. All of us would be officially backward, a true and lasting equity would be achieved.

If the scenario depicted above seems far fetched, then be aware that they are not. I am personally aware of some cases, where by bribing the right people , higher caste people have got their wards converted to lower castes.

Making a section of society competitive enough to let them rise up to the challenges is a far harder task but is the one which is going to have lot of benefits for not only the groups being helped but for society as well. Indian politicians(or politicians in general for that matter) have neither the foresight nor the willingness to make policies for the long term. Afterall, long term planning takes vision and courage and may not necessarily pay in the next byelection. On the other hand, reserving seats is easy, has the apperance of helping a section of society and ensures vote banking by playing one caste against another (e.g. Laloo Yadav) . Our corrupt politicians are employing the british raj tactics at a much broader scale to lead India towards a long term disaster. If things continue, the day is not far when India will be a "quota society", where everybody is granted a reservation, a society where merit takes a back seat and your birth largely determines your fate. Such a society is unlikely to be very competitive in a globalized world even more so because smart and talented people would leave this society for better opportunites abroad. What we are going to see is a resurgence of a caste-based society, a casteist society, something like a Bihar or UP where caste is everything. Is this the legacy we wish to leave for our children?

Europe's fear of globalization

That Laxmi Mittal is a man of steel, in more ways than one, had long been established. His steely resolve is what exactly is the need of the hour if he has to see his bold bid on European steel maker Arcelor through. Reactions to Mittal Steel's take over attempt for its nearest rival has been hysterically hostile in Europe which is not very surprising. Europe has always been very hypocritical in its approach towards globalization even though globalization is the ideology which has been primarily responsible for its prosperity. It is good as long as it helps European companies acquire assets and markets abroad, but loses its allure if the very same companies are in danger of being gulped by bigger & better rivals. The excuses offered by the French government, of job losses and that Mittal Steel is majority family owned, are difficult to be qualified more than hogwash. Europe has to understand that globalization is not a one way street unlike the old colonial times, when european companies destroyed the local industries of their colonial conquests. The world can no longer function according to the wishes of european politicians, if they expect other countries to open up their markets and assets then they have to reciprocate. Unduly extreme and protectionist measures are going to isolate Europe from rest of the world which in the long run will prove counter productive. In the interest of a better world, let globalization be.

In praise of Rahul Dravid

Who can doubt that Rahul Dravid is one of the greatest cricketers of his generation? Great batsman, quintessential nice guy , a role model-- you can add a great leader and a very articulate speaker to that list. Is there any more well spoken man in cricket right now? This interview is an ample testimony to his poise and eloquence. As a leader and sportsman , he is bound to scale new heights. How much I wish we can get leaders half as good in politics as well.

Freakonomics

Perhaps the most remarkable thing about Levitt and Dubner' s highly acclaimed book is that although it is freaky in good measure, you will be hard pressed to find any traditional economics in it. May be this book could have been more appropriately titled 'Freakostatistics' or 'Freakometrics', because what this book really is about is Data and its power to give surprising answers if the right questions are asked. This is where U Chicago economics professor Levitt excels at-- asking the 'right' and often unconventional questions. His modus operandi is simple. He looks for a field where there is a wealth of information available in the form of raw data, he lets the data speak for itself by giving it the voice of statistics and asking questions which nobody else thought of asking. What he finds is that data can be a surprisingly insightful speaker revealing both profound and mundane. It can tell you what really brings down crime in society, what is the best way to raise a child or what is common between real estate agents and Ku Klux Klan! A good measure of a book of this type can be gauged from the number of times you find yourself saying "A-ha!". On this test, Freakonomics does not disappoint at all and is an A-class "A-ha!" book.

Armageddon according to Bill Bryson

Bill Bryson's A Short History of Nearly Everything is a wonderfully entertaining and amazingly enlightening book. His insatiable curiosity to actually find out all the things he did and great dexterity as a writer to explain all that in wonderful prose are something to marvel at (For a detailed and wonderfully written review go here). As the title of the book indicates, included in the book is the history of earth and humanity and what is more, a possible end as well! Following passage from the book describes rather vividly how the end of humanity- The Armageddon- in the form of a cosmic collision between earth and a wandering asteroid will look like.

An asteroid or comet traveling at cosmic velocities would enter the earth's atmosphere at such a speed that the air beneath it couldn't get out of the way and would be compressed, as in a bicycle pump. As anyone who has used such a pump knows, compressed air grows swiftly hot, and temperature below it would rise to some 60,000 Kelvins or ten times the surface temperature of the Sun. In this instant of its arrival in our atmosphere , everything in the meteor's path-people, houses, factories, cars-would crinkle and vanish like cellophane in a flame.

One second after entering the atmosphere, the meteorite would slam into the earth's surface, where the people of Manson(an impact site of such a collision millions of years ago) had a moment before been going about their business. The meteorite itself would vaporize instantly, but the blast would blow out a thousand cubic kilometers of rock, earth, and superheated gases. Every living thing within 150 miles that hadn't been killed by the heat of entry would now be killed by the blast. Radiating outward at almost the speed of light would be the initial shock wave, sweeping everything before it.

For those outside the zone of immediate devastation, the first inkling of catastrophe would be a flash of blinding light-the brightest ever seen by human eyes- followed an instant to a minute or two later by an apocalyptic sight of unimaginable grandeur: a rolling wall of darkness reaching high into the heavens, filling an entire field of view and traveling at thousands of miles an hour. Its approach would be eerily silent since it would be moving far beyond the speed of sound. Anyone In a tall building in Omaha or Des Moines, say, who chanced to look into the right direction would see a bewildering veil of turmoil followed by instantaneous oblivion.

Within minutes, over an area stretching from Denver to Detroit and encompassing what had been Chicago, St. Louis, Kansas City, the Twin Cities-the whole of the Midwest, in short- nearly every standing thing would be flattened or on fire, and nearly every living thing would be dead. People up to a thousand miles away would be knocked off their feet and sliced or clobbered by a blizzard of flying projectiles. Beyond a thousand miles the devastation from the blast would gradually diminish.

But that's just the initial shockwave. No one can do more than guess what the associated damage would be, other than that it would be brisk and global. The impact would almost certainly set off a chain of devastating earthquakes. Volcanoes across the world would begin to rumble and spew. Tsunamis would rise up and head devastatingly for distant shores. Within an hour, a cloud of blackness would cover the planet , and burning rock and other debris would be pelting down everywhere, setting much of the planet ablaze. It has been estimated that 1.5 billion people would be dead by the end of first day. The massive disturbances to the ionosphere would knock out communications systems everywhere, so survivors would have no idea what was happening elsewhere or where to turn. It would hardly matter. As one commentator has put it, fleeing would mean, `` selecting a slow death over a quicker one. The death toll would be very little affected by any plausible relocation effort, since earth’s ability to support life would be universally diminished.”

The amount of soot and floating ash from the impact and following fires would blot out the sun, certainly for months, possibly for years, disrupting growing cycles. In 2001, researchers at the California Institute of Technology analyzed helium isotopes from sediments left from the later KT impact and concluded that it affected earth’s climate for about 10,000 years. This was actually used as evidence to support the notion that the extinction of dinosaurs was swift and emphatic- and so it was in geological terms. We can only guess how well, or whether, humanity would cope with such an event.

And in all likelihood, this would come without warning, out of a clear sky.

Munich- A fine but biased movie

Since George's review on Steven Spielberg's latest offering is going to take a while, I thought I may jot down some of my 2 pence thoughts on Munich. Spielberg does have a knack of overdoing things , his previous oscar winning efforts Saving Private Ryan and Schindler's List are cases in point, where the scenes of grotesque violence were unbearably long. Thankfully, in this movie he does not harp on the atrocities as much but rather concentrates more on the characters and drama, which is quite intriguing. The backdrop of all that subsequently unfolds in the movie is the 1972 Munich Olympics massacre in which 11 Israeli atheletes were taken hostage and then gunned down by Palestinian revolutionaries. This action played out in all its horror on TV the world over galvanised the Israeli establishment into taking matters in their own hands. Mossad, the Israeli equivalent of CIA, formed hit squads to assassinate all those who were behind the events at Munich. One such hit-squad has Avner (Eric Bana), the story's main protagonist. Rest of the movie is about how Avner and his fellow Mossad agents go about their mission.

A high point of the movie is its realistic portrayal of the events under study. The story has all the elements of a highly charged spy thriller and there are some moments of pure adrenaline rush, but for the most part the movie underplays those sequences and concentrates more on the fate of protagonists. The story is told from the point of view of Avner, who develops a crisis of conscience while carrying out his hatchet job and according to the movie with good reasons. No matter how one interprets the events unfolding on screen, Israel and Mossad come out as villains. For example, most of the palestinian "terrorists" depicted in the movie come across as affable, academic, family men whose only crime seems to be that they are voicing the palestinian cause. They are never shown or even hinted at causing voilent terrorist activities. It is never clear whether those people were actually involved in the terrorist acts or were they merely part of the political arm of Palestinian organizations. The movie does more than hint that Mossad is using Avner and his group as mere pawns to eliminate everybody they perceive as threats- past or future. Towards the end Avner gets disillusioned with Mosaad as well as Israel and refuses to go back to Israel inspite of pleas from his Mossad boss. Unlike the audience, he is convinced that Israel is evil. No wonder pro-Israel groups are up in arms against this film, a fact which no doubt is going to hamper its prospects in the awards season inspite of movie's technical merits.

Its anti-Israel bias not withstanding, Munich is still a finely crafted piece of work which deserves a viewing. The work is largely based on a book, so any biases are probably inherited from there. To this day, Israel has not accepted existence of any assassination squads, a denial which is hard to reconcile with the sudden emergence of body bags containing Palestinian leaders in the aftermath of Munich. Spielberg enhances his reputation as a master story teller. His Munich is a fine effort in bringing one of the most long standing disputes in contemporary politics into mainstream Hollywood's focus.

Most Valuable Three Dollars

A lot of money is not likely to buy anybody love or happiness, a mere three dollars even less so. Friday, however, was one of the those rare days when those lowly three dollars-that too not my own- bought me immense satisfaction. The reason for this unexpected good fortune was an unscheduled visit to the local public library, which was having a book sale selling some eminently likeabale titles for little over hundred cents. A cursory browse at the biographies section yielded two gems - Abraham Pais's scholarly biography of Einstein 'Subtle is the Lord' and James Gleick's biography of Feynman 'Genius-The Life and Science of Richard Feynman'. I had never been happier parting with three dollar bills, not even after devouring a yummie Brownie Fudge Sunday at Steak & Shake.

Getting the books, even at such throwaway prices, is the easy part, actually getting down to read them is where the challenge really lies. Unfortunately, this is a challenge which I do not wish to undertake any time soon especially with regard to these books which apart from being scholarly biographies are semi-technical journal articles as well lasting well in excess of 400 pages. For now I will not let that worry me. I am just happy to possess these classics much like a vintage car collector who is happy to own some valuable cars without ever testing how they may actually drive.

Politics in Education

Government of India has passed 104th amendment to the constitution. This amendment overrides the supreme court judgement prohibiting government interference in the workings of privately run educational institution mainly pertaining to the question of reservations for minorities. The new amendment makes it mandatory for all non-minority privately run educational institutions(profit or non-profit) to reserve seats for minority students. Interestingly, minority run educational institutions have been exempted from the law. The motivation for such a law is obvious- politics of votes. Typically, politicians of all hue take up a socially important issue and instead of providing sensible, lasting solutions come up with ideas which are populist and more often than not do more harm than good. This really is the nature of profession of politics. There are a number of things which are wrong with a law of this kind, not least among these is its ineffectivenss-

1) At an ideological level this law is contrary to the principles of free-markets, less government controls and more economic freedom to individuals, which India is trying so hard to embrace. Privatley run educational institutions are like any other business. They are into it for the primary purpose of making money. This government decree is a direct hit on their potential profitability. The likely result is going to be a slowdown in the private investments in higher education meaning less colleges than there could have been and in extreme cases, a shutdown of some colleges because they are no longer profitable. In this day and age where India needs as much investment in education as it can get this law is a backward step.

2) Very interestingly, minority run educational institutions have been exempt from this law! This means educational institutions run by christian or muslim organisations do not fall under this law. At a basic level, this is discrimination against a particular section of population, mainly the majority and at a deeper level it is an assault on the fundamental right of individuals to form associations. The amendment implies that a hindu can not form a Hindu educational institution open only to Hindus whereas Muslims can form a muslim university open only to muslims. It is another ironic example in a "free democratic secular" India, where different laws apply to different sections of population fueling resentment and segregation sentiments.

3) A law like this is not likely to be effective in a country like India where everybody belongs to a minority of some kind. It is very easy to evade this regulation on paper. What we are going to see is a rush by for-profit institutions to register themselves as minority run institutions, which are exempt.

Problems of a society are rarely solved by active government regulations. An imaginative government would try to tackle the problem in ways consistent with the ideology of free-markets. A privately run business needs to be provided with incentives for contributing to higher social goals. For example, government can provide tax credits to an institution which actively engages in affirmative action, earmark funds for institutions which provide aid to poor students or encourage US style student loan markets. There are far better ways to tackle social problems but unfortunately in politics short term political gains almost always take precedence over sensible effective policies.

NYtimes story on India's highways

NYtimess has done a wonderful series on India's Golden Quadrilateral highway project, the most ambitious road building effort ever undertaken in independent India. Wonder why our mainstream newspapers and magazines fail to do something like this.

Bhiku Mhatre Haazir Ho

Satya is probably the best mob movie ever made in India and in my humble, relatively uneducated opinion, one of the best mob movies ever made in the world, right up there with the Corleone family saga . It isn't so much about the gangster side of the story, which happened to be the profession of our lead characters, but the human relations depicted in the movie which really mesmerised me. More than a crime-saga it is a story about friendship, love, betrayal, sacrifice, duty, politics and many other themes of human relations which lifted this movie several notches above any regular crime-drama and put it into a pedestal along with the great movies of modern times. It is Ram Gopal Verma and Manoj Bhiku Bajpei at their best.

Speaking of Manoj Bajpei, in my humble opinion, his performance in Satya is the best performance by any actor in Bollywood during past 20 years. Right from his introduction scene, where he picks up his mobile to answer a call from one of his goons, to the scene where he is shot dead by Bhau , you can feel the intensity in his portrayal of Bhiku Mhatre. Like all great actors, more than the words, it is his eyes and mannerisms which do the talking. It is the kind of performance which you can not describe in a blog post, you just have to see it to believe it. He brought the character of Bhiku Mhatre alive on screen in a way I don't think any other Bollywood actor has the talent to do.

I recall he had some really good performances post Satya as well. His portrayal of a psychopath in Kaun and an honest police officer in Shool were great too, even though it did not bring him that much acclaim. Post Shool however, he does not seem to have done anything of substance. A simple search on IMDB tells me roles in Zubeida, Road, Pinjar and some other very forgettable movies. It is a pity indeed that an actor of this amazing caliber has not got the kind of roles he deserves, but this really is a problem with Bollywood , which is nothing more than a glorified crap-machine churning out garbage day-in and day-out having no place for fine actors dedicated to their craft.

India-another missed opportunity?

Textiles is one of the few manufacturing sectors , where India can hold its own against great Chinese maufacturing machine. It has a huge domestic cotton industry, plenty of expertise and low labour costs which are at par with China's. With the ending of global quotas at the start of this year, India has a golden opportunity to take an early lead in market share for global textile market, however whereas China's exports this year in textile have surged 59%, India's have increased a very modest 5%. The culprit- India's ancient labour laws which are completely out of sync with modern times. For starters, in India you need government permission to fire workers in a factory employing more than 100 workers, which imply that in a labour intensive sector like textile businessmen are afraid to hire in anticipation of demand because firing workers later will not be possible if demand does not materialize. Plus labour laws place restrictions on contract labour and overtime thus unnecessaily increasing labour costs. The result of these archaic laws is that Indian companies are reluctant to expand, operate in smaller units of less than 100 workers which makes economies of scale difficult and in general become less competitive than their chinese counterparts. The macro effect is that India is unable to even take advantage of situations which are apparently tailor made for its strenghts.

I just fail to understand why Indian politicians can not see the obvious example of Chinese model which has been so successful in creating wealth in our giant neighbour. India has almost every advantage which China posseses plus some more like rule of law, large english speaking population and democracy. All politicans need to do is to get rid of old rules and regulations, relics of our Soviet inspired socialist past and take advantage of the globalized world which clearly has the potential of creating enormous wealth for us as chinese have demonstrated. The reason our software or outsourcing industry has grown by leaps and bounds is because senseless government regulations have been kept out. India clearly has the potential of creating the same miracle in manufacturing as well, if only sensible economics can prevail. The stakes are even higher in the battle for manufacturing eminence because manufacturing can provide millions of jobs to vast number of semi-literate or illiterate people in India, which outsourcing and software industries will never be able to provide. A failure to create jobs for these underpriviliged can create social unrest which may hamper India's future prospects. The only way to create more opportunities for India's poor is to open up economy further, allow indian enterpreuners to form companies, allow foreign investors to invest not only in markets but in factories , improve the physical infrastructure. A failure on these fronts has very high cost for our future. We may miss the globalization bus just as we missed the industrial revolution.

The next Bangalore

Bihar has arrived, in international media that is. India's poorest and most lawless state has voted for development proclaims Business Week. The magazine goes on to state-

Biharis voted for economic development and rejected the candidate who had ruled the state on the basis of caste for 15 years. The meaning is clear: Bihar aspires to be like Bangalore, India's tech capital. That brings Bihar into the mainstream of the new India.


Pardon me for puncturing the unbridled enthusiasm of an international magazine which presumably knows next to nothing about political equations in India's own wild wild west. According to some reports, Lalu Yadav suffered a vote loss of only 0.87%, hardly the stuff of categorical rejection, however this being India's coalition politics, it cost him a very disproportionate share of seats benefiting Nitish Kumar led NDA immensely. India's public has rarely rewarded growth or sensible economic policy focusing on more down to earth issues like who is providing free electricity, what is the caste of the candidate, who is providing daaru for votes or who is building a Mandir at God knows where. I , for one , do not believe that Bihar public which as recently as February voted Lalu's RJD as single largest party is suddenly aspiring to make Patna the next Bangalore. Anybody proclaiming otherwise just needs to look up Marxists' non-stop victorious record in West bengal or NDA's heavy defeat despite a very strong economic growth , which by the way did make a nice omelette on the faces of pollsters or Chandarbabu Naidu's heavy defeat in Andhra. Electoral politics in India is very complex and interplay of many factors decide the final outcome but I doubt that development or growth is a very significant one among them especially in India's most BIMARU state.

Nostalgia revisited

Thanks to the generosity of my friend Neeraj I have got a very good collection of Sachin Dev Burman's songs . Listening to these unforgettable gems again made me realise what I was missing. The man from whom Sachin Tendulkar got his name is probably the greatest hindi music composer India has ever produced. Only a genius can compose songs like Din Dhal Jaye(Guide), O Re Maajhi (Bandini), Khoya Khoya Chand (Kala Bazaar), Jalte hain jiske liye(Sujata), Waqt Ne Kiya (Kaagaz ke Phool) and many many more. SDB's music is no ordinary melody. Inspite of being within the constraints of a 4-5 minute time-frame of hindi movie song, his music is capable of seeping into your heart & soul and stirs emotions from within. Fortunately I have this great music now. Life is good.

IIM graduate murdered for honesty

IIM graduate Manjunath Shanmugham shot dead in cold blood by UP's petrol mafia for doing his duty. Manju was 27 years old and a recent graduate of IIM-L. He was working for Indian Oil Corporation where his work entailed checking the petrol pumps in his purview for any adulteration in the petrol they sell. One petrol pump was reported by him for engaging in rabid adulteration and he recommended to revoke the license of that pump. The result- Manju was murdered in cold-blood by the petrol pump owners. At the risk of sounding callous, I would like to say that I am not surprised, yes shocked I am. Shocked at not why this happened but shocked at why this fine young man had to join a Public Sector Company in India when he could have picked and chosen cream of jobs in Indian corporate world, why if he had decided to join a PSU he had to show courage and honesty when he could easily have turned the other way and why unlike everybody else he did not care for his personal safety . But then these questions are the ones which feeble minded people like me who take the easy way out will probably never understand. Manjunath Shanmugham was a great man and deserves a big salute from everybody who values honesty & courage. May you rest in peace, Sir.

PS: Gaurav Sabnis writes about Manju, whom he had the good fortune of meeting during his IIM days

Ode to Prabhuji

For lesser mortals Mithun may be another flop hero of B-movies however for the true devotees, who have had enlightenment , he is the one and only true God in a world full of false gods. An ode to Mithun aka Parbhuji and the religion of Mithunism can be found here.

Thomas Friedman's talk

Thomas Friedman of NewYork Times was at Georgia Tech today giving a highly eloquent and entertaining talk on outsourcing and globalization-the theme of his latest book The World is Flat. Personally, I haven't read Friedman 's columns much on NYTimes, ( I usually read WSJ because of its bent on my favourite topic finance & economics), but he is believed to be a very insightful writer & a tremendous speaker. In his talk , he started out with how he got the idea for his book which he attributed to a conversation he had with his friend Nandan Nilekani, the CEO of Indian outsourcing giant Infosys. Most of his subsequent talk was focused on how the world has become a level playing field with nobody having a location advantage any more. Any job which can be done in sillicon valley can as well be done in Bangalore and with a fraction of the cost. Thus, the world has become a level playing field hence the term 'Flat'. Much of what he said may have a ring of common sensical familiarity to any follower of world news, however it was laced with humour and interesting anecdotes apart from his interesting analogy with a flat world which made this talk a very worthwhile one to attend. I came away really impressed with Friedman's eloquence and the ability to hold audience's attention for a significant time. All in all, a very well spent 90 minutes.

Other side of China's rise

China's rapid rise in past couple of decades is undeniable. The country's spectacular success in embracing atleast some of the ideology of free markets is a lesson to many other developing countries like India. However, most of the success of China as a rapidly rising power can be attributed to its unique situation of having a "benevolent dictatorship". Chinese leadership had long ago realised that if it has to maintain its stronghold on power and prevent social unrest then they have to make a serious dent into poverty. It has certainly managed that task extremely well by embracing its own version of capitalism but advances in the free market ideology has not brought commensurate progress in the form of a modern legal and politicial system. Government still is the law, police, judge and jury. This system certainly makes building up infrastructure or bringing about big policy changes much easier than it is in a democracy like India but it also has a huge cost on the ordinary citizens or people who fall on the wrong side of China's all pervasive government. The story of David Ji, a Chinese born american citizen is a case in point . David Ji founded the hugely successful Apex Systems, an importer of Chinese made DVD-players. He ran into a contractual dispute with his chinese supplier Changhong, a government owned company masquerading as a publicly traded one. Ji made the grave miscalculation by deciding to travel to China for settling the dispute even when advised against it by his executives. He was confident that his US citizenship, money & status in US and Chinese connections will guarantee his personal safety. On arriving in China , he was arrested, detained for months without any charges being filed, humiliated and made to sign papers handing over the controls of his company to Changhong i.e. the government (more about this appears in NYtimes ). Ji's is not an isolated example of government high-handedness in China in matters of legal disputes. China's legal system is a far cry from what it should be for a modern , business friendly society. Government rarely loses a case, trials are dispensed with in a day or even less, police routinely tortures citizens to extract confessions and abuses by government officials are rampant. India, for all its flaws in the legal system, still has an independent judiciary and check & balances against the abuse of government power. There is atleast one count on which China can learn from its formidable neighbour, which is how to have a rule of law not rule by law.