Jost Zetzsche Tool Kit

Friday, December 26, 2008

From the dark pages of history

Today morning I received this email (reproduced in full below) from one Kashyapa Kumarilla. I feel it deserves to be converted into a blog post, at least as counter to the apologists of the Soviet Union. I am yet to go through the interviews given by the the Soviet defector Yuri Bezmenov due to lack of time but will do so soon. Now for the email. I have suppressed the from address of the sender as it will not be proper to do so without the concerned person's consent. Now, over to email in bold italics:

from Kashyapa Kumarila
reply-to
to
date Fri, Dec 26, 2008 at 6:42 AM
subject Fw: Video: How communist subversion of India happened
mailed-by xxx.com
signed-by xxx.com

Hello,

Can you post it in your blog ?

Thanks,
KK
----------------------------------------------------------------

Yuri Bezmenov was a member of Propaganda Team of KGB. He was posted in Delhi Embassy of Soviet Union in 60's to 1970. He defected in 1970 to USA .

In early 1980's there was a TV interview of Yuri Bezmenov which is given below in parts in YouTube link. It is interesting to know how communist subversion happens in many countries. He shows how the Journalists, Writers, Academicians, politicians etc from India were indoctrinated in communism/Marxism. Especially the videos 6, 7, 8 where he shows with pictures how Indian professors would be indoctrinated & how many Indian academicians were dishonest.


Play list : http://www.youtube.com/view_play_list?p=96832BA85ECDC4FF


We don't have to accept everything he says or accept every analysis he makes. But he shows how "progressives”, "liberals", "human rights activists" etc are made.

Makes a lot of sense in Indian context. Nowadays, Christian churches & Arabian Mullahs are using the same above methods to create “pseudo secular activists , “journalists”, “Intellectuals” like Guha etc.


In case you are interested, you can read a transcript of the interview in 3 parts as follows.

part 1
part 2
part 3

Back to Dondu N. Raghavan. Please go through them. You will be amazed.

After the collapse of the Soviet Union a lot of information came out as to how the communists of all hues in various countries were in league with the Soviets. As they were already of a bent of mind susceptible to the communist lies, I guess the Soviets had no difficulty recruiting them, especially the Indians.

I will come back in another post within the next few days after making a thorough study of the tapes and the transcripts.

For the moment, ciao and Happy New Year to all of you.

Regards,
Dondu N. Raghavan
P.S. Well I read the transcripts. Quite shocking. By the way, the Tamil version of this post can be seen here.

Sunday, December 14, 2008

Car rental services at airport: plea by call taxi firm rejected

In today's Hindu (14.12.2008) the following news item is published. Let us first see the item and then Dondu N. Raghavan shall comment.

Special Correspondent
CHENNAI: The Madras High Court has dismissed a petition filed by a call taxi services company seeking to call for records of the Airports Authority of India (AAI) in issuing tender for granting licence to internationally branded car rental services at the airport here, and quashing the same. Fast Track (P) Ltd. said it was running call taxi services in eight centres in South India, including Chennai. It submitted that as far as the tender was concerned, in view of the terms and conditions imposed, relating to internationally branded car rental services, the company and other local taxi operators were excluded from participating.

A.Xavier Arulraj, counsel for the AAI, submitted that the terms and conditions stipulated in the tender relating to internationally branded car rental services at the airport were based on the commercial policy of the AAI and approved by the board of directors of the Authority. The eligibility criteria for different services had been laid down.

In her order, Justice K.Suguna said a plain reading of the relevant clause of the notice inviting tender made it clear there was no prohibition on any local taxi operators from participating in the tender process. The only condition was they should fulfil the conditions.


Now for Dondu Raghavan's stance:

The term "plain reading" referred to in the last para is a little intriguing. What is meant by plain reading? Does the Honorable justice mean "prima facie"? If that is so, I would say that is precisely what the case is about. From the above news item I gather that the call taxi firm wanted to see what led to the decision of the Airports Authority of India (AAI) to limit the tendering to just "internationally branded car rental services". What does the term "internationally branded" qualify? Is it the car or the rental services? And by the way what is exactly meant by "internationally branded"? Definitely the records would have held clues as to the various definitions and if they did not contain them the same would have been sufficient reason, I believe, to reverse the Authority's order. Presumably the records would have been shown to the Honorable judge, though the above news item does not specifically say so. (I would like to clarify that I shall not question a court's judgment. Nor am I doing it. But I can question the AAI).

Then another point. Why should it be limited to only internationally branded car rental services? I would have thought some specifications as to the quality of the cars deployed, drivers employed (should be capable of communicating well with the passengers etc) would have been more important.

I am reminded of an instance some years ago, when the tender calling for minivans clearly mentioned Matadors. Apparently the clerk formulating the tender thought that all minivans are called Matadors whereas it was just one of the brands of commercial minivans. Had this tender calling been challenged by a firm offering "Dynaclippers" (another brand of minivan), and if the judge had ruled on the virtue of plain reading and just dismisses the case saying that there is no ban on the firm offering Dynaclippers as they can very well offer Matadors too, what then?

Will any lawyer friends enlighten me on the subject?

Regards,
Dondu N. Raghavan

Thursday, November 20, 2008

The revival of a costly myth

My friend Chandrasekar forwarded this mail to me. It is an interesting article about government spending. The way governments work all over the world, any new scheme has to be gone through with a very fine toothcomb. It is sad but true that any socalled temporary measures on the part of the government tend to linger on quite long after the end of its need. One example that comes to my mind is the Rent Control Act in Bombay, Chennai and other metropoles. Started as a stop-gap arrangement immediately after the end of the Second World War, it is still hanging on creating havoc in the houseowner-tenant relationship, new house constructions, availability of rented accommodation to newcomers to the city and what not.

Yet we do not seem to learn. It is really tiresome the way people have a short memory, so laments Christopher Lingle in "the revival of a costly myth". Over to Christopher Lingle. Dondu N. Raghavan will come afterwards.


Deficit spending to boost a weak economy is an argument that has little justification in fact and reality.

Despite having a stake driven through its heart after being identified as the primary cause of the stagflation of the 1970s, a failed economic policy has risen from the dead. Yet, the consensus at the recent G-20 meeting is that governments can create jobs and end recessions simply by spending more money.

The myth that higher public spending is good economic policy is so resilient that its supporters are unperturbed by all the evidence that contradicts it. Consider that Japan's policymakers began throwing massive amounts of money at the economy in the late 1980s to reignite it. This constant flow of deficits brought only a growing mountain of public sector debt with the economy regaining its long-term growth trajectory. Nor did it deter Japan from ushering in yet another recession.

More recently, the Economic Stimulus Act of 2008 gave so-called tax rebates worth $100 billion to US households in May, June and July. But the rise in spending was very small since most went into savings, including paying down debt.

Numerous studies show that one-time tax rebates cannot bring higher economic activity. This is because temporary increases in disposable income do not create incentives to increase consumption over time. The only certain thing is that stimulus packages based on increased public sector deficit will add to national debt.

Belief in the efficacy of deficit spending rests on a naïve notion that consumption is an important driver of economic growth. It is as though consumer goods and services are merely gifts of nature.

In reality, the path for sustainable economic growth requires more savings so that there can be more capital goods. As it is, capital goods are the basis of higher output and increased wages by boosting productivity. The provision of capital goods requires that consumption be deferred.

It seems that saving is not only a natural instinct, but it is also promoted by many fables, biblical and otherwise, that show the merits of thrift. In recent years, central bankers removed incentives to save by driving interest rates to unsustainable and artificially low levels while inducing more consumption.

This leads to a "paradox of spending" whereby consumers, deterred from saving by low deposit rates, are lured into low-interest borrowing to boost current living standards. This distortion in credit markets induces individuals to make decisions that lead to greater misery in the future for them and for others. Indeed, increased spending may cause incomes to fall by a greater amount since the attempt to buy more today backfires as there are fewer jobs and less to consume later.

By spending beyond means to create jobs, governments undermine or eliminate future employment

Therefore, policies that aim to raise consumption now lead to less capital being available for future production, so there will be less future consumption.

An enduring fable has it that governments can "create" jobs either through public spending to employ people in the public sector or to increase overall demand. During his campaign, Barack Obama promised to use $150 billion to promote windmills, solar panels and "energy efficiency" that would supposedly create five million "green" jobs.

In the first instance, government spending to "create" jobs costs more than jobs created in the private sector, since public sector recruitment involves massive bureaucracies. And since adding workers to the public payroll creates a new burden on taxpayers who have less to spend or invest, this means there can be no net gain to the economy.

In all events, government funding to "create" green jobs may be the worst of both worlds. Much of the support for green projects exists as they are thought to create more jobs because they involve more labour-intensive production. For example, supporters of initiatives for alternative fuels insist they would boost employment than would the building of conventional power stations. But conventional power stations operate with enormous economies of scale that bring lower unit costs so that more jobs can be created throughout the economy.

Job creation based on real economic merit does not require government involvement. But providing subsidies to support inefficient technology raises the labour-to-capital ratio so that the demand for labour will be lower and real wages will fall.

It is bad enough that deficit spending on job creation is simply ineffective. What is worse is that government spending schemes that expand public sector debt impose several burdens on future generations. Most obvious is the additional tax burden they must pay for debts incurred in the present.

By  spending  beyond  their  means to conjure up jobs, governments undermine or eliminate employment that would have been created in the private sector in the future. If increasing the share of GDP claimed by government leads to lower long-term economic growth, "creating" jobs today will mean fewer jobs in the future. The best way to avoid a future of booms and busts is to consign economic theories that support public sector deficits to the dustbin of history.


[Christopher Lingle is a research scholar at the Centre for Civil Society in New Delhi and a visiting professor of economics at Universidad Francisco Marroquin in Guatemala. Comments are welcome at theirview@livemint.com]

Back to Dondu Raghavan. It is really amazing the naive manner of people faithfully repeating the old mistakes. Creating job is different from creating posts in government departments. As per the Parkinson's law, the more the posts, the more the infructuous efforts and nothing else.

The depression of 1932 is said to have been overcome by Franklin Roosevelt's New Deal. Actually what turned the economy around at that time was the onset of the Second World War creating acute demands for the war effort. Even in Germany the unemployment was reduced mainly due to Hitler's militarization of Germany, which triggered the Second World War.

Can this be repeated? I am afraid that the third world war if it comes may bring about things in such a way that the fourth world war can be fought with just bows and arrows, that too after some hundred years.

Regards,
Dondu N. Raghavan

Tuesday, November 04, 2008

Blind faith in the printed word


The English is clear enough to lorry drivers - but the Welsh reads "I am not in the office at the moment. Send any work to be translated."
The above image is courtesy this post.

This has brought about a lot of head scratching, as one can very well imagine.

The official entrusted with the task of getting the English message translated into Welsh sent an email to a translator incorporating the message to be translated. The translator was away as the mail went to his id and an automatic reply to the effect, "I am not in the office at the moment. Send any work to be translated" was generated and received by the concerned official. And the credulous official thought that this was the actual translation and this resulted in the above sign board. What is more incredible is the fact that nobody had spotted this howler till the last minute.

A similar thing happened recently in 1989, when I was working in IDPL. Our C&MD got Christmas & New Year Greetings from France, wishing him "Joyeux Noël" and "Bonne Année" respectively. The greetings were in big print and the signatures below were just scrawls. Contrary to his usual practice of sending them to me, the French translator, for translation of the French original into English and the English reply into French before dispatching them, he thought that he could just send the replies in English as he guessed that they were routine season's greetings.

Fortunately I happened to pass by when the replies were being sent to him for signing. I just threw a cursory glance at them and was dumbfounded to note that the letters started as follows.

Dear Joyeux Noël or Dear Bonne Année!!!!

If only the letters had gone out, they would have caused a lot of merriment at IDPL's expense.

Once my client's daughter corrected my French to English translation on the sole strength of her being a French learner. I had to tactfully tell the client that the lady was quite wrong.

Regards,
Dondu N. Raghavan

Thursday, October 30, 2008

Why India needs Narendra Modi? by Mr. Suhel Seth

My dear friend Jayakamal drew my attention to this posting by Mr. Suhel Seth, erstwhile critic (that too very strong) critic of Shri. Narendra Modi. My sincere thanks to Jayakamal. As per usual practice in such posts of mine, the "I" in the foloowing lines refer to Suhel Seth. Yours truly Dondu Raghavan will come afterwards.

Let me begin with a set of disclosures: I have perhaps written more articles against Modi and his handling of the post-Godhra scenario than most people have; I have called him a modern-day Hitler and have always said that Godhra shall remain an enduring blemish not just on him but on India's political class. I still believe that what happened in Gujarat during the Godhra riots is something we as a nation will pay a heavy price for. But the fact is that time has moved on. As has Narendra Modi. He is not the only politician in India who has been accused of communalism. It is strange that the whole country venerates the Congress Party as the secular messiah but it was that party that presided over the riots in 1984 in which over 3,500 Sikhs died: thrice the number killed in Gujarat.

The fact of the matter is that there is no better performer than Narendra Modi in India's political structure. Three weeks ago, I had gone to Ahmedabad to address the YPO and I thought it would be a good opportunity to catch up with Modi. I called him the evening before and I was given an appointment for the very day I was getting into Ahmedabad. And it was not some official meeting but instead one at his house. As frugal as the man Modi is.

And this is something that the Gandhis and Mayawatis need to learn from Modi. There were no fawning staff members; no secretaries running around; no hangers on…just the two of us with one servant who was there serving tea. And what was most impressive was the passion which Modi exuded. The passion for development; the passion for an invigorated Gujarat; the passion for the uplifting the living standards of the people in his state and the joy with which he recounted simple yet memorable data-points. For instance, almost all of the milk consumed in Singapore is supplied by Gujarat; or for that matter all the tomatoes that are eaten in Afghanistan are produced in Gujarat or the potatoes that Canadians gorge on are all farmed in Gujarat. But it was industry that was equally close to his heart.

It was almost like a child, that he rushed and got a coffee table book on GIFT: the proposed Gujarat Industrial City that will come up on the banks of the Sabarmarti: something that will put the Dubais and the Hong Kongs of this world to shame. And while on the Sabarmati, it is Modi who has created the inter-linking of rivers so that now the Sabarmati is no longer dry.

He then spoke about how he was very keen that Ratan Tata sets up the Nano plant in Gujarat: he told me how he had related the story of the Parsi Navsari priests to Ratan and how touched Ratan was: the story is, when the Navsari priests, (the first Parsis) landed in Gujarat, the ruler of Gujarat sent them a glass of milk, full to the brim and said, there was no place for them: the priests added some sugar to the milk and sent it back saying that they would integrate beautifully with the locals and would only add value to the state.

Narendra Modi is clearly a man in a hurry and he has every reason to be. There is no question in any one's mind that he is the trump card for the BJP after Advani and Modi realises that. People like Rajnath Singh are simply weak irritants I would imagine. He also believes that the country has no apolitical strategy to counter terrorism and in fact he told me how he had alerted the Prime Minister, the Home Minister and the NSA about the impending bomb blasts in Delhi and they did not take him seriously. And then the September 13 blasts happened! It was this resolve of Modi's that I found very admirable. There is a clear intolerance of terrorism and terrorists which is evident in the way the man functions; now there are many cynics who call it minority-bashing but the truth of the matter is that Modi genuinely means business as far as law and order is concerned.

I left Modi's house deeply impressed with the man as Chief Minister: he was clearly passionate and what's more deeply committed. When I sat in the car, I asked my driver what he thought of Modi and his simple reply was Modi is God. Before him, there was nothing. No roads, no power, no infrastructure. Today, Gujarat is a power surplus state. Today, Gujarat attracts more industry than all the states put together. Today, Gujarat is the preferred investment destination for almost every multi-national and what's more, there is an integrity that is missing in other states.

After I finished talking to the YPO (Young President's Organisation) members, I asked some of them very casually, what they thought of Modi. Strangely, this was one area there was no class differential on. They too said he was God.

But what they also added very quickly was if India has just five Narendra Modis, we would be a great country. I don't know if this was typical Gujarati exaggeration or a reflection of the kind of leadership India now needs! There is however, no question in my mind, that his flaws apart, Narendra Modi today, is truly a transformational leader! And we need many more like him!


The writer is Managing Partner, Counselage.

Now back to Dondu N. Raghavan. What is more, the author is a Muslim. And he has no hesitation in singing Modi's praise.

Regards,
Dondu N. Raghavan

Thursday, October 16, 2008

Henry Hazlitt on the Bailout by Scott A. Kjar

My dear friend Chandrasekaran forwarded me this very interesting article. First the article and then the comments by yours truly Dondu N. Raghavan. Over to Scott A. Kjar. By the way, Scott A. Kjar teaches economics at the University of Dallas.

Treasury Secretary Henry Paulson needs to change his reading list. Instead of reading the balance sheets and income statements of the failing banking industry, he needs to read Henry Hazlitt's classic book Economics in One Lesson. It will cost Paulson far less than the $700 billion that he is spending on the bailout, and he might just learn a little economics in the process.

Hazlitt delivers his "one lesson" in chapter 1, and proceeds to spend the rest of the book giving examples. His lesson, based on the work of Frédéric Bastiat, is that "the art of economics consists in looking not merely at the immediate but at the longer effects of any act or policy; it consists in tracing the consequences of that policy not merely for one group but for all groups."

For example, in chapter 2, Hazlitt delivers the well-known "broken window fallacy" in which a hoodlum breaks a shopkeeper's window with a rock. The common folk see it as a tragedy, but an astute Washington bureaucrat could argue that it creates new jobs for glaziers. As Hazlitt points out, though, any resources that the shopkeeper spends on the new window would have been used elsewhere, perhaps for a new suit. So while the glazier gets new business, the tailor loses the same amount of business. There is no net benefit; in fact there is a net loss. Absent the hoodlum, the shopkeeper would have had both a window and a new suit; given the hoodlum, the shopkeeper has a window but no suit. Even though the damage was to the window, it is the suit that is lost to the shopkeeper and, hence, to society.

In chapter 6, entitled "Credit Diverts Production," Hazlitt discusses government lending policies, such as additional credit to farmers or business owners. However, he points out, the recipients of such programs are rarely the more-productive farmers and business owners. After all, the more-productive people are able to borrow their money from private lenders. It is only the less-productive individuals and firms, unable to get funds on the free market, that must turn to government.

For example, suppose that there is a farm for sale. A private lender would normally be willing to lend money to farmer A who has proven his abilities in the past, rather than to farmer B, who has demonstrated a lower level of productivity than has A. However, because government taxes citizens or borrows money itself in capital markets, private lenders have fewer funds available to lend to A. Instead, government lends the money to B on the grounds that B is underprivileged, in need of a hand, or some other politically based argument. The more productive borrower, A, loses out on the scarce land while the less productive borrower, B, gains the resources. Because the less-productive individual acquires the scarce resource, there will be less total production, and the entire society is worse off.

Further, Hazlitt states, the government takes bigger risks with taxpayers' money than private lenders take with their own money. Private lenders who make bad loans will go bankrupt and be forced out of business. But when the government gets involved, it lends funds for riskier ventures since the bureaucrats who approve the loan face no personal recriminations — much less loss of profit — for error.

In other words, private lenders would take Action A while government lenders would take Action B, and Action B is the less-productive path. After all, there is no need for government to take Action A: it can be handled quite well in the free market.

So it is with the current rash of bailouts. Whatever the final price tag — $500 billion, $750 billion, $1 trillion, more — the fact is that government gets its money either from taxes, borrowing, or the printing press. It is hard to raise taxes by $1 trillion on short notice, and since there is a small hurdle that slows the government's ability to print the money,[1] we know that government will issue bonds. In other words, government will borrow the money from private capital markets.

As Hazlitt points out, though, the private capital markets (those that aren't bankrupt and standing in line for a bailout) would otherwise lend their funds to more-productive ventures. If private capital wants to lend directly to the failing banks, it is already capable of doing so. The fact that such private capital is not lending to the banks is a clear indication that the government's current bailout is contrary to free-market principles.

The argument that the government is somehow pumping new capital into the market is absurd. Government is actually borrowing the money from the capital markets that it is in turn injecting into the capital markets. There is no additional source of funding; there is only a diversion of funds from more-productive outlets to less-productive outlets, with government acting as the middleman.

So when Henry Paulson argues that it is necessary to pump money into credit markets to prevent them from freezing up, he doesn't bother to realize that the money he pumps into the credit markets is coming directly out of the very same credit markets. He is doing little more than rearranging the deck chairs on the Titanic; shuffling the money from one set of financial intermediaries to another does not increase either liquidity or solvency. It merely delays the problem for a few brief moments.

Even the failing banks pay lip service to their fiduciary responsibility, but any privately funded firm that took money from more-productive people to give it to less-productive people would soon go out of business. Only the government can violate Hazlitt's logic and survive, because only government can socialize its losses through the tax system.

Comment on the blog. As I am writing these lines around ten comments have come up and they do need to be reproduced here.

Comments
Tim Kern
Did anyone note that in the President's speech, after the House rejected the bailout, one of the reasons offered for the necessity of opening such a lending spigot was "to allow businesses to borrow for their day-to-day needs?"
A business that needs to borrow to cover daily operations is in a whole lot of trouble, already!
Lord, save us from more "experts!"

George
Saving in an inflationary environment is costly, borrowing is logical.
"income taxes, inflation, risk"
You can avoid any two, it's the third which is hard to avoid.

Aaron
Atleast the comedians have not drank the Keynesian Kool-Aid... very funny
http://www.sinfest.net/archive_page.php?comicID=2959

Dayle Van Alstine
The article is a timely reminder of the wisdom which is available to those whom have influence in our national economic policies. We can be sure that they are familiar with it. This is what makes our current situation so frustrating. Our economic policy leaders have decided that it is not expedient to follow the the wise counsel and impose the proper prescription.
Our government, fortified and emboldened by a lazy and irresponsible citizenry, has no compunction about disregarding the wisdom and warnings provided by the observations of Messrs. Hazlitt, Mises, or Bastiat. When the ordinary people on the street do not recognize the responsibility they have to understand the consequences of purchasing things that they know they cannot afford; when the political elite reinforce such conduct by demanding that more credit be made available to such people; when financial leaders do not stand firm against such policies; when politicians are more concerned with acquiring and maintaining power and influence than doing what is best for the nation and its people, then we will all have to prepare to contend with the consequences of this folly.
Hazlitt is right, of course; but we in the choir already know that. What to do? Share the wisdom in hopes of enlarging the choir; stay out of debt; develop a portable skill.

Enjoy Every Sandwich
Our "leaders", if they don't already know the principles described in Hazlitt's book, would not be interested in learning them. Following the principles would reduce their power, and that they cannot abide.

Stanley Pinchak
Enjoy Every Sandwich is quite right. The number of men who can follow the course of Cincinnatus is small indeed. We as the people must act on the consul of Étienne de La Boétie. We must remove our consent, refuse to subjugate our fellow man for the false promise of living on the backs of others. We end up as the associates of the tyrant do, subjects of tyrannical action ourselves, or worse when the administration changes. We weld our own bars. We forge the very chains which bind us.
Rothbard calls for radicalism. A radical call for liberty. A radical denunciation of the state and its works. Until we heed this advise we remain prisoners in an open cage, terrified of the unknown just across the threshold. Stuck in a liminal state, abused by our own inaction, fearful of change. Servants willingly submitting to an unworthy master. A master who's hands we have placed around our throats.
The emperor wears no clothes! The state must be itself subjugated. We must throw off the mental yoke, reach out and grasp freedom.

Greg Fisher
The hoodlum breaks a window, it cost the economy a window. If he continues to break windows, he must be stopped before he underminds the economy. And if the shop keepers cannot pay to fix their windows, it would be in the best intersest of the society to help fix the windows to keep the shops open and contributing to society.
Since the world is not static, things change. The unproductive farmer may become more productive with additional capital. Many times it is these people that come up with better ways of doing things and the economy advances.
We need to understand the problem in order to form a solution and the role of society.

Michael A. Clem
And if the shop keepers cannot pay to fix their windows, it would be in the best intersest of the society to help fix the windows to keep the shops open and contributing to society.
If the shopkeepers cannot pay to fix the windows, where do you think the money to fix them is going to come from?? And why should the unproductive farmer become productive, when he's getting paid to remain unproductive? You fail to see the moral hazards of your proposed actions. The problem is that it is the government that is "breaking the windows", instead of some hoodlum, with their flawed policies and interventionism. We do indeed need to stop breaking the windows, but the bailout is like breaking more windows in the hopes that it will fix the other windows.

Eric
The wise entrepreneur would foresee that the hoodlums out there like to break glass and so might invest in Plexiglas.
Alternatively, the entrepreneur might invest in security services. Then only those that remain open for business (with non-broken windows) would continue to make profits. Others, with less business sense, would go bust - and society would benefit from having a smarter class of shop owners in business.
However, if society bails out the shop owner as Greg suggests they should, then society would be subsidizing "mal" shop owner behavior. In addition, not only doesn't this solve the real problem, but it makes any real solution less likely to be discovered.
Moreover, there'd be little incentive for the shop owner to upgrade his windows (or security or whatever else would solve the problem) even if he knew how to solve it. This is the moral hazard produced by bailouts.
Therefore, the same theory that describes bailouts of industry X can be used to analyze the broken window fallacy.

Back to yours truly, Dondu N. Raghavan
As I read the above lines, I am more and more reminded of Ayn Rand's Atlas shrugged. There was in that novel a story about a private owner turning over her ownership to all the workers and every worker started discussing company policy. Since all were responsible no one felt any particular responsibility. Each one was out to get more for himself at the expense of others. One or two with some initiatives were saddled with more work and they too rapidly lost that initiative and kept mum. At the end the factory folded and only the ex-owner was surprised. That she was spat upon is but a feeble comfort to yours truly Dondu N. Raghavan.

Regards,
Dondu n. Raghavan

Friday, September 26, 2008

"US Congress Should Back U.S.-India Nuclear Power Deal", says Jeff Immelt

Congress should back U.S.-India nuclear power deal according to Jeff Immelt, the chief executive officer of General Electric Co. Over now to Jeff Immelt.

In the U.S.-India agreement on civilian nuclear-power cooperation, Congress has the opportunity to create thousands of U.S. high-tech jobs, to encourage adoption of the safest, non-polluting energy-generation technology and to help solve the energy needs of India's 1 billion people. It also would solidify relations with a key democratic ally.

In a time of market turmoil and economic instability, this is a remarkable opportunity for the U.S. and a rising economic partner. It must not be missed. Congress should approve the agreement as soon as possible.

Finding a solution to India's mounting energy needs is more important than ever. As one of the world's fastest-growing economies, India has an escalating power demand that is straining international energy supplies. Unchanged, this demand will be met with a greater reliance on fossil fuels, squeezing global oil prices while exacerbating greenhouse-gas emissions.

India understands this. So does the international Nuclear Suppliers Group, or NSG, those countries seeking to contribute to non-proliferation through the implementation of guidelines for nuclear-related exports.

Earlier this month, the NSG waived a 34-year ban on nuclear technology trade with India, giving it access to nuclear services from suppliers around the world. For the U.S., there remains one problem: Without congressional approval, the NSG waiver is moot, as U.S. firms and their employees will, by law, be forced to sit on the sidelines.

Reactor Construction

The agreement is good for the U.S.-India relationship, good for global energy policy and security and good for U.S. jobs. It opens up prospects for U.S. companies to supply potentially billions of dollars worth of reactor technology, fuel and other services to India -- especially given the ambitious nuclear-plant construction program planned by India. About 30 domestic and foreign-supplied reactors may be built by 2030 alone.

As chief executive officer of a company making this technology, I want to retain and hire those workers who can build the products that will help India realize its future. Preventing U.S. companies from competing with international suppliers isn't sensible policy. It risks thousands of high-paying jobs and would diminish the U.S.'s ability to participate in India's peaceful nuclear-power development.

Refusal to approve this agreement would also miss an opportunity to expand the broader U.S.-India trade relationship.

Lackluster Trade

For decades, trade between these two great democracies was lackluster. In 2000, the U.S.'s bilateral goods trade with India was around $14 billion -- less than our trade with Ireland or Venezuela. Today, thanks to concerted efforts by the U.S. and Indian governments, bilateral trade has almost tripled. Still, this is far less than it should be for two of the world's most dynamic economies.

Because nuclear energy can meet so many of India's energy and economic needs, this trade agreement has significance that resonates beyond a single industry. The agreement, if adopted, will strengthen the economic, strategic and diplomatic ties between the world's two largest democracies. To fail to approve the agreement would undermine the goodwill generated in India by U.S. efforts to conclude an agreement.

The U.S. government, and Congress specifically, deserve praise for their hard work in getting us to this point. After all, it was Congress that voted, overwhelmingly and on a bipartisan basis, to support the launch of negotiations two years ago. Now Congress must do its final part by approving this agreement expeditiously. A signed U.S.-India civil nuclear agreement will signal a new era in U.S.-India relations. This is a rare opportunity that must not be missed
.

Now back to Dondu N. Raghavan. The Indian Prime Minister is to be congratulated for having played his cards properly and got the NSG approval. At this juncture, even in the worst scenario of the US congress not ratifying the deal, India can now freely approach other suppliers. It is now really in the interest of the US to get the deal ratified and become an important supplier to India. The pressure is now on the US.

Let us now worry about India's interests and let the US do its thing or lose out to other supplier countries.

I thank my friend Mr. Jayakamal for having brought this to my notice.

Regards,
Dondu N. Raghavan

Wednesday, August 13, 2008

Dreaming of Swatantra by Niranjan Rajadhyaksha

The article with the title "Dreaming of Swatantra" was forwarded to me by my friend Chandrasekhar. It raises an interesting question about the now defunct Swtantra Party founded by Rajai, Masani amd Ranga recently in 1959. First let us go to the article reproduced here in bold italics.

Modern India's only stab at a successful liberal party started in August 1959; the Swatantra Party would have entered its 50th year this month, if it had survived as a national political force

(Cafe Economics | Niranjan Rajadhyaksha)

Nobel laureate Amartya Sen — who is not a free-market liberal — has spoken on how contemporary India needs a right-wing political party that is both secular and committed to an open economy. This is a good time to go back to the issue, for two reasons. First, we have seen how economic reforms were blocked by the Left to begin with and have now been hijacked by the crony capitalism of the Samajwadi Party. Second, modern India's only stab at a successful liberal party started in August 1959; the Swatantra Party would have entered its 50th year this month, if it had survived as a national political force.

Countries with low levels of trust and high levels of corruption tend to be more wary of free market capitalism
Fifteen years of high growth, thanks to economic reforms, should have created a strong political base for liberal party. It hasn't. I am often surprised at how even people who have benefited from economic reforms still believe that the government should control prices to beat inflation or that companies are making too much profit at the cost of society. Is it any wonder that no party is ready to face the electorate with a free market agenda?

The interesting question is why this happens. The answer involves more than political failure. The nature of Indian society and capitalism are also part of the answer.

An interesting new research paper by Philippe Aghion of Harvard University, Yann Algan of the Paris School of Economics, Pierre Cahuc of the Ecole Polytechnique and Andrei Schleifer of Harvard University offers one set of clues. They have mapped the relationship between demands for regulation in a country and the level of distrust between its citizens.

What these four economists show from their study of rich nations is that people ask for more government regulation when they do not trust their fellow citizens. They have used a concept that has attracted a lot of attention over the past decade and more — social capital. Any economy needs physical capital (tools), financial capital (money) and human capital (skills) to grow. It also needs social capital (trust). Economist Kenneth Arrow once said that virtually "every commercial transaction has within itself an element of trust, certainly any transaction conducted over a period of time. It can be plausibly argued that much of economic backwardness in the world can be explained by the lack of mutual confidence."

Aghion and his three fellow authors show in their July paper, Regulation and Distrust, that countries with low levels of trust in other persons, companies and political institutions are more likely to have more regulations on economic activity. But this regulation leads to low growth and corruption, as we know from our own experience of the licence permit raj. "What is perhaps most interesting about this finding…is that distrust generates demand for regulation even when people realize that the government is corrupt and ineffective; they prefer state control to unbridled production by uncivil firms," say the economists.

The way companies earn profits does affect the popularity of capitalism. In a paper published in 2006, Rafael Di Tella of Harvard Business School and Robert MacCulloch of Imperial College ask: Why Doesn't Capitalism Flow to Poor Countries? They say the most important factor is corruption, which cuts into the "moral legitimacy of capitalism". Di Tella and MacCulloch add: "Existence of corrupt entrepreneurs hurts good entrepreneurs by reducing the general appeal of capitalism."

These two pieces of research show that the popularity of a free market political party will depend on both the level of trust in a country and whether profits come from competitive markets or oligopolies protected by the state.

Economic historian Douglass C. North and his colleagues have given us what they call a conceptual framework to interpret human history. They say that societies emerge as "limited access orders". Here, the political system is used to limit economic participation and impose social order. The lack of economic competition leads to excess profits that are used to limit violence and maintain political stability.

North says that some societies later evolve into "open access" orders. Here, there are few restrictions on economic and political participation, which is another way of saying that these societies have open economies and open political systems. Order is maintained through the competitive process.

There is a famous story about Margaret Thatcher. Soon after she became head of the Conservative Party in the UK, she is said to have reached into her briefcase and pulled out a copy of F.A. Hayek's Constitution of Liberty, a book that explains with great clarity why liberal systems lead to freedom and prosperity. Interrupting the speaker, she is said to have banged the book down on the table and said: "This is what we believe."

Is there any Indian politician who has similar convictions — and the guts to make them public?


Now back to Dondu Raghavan. A few minutes after forwarding the article, Mr. Chandrasekhar has sent another mail saying,
"The important point I wanted to mention here that Mr Sen lectured at Indian Parliament recently (on this monday) on "demanding Social Justice". What a naive request! Where can he can get this social justice, when it is nowhere available in the world? (That what F A Hayek said years ago. "There is no such thing as Social Justice").

Thanks Chandrasekhar. But there is one small snag. It will not be possible to renew the Swatantra Party with things as they are obtaining in India now. A party has to take a constitutional oath owing allegiance to socialism, the selfsame bankrupt ideology, which the Swatantra Party was by default opposing. See my Tamil blog post on this subject. Unfortunately the original economic times article is no longer readily reachable; fortunately I had reproduced it at that time in toto just for such contingency.

Regards,
Dondu N. Raghavan

Monday, August 11, 2008

Rich job offers cause poor response for economics PhDs

This article penned by John Samuel Raja D and forwarded to me by my friend Chandrasekharan (Hayek Order) goes on to add that poor faculty and scholarships also dissuade students.

It reminds me of Agatha Christie's novel 4.50 from Paddington starring the lovable old detective Miss Marple. In this novel she is assisted by one Lucy, who has majored in Mathematics but instead of pursuing a career in mathematics opts for the job of a housekeeper after a thorough study of the market needs. She goes on to become a highly successful housekeeper very well-paid and much in demand.

My reason to mention this is illustrated more starkly in the article referred to above. Now over to the article in bold italics.

D K Srivastava, director of Madras School of Economics (MSE), is disappointed when he sees 50 Master's students graduate every year with lucrative job offers.

He is unhappy because none of the 50 students apply for a PhD or doctoral degree and the Chennai-based institute is finding it difficult to attract high-quality students for this programme.

Like the MSE, the poor response to programmes for Economics PhDs (the abbreviation of the Latin Philosophiæ Doctor) appears to be a chronic problem in India.

"The best brains are going to industry after completing the Master's degree," said Srivastava, who has specialised in public finance and economic forecasting. "This is the malaise of good institutions where highly qualified students don't stay back," he added.

Even the Indira Gandhi Institute of Development Research (IGIDR), a premier institute set up by the Reserve Bank of India (RBI) for research in development issues, found it difficult to attract students for its PhD programme a couple of years ago.

MSE admits two or three students every year for its doctoral programme, a third of what it can accommodate. Aggregate data on the number of students completing their PhD in Economics are not available.

While PhD programmes run by universities across India have faced problems in attracting high-quality students for a long time, it is only now the top economic research institutions are facing the problem of student shortage, given the jobs boom that is attracting the best and brightest among Master's students.

Though there are globally recognised Indian economists like Nobel Prize winner Amartya Sen and trade economist Jagdish Bhagwati, universities based in India have not kept pace with cutting-edge research produced by their counterparts in the United States and Europe, resulting in poor research output.

Three issues — faculty profile, poor scholarship funding and job opportunities — are being cited as reasons Indian universities have failed to attract good quality students, said four economists, including three heads of the institutions, who were contacted for this article.

For the few students who want to pursue a PhD, foreign universities have emerged as a viable option. These overseas institutions are targeting Indian students and are offering liberal scholarships that are hard for Indian counterparts to match, said D M Nachane, director of IGIDR.

Research scholars in Indian institutes are mostly paid between Rs 6,000 per month and Rs14,000, except in a few management institutes where they are offered around Rs 25,000 a month. Compare this with foreign universities that provide a tuition fee waiver and a monthly stipend ranging from $800 to $1,500, depending on the financial strength of the institute and its location.

Both Nachane and Srivastava agree that it's vital to increase the scholarship amount to attract students and provide an alternative within India. Both, MSE and IGIDR are exploring ways to increase their scholarship amount. Delhi School of Economics (DSE) did not respond to a questionnaire.

Students graduating from Master's programme in MSE and IGIDR get job offers in the salary range of Rs 6 lakh and Rs 8 lakh a year -- mostly from banks, financial institutions and consultancies. Candidates even after completing the PhD would get only Rs 50,000 more than what a Master's level students would get, said IGIDR's Nachane.

"The opportunity cost for a student with Masters Degree to pursue a PhD in economics is very high," he added referring to Rs 6 lakh salary the PhD student would have earned for four years, if employed.

Apart from scholarships, the faculty profile and the syllabus play an important role in attracting students. "What I learnt ten years ago is not even offered here in India," said Parth J Shah, economist and former professor of Economics at the University of Michigan.

Lack of quality faculty is often linked to salary structure in Indian universities that fail to differentiate between a professor who has done cutting-edge research with publications in leading journals and faculty who has only concentrated on teaching. "The sixth pay commission will solve this problem because it allows flexibility in salary structure," said Nachane.

But for Shah, who is now involved in a not-for-profit research and education institution Centre for Civil Society, the solution could also lie in giving choices to institutes to decide whom to affiliate.

At present, an institute present in a city has to affiliate in a university based in that city. "The geographical monopoly of the universities should be broken. This will create competition among the institutions," he added.
In the meantime, every year around five students of Madras School of Economics (MSE) come back to pursue research after working for a couple of years in the industry. But, as of now, they come to MSE to prepare for admission to foreign universities and Srivastava is hoping that some will stay back in days to come.


Now back to Dondu Raghavan. I would like to close this topic with an anecdote. A heart specialist calls in a plumber by name John Updike to have his washbasin repaired. After the work is over, John gives him the bill, which is for a hefty amount. The doctor sighs and exclaims, this is way above what I would have earned as consulting physician, whereupon he gets the reply "I know doc from my personal experience as doctor before changing over to plumber profession" from Doctor John Updike.

Regards,
Dondu N. Raghavan

Sunday, August 10, 2008

Mr. Lee and Mr. Chee agreed to have a fight

My friend Jayakamal has the welcome habit of forwarding articles that kindle my interest. I do use them for my blog posting in Tamil. Now due to a certain development in the blogger facilities, I would like to post the same in this English blog of mine as well. My Tamil post for those able to read Tamil is here. Now for the forwarded article Mr. Lee and Mr. Chee agreed to have a fight. Over to Atanou. The "I" in the succedding lines in bold italics refer to Atanou.

The NY Times of 30th May reports ("Power and Tenacity Collide in Singapore Courtroom" — Thanks, Naman) on the clash between two personalities — one powerful and famous, the other powerless — in a Singapore courtroom. Former prime minister Lee Kuan Yew, 84, met his political adversary Chee Soon Juan, 45, in court where the former is suing the latter for libel. In a newsletter published in 2006, Mr Chee had accused the Singapore government of corruption. Mr Lee takes charges of corruption seriously and refused to let Mr Chee’s accusation go unchallenged.

I suppose the court would figure out if Mr Chee’s charge is true or not. If the charge is false, I would be much relieved because I would hate to find out that the man I have very high regard for — Mr Lee Kuan Yew — has feet of clay.

Why do I admire the man so much? Perhaps because of what he achieved. Here’s the NY Times:

“The final test is what Singapore was when I became prime minister in 1959 and what Singapore is now,” Mr. Lee said. “We had less than $100 million in the kitty.” Today, he said, “global financial services assess Singapore to have sovereign wealth funds of over $300 billion.”

Singapore is just a few million people. LKY worked the miracle of transforming a third world resource-poor mosquito-infested swamp into a wealthy first world nation state admired around the world for efficiency, lack of corruption, order and cleanliness. He didn’t make pretty speeches about scaling the commanding heights of the economy. He just did it and did it within a generation. Not just the phenomenal infrastructure of the tiny place, not just the rich stock of human capital, Singapore has also amassed $300 billion in reserves. Under LKY’s guidance, Singapore’s reserves have multiplied 3000 times. How great is that?

Lee says that Singapore has $300 billion in the kitty. Chee says that it does not make up for the silencing of political opponents, the closing down of independent media “and all your shenanigans, including making sure that I’m not allowed to speak during an election rally.”

Speaking strictly for myself, I value political freedom and the freedom of expression. A civilized human existence requires freedom. But in what sense is there freedom if one is starving? Isn’t one willing to sell one’s soul for a piece of bread when starvation threatens one’s life? What would you give up in exchange for not seeing your child starve to death? I know that I would give up a lot of my highly prized freedom of political expression if in the process I could at least see my children not starve.

Mr Chee says that $300 billion in the bank (and of course all other goodies that Singapore enjoys) is too high a price to pay for the lack of political freedom and the muzzling of the press. Perhaps the restrictions on the press and on political opposition were wholly unnecessary and Singapore would have been what it is today even otherwise. Perhaps it was merely to satisfy LKY’s personal whims and fancies that political opposition was curbed and which actually did not serve any instrumental purpose. But I doubt it. When a country is poor, the squabbling for resources does push to the fore the most opportunistic criminals to enter the policymaking circles.

I know that no one reading this is actually starving. When one is sitting comfortably with a full tummy, it is easy to see how valuable it is to have the freedom to speak your mind. It is clearly better to have political freedom than not to have it, all else being equal. But how would one rank these two: one, a very full stomach but limited political freedom; two, a very empty stomach but unlimited political freedom.

At which point does the benefits of political freedom of the few outweigh the material concerns of 500 million others? How many million people is it ok to condemn to a pitiably poor life so as to guarantee that a few people have the right to make fiery political speeches?

And often times, the only political speeches made are ostensibly on behalf of the starving millions. If those starving millions did not exist, these politicians would have little to make speeches about. So it would seem that if by banning idiotic political speeches, one achieves a level of prosperity such that it makes political speeches about poverty completely irrelevant and inconsequential, it would be a good thing.

I think that there is a hierarchy of needs, as Maslow pointed out. Only after the lower level needs are met can one attempt to satisfy needs higher up. I will secure air before I start worrying about food and water. I will not worry about free speech if I am in imminent danger of keeling over from hunger. I would trade in a lot of pretty political speeches in exchange for a decent shot at living a comfortable life. If I were in the bottom 300 million in India, I would happily trade in my situationally useless right to political freedom in exchange for the life of an average Singaporean.

All the above with the usual disclaimer that your mileage may vary.

POSTSCRIPT:
Why do I stress so much on the starvation bit? Because I know how it feels to starve for 2 days. If it feels that awful to starve for just 2 days, I wonder how it must be to chronically starve — as do an estimated 200 million in India. I know that I could not handle it and I would make a deal with the devil himself to try to avoid it. That is what I fear: that millions of people at the edge of starvation are quite capable of making deals with the devil. Don’t believe me? Well, then, how do you think the communists get elected in India?


Now back to Dondu N. Raghavan.

It is really very naughty of you Atanu. I refer of course to your last line. The commies do get their vote by promising the socialist utopia. In a way they keep their promise. The inequality between the haves and have-nots diminish as evry one tends to become a have-not except for the commissars with their filthy power of life and death. Let us keep aside for the moment their loyalty to the People's Republic of China and talk economics. In a way both Lee and the commies are alike in the matter of denying political freedom, but at least Lee delivered while the commies just took away everything.

I personally feel that Lee should not bother his head about Chee. Lee has already made his point.

Regards,
Dondu N. Raghavan

Thursday, March 06, 2008

Officespeak

This came in an email forwarded to me. Quite hilarious, the unusual translations.

Office Language.... ...

It's too good........ .

1.."We will do it" means" You will do it"

2."You have done a great job" means" More work will be given to you"

3."We are working on it" means" We have not yet started working it"

4."Tomorrow first thing in the morning" means" Its not getting done, At least not till tomorrow!"

5."After discussion we will decide-I am very open to views" means" I have already decided, I will tell you what to do.

6."There was a slight miscommunication" means" We lied"

7."Lets call a meeting and discuss" means" I have no time to talk now"

8."We can always do it" means" We cannot do it on time"

9."We are on the right track but there needs to be a slight extension of the deadline" means "We screwed up, we cannot deliver on time."

10."We had slight differences of opinion "means" We fought"

11."Make a list of the work that you do and let's see how I can help you" means" find a way out yourself, no help from me"

12."You should have told me earlier" means" Well even if you told me earlier that would not have mattered!"

13."We need to find out the real reason" means" I will tell you where your fault is"

14."Well Family is important, your leave is always granted. Just ensure that the work is not affected,"means," You are not going home unless you finish your job"

15."We are a team," means," Everybody shares the blame"

16."That's actually a good question" means "I do not know anything about it"

17."All the Best" means" You are in trouble"

Regards,
N.Raghavan