Saturday, 19 December, 2009

But for the results, it’s a great success

In an article titled Victory in the cold war was a start as well as an ending in Tuesday's FT, Martin Wolf comments on the mixed blessings of the Cold War 'victory'. But the most interesting thing in the article was the graphs below (picked without permission from FT):

A little guessing about the estimated figures (not quite clear from the graph) and back-calculation show up the following figures:

Country

Estimated real GDP

in 2010 (1990 = 100)

Growth rate

Poland

200

3.53%

Czech Republic

165

2.54%

Slovak Republic

140

1.70%

Hungary

140

1.70%

Lithuania

140

1.70%

Estonia

100

0.00%

Latvia

100

0.00%

Russia

125

1.12%

Ukraine

105

0.24%

Romania

95

-0.26%

Bulgaria

65

-2.13%

According to Wolf, Poland is the star of this group. If the star's performance is 3½%, one must wonder what standards Wolf and his ilk are using here. European countries don't have growth rates like some emerging economies do, but is 2½% and 1¾% ok by any standards? And ex-communist countries are supposed to be emerging economies, aren't they?  

By the way, this misses out Albania, Belarus, Bosnia, Croatia, Kosovo (a country as per USA), Macedonia, Moldova, Montenegro, Serbia, Slovakia and Slovenia. Do look up Down in the dumps
in the Economist.

Tuesday, 15 December, 2009

Telcom gets its comeuppance

I was delighted to read, in yesterday’s FT, that India’s telecom is heading for doomsday. Of course, the paper didn’t say as much, but the fact that telecom is the worst performing sector in the stock market is consolation enough for the daily insults that stupid, opinionated telecom marketing executives hurled at us over the four years that I had the misfortune of working on telecom accounts. So petty and stupid were they, they shook to the core my hopes that Indians may someday be a race of professionals.

Of course, the fall of telecom had little, if anything, to do with them. In spite of all the bribery and big talk, in the end economics played its hand. We are just too poor to give telecom the sought of profitable growth it sought.

Moreover, telecom companies never fulfilled the rural quotas they were supposed to, over-saturating the urban markets instead. If the labourer in the city couldn’t keep in touch with his family back home, why should he fill the telecom companies’ coffers? The question was basic enough. Somehow, telecom companies never felt the need to answer it, perhaps because they could, till now, trick Western speculators (a notoriously gullible lot when it comes to India’s impending ‘rise’) to keep pouring in money.

Actually, the writing was on the wall years ago, when the Ambanis fought over Reliance Telecom. The matter boiled down to churn management, or its absence, with the younger brother questioning the older brother’s marketing spends into a bottomless bucket.

Strangely, little was written about it at that time. Even more strangely, the younger brother ended up with the telco when the empire was divided!

Monday, 14 December, 2009

Bankers and peasants

England’s finance minister threatens to tax rich bankers. They threaten to leave London, and ruin a substantial portion of the British economy. The media go on an overdrive to show how stupid the minister is and why bankers should never be taxed because they are doing the rest of us a gigantic favour by shouldering our risks.

Somewhere in India, farmers refuse to give up their source of livelihood and accept ‘generous’ alternatives, and the same media descends on them like vultures, calling them misguided fools.

It’s perfectly fine for rich people to look at their own interests; it’s totally stupid for poor people. I’m not saying that it’s ok to be selfish. But surely being rich doesn’t justify selfishness any more than being poor does. 

Saturday, 12 December, 2009

On the wings of nonsense

Picked up a book titled The Elephant and the Dragon and opened a page at random. In just two paragraphs on page 43:

  • “J. R. D. Tata supplied the steel needed for India’s post-independence five-year plans.”

Any Indian child knows that most of the steel came from state-owned companies, some built with foreign collaboration. No one company could have supplied the steel for any country’s, even little India’s, five year plans.

  • “At Nehru’s request in 1952, he even created India’s first cosmetics company, Lakme, so that women wouldn’t complain that Nehru banned foreign cosmetics from India.”

Most of India’s women are too poor to wear any cosmetics. They best they can hope for are home-made products. And there were small cosmetics companies long before 1952, including Boroline and Afgan Snow.

  • “Nehru stayed in power for decades as India became a democracy with one-party rule.”

This is deeply insulting. India was never a one-party country, before or after independence. Nehru, except the one black spot of sacking a Communist government in Kerala, went out of his way to accommodate rivals.

This goes on and on. On page 55, Kamal Nath says China can progress faster because it is authoritarian and can ‘take many shortcuts.’

An example? Well, the author says, ‘China’s Three Gorges Dam inundated 365 towns with water, requiring about 1.2 million people to move, virtually all of it accomplished by government fiat.’ This, she sniggers, couldn’t be done in India.

Think of it this way. The population of Auckland is about 1.3 million. Would it be progress if the New Zealand could order them to move, by fait? If not, at least one Indian, me, is very happy we don’t have progress and shortcuts of that sort.

You can’t develop people by destroying them. The Soviet Block tried for 70 years. We needn’t.

But my problem is that no capitalism will come to India’s rescue on the wings of such nonsense as this.

The author, Robyn Meredith is the Forbes magazine’s specialist on India and China, an award winner, and a ‘1998-9 Knight-Wallace Fellow at the University of Michigan.’ And this is what she produces. Unfortunately, she’s by no means atypical.

If such is the state of experts, imagine that of the MBAs, Western and, sadly, Indian, who swear by their expertise.

We are doomed.

Tuesday, 8 December, 2009

Doesn't age matter?

India's median age is 25.3 years; China's is 34.1. Does that make a difference? Look at the chart below, made of data from the CIA World Fact Book:

This contains many small nations and colonies. So let’s see what happens when we drop the countries with populations of less than 5 million.

 

Tuesday, 1 December, 2009

Useless Facebook

Apparently, the Coke’s Facebook site has only less member’s than Obama’s. Makes one wonder. If those people have nothing better to do than swat and squawk at a soft drink’s Facebook page, do they have any money to actually buy it?

Minarets in Switzerland


This poster was part of a national campaign in Switzerland, leading to a referendum on whether minarets should be banned. 3 in 5 Swiss voted for a ban.

Direct? Yes. Democracy? No. Dangerous? The Swiss, with a cross on their flag, must be cuckoo to send out a message as communal as this.

PS: Neither of my three Muslim women classmates observe purdah, though one wears the hijab. Wonder how many Muslim ladies in Switzerland observe the purdah. More importantly, why are some Swiss so bothered about what other Swiss wear? I thought only religious fundamentalists bothered about those things, not secular citizens.

PPS: Sarkozy, in a front-page editorial in Le Monde, said, "Instead of condemning the Swiss, we should try to understand what they meant to express and what so many people in Europe feel, including people in France. Nothing could be worse than denial."

Well, I can think of one thing that's worse. Not condemning the Swiss for gross religious rights violation. Why should understanding them prevent anyone from condemning them? If a policeman understands why a thief is stealing, does he have to let the crime continue?

PPPS: On 15 December, Haig Simonian wrote in the FT (in an article titled Swiss way of life no longer offers passport to harmony), "Last month's referendum to ban minarets was a classic own goal: the country only has four such buildings, and the small and unzealous Muslim community is hardly clamouring for more." (Emphasis mine.) The author is well-meaning, but either completely ignorant or unconsciously racist. Otherwise why does he think only zealous Muslims want minarets in their mosques? Do you have to be a fundamentalist Christian to have a belfry in your church?

Still more: On 16th December, this letter appeared in the FT. I have highlighted the portions I want to discuss: " Sir, Haig Simonian eloquently analyses some of the problems that Switzerland has recently grappled with, including the "own goal" of the recent ban on minaret construction ("Swiss way of life no longer offers passport to harmony", December 15).

Politicians and commentators across Europe and beyond have widely bashed the Swiss for taking the decision, which is indeed regrettable and inconsistent with the long-standing humanitarian values of our country. Muslim leaders have also condemned the Swiss verdict, despite incomparably more constraint personal and religious freedoms in their own countries.

However, rather than a weakness of our political system, as Mr Simonian argues, I think that voters having a chance to express their frustrations – whatever they may be – should be seen as a strength. We may not like the outcome and some damage to Switzerland's image may have been done, but at least Swiss voters feel that their views are taken seriously and actually make an impact, even if giving the government a massive headache.

In the longer term, it may well prove healthier and more productive to discuss openly and address anti-Muslim feelings rather than deny they may be present in a large part of the population, as is the practice in most of Europe.

Longer-term social harmony does not mean always just being nice to each other, but instead occasionally requires addressing any ill feelings, however embarrassing they may be. It was unfortunate that the discussion could take place only on the back of a regrettable decision.

However, at the risk of being called naive, I think that following a largely fair and constructive discussion, social harmony in Switzerland will ultimately be strengthened – and the minaret construction ban be scrapped.

Beat Siegenthaler, London SW11, UK

Mr Siegenthaler is surely a fellow liberal, so I do not want to be harsh to him, but two points are worth making.

First, he assumes 'anti-Muslim feelings are present in a large part of the (white) population' all over Europe. As per him, it is impossible that people may just keep their noses out of each other's lives. There has to be ill will for the 'other'. There is no smoke, but there must be a fire, because I believe there is one.

Second, he assumes that occasionally addressing ill feeling will lead to social harmony. Does it? If it does, such discussion has to be infinitely more civilised and open-minded than this indefensible ban. This ban doesn't invite dialogue; it signals the rejection of any possibility of dialogue.

Besides, is social harmony so desirable a thing that we must quarrel for it? Won't social neutrality do? Do we have to understand and appreciate each other? Can't we just let people be?

And is it not possible that my hate for a person has nothing to do with him and everything to do with me? Shouldn't I get my head checked?

Third, I'm most interested in knowing which Muslim leaders from regressive countries criticised the Swiss decision. My guess is that Mr Siegenthaler has got countries and religions muddled up. A Muslim leader in, say, UK, cannot be held responsible for lack of religious freedom in, say, Saudi Arabia, can he? In his country, UK, there is religious freedom, and he has every right to shame the Swiss for their bigotry.

Is Chomsky the world’s biggest hypocrite?

Professor Chomsky is brave, learned and respected by everyone but the right lunatic fringe.

Yet, for us from the Third World, he and all other Western scholars who refuse to equate capitalism with oligarchy and diplomacy with hegemony are hypocrites. Because all their truth telling seems to be in vain.

I just finished a book titled The Dark Side of Camelot by Seymour Hersh. It has the president of USA bribing, lying, plotting assassinations and terrorist strikes, repeatedly placing personal interests above national ones and, of course, whoring.

The stories told in this book, and many such stories, have been around for decades. But they have led to no reform at all.

Were they told then to create an impression? Are all of them in a conspiracy of cacophony? "You keep screaming, we keep doing whatever we have been doing, and lecturing the world on freedom." 

That's ridiculous. But is it true?

PS: I was reading The Longest War by Dilip Hiro, on the Iran-Iraq war. At the end of the war, in an incident that Americans claim ended the war, the US Navy downed an Iranian civilian jet and killed all passengers and crew on broad. Apparently, in a Washington Post survey following this 'accident' 3 in 4 blamed Iran more than the US; and 3 in 5 rejected the suggestion that the families of the victims be compensated.

I am reading William Blum's Killing Hope. This states that following the infamous turkey shoot of Iraqis retreating from Kuwait, Bush's approval ratings shot up to 82%, his highest till then. If we assume that these ratings reflect reactions to news, then we can say that 4 in 5 Americans approved killing a retreating enemy (admittedly returning with loot) who had no way of defending themselves.

So, why were Americans so shocked and angry when Palestinians banged pots and pans on the Twin Towers bombing?

I am not defending the Palestinians' merriment, because it was callous and, for them, extremely brainless. Besides, most of my generation of my family live in the US. So, an attack on the US is an attack on my family.

But if I were American I'd not be surprised if many Muslims hated me.

Tuesday, 17 November, 2009

Maybe we can teach them a few things

Most Western nations have small immigrant from third-world countries, often their former colonies. In quite a few cases, the immigrants are highly qualified. More often though, they are not.

Sometimes, it gets very messy with second and third generation immigrants - racially different, economically backward, politically weak and educationally unemployable in all but the worst paying jobs.

Yet, these immigrants form far smaller fractions of the Western nation’s populations than refugees did in India’s and Pakistan right after Partition.

1 in 6 Pakistani was a refugee, and 1 in 72 Indians was one.

The latter number is somewhat misleading, because those who came to India weren’t uniformly spread. Most came from from what had become East Pakistan and West Punjab, and came to West Bengal, East Punjab, Delhi and Bombay.

Anyway, as the West stood aside and licked its Second World War wounds, the two new and extremely poor nations had to deal with gigantic refugee populations besides all their other problems.

Neither covered itself with glory; neither could have. Yet, when compared to what the West has done, with a much smaller number of immigrants, coming over a far longer time, and with infinitely more resources at its disposal, India and Pakistan’s efforts are most creditworthy.

Perhaps instead of giving us uninvited advise all the time, the West can seek a lesson or two there.

How racism burst the dotcom bubble

In the pre-Internet era, ‘market’ meant ‘The West’. The S-curve counted only Westerners when calculating market penetration.

Somewhere the percentages became absolute numbers in analysts’ minds. Instead of asking ‘How long did it take this technology to reach x% of its potential market?’ they started to ask, ‘How long has it taken this technology to reach 50 million users?’

On that count, the Internet went mass with unprecedented rapidity. Unfortunately, in terms of the global population the penetration was – and continues to be - pathetically low.

And therein lay – and continues to lie - the problem.

As long as industry (and Net, but industry first) don’t reach the interiors of Africa and Asia, the Net does no more than tell people what they already knew. That wasn’t enough to justify the money that poured into it. And it isn’t enough to justify the hopes people have from it.

(My course textbook probably means exactly the same thing when it says that for most users the Net was a sustaining innovation, not a disruptive one.)

Let’s say an American business wants to know where he can buy widget XYZ. His Internet search leads him to 20 companies. Of these, two are already major suppliers of his; he has had some dealings with another two; another half dozen he’s heard of, but never bought from; and the rest are new names to him.

So, thanks to the Net, he knows something more than he did before he hit the ‘Search’ button.

Not quite.

The 10 companies he just found out about are probably very similar to the 10 he already knew. That is, they are Western companies selling the same thing at the same price.

In one or two cases, he may have got names and addresses of Chinese or Korean companies: The Net merely added specificity to what has long been common knowledge.

In short, he has some new (mostly useless) data but no new (useful) information.

Had the Net introduced him to a factory in Madhya Pradesh that supplied widgets at 50% of the others’ price, he’d have learnt something new. But he didn’t, because there aren’t any factories in MP.

But where does racism come into this?

Well, that’s a little complicated. “Your competitor is only a click away,” was a cliché from the early days of the Net. What this cliché did not say was, “…and he, and by extension the Net, won’t make any difference unless he’s also a continent away, trapped in poverty and, hence, able to offer a rock bottom price.”

For the analysts such people – we – did not exist. Consequently, we never entered the denominator when he calculated penetration. By underestimating the market the Net needed to reach, they (analysts) hugely overestimated the Net’s penetration, led investors awry, and burnt billions of dollars.

Sunday, 15 November, 2009

Global village

It goes somewhat like this. There is the old zamindar family. Actually, it’s not that old a family as zamindar families goes. Before they became zamindars they didn’t amount to much, but they immigrated, they worked hard, and were absolutely ruthless. So they did very well for themselves, more so after they got into industry after two centuries of farming.

But of late the shine seems to be waning. There is still plenty left though, and it’d take at least a couple of generations before there’s any serious damage. Anyway, they rule the roost. Besides, they have the henchmen, and might is right. Much might is absolutely right.

Then there are the traders. Actually, they were traders for most of their history, which is very long. In the middle, they fell in bad days, when their headman went cuckoo. However, of late they have taken over the industries that the zamindars consider it beneath themselves to run, and have prospered again. That they have no compunctions at all helps immensely.

They’ve also gotten into usury, lending mainly to the zamindars, primarily so that they can sell the produce from their factories to those zaminders. The zamindars gamble insanely too, a sure sign of irreversible decadence and decline. The end is as far as others think, hope the tradesmen-turned-industrialists. They’ve started to flex their muscles.

Finally, there are the poor Brahmins. Once they weren’t so badly off, but they fought incessantly between themselves and were reduced to slavery and penury.

When their old masters fell in bad times and abandoned them to their fate, they became hangers-on in the court of a nearby zamindar. That fellow was more a thug than anything else, and after some time he too softened and popped off.

The Brahmins had no choice but to try and live by their wits again. To their delight, they discovered that disuse hadn’t completely killed the little grey cells. They are still poor, but no longer so hopeless.

The main source of their hope is the employment they’ve got from the zamindars. The latter, as loath to use with their heads as they are to work with their hands, are only too happy to hand over the more mundane tasks to these newfound clerks.

In fact, they have discovered some of the Brahmins are quite smart, in their own way. To these, the zamindars offer a quick ticket out of poverty: “Break off from your people and live with us in our palace.”

Now, the traders want to figure out how far they can go, but without getting into trouble directly with the zamindar. Therefore, they’re pushing around the Brahmins, needlessly insulting them, and demanding various pieces of their land. The actual aim is to see how far they can go before the zamindars read out the riot act.

So far, the zamindars have looked the other way. Apparently, their debts have sealed their lips. Or so the traders hope.

The Brahmins, on the other hand, hope otherwise. “The zamindar is the traders’ biggest customer,” they say, “and if the traders have lent money, it’s only to keep their many factories running. Besides, the zaminders still have enormous muscle power. If they decide not to repay, there’s nothing those traders can do. Besides, if there’s any pushing around to be done around here, surely the zamindars would want a monopoly of that.”

And so we have a rather interesting situation. Nothing much is happening, though there’s a good deal of huffing and puffing. Let’s see how it goes.

PS: We are poor. We may have some dream, but not much to lose really. The US have a lot to lose - symbolically, for now; actually, later. And if we should remember 1962, the Chinese will do well to remember the Opium Wars.

Thursday, 5 November, 2009

No hats, no queers, no whores

At one time, everyone in the West wore hats, at least that’s what movies and photographs of that age tell us. Now, nobody does. Why?

I haven’t seen any same-gender PDA here. Does French homosexuality stay as much in the cupboard as the Indian variety does? Why?

I haven’t seen any prostitutes either, though plenty of beggars. (But then I’ve hardly ventured out after sundown.)

Is France actually a conservative country?

Tuesday, 3 November, 2009

Fighting friends

Tomorrow I have to make a short presentation on as my assignment for the Leadership course. Here is what it’ll be:

I read this story when I was eleven or twelve. I have tried to live its essence ever since.

Once, Akio Morita, founder of Sony and ‘serial disrupter’ had a roaring argument with his chairman, who was also a great opera singer. Their differences went to such an extent that the chairman said, “Mr Morita, it seems we cannot agree at all. I should resign.”

Morita’s reply represents the essence of leadership to me. “Mr Chairman,” he said, “That we disagree is why neither of us should resign. Had we agreed, the company would be paying one salary too many. One of us should then leave.”

An egomaniac can take decisions; a strong man can make others follow; a cold-blooded bean counter with a little bit of luck can please the stock market.

But it takes a true leader to create the culture where team members disagree without disrespect, defer without resentment, cooperate without agreement, and dissect without blaming.

A true leader makes friends unafraid to fight, because regardless of who loses, the team wins. And perhaps nothing spurs creativity – the fusing of two existing ideas to crate a new one – as the clash of ideas.

If we live in the Knowledge Age, then creativity is the key. The team who’ll win now is the team that’s the most creative, that is, the team of fighting friends.

(The details may be slightly wrong; I haven’t reread the piece in two and a half decades. Also, I have never led, nor will I. I have, however, always argued.)

Friday, 30 October, 2009

Ancient forces

Caste-based politics in India, tribe-based politics in Kenya, special interest groups in USA… What’s the difference? 

Monday, 26 October, 2009

Why management-speak

The language of management is either jargon - when you’re trying to impress the professors - or ad-speak - when you’re trying to write the next bestseller.  Either incomprehensible and boring or clichéd and boring, but always trying desperately to sound wise.

When we’re going to spend the rest of our lives doing the stupidest thing known to man – chasing money for its own sake – that probably makes sense. 

Hey, we exist

“We are in the knowledge economy now. Products don’t matter. Anyone who wants anything can get it from somewhere in China…”

Hold on, professor, please. Where’s China? On another planet? Who are the Chinese? Robots? Products do matter in China, don’t they? And the Chinese do rise and fall by what they produce. They’re one in six of humanity and they aren’t in that knowledge economy yet, as aren’t we Indians, and all of South East Asia, Africa and Latin America.

(The Middle East is in the oil economy, so they’re out – never mind most Arab countries and almost all Arab people have nothing to do with oil.

By the way, what is ‘China’? Another brand like Ford, Coca-cola and Microsoft? Or a country with many different brands?)

Our professors are unfailingly fair to non-European students. Sometimes they try to preach, but back off when told ‘Doctor, heal thyself.’

However, they don’t realise how blatantly racist they can be in the way they think: “Those who are not in the West, don’t count!  You’re ok, but your country… it exists only as a source of raw material and labour (products), and as markets for commodity and semi-commodity products. Leave the thinking to us.”

This view may be very real, but it isn’t one we want to stay real for ever. So resentment builds up. It is in both sides’ interest that it doesn’t burst. 

Saturday, 17 October, 2009

If Coke is the most powerful brand…

The sage of Indian advertising, and my former senior, Mr Anand Halve, is very good at putting things in perspective.

The question he asks about Coke is an excellent example of this quality. “If Coca-Cola is the world’s most powerful brand,” he asks, “why can’t it command even a single paisa’s premium over Pepsi?”

Strange, no finance guru asks this obvious (only in hindsight) question. Or do they consider water, and not Pepsi, to be Coke’s competitor?

Double-spaced

Professors want our assignments to be double-spaced. Why?

Double spacing probably made some sense in olden days when assignments were submitted in hard copy and professors could to write their comments between the lines.

Nowadays, all assignments are submitted electronically, which means the professors can make markings in the softcopy and save trees.  And don’t they find double-spaced writing very unusual and, therefore, difficult to read.

The price of milk

Apparently Aldi, the German deep discounter, maintains P&L accounts for each product. Which leads to this tale: Tetra packs of milk sold much better than bottled milk in Aldi stores, but didn’t yield good margins because they leaked and the stores had to spend a good deal cleaning the mess.

So, they stopped stocking tetra packs.

This is supposed to illustrate the store’s commitment to price.

I’m afraid it doesn’t. Because product-wise P&L accounts is a prehistoric concept in these days of data analysis; what Aldi should look at is ‘basket-wise’ P&L accounts.

I suspect those tetra packs went into baskets of single people or childless couples who also bought a good deal pre-cooked and semi-cooked food. And also have more disposable income than other shoppers. Taking them off the shelves, ruins these customers’ baskets, and invites them to shop elsewhere, perhaps for ever – that is, when they are no longer single or when they have children.

Thank heavens we have elections

A professor was comparing India’s reluctance to allow foreign direct investment in retail beyond a certain limit with China’s enthusiasm for FDI. “We have elections, sir, and they don’t,” I said. He smiled and that was the end of it.

Except that I fear he thought I was among the many Indians who think democracy is holding India back. I don’t.

Votes are poor people’s currency. They are the only way they can outbid the monetarily rich and economically powerful. Those who blame politicians for doing this and that economic blunder for political reasons fail to see this simple thing.

For instance, unrestricted FDI in retail may lead to huge mega-marts, jobs and much needed efficiency in supply chains. But if they harm local groceries, they’d endanger millions of jobs, not only in retail but in tiny manufacturing units, who can never fulfil supermarkets’ orders.

Also, there is no guarantee that organised retailers will treat the farmer any better than the middlemen do. 

Also, I don’t see how organised retail can do anything for the vast majority of Indian consumers who are too poor to buy the SKUs that big stores must stock.

Even the so-called middle class cannot shop as much in a trip as its counterparts in the West do. Besides, prices of staples will be much lower than in the West (for instance, a litre of milk costs more than a euro here [in France]; it costs, at most, one-third that in India).  

Yet Western investors will have high expectations from India’s middle class, not realising that the phrase means a much ill-off population. In no time, we’ll have a royal mess. 

If votes prevent the politician from robbing Peter to pay Paul, and keeps Western investors from taking miscalculated risks, thank god we have votes.

Monday, 12 October, 2009

The human robot

The assembly line worker is characterised as a human robot everywhere, from literature to management texts. Chaplin’s Modern Times is possibly the best example of this view.

Yet, have we ever wondered, even less inquired, what the poor assembly line worker thinks of his job. In the developed world, the line enables many otherwise unemployable people to lead decent lives (by the standards of poor countries). In poor countries, it’s the only defence against starvation.

The workers’ feelings towards his assembly line may be quite different from what the novelist and the management guru insist they are.

Also, has someone researched innovation on the shop floor, especially in Japan.

Lastly, take the jute mills of Howrah. During the Second World War, mill owners amassed fortunes from machines that had, theoretically, long given up the ghost. How did they do it? With brain-dead labourers? I suspect not. 

Our most valuable asset

Managers are deservedly despised as hypocrites for effecting mass sackings in downturns, after having repeatedly described their ‘human resources’ as their companies’ most valuable assets.

Now, describing people as ‘resources’ and ‘assets’ gives away the manager’s moral imbecility. However, there is no contradiction between their words and deeds here.

Risks are proportionate to returns. While people can do great things (for which managers take credit) when they have work, they are capable of greater mischief when the tools are down. Hence, managers are perfectly consist when they get rid of ideal hands and minds.

Saturday, 3 October, 2009

I don’t know

Is there a management course that accepts “I don’t know” as a good answer?

Not “I don’t know because I was asleep in class” but “I don’t know because the data supplied is inadequate to even attempt an opinion.”

Why must managers always decide? Why can’t they, sometimes, defer? Why is decision good and postponement a sin?

Because your competitors will be upon you? If you decide wrong, will speed make any difference at all?

You can’t wait till every datum comes in, can you? Of course you can’t. None but the psychologically ill do that.

All I’m suggesting is that someone who insists that we can’t decide has at least as much chance of being right as someone insisting that we must.

XYZ is not a factor

Once, the famous cartoonist RK Laxman was asked what makes a good cartoonist. He mentioned several factors, like being good at drawing, having a sense of humour, having an excellent grasp of politics. I don’t remember the list.

What I do remember was that he emphasised, over and over, that you needed all these at once. Having, say, three of them, and not having the fourth, was no good.

Whenever I hear or read someone saying that this or that (character, charisma, curiosity) is (or isn’t) a factor for success in something (leadership, innovation), I remember Laxman’s interview.

Hey, factors don’t act alone, except in books where the author has decided the conclusion before he begun his investigation. Which is why he spent his entire time factoring out effects (“Everything else being equal, charisma is not a factor.”) and none in searching for interactions between between factors (“In the vast majority of cases, an effective leader had both character and charisma”).

Wouldn’t over-complicating lead to analysis paralysis?

But who’s talking about making things uselessly complex. I’m all for simplifying. Science and technology doesn’t move an inch without making simplifying approximations, and it has come a long way. That’s equally true for the arts subjects. Simplification (approximation, generalisation, etc) is indispensible for understanding and discussing anything.

However, it’s equally important to be conscious that one is simplifying, that whatever one has is, at best, an extremely crude copy of reality, and that the real world is not obliged to resemble it.

So you have to make room for things you don’t know or deliberately left out, that is, for Chance.

Singur is political…

But it’s fine not to pay income tax.

It’s ok to say, “All politicians are thieves, and if they want my money to use for the general good, they are lying. I want to do my bit (give back), but I’ll do it by spending on things I want and need, with the certainty that doing so will lead to good tickling down, etc. I decide how every penny I own and earn should be used.”

“But Singur is political. If a farmer says, ‘I want my land to stay mine, and I don’t care if any company or government thinks it will help society, including me and my progeny, if it becomes a factory plot instead,’ he’s short-sighted, selfish and silly.”

“It’s perfectly fine to reason that a factory must come up near a big city primarily because no executive will work in a place without good schools nearby. It’s fascist to suggest that executives should be made to shift wherever they need to be for the long-term good of society (never mind if their own children grow up illiterate and unemployable). But farmers shouldn’t have that choice.

If one must suffer for the good of all, so be it.” 

The point isn’t whether Singur was political – and I just don’t see what’s so horrible in anything being political; it’s that if we are so hell-bent on never putting ourselves in the other person’s shoes, we shouldn’t expect any solution.

Tiger Woods and Obama

Tiger Woods is half-Thai. Obama, like most American African-Americans, is half-white. Wonder why they must be seen as blacks all the time?

Tuesday, 29 September, 2009

Roll over and die

What do you do when a new competitor enters the market? Or a new technology appears on the horizon? Buy it? Copy it? Beat it? What’s the strategy?

Many are listed and debated in business books and MBA classes. One isn’t: Do nothing.

In 9 cases out of 10, the threat would probably self-destruct. In the one case that it’d destroy you, you may be better off committing suicide (not literally, of course). 

Because you may lose if you tried to fight. Even if you won, you may bleed so much during the fight, that the victory would be quite hollow. Also, your margins post-victory may be far thinner than those before the threat appeared.

But don’t you owe it to your shareholders to fight? Not necessarily, if you can convince them that the immortal corporation is nothing but a counterproductive marketing myth to sell shares. (“You will make money eventually. And if you don’t, your grandchildren surely will.”)

Sounds silly. It did to me, until I read what Sir AJP Taylor said about Beneš’s surrender of Czechoslovakia after the Munich Pact. Taylor said (I am quoting from memory), Czechoslovakia lost relatively few people during WW2. States which didn’t surrender, lost far more many.

I just looked up the figures in Wikipedia (not the best of sources, but in cases like this, no source is likely to be reliable). USSR lost 1 in 7; Greece lost 1 in 9, Yugoslavia, 1 in 15… Czechoslovakia 1 in 44. My guess is that most of that came from the Quisling Slovak Republic.

Perhaps surrender shameful in the history of a people. But why should it be shameful in business?

Wednesday, 23 September, 2009

The roads of France

Whenever I am on the road, I find myself admiring the French for driving small cars. There are a few big Benzs and BMWs and even some from the French makers, but I guess 4 in 5 cars are basic and small, like the ones most car owners in India have.

The next moment I find asking myself, “What’s wrong with this picture? This city is a town by Indian big-city standards. Why does it need so many cars? Wouldn’t they be better off with more buses plying more frequently?

Or will such a bus system drain the city’s coffers, because people here may expect a bus system to be hugely subsidised, if not state-owned and virtually free?”

The second thing that strikes me here, and which I also found strange in New Zealand, is that the pedestrian has right of way.

This doesn’t make sense. The pedestrian’s time, either by choice or compulsion, is less valuable than that of person driving a car. Shouldn’t the one with the more valuable resource be allowed to go first (very old and very young people, and disabled people being exempted, of course)?     

Tuesday, 22 September, 2009

Why not collective security?

If you lose your job in France, and want to get a degree before going back to the workforce, the state will pay for your and your family’s upkeep.

The Americans may hate that, but an Indian like me can only wish our government did that. More so, because the state subsidised my education almost entirely before I entered the job market for the first time: It makes no sense to have me rot jobless, and pay no taxes, if I am willing to upgrade, so that I can go back to paying taxes, at a higher rate.

However, one question bothers me. Does the French government give employers easy loans or even straight aid so that they won’t have to layoff people, especially during a widespread downturn, when the employers’ altered circumstances cannot be easily blamed on their misdeeds? Or does that become communism?

Or do you have to be an American bank to have the government take you over – with a guarantee that fat bonuses will be left untouched - once you have ruined the world’s economy (yet again).

Not all employees are willing to retool, though all will have to be taken care of by the state till they get back to their own feet. So the state’s (society’s) expenses don’t (necessarily) change if they keep companies running at full-employment during recessions.

In other words, if French citizens can have social security, why not French companies?

Would that muddle economic signals? Not necessarily. There isn’t much you can learn about running your business form an universal downturn, except that perhaps you should have made more provisions for the rainy day.

(Could you have done that? Keeping aside a nest egg means lowering present spends, i.e., less investment in growth and, more importantly, lower salaries. Both are bound to hurt the present health of your business, unless all your competitors join you in doing exactly what you are doing. In which case, you only lower standards throughout your industry, and do no-one any good.)      

What’s left for the alley cat

Mummy’s grocery purchases = Family’s meal + alley cat’s dinner. This implies mummy cares for the cat (though she cannot keep her at home).

Alley cat’s dinner = Mummy’s grocery purchases - Family’s meal. Most probably, the poor feline has to fend for herself.

Makes sense?

Then why do we keep writing Assets = Liabilities + Equity when it is actually Assets – Liabilities = Equity.

The first, at least if you were a student of science, makes you expect something like a law of nature (e.g., the laws of conservation of energy and mass), impossible to violate and the fountain of much knowledge and progress.

The second tells you what businesses do, and clears weeks’ of confusion.  

Friday, 18 September, 2009

Six myths of the Raj

Scratch an English historian of the Raj and you’ll find a few set themes:

  • Indians were conquered because they were not united: You were divided, so we ruled. The English united and pacified the country and created India for Indians.
  • The Mutiny of 1857 was to bring back the feudal order, and drive out missionaries. Hence, it wasn’t a war of independence.
  • The demands for representative government did not come from the poor: It came from the English-educated elite. The masses were more than happy with the English for bringing them out of the 10th century BC to the 19th century.
  • In fact, the people were so loyal and grateful, that this vast colony was ruled by a handful of civil servants and soldiers. 
  • Gandhi was no saint. He was a wily politician, who would often change his stands. In many matters, he was eccentric. Above all, he was a sexual pervert.
  • Partition was inevitable because the Hindu majority would have never given the Muslim minority a fair deal. The English had to curve up the subcontinent into Hindu India and Muslim Pakistan.
  • Had it not been for the Raj, we’d not have had courts, colleges, civil servants, trains, and the rest.

Let’s try some commonsense on each of these:

Indians were conquered because they were not united.Indian rajas fought each other no more than their European contemporaries did. Third-parties took advantage of the fighting to create empires, the most recent examples being the division of Europe into American and Russian satellites following WW2. No problem with that.

What I find puzzling is the English insistence that there was no India before the Raj and, in the same breath, blaming the rajas for not being united… as Indians. That’s blaming the past for not being the present.
  
The Mutiny wasn’t a war of independence.This assumes that independence = capitalism + democracy. In other words, unless you were fighting your version of the American War of Independence, you weren’t fighting for freedom.

The Mutiny was a fight for freedom by the yardsticks of its time. Shouldn’t that be good enough?
  
Common people didn’t care for independence.Common people don’t care much about anything. If they did, they won’t be common. Issues don’t bubble up, fully developed, from below. So what?

The question is whether the issues, introduced from ‘above’, found mass support.

And isn’t it strange that there were no mass movements, led by anyone, to keep the Raj. If the common people were so happy with the English, that sort of thing would have sold very well. 

And what’s so horrible about being led by your demographic ‘betters’? Dr King was the son of a minister, not a sharecropper. Should that have disqualified him from leading the black movement? Many Israeli prime ministers are ex-army generals. Should that have barred them from political office? Through most of the Raj, English politics had a fair sprinkling of aristocrats. Did that disqualify England from being a democracy?

By the way, Hitler, Mussolini and Stalin were ‘one of us’. Fat lot of good that did.
  
The people were willing slaves, for they needed so few masters.  Independent India has, most probably, far fewer bureaucrats and soldiers per 1,000 of its population than the poorest developed country. Does that prove that we Indians love our present rulers?

We also have far fewer doctors and schoolteachers than developed countries do? That should mean we are very healthy and are born wise.

And I’ll bet Belgian Congo had far fewer Belgians per 1,000 Congolese than British India had British per 1,000 Indians. So what?

The moot point is not that so few of them could hold the peace; it is that there were too few of them to wage war against poverty, backwardness and illiteracy. By all accounts, the Indian Civil Service was staffed by selfless souls toiling in the midday sun for this benighted land. Wouldn’t it have been be wonderful to have had more of them?
  
Gandhi was no saint.Can we have a few illustrative examples of his famed craftiness please?

Or is he being blamed for not being rigid? His stands on many subjects, like the caste system and women’s issues, changed over time, but never regressively. Isn’t he to be admired for that?

And so what if he was eccentric about many matters? How did that effect his politics and reform work? He didn’t keep his private life private? But what good does it do to put that under focus?

Admittedly, his sex life and beliefs were bizarre, even by the standards of his days. However, let’s not forget that all the information we have about this comes from him. How do we know if other leaders, then and now, don’t have equally strange sex lives?

There is a petty trick in all this, which is best explained through an example. In Empire: How Britain Made the Modern World, Niall Ferguson writes, “An Irishwoman was elected to the presidency of the Congress in December 1918: Annie Besant, a half-mad theosophist who believed her adopted son to be the ‘vehicle of the world teacher’ and saw Home Rule as the answer to the Indian Question.”

That’s the only reference to Mrs Besant in the book. Now, what is the reader to make of that part of her that wasn’t mad? Or of the party that elected her to its presidency? Or of the political (not theosophical) causes she advocated? This is nothing but vilification by omission, trivialisation and distraction. 
  
The English had to curve up the subcontinent into Hindu India and Muslim Pakistan.Whether partition was inevitable, I must leave historians to decide. My problem is with ‘Hindu India’ and the implication that that the British solved our religious problems by dividing us.

How can the country with the second largest Muslim population in the world be Hindu? What in India’s laws or constitution is Hindu? Or does the poverty and backwardness of Indian Muslims make India Hindu? By that logic, USA is white. And China is Huang. Why don’t Western books use these adjectives?
  
Had it not been for the Raj, we’d not have had courts, colleges, civil servants, trains, and the rest.First, which of these is the envy of the world? If not one is, what are the English gloating about? Or do they want to be canonised for being nicer to India than, say, Hitler was to Poland? 

Or was everything shipshape in 1947 and we have made a royal mess in the six decades since then? How about some comparative analysis?

And must we accept the characterisation of all Indian rulers and admirations as oriental despotism at face value. Chance dictates that not all of them could have been that rotten. Or were they?

Or are we being blamed for not having reinvented the wheel? 

Incidentally, what about courts and parliaments in Pakistan and Bangladesh? Should their prolonged periods of military dictatorship be blamed on the English?

 

I’d gladly let the dead past lie, but others won’t. I suspect that has something to do with what they want now, and from me. That’s why I must look back. There are lessons there. And lessons too in how the present interprets the past. The future lies in the eyes of the historian, for what is history but predictive analysis on a mass scale.

PS: I get what really gets me mad is their trying to make a balance sheet of history. This was the good the Raj did; this was the bad. It reminds me of that monster in Austria who kept his own daughter entrapped in the basement for years, raped her and fathered several children through her, who he also kept underground. Would these historians say, "At least he fed them"?

Churchill wrote that the Raj kept Japanese Army out of Indian soil (Mizoram doesn't count) during World War 2. Sure, but what about the Bengal famine? Keeping a war out and keeping an army out are not the same thing, except in a balance sheet. 

Sack all

In an interview with Jack & Suzy Welch, the great (greatest) manager argues that his policy of sacking the bottom 10% of his company each year was a good thing because it allowed the sacked employees to go wherever they could do better.

Further, he argues that because the feedback was continuous at GE, it wasn’t as if the sacked employee would come to know one fine morning that he was jobless. He was given plenty f opportunity to shape up before he was declared as hopeless. To put it differently, GE and the employee tried hard to work things out before GE decided that they were incompatible.

On the face of it, Welch is most convincing, though Pfeffer has argued, equally convincingly, against the policy (in general, not specifically at GE).

However, may we ask two questions, both concerned with cut-offs? Why 10%? And why one year?

Isn’t a year too long to decide that a company and an employee don’t belong together, more so when the former has the collective wisdom of its managers, codified into policies and criteria, on its side?

Does, say, an undergraduate student need to wait to the end of the year to understand he isn’t learning anything, not because he’s stupid but because he hates the subject. (He may pass the exam, but that’s a separate matter, and a sad reflection on the evaluation system.)

Of course, knowing in advance doesn’t help the student much because he can’t change courses mid-year, and has to waste till the next academic year starts. In GE’s case, however, isn’t the company needlessly prolonging the pain (and messing up the employee’s resume)? Shouldn’t the probationary period (surely they had one), whatever it is, be enough? If it isn’t, shouldn’t it be made so, by packing in enough into it for both parties to get a fair idea of whether there’s hope ahead? Was GE too kind?

Second, why sack 1 in 10? Did the 9th chap take the hint and leave anyway? If he did, what about the 8th chap? And the 7th, and so on? How were border-line cases dealt with? Were they transferred within GE?

By the way, what happened to the top 10%? Did they stay, or leave with the great taskmaster’s certificate getting them fatter paycheques from GE’s competitors?

Finally, did GE keep in touch with the sacked employees to figure out if that logic of releasing people for better things held water. That would have some implications for their recruitment system. If (most of) the sacked-employees went on to better things, it’d imply GE picked winners though it couldn’t always find the correct slots for them; on the other hand, if the sacked employees continued to do badly, one would suspect deeper flaws in the selection processes and criteria.

Wednesday, 16 September, 2009

The how not the why

What would you expect a class titled Introductory Statistics to teach you? You’d expect exactly what the title says, that is, basic stats; you wouldn’t expect Excel tutorials. Not just Excel tutorials, at any rate. 

What would you expect in a class on the basics of presentations? How to do slides, throw your voice, move your hands, etc.

But that’s the how, not the why. Why make presentations, considering most presentations are so badly made and badly received? How else can one inform and persuade? What really happens when we speak? What are the latest theories on face-to-face communication?

What really matters? Who’s presenting? Who he’s presenting to? What he’s presenting?

How much does how matter?

None of these need be as obvious as it seems at first glance. But when each of these are intelligently discussed, the learners may get a sound foundation that’d help them think through their presentations.

I believe, in the end, it boils down to this:

  • If you know your subject, you would be able to speak about it; it doesn’t matter if you stammer or shutter or wear the wrong tie. People's self-interest in getting your expertise will more than make up for any drawback you may have. 
  • On the other hand, if you don’t know your subject, the  rules and tricks can’t save you. Even if you are able to sweep your audience off its feet with histrionics, that would serve no purpose… because you couldn’t have told them anything useful… because you don’t know much yourself.

So, why bother about presentation skills? Just learn the subject.

You can’t win

I’ve been reading and listening to Jeff Pfeffer on evidence-based management. Basically, the good doctor wants managers to look at the theories, instead of mearely going by beliefs that sound ruthless enough, i.e., in line with with Econ 101, e.g., ‘fire the losers, give stock options to winners, etc’.

Two problems come to mind immediately. Managers may not know how to look at evidence. Those who come from the Arts, may not know any statistics, and may even be scared of numbers. Those who come from the Sciences, while somewhat better equipped, may over-estimate the power of numbers… mistake data for information. Men and women are not screws and nails. Companies are not bridges and towers. Markets are not computer models.

The second problem is that the evidence at hand may be misleading for complex systems. Let’s take, say, stock options. Apparently, there is no evidence that it makes any difference. In some cases, it is counterproductive. So what? The question is not ‘What does it do in general?’ but ‘How do the people who do it right do it?’

(Let me take an extreme example to amplify: There is no evidence that keeping accounts will make your business prosper. All businesses keep accounts of some sort; most fail. Hence, we should conclude that keeping accounts is immaterial to business success.

But we don’t. Instead, we try to figure out the best way of keeping accounts, because commonsense tells us, without the need of any research, that accounts should matter a great deal.)

I have the same problem with this thing as I had with The Bottom Billion by Paul Collier, namely that applying data analysis may be as much as an over-simplification as not applying any. A diverse, representative sample may be as wrong as a sample of a single failure or a single super-success.

Monday, 14 September, 2009

Lost opportunity up the hill

I live in a hostel halfway up a hill. If doesn’t have a grocery. And its canteen is open for only a couple of hours every day. This is gross under-exploitation of a captive market, more so because the nearest alternatives are down the hill, a 20-minute walk.

Tuesday, 8 September, 2009

When the cat is away…

“Is your wife here in Grenoble?” “No, I came alone.” “Oh, when the cat is away the mice will play.” Thus went a conversation with a Australian classmate with whom I had just become acquainted.

A few quick observations:

  • It’s not considered impolite and presumptuous to suggest adultery… but talk about anything else under the sun and you’re a nosy Indian.
  • The belief is that while men will sin, our women won’t. Women here are another matter: They won’t think twice before ‘playing’ with someone else’s husband. 
  • Almost all my male acquaintances in India had the same suspicion as my Australian friend; not one of the ladies said anything of that sort. 

I wonder, I wonder.

Down with representation without taxation

As soon as the news of the Andhra Pradesh chief minister's crash was on Rediff, the piece attracted scores of hate posts. This was only expected because hate posts rule Rediff news. Never mind what the news, it brings out the worst in Rediff readers. Or perhaps the worst people read Rediff.

Nevertheless, it may be useful to think for a moment about why we, the better off Indians, hate politicians so.

Do we hate them because they’re corrupt and ineffective? But so are we. We use every trick in the book to avoid paying taxes and fines, and consider it perfectly ok to bribe.

In the vast majority of cases, who accepts the bribe? Not a minister, but an official whose demographic profile is not too different from the bribe giver’s. They’d be in the same decile in terms of per-capita income.

We are also morally rotten because we do nothing against the wretched poverty and ghoulish disparity that surrounds us.

As for effectiveness, what have we done lately (in the last two thousand) years that should make the 1.1 billion chests swell with pride?

So, it’s simply another case of the pot calling the kettle black. Since most pots do that, shrinks must have figured out by now why they do it.

However, I believe our rage also has something to do with taxes. We genuinely believe that paying taxes is a stupidity and a sin because it hands over our ‘hard-earned’ money to politicians and bureaucrats to squander.

The trouble is that while we can wriggle out of paying direct taxes, completely avoiding indirect taxes is not so easy. So we end up paying some taxes, which we resent horribly, party because some of it reaches to the poor. Otherwise why can’t we have a discussion on politics without using the terms ‘populist’ and ‘sop’?

Interesting, whatever comes our way is a ‘relief’, a ‘reform’ or even an ‘incentive’. It’s as if changing the words changes the equations of economics.

We only want our tax rupees to pay for things (infrastructure, felicities, public services) that benefit us directly and exclusively, and not at all those who enjoy representation without taxation, that is, the vast majority who earn too little to come within the ambit of income taxes and spend too little to be paying much indirect taxes either, at least on a per capita basis.

We don’t see the redistribution of national wealth – leave alone the levelling of society (remember the ‘socialistic pattern of society’) – as government's job.

At best, we can let a little ‘trickle down’. That’s it.

Why Russia attacked Georgia

Because it wanted to tell other European countries not to build a pipeline through Georgia to bypass Russian control.

Why did central American countries vote for leftists? Because they wanted to harass American fruit companies.

Why were there pro-Nasser demonstrations in Arab capitals? Because they wanted to deny oil to Americans (err… Who would they have sold it to?)

Local issues don’t matter. Only America matters. Not only to Americans, but to everyone else. Perhaps America’s interests would be better served if it stepped back for just a moment and took a look at what really matters to the ‘other guys’.

The baby doesn’t always cry to bother mummy: Sometimes, it is genuinely hungry.

Friday, 4 September, 2009

Less than $ 2 a day

Extreme poverty is quantified as having to live on less than $ 2 a day.

Now, if you exclude rent, $ 2  is not such a bad deal in, say, Bombay. You can get two reasonably filling meals and buy two bus or train tickets for that amount. Maybe you’d still have some left to send your child to school.

A monthly salary of $ 60 comes to Rs 3,000. That’s a very low salary, even by Indian standards, but it was my first salary!

My point is not that $ 2 is actually fine; my point is that we should be looking at what people should be able to buy, at a minimum, and what fraction of that they can buy. 

The phrase ‘should be’ is loaded. Should everyone be able to buy a bachelor’s degree for their children? Or even 12 years of schooling? Are there jobs out there that can efficiently use 12 years’ of education? If the person so educated can’t use his learning at his workplace, can he use it to tackle the complexity of life outside his workplace?

If there are no easy answers, and answers depend on ‘ground realities’, is there any point in going looking for easy but misleading answers… like $ 2 a day?

Wednesday, 2 September, 2009

A few observations after 10 days in France


  1. Apparently this means “Drugs available. Inquire.”
  2. The French keep dogs; they don’t keep cats. Which is just as well, because the dogs are rather silly. The cats have attitude.
  3. The bath-cabin at my hostel has only two hooks. So where am I supposed to hang the clothes I got out of? And there’s nothing to hold my soap.
  4. A small coffee costs 1 euro; a big coffee costs 2.4 euro. Now, it doesn’t take more effort to brew the big one than it takes to make the small one: In both cases, you just put a cup beneath a blender. Assuming everything costs so much (thrice as much as it does in India) because labour is so expensive here, why does the big coffee cost 2.5 times the small (actually, tiny) coffee.
  5. The ladies at my present bank (CLC Victor Hugo) can hardly understand English; the ladies at my bank in India (Bank of India Vile Parle [E]) were fluent in English, Hindi, Marathi and Guajarati.
  6. There is a great deal of giggling in the French class, and the Korean girl takes the cake. But when the instructor asked how many weeks of paid leave were normal in her country, she replied, “None. You may get a week or two. It depends…” In other words, that gaiety covers up extreme hard work, as was confirmed by her conversation with the Chinese girl (Me eavesdropping, as usual).
  7. I thought hamburgers were the bottom of the gastronomical pyramid worldwide. They aren’t. That position goes to the ‘kebab’ grilled meat in a pitta, sold by Arab immigrants here. (I hope that doesn’t make me a racist.)

Friday, 31 July, 2009

Why is the US scared of Dr Kalam?

Our ex-president was frisked while boarding a plane for the US. By way of explanation, the airline, Continental, said, “TSA (Transportation Security Administration of US Department of Homeland Security) requirements impose a final security check in the aero-bridge just before boarding the aircraft. This procedure is followed by all carriers flying to the US from most of the countries in the world and there is no exemption to this rule.”

That coloured phrase (‘most’ but not ‘all’) gives all away. Entire (white) countries can be exempted, but not India’s ex-president.

PS: The TSA put out a press release saying, “On 21 April 2009, former President A.P.J. Abdul Kalam was traveling aboard Continental Airlines flight 083 from Delhi to Newark. Dr. Kalam was required to undergo pre-board screening in accordance with the Transportation Security Administration’s (TSA) regulatory requirements immediately prior to boarding the aircraft. TSA requires that all passengers and their accessible property are screened for any items listed on the prohibited items list.

There are reports that the government of India has an official list of VIP’s and their spouses that are exempt from pre-board screening procedures. However, such a list does not mirror U.S. requirements for passengers that are exempted from pre-board screening when traveling aboard U.S. commercial aircraft. While traveling from an international location to the U.S. on an U.S. commercial aircraft, former Heads of State, and other VIPs, are screened according to the same screening procedures as for any other passenger. If requested, private screening can be provided.

TSA has reviewed the circumstances of Dr. Kalam’s travel and confirms that Continental Airlines implemented security measures in compliance with TSA regulations. TSA regrets any inconvenience that Dr. Kalam may have experienced as a result of our standard security requirements. TSA works closely with our international counterparts and our stakeholder air carriers to ensure a safe and secure transportation network.”

On reading this, I wrote to TSA asking exactly which regulations required Dr Kalam’s frisking. I strongly suspect they have recommendations but no regulations at all.

Here’s what they wrote back: “Thank you for your email message. 

Because this is beyond TSA jurisdiction we encourage you to contact your airline to obtain information regarding policies on this matter.

Please visit our website at www.tsa.gov for additional information about TSA.  We continue to add new information and encourage you to check the website frequently for updated information.

TSA Contact Center” (Emphasis mine)

Aren’t I glad these guys aren’t protecting me!

Wednesday, 29 July, 2009

Why movie stars pay the most tax

The film ads proclaim, “Rs 120 crore collection!” The seats are empty.

What’s up? Yesterday’s Times of India offers hope out of the mystery.

According to an article titled India makes almost as many films as US, Japan & China, an average Indian movie ticket costs $ 0.5 while an average American ticket costs $ 7.2 and a British ticket costs $ 9.5.

Now, Hindi, Tamil and Telgu films collect a good amount from overseas. A few reasonable assumptions and you have:

  Here US UK
Per ticket 0.5 7.5 9
Seats per hall 400 150 150
Shows per week 28 28 28
Weeks' stay 4 2 2
No of halls 100 30 20
% filled 15.85% 6.16% 4.25%
Seats filled per show 63 9 6
Tickets sold 4,50,27,370 1,43,630 45,455
$ earned 2,25,13,685 10,77,224 4,09,091
Total in $ 2,40,00,000    
in Rs 1,20,00,00,000    

 

Of course, films are imported elsewhere too. The Middle East must be a big market, at least wherever movies are allowed. And there’s Southeast Asia.

And I refuse to believe that the average ticket price commanded by a big movie in its first few weeks is as low as $ 0.5 (Rs 25). Surely they make much more in the multiplexes.

On the flip side, one wonders if Indian films get 4 shows a day throughout the week outside India. But we don’t need the details now.

The point is that with a weak rupee, a hit rate of1 in 25 should be good enough to turn any movie into a blockbuster, and Indian moviemakers need never look for non-Indian (Chinese, Western) audiences because Indians abroad are enough!

No wonder stars pay the highest taxes: They have so much to spare. The tragedy is that almost everyone else connected to movies – technicians, bit players, ushers - seem to be making a pittance. Why?

Monday, 20 July, 2009

If Ahmadinejad won hands down why didn’t he count the votes?

Apparently, Ahmadinejad’s victory in the presidential polls in Iran was a surprise only to Western columnists, who had taken Tehran, the capital, for Iran, the country. While Ahmadinejad isn’t popular in Tehran – and didn’t get votes there – he did well everywhere else.

This fortnight’s Frontline writes, “From the outset, it was only the Western media pundits who were predicting a victory for Mousavi. There was no doubt that he swept the poll in northern Teheran and other affluent suburbs in various Iranian cities. But the majority of Iranians, who continue to be poor, obviously preferred to renew their trust in the incumbent President…

…Most of the pre-election opinion polls conducted since March showed that Ahmadinejad was a clear front runner. The only poll conducted by a Western agency, on behalf of the BBC and the NBC, predicted an 89 per cent voter turnout. The poll conducted by the independent Centre of Public Opinion (CPO), which is backed by the Rockefeller Foundation, a few weeks before the election revealed that Ahmadinejad had a nation-wide advantage of two to one against his closest rival, Mousavi.

In the actual election, the turnout was 85 per cent, with Ahmadinejad getting 66.2 per cent of the votes polled and Mousavi 33.8 per cent. The Western media mainly covered the big rallies addressed by Mousavi in Teheran and other cities. Ahmadinejad criss-crossed the country addressing hundreds of equally well-attended rallies. In the 2005 presidential election, too, Ahmadinejad got almost the same percentage of votes. His rival, Rafsanjani, secured 35 per cent of the votes.”

Some people of Tehran have made the same mistake as Western commentators. They keep asking, “Where’s my vote?” Ahmadinejad’s answer should be: “Your vote’s been counted and your candidate lost.”

Fair enough. Only, it’s not so easy. Because last fortnight’s Frontline wrote, “Mousavi’s camp knew that it would have to fight hard to get as many votes as possible from the 46 million voters that comprise Iran’s electorate. Ahmadinejad was declared winner after only 20 million of the ballots had been counted.”

In other words, Ahmadinejad was declared the winner prematurely. We cannot say whether he had an insurmountable lead unless we know where his opponents stood (at the point when results were declared). Why did their election commission declare the results before counting all the votes, more so because pre-poll surveys showed the result to be a foregone conclusion? Very strange… 

Friday, 10 July, 2009

Why New Orleans looted and Bombay didn't

In late August 2005, the American Gulf Coast was hit by Hurricane Katrina. Along with large scale destruction, there was, supposedly, a breakdown of law & order, and a great deal of looting.

About a month earlier, there was a massive flood in Mumbai. This too caused great destruction, but there was no looting at all. In fact, the then president drew attention to this contrast in a speech. 

Somehow, it didn't make sense. Perhaps all this has something to do with the fact that many of Hurricane Katrina's victims were black. But what?

Today, I got an answer. I was going through lecture notes on Stereotyping by Prof. Jacob Groshek of Iowa State University. In his section on stereotyping of blacks, he had this cartoon.



For once, a picture was worth a thousand words.

Tuesday, 7 July, 2009

South Bombay gets its comeuppance

Our princesses and nobobs were delighted when The Decent Papaji made it on his own, under madam's guidance, and without the left. We'd turn right, but without paan-chewing knickerwallas. Bombay will be Big Apple; Sanghai is too small a dream for the i-generation.

Well, Congress ka haath, aam admi ke saath. And baba saw that only too well. So dada and didi were told to go socialist with a vengeance. And South Bombay's princesses and their stockbroker husbands got aam admis' jhapad in the form of two budgets, one for railways and the other for the country.

Why are they complaining now?

And why is this not a 'reform budget'? You had free market since 1991. Going back to socialism is reform, isn't it. We got to lose our 'pro-poor = sop, pro-rich = reform' glasses once in a while.

However, dada is wiser than he seems. How does one pay back the contributions made by big money during the pools? Simple. Make infrastructure, mostly in backwaters (anything outside South Bombay, New Delhi and Infosys Campus, Bangalore). Which means no journalist, leave alone any columnist, will bother to bother the big money contractors while costs quadruple on bridges and flyovers.

So everyone is happy, except poor rich South Bombay.

Monday, 6 July, 2009

Poor man's business channel

Why isn't there be a TV channel or a newspaper aimed at people who don't play the stock market but are, nevertheless, interested in the economy and business. Particularly, those who don't believe that everything that favours business are 'reforms' and anything that favours poor people is a 'sop'. 

That doesn't mean it'd stay away from the stock market. However, it does mean that analysts will take off their rose tinted spectacles while looking at Dalal St. 

Importantly, it'll have a heavy dose of technology, investigating it's impact on business. Let me take a specific example to explain what I'm getting at. Ambani is considered a great visionary because he gifted us with cross-country phone calls that cost less than a post-card. What is less well remembered is that other operators matched his prices all most immediately. One strongly suspects that the operators already had the technology to provide cheap calls; it's just that they didn't want to pass on the savings to consumers. Ambani had the foresight and the financial muscle to break the cartel, real or imaginary, and all credit to him for that. All the same, let's give technology its due too. 

More importantly, telling people what can be done should encourage them to ask why it's not being done. 

Similarly, we need economists who are not on the right of Ronald Reagen. Again, let me pick an example to explain what good that'd do. Every 'free market' columnist urges the government to close down all government schools, privatise education, and give education coupons or cash handouts to the poor to educate their children. Their pet justification is that the government schools are nothing but a drain on the tax-payers' money. (It helps that income tax-payers rarely send their children to government schools.) 

That read ok till I read Jayati Ghosh's column, titled Services for All, in this fortnight's Frontline. Says she, "It is often pointed out that the quality of education in government schools is poor and occasionally abysmal, but it is rarely noted that this closely tracks the spending per student. The Kendriya Vidyalaya system is run by the government, and there are few complaints about its quality. Yet this is a privileged part of the government school structure, with the cost per child currently in excess of Rs.13,000 per annum. By contrast, most school education in the country is operated on a pittance, of an average of around Rs.600 per student per year. So it is not surprising that there are inadequate facilities and uneven quality of teaching in such schools."

More such hard facts need to be put before us. 

But how would such a poor man's business channel make any money? Should it be a public service channel, run on 'government largesse'? Well, why can't it run like entertainment and sports channels run? On ads for things other than mutual funds?

Jews made Hitler hate them. Why blame him?

A good deal is being written, online and off, on the attacks on Indian students in Australia. Strangely, some of these articles have tried to explain why Indians are so hated (curry, part-time jobs, ghetto culture).

First, I wonder if Indians are hated at all. I mean there will always be compulsive haters in every community and country. To take their behaviour, or misbehaviour, for their communities' feelings is very strange sampling, to say the least.

Even assuming that Indians haven't been accepted and 'assimilated' all that nicely, how does that begin to explain racial violence. Racial violence is a subset of race relations, and the most visible part. But mixing the two too much ends up blaming the victim. The perpetrators cannot be blamed if they get the impression that society supports, or is at least sympathetic to, whatever they're up to.

Why can't the media act with sense of proportion for once, and send out the message that violence is not a continuation of communication by other means than 'war is merely the continuation of politics by other means'? If that sounds too naive, can't they, at least, shut up?

Wednesday, 1 July, 2009

They know no English

Was having lunch with a friend the other day. He works for a great advertising mind these days… Canas jury and all that. Was telling me how took apart a rookie copywriter for daring to presnet an English idea for a bank targeting second tier towns.

Now, I don’t know what you mean by ‘second tier towns’ in a world where most parts of most big cities don’t qualify for human habitation.

But if that means India outside Bombay, our genius is dead wrong. We talk English, we walk English as much as the big city guys do. There are fewer English types in any small city, but that’s because there are fewer people in any small city.

Mr Genius comes from a somewhat poor family in a small town, but is that any reason to assume that all small town folks are ill-off.

We small town guys are all sorts. I thought that was obvious. But then I’m a small guy.

Monday, 29 June, 2009

Why double standards?

What would you say if the chairman of an airlines became civil aviation minister? Or an arms dealer was appointed defence minister? Or the head of a private bank, other than the central bank, became finance minister? The media would make the appointment stink to high heaven, even if the appointee was completely clean and competent.

But Mr Nandan Nilikeni’s inclusion in the cabinet to head the government’s biggest IT project is welcomed with 1 & 1/2 pages of paeans in The Times of India.

Why?

Tuesday, 23 June, 2009

1 in 8 Hindu males active RSS member

According to this cover story in this week’s India Today (The lotus eaters, Prabhu Chawla, June 18, 2009), “With over 55 million active members spread across the country, the RSS has provided the BJP with an ideological framework and a dedicated workforce to fight and win elections.”

Now, the RSS is overwhelmingly Hindu male.

About 72% of our population is Hindu, and 52% (51.73%) male. So a back-of-the-envelope calculation says 13% of Hindu males – nearly 1 in 8 – are active RSS members. Drop the babies in arms and grandpas and you have an even higher fraction. Really?

Why search

Download any MR research file. Start reading. You can’t. It’s horribly written. Academic papers are supposed to be written in a certain way, to keep the plebeians away.

But you persist. The first four pages go in quoting other papers. I quote you, you quote me. Can’t be avoided.

Then there’s the hypothesis. And the method. Great. Takes care of statistics.

Then comes the tell-tale phrase: ‘70 students of a north-western university’.

After this you can stop reading. Because there are only two possibilities now. First, the sample is horribly unrepresentative of the balance 6.7 billion of us, which makes the research horribly suspect.

Or, the conclusions can actually be extrapolated to everyone, in which case, it probably states the obvious (Research shows that when an item is on discount only morons pay full price.) So, the research was redundant.

A variation to this theme is asking people what they will do. This is worse – in so far as nonsense can be worsened. Because we humans rarely do, or can do, what we say.

No marketing professional who makes his living in the real world will bother about such research. Yet they are conducted and doctorates are awarded too. Why?     

Wednesday, 17 June, 2009

No loans for the self-employed

Self-employed professionals pay more interest on personal loans, have a tough time getting credit card, and are eligible for far less home loans than employed people of equal income.

Why?

Because they are less creditworthy. How?

How is a doctor, architect or lawyer who can earn, say, Rs 2,00,000 a month on his own steam less creditworthy than an engineer or executive drawing the same salary. Isn’t the former more creditworthy, because he doesn’t have a job to lose?

How about fluctuating income? Well, shouldn't the lender be more concerned about how disposable income instead? I mean, if the employee has wildly varying expenses, wouldn’t that effect his ability to repay?

So, why is the self-employed professional sub-prime? The only explanation that comes to my mind is that lenders forget to adjust for income. Among poor, the self-employed are worse off than the employed. (Hence, they are denied credit by the institutions and have to turn to autarkic moneylenders.) This disparity diminishes with rising income, but banks refuse to take note.

Why?

A loan saga

I needed money to pay for my MBA. “Borrow the money from me,” offered my father. “Let’s pay from our savings,” said the wife. Both wanted to save on interest. Fair enough. But I argued, “Let’s take a student loan, so that our savings stay liquid. We’ll repay once I get a job after my course. That way our cash flows stay better.”

They agreed. I applied.

First problem: I’m over-age. Umm… what has age got to do with this loan? I mean, at 39, what are the chances of my popping off tomorrow from age-related diseases? And how does it effect my chances of getting a job, provided I’m realistic about the salary a 40-year-old fresher can expect, and considering I am employed right now?

Second problem: My father, the guarantor, is over-age. But the security offered is his property, which has nothing to do with his age.

Third problem: The property is inacceptable as security because it is in Salt Lake, where all land is leased and none sold. So my parent’s home is built on land leased from the government for 999 years. If my parents want to get rid of it, they must give it back to the government and take whatever the government deems fit.

But doesn’t that disqualify all landowners in Salt Lake from getting home loans?

Anyway, there is a solution to all these problems: Ask for a loan of Rs 7,00,000 instead of Rs 20,00,000 and open a fixed deposit of Rs 3,50,000 (as a mark CBM [Confidence Building Measure]?).

Very well, my father opens the fixed deposit. But shit happens. So they don’t take a decision on the loan by the time I must pay my fees. I borrow the money from my father.  

Then yesterday, 15 days after the last date for paying fees, I get a letter from the bank, denying the loan.

Big question: Why did the bank drag its manager all the way to my father’s office and assure him that the loan will come through once the FD is opened? Why did they make so many phone calls? The FD amount was trivial on the scale that big banks deal with. Why were they so eager?  

Friday, 12 June, 2009

Two questions we need to ask before buying a home

Real estate prices had shot up in the last few years, by as much as 100% a year in some places. Developers were getting any price they quoted. Ask anyone and he’d say it was a simple matter of demand and supply. But when we saw a single room going for Rs 500,000, I instinctively knew it couldn’t be so simple.

There had to be something fundamentally wrong.

Prices have come down since the global crash, but developers’ ads insist that they will not go down any more.

I’m not so sure. Anyways, I’d like to ask two questions.

Why must one own a home? ‘Land to the tiller’ is a wonderful political slogan; it’s economic merits are debatable – ask any Bengali farmer who got land during the Barga ‘reforms’.

(It can be easily argued that a lot of other things have gone wrong for them since, but surely quite a few of them can be traced to the miniscule size of their holdings.)

Perhaps the blessings of ‘my own home’ are mixed too. Huge amounts are involved and at least two powerful industries, the banks and the builders. Such forces can mould minds of millions.

Let’s go a little deeper. Tell anyone you find prices too high and you get a stock reply: ‘If you’re going to live in it, don’t think about the price.”

By that logic you shouldn’t think of the price of the food that you will eat. But you do. And if you think it’s too high, you do buy cheaper alternatives.

And renting can be a cheaper alternative than paying EMIs. Because rents can go down, while the EMIs won’t – at least not the principle involved. So, you need to think through the time cost of money before spending it, even if it’s for your home.

I suppose the unsaid part of the justification (of not looking the price of your home) is the hope that the property will certainly appreciate substantially by the time you sell it, several decades later.

This brings me to my second question.

What’s the guarantee that property prices won’t come down? In The Wall Street Waltz, Ken Fisher shows how home prices came down in the US during the Depression. In Irrational Exuberance, Robert J Shiller records several instances of crashes in real estate markets, including the Indian market.

But let’s say those crashes never happened. Fact remains real estate prices have crept up till quite recently.

(Real estate gave the appearance of being a great investment because there was, usually, an enormous time gap between buying and selling, in which compounding interest showed its power. Moreover, the investor would be daddy and beneficiary sonny. One sowed, the other reaped, for free.) 

In the last few years, it has galloped. That may have changed the very nature of this investment.

(Think of a parallel. ‘What goes up, comes down.’ True, but that was as long we didn’t know about escape velocity. Since we blasted off, all that goes up hasn’t come down.)

For starters, it may fall. Second, even if it doesn’t, it may solidify.

That is, it can suffer an enormous and crippling loss in liquidity, because too few people would be able to buy homes, or would want to. Convertibles and yachts may not deprecate, but you can’t sell them as easily as you can sell, say, old newspapers.

In other words, homes may become a luxury, with a economics very different from what it had half a decade ago.

The home market is a case of sour grapes with me. Yet, these questions will need answers.

On the face of it, Indian banks may not have made subprime loans. But in a recession, one cannot be so sure.

Also, those who bought solely to sell and pocket the difference may behave very differently from those who wanted to move in: It doesn’t take too many sellers for bears to rampage. Let’s not forget that the majority of subprime debtors are still repaying their loans.

Third, do we know what will happen if there is a sudden drop in the number of applicants for home loans? Will banks rethink the security afforded by the properties mortgaged by existing debtors? Will home loan laws change? What fraction of homes are bought with loans anyways? What will home owners, who need not be landlords (i.e., they may be living in the property themselves) do if they see rents going down?