Walmart and Gazowhat

Free market preachers never tire of giving examples of Soviet retail giants and government distribution agencies which constricted choice, eliminated competition, destroyed efficiency, destroyed the Soviet system and won USA the Cold War.

Perhaps, but I don’t remember reading any populariser laying the same blame of recent crashes at the door of giant MNCs like Walmart, P&G and GM.

These are not government bodies, obviously, but they are surely gigantic. Why should they not invite all the ills of planning and obesity to visit the economies they operate in?

For what competition can realistically exist in a land where Walmart decides, say, that all men should wear the same shirt, stitched in the same cut and and at the same cost in Bangladesh and Guatemala.

One can argue that Walmart, in spite of its size, is not a monopoly. It must compete with This-mart and That-mart. But do we really believe that a system where mammoth sellers club each other in bloody price wars can offer real choice to buyers? If P&G has brand A does Lever have any choice but to offer its cousin, A1 – never mind the billions spent in ads to differentiate them?

Now, lack of (real) choice (i.e., discernibly different benefits) should mean that buyers have no clear preferences and loyalty, and, consequently, no reason to pay any premium to anyone.

In other words, irregular and, at best, wafer thin profits throughout any given industry. If profits exist, they’d probably be in the coffers of niche brands, which have minimal roles in the the giant Western economies.

Imagine linked treadmills all around, the entire mass (mess) going nowhere. 

Doubtlessly such a view is simplistic and illiterate. Is it wrong too?

Should there be quality standards in services too?

Can a restaurant take too long to serve you? Can a shop have a complicated, time-wasting billing process? Is charging 2% on credit card payments OK?

There can be two views. Yes, these but correspond to quality standards for products. If its fine to have restrictions in products, and not wait for market forces to reform or ruin wrongdoers, why not have them in services too?

The opposite view is that quality in services would be hard to quantify. Hence, a breach of quality standards should be hard to establish, and punish. Besides, you'll have to combine the CIA, KGB and Gestapo to keep track of the offences. Yet...

Actually, this begs a bigger question: Should illogical be illegal? Should bad business practices, those that can be shown to be counter-productive (to whom?) be banned? On the other hand, how much can outsiders interfere without Marshal Stalin taking over? Shouldn't some businesses be allowed to fail so that others may learn? Failures are the stepping stones to success, etc.

Should there be certification for buying financial products?

You need to be 18 to vote. And to drink. And you need this and that degree for various jobs. And to sell this and that.

Then why not make it mandatory that you'd have to go though certain courses before you can buy certain financial products. The more complicated the product, the more detailed the course.
This may mean that a few products will be available only to doctorates. Or it may mean that most people will find ways of going around the rule, buying products in others' name.

Either way, it should free the government of any obligation to save those ruined by the stock market and its appendages. Just as the government is not expected to pull out those ruined by gambling. You're supposed to have taken the risks knowingly.

It may also spell the doom of some products, whose existence depend on finding enough suckers most of the time.

Send him back to school

Liddy of AIG made all sorts of excuses for handing out bonuses. Do they make sense? I beleive they defy basic economic sense. Here's why: http://docs.google.com/fileview?id=F.ac5a3238-af19-43eb-aaf3-d899e16160ee&hl=en

Italics for emphasis; comments in blue.

Why Varun hates Muslims

Sanjay Gandhi's son, Varun Gandhi, is in trouble over inflammatory, anti-Muslim election speeches. But there may be a very good reason behind his hate. You see, most of us like to believe that Mrs Gandhi and her son lost the 1977 elections because of the Emergency. The people of India demonstrated how dear democracy is to them, etc. 

I think that's BS. We give less than a hoot for democracy, or any ideal, being the most materialistic tribe on earth. 

But we must breed. Sanjay Gandhi's undoing were the sterilisation camps, especially in Muslim areas, which got a lot of attention.  

And his son thinks like I do.

In praise of pitches

Speculative creative work, that too for free, is probably the most inefficient way of getting business; but it may also be the most effective way of training young ad men, particularly in account servicing. That's when they learn to ask questions and judge if work is on breif.

On the other hand, may be not. 

In workshop after workshop I have seen account servicing people applying their grey cells wonderfully. In office, the very next day, they'd all go back to being peons. I never understood why. Here they were getting all the praise in the world, and being promised that if they contributed similarly in real world, they will surely make more money, for themselves and the agency... yet, in the real world, they wouldn't even try!

Valkyrie lifted?

We saw Valkyrie (music by John Ottman) yesterday night, and the background music in most of the dramatic scenes was a 'rat-a-tat-rat-a-tat' that iexactly the same as in Battle for Algiers (music by Ennio Morricone & Gillo Pontecorvo). I can't believe it was coincidental.

Export manufacture, reserve service

Said Obama to Congress on 24 February, " We will restore a sense of fairness and balance to our tax code by finally ending the tax breaks for corporations that ship our jobs overseas." 

Congress applauded. Aside from some huffing and puffing that night, Indian commentators ignored the threat (promise). Afraid? Or dumb?

Because Obama didn't say anything about ending tax breaks to companies who buy foreign goods, which, in effect, ships manufacturing jobs overseas, that is, to China.  

Astoundingly, when we talked about this to a couple of people, the instant reaction was that Obama was doing what was 'good for his country'. Reservation is good for USA! Not competing for jobs with slum-dog Indians is good for USA! Since when? Since they burnt all the books by their 'free market' economics who have been untiringly taking Indians to task for not opening their economy?

OK, USA is an outlier. Rules that apply to others don't apply to it. And I don't say this cynically. I mean it. Perhaps the good of all lies in understanding and accepting this. (Bhim should get more food than his four brothers. There is nothing unfair or bad about it. He's just a very big boy.) 

However, shouldn't our free market economists take the trouble to explain this to us poor brownies, if for nothing else, then for the sake of a 'sense of fairness' (never mind if that is not the same as fairness itself)?  

Dangerous conclusions

I am reading The Bottom Billion by Paul Collier. It, according to The Economist, will be hailed a classic. Maybe it is one already.Blogger is a free blog publishing tool from Google for easily sharing your thoughts with the world. Blogger makes it simple to post text, photos and video onto your personal or team blog.

But I find it illogical and somewhat dangerous.

First, the book is based on the premise that nations can be reduced to numbers. This is an oversimplification so gross that some may find it completely unjustifiable. 

Having taken this premise, the author generalises. Let me take a typical example. While discussing the factors that may affect the 'turnaround of a failed state', he concludes, among other things, that democracy is not one of the factors.

There are two immediately perceptible problems here. First, democracy is an amorphous concept. North Korea calls itself the Democratic Republic of Korea; India is a democracy; and so is the United Kingdom.  

Second, this overall statistic may mean nothing in a particular case. 

Let's go off elsewhere to understand this. 

Let's say we want to know, from data on donors to a charity that funds children's programmes, if a person's place of residence influences his propensity to give. And we come to the conclusion that it doesn't. A citizen of Madras, picked at random, is just as likely to donate as a citizen of Bombay (picked at random too). 

This tells the charity that when, say, it's mailing out appeals, there is no reason to prioritise mailing to any city (or neglect any one). 

Yet the conclusion may be completely wrong on in the particular, where place of residence may be decisive. Let's say you live next to a well-run school for poor children; while I live next to a remand home that is hell on earth. You believe giving money will help run similar schools; I believe anything I give will go into more such hell-holes. You are very likely to give; I am very likely not to. 

Both of us are probably wrong, but that's not the point. The point is that in our cases, residence mattered.

In an ideal world, this detail, and every other, would be known to the fund-raiser, and he'd be able to act with minimal risk. Of course, he has nothing remotely comparable to omniscience, and does the best he can. 

That's probably OK too, because data comes at a price. One has to do a cost-benefit analysis, even if that's intuitive. The 'general' will, at some stage, triumph over the 'particular'.

Now, Collier is not talking about thousands of donors on a mailing list; he is talking about millions of people mired in seemingly hopeless poverty, whose lives can well depend on interventions by Western powers. Is statics of his sort a good tool to decide matters of that magnitude?

"But wait a moment," you'd say, "nowhere does Collier claim that his conclusions will hold in every case. He is simply giving an overall picture. So what's the problem?" 

The problem is that his picture is accessible. It will be used by many, directly or indirectly (by those who know Collier from, say, columnists who quote him), to judge their governments, without going into the details and caveats which, surely, exist in Collier's academic papers.  

So, let's say you are a policy-maker who must decide if a particular third-world country should get badly needed aid. It is at present under an old-fashioned deranged dictator. Further, your government is not particularly bothered about democracy, choosing instead to worry about economic progress. Nonetheless, in this case, you know that nothing will improve unless the poor country gets something that can be logically called a democracy and free press. 

Logically, you should make aid conditional to the dictator's departure. But... you can't. Because, thanks to Collier, everyone knows that democracy doesn't matter. 

Obviously, Collier never drew that conclusion. Inevitably, that conclusion, and similar ones, will be drawn.  

Savarkar's photograph

I just finished Malgonkar's The Men Who Killed Gandhi, and it answers a question that has bothered me for nearly three decades now: How was Savarkar acquitted for lack of evidence when there was a photograph of him with the other conspirators? The books that have the photograph, and few that cover the incident don't, make it seem that the decision was political. Savarkar was too big to hang. 

Malgonkar's book contains a sworn statement by Savarkar stating that the photograph was taken after the crime, by the CID. It was staged!  

Which means Savarkar's heirs can probably sue every publisher who has used the photograph for libel. For truth's sake, I wish they did.

PS: I showed this to a friend, who supports Savarkar, and he said something strange: "My father, in spite of being a Savarkarite, believes Savarkar was involved." 

Does he believe that the Savarkar was guilty and it was a blot on him; or does he believe that Savarkar did a good thing and got off too, which added to his credit? I didn't ask. 

I did however look up Savarkar on-line and soon found savarkar.org. Its contents left me astounded. 

Under the section on Gandhi's murder, it had Savarkar's statement in his defence and among Savarkar's associates, it had pictures of Godse, Karkare and Apte, the three who hung. This is inexplicable by normal logic. 

In his statement, Savarker makes it abundantly clear that (a) he had no role in the murder (b) these three were not specially close to him and, perhaps most importantly, (c) he considered Gandhi a personal friend. Let me quote from Savarkar's statement:
"...in 1908 Gandhiji resided in “India House” in London owned by the well-known personality, Pandit Shyamji Krishnavarma, and placed under my management and led by me; how Gandhiji and myself lived together as friends and worked together as compatriots, how later on he paid a personal visit with his wife to me and my family and spent hours in happy talks about our old comradeship and current politics. I would not waste the time of the Court in telling how Gandhiji wrote now and then kind notes about me in 'Young India' too... Enough to say that in spite of fundamental differences in our ideologies on some points and in virtue of close affinity on others, there ever continued a mutual respect for and a personal goodwill to each other." (Highlighting mine.)

Savarkar includes several press notes on Gandhi to support this. 

Surely it'd be idiotic to suggest that Savarkar was unaware of his supporters' fanatic devotion to him and did not mean what he wrote; that he was building a cynical defence all along, plotting Gandhi's murder! 

It'd probably be correct to say, in the light of Savarkar's own statement, that he did not want any credit (if such a word can be used) from his friend's murder. Yet, his followers at savarkar.org include the three convicted murderers among his associates. 

Why? 

Because they were, in fact, associated with his organisation? And because they were inspired by him? 

But this goes against Savarkar's own logic, as mentioned in his statement: 
"Many criminals cherish high respect and loyalty to the Gurus and guides of their religious sects and profess to follow their tenets. But could ever the complicity of the Guru or guide in the crimes those of his followers be inferred and held proved only on the ground of the professions of loyalty and respect to their Gurus of those criminals? Numerous persons accused of crime have a close association with and cherish reverence for their parents, brothers and relations and subscribe obedience in their letters to them. But are those relatives ever held as accomplices in law with the accused only on the strength of an interference that the accused who were so obedient to them must have consulted them in committing the crime too? Or, are political leaders alone to be held as hostages in the hands of the police and accountable for the crime of any one of their numerous followers who happened to respect and revere them sometime or some way? Does it not often happen that some of the followers do actually try to exploit the moral influence of the leaders to further their activities which the leader had never sanctioned? In 1942 in the 'Quit India' movement some leading workers who had been close associates of Gandhiji as Congressmen and respected him, resorted to underground violence. I am not concerned here with the question whether such an underground movement against a foreign domination was or was not justified. It is enough to say that Mahatma Gandhi condemned all underground violence. But masses resorted under the lead of those workers to arson, sabotage and bloodshed shouting all the while “Mahatma Gandhi ki jai”. But even the British Government did not put Gandhiji in the dock for their crime simply because the masses respected him and were doing those very criminal acts shouting “Gandhiji ki jai”, and therefore they must have had consulted him! In this very case, the Prosecution has examined some Gurus and guides as witnesses who told on oath that they had supplied incriminating and dangerous explosives to some of these accused and actually incited them to murderous crimes such as to take the life of Jinnah and Liaqat Ali who were till then Indian citizens during the very period of December–January last when this conspiracy is alleged to have been hatched. Nevertheless even such admittedly criminal association could not persuade the Prosecution to infer that the accused must have consulted these witnesses in this conspiracy to and that the latter also must be held as incriminated in this crime. I do not say that they should have been incriminated. But I do say that it is absurd and highly unfair that the same Prosecution should infer, nay, assert dogmatically that even the legitimate correspondence and association which Apte and Godse had with me years ago warrants the inference that they must have consulted me in this conspiracy and therefore I should be held as incriminated in it. I do not attribute motives. But the Prosecution evidence itself of the above nature, based only on 'must have been' and 'would nor have been' type of surmises, makes it abundantly clear that more hopeless the Prosecution grew in finding substantive and direct evidence to prove their case against me, the more helplessly and recklessly they fell back on absurd inferences and innuendoes for support to save their prestige which, rightly or wrongly, they felt was at stake." ( Highlighting mine.)

Now, I don't know what Savarkar did for the accused after the trial. I do know that Nathuram Godse's neice did marry Savarkar's nephew. And I do know that the fanatics behind savarkar.org must have a warped logic by which they eat their cake and have it too: Savarkar was acquitted yet may all credit of the deed come to him, and through him, to us. 

Otherwise, how can you count the murderers of your guru's friend among his associates? This is data masquerading as truth.