Upper and Lower Mumbai: A Tale of Two Cities

Mumbai is a fascinating place. It is place where the rich and the poor live cheek to jowl, where the so-called first world, the second world and the third world co-exist in the same geographical space. In a manner, it is a microcosm which reflects the global economic condition. Continue reading “Upper and Lower Mumbai: A Tale of Two Cities”

Palliatives Considered Dangerous

Recently the Indian Postal Services have started offering a service which can be characterized as “mediated email services.” You write out a message on a piece of paper and bring it to a post office and they will transmit the information to an email address after any required translation. On the return route, they will print out an email and a postman will deliver it to the addressee who does not have direct access to email.

I subscribe to an email list where matters relating to India’s progress down the information highway is discussed. One member, Mr. S.N.Rao, wrote in response to the postal department’s scheme. I find Rao’s comments very pertinent and with his permission I quote him for the record.

I can see that this is a very useful thing to have and that it benefits large numbers of poor people who cannot afford to own computers or learn how to operate them or speak/write English.

That brings me to the frighteningly palliative nature of this kind of solution. It attempts to provide a workaround – causing the real problems to be ignored along the way. I hope I am not the only one to see the striking parallels between this solution and the “good old days” solution to illiteracy where the postman often read out incoming letters to his customers and scribed outgoing mail on their behalf!

The basic problems that need to be solved are

a. Computers and technology are still bewildering and sometimes threatening in their cost and complexity of use. The platform that is used to develop and test software is basically the same as the platform that is used as a home PC…with all the attendant disadvantages of a user interface geared for essentially production/office environments.

There are some products that make sending email simpler by providing a dedicated email station that does nothing else – but that again is a point solution. There is a sorely felt need for a home platform. Sending email/voice/photos via the internet should be at least as easy as turning on the TV and switching between Z-TV and CNN (if not as easy as switching on a light).

b. Local language support is nearly non-existent despite large cumbersome frameworks and customisation options being built into operating systems. As a result it is almost imperative that the user be comfortably familiar with English. Oh! wait – that’s only true for India and a few other countries – in Japan, the computers, UI, keyboards are all in Japanese (I think you might be even able to select between two different scripts – kanji and the more common mix of katagana and hiragana). Now wouldn’t it be nice for the old man in Alleppy if we had a computer with an interface and markings entirely in, for example – Malayalam?

Band-aids, palliatives, patches, workarounds — are dangerous when they mask underlying problems. They work in the short-run and appear to solve the problem but in the long-run, they indirectly contribute to the persistence of the problem. They often address symptoms rather than causes. I am not advocating the abandonment of band-aids. My insistence is on making sure that even as we are busy putting on band-aids, we should spare some time and effort to address underlying causes.

Computers are complex beasts because of the evolutionary pathway they have traveled. Made by techies for techies. For them to be useful for the unwashed masses (such as yours truly), they have to be transformed into easy to manage domesticated animals. Some people are working on that domestication.

The availability of computers for the masses is of course increasingly becoming a necessity. But that is far from sufficient. For us to have a reasonable shot at development, we need to have a literate population. Palliatives that mask that underlying deficiency should be considered dangerous.

People Matter: India’s Population Problem — Part II

{Continued from People Matter: India’s Population Problem.}

A big picture description of an economy would have to include at its minimum the resources within an area, the technology available, the population and how they are organized. The available resources are strictly limited in the short-run. For a given area and its resources, a factor called the carrying-capacity can be defined. This indicates the level of population which the area can sustain without resource depletion. Any population larger than the carrying-capacity would lead to unsustainable resource depletion. By this factor, any area which exceeds its carrying-capacity is considered overpopulated. It can be plausibly argued that India’s population exceeds India’s carrying-capacity. That is not to say that India is alone in this regard; even the US is vastly overpopulated by this criterion given its capacity and inclination to use global resources unsustainably. But my focus here is India.

Some of the effects of overpopulation should be briefly indicated. Intensive agriculture can impoverish the soil and the relentless conversion of forests and old growth to farmlands leads to soil erosion and desertification. India loses about 8,000 square miles of arable land each year. Fresh water reserves are used up faster than what nature can replace; groundwater levels fall. With the disappearance of forests, rainfall patterns change leading to droughts and floods. The biotic diversity decreases with the loss of animal habitat. Pollution of lakes, rivers and the atmosphere takes its toll in terms of health hazards.

At the social level, overcrowding leads to communal tensions and civil unrest. Malnutrition and poor health services create unnaturally high infant mortality rates. Education takes the back seat while the society is remorselessly driven to unemployment and underproductivity. The cycle of poverty finally gets a firm hold on the population at large and it is a vicious cycle from which it is almost impossible to break free. Though we may gloss over the details of the exact effects of all this, it can be reasonably argued that overpopulation is the corner stone upon which all the other ills of society are founded.

The scarcity of goods and the abundance of people are a potent formula for poverty. Poverty and exploitation are quite well suited. Let’s look at an analogy to see the connection and further explore its implications.


Consider the hypothetical situation of two men who start out with equal resources at their disposal in terms of earning capacity and so forth. One of them, call him Blue, has two children whom he cares for with all his limited resources. The Blue children get reasonable education and become professionals. The other guy, call him Green, has six children. The Green children do not become professionals since they each had only one-third the resources as the Blue children. The Green children become labourers. The trend continues and soon Green has 36 grandchildren all of whom are not very well educated. The Blue grandchildren, numbering four now, continue on the footsteps of their parents since the parents were educated and more productive. The Blue children were able to have spare resources to educate their children and these became rich people who finally employ the Green grandchildren to work for them.

Now in this hypothetical situation, we need not ascribe any malice on the part of the Blue family nor any attempt on their part to exploit the Green family. All things being equal, the Green family just did not have any surplus to invest in the education and growth of their offsprings unlike the Blue family. The Green family just had to use all its steadily declining resources to feed its exponentially increasing population; they just did not have any left over money to improve their lot.

Let’s fast forward a few generations now. Given the rate of growth of populations — exponential — the Greens number in the thousands and the Blues are in hundreds. The Blues have steadily improved their lot since they keep getting richer doing more productive and creative work which is highly valued and the Greens work for the Blues in factories, houses, etc., at less productive (albeit necessary) positions.

What can be learned from this admittedly highly artificial scenario which we have developed? That humans are in one significant respect different from any other species on the planet. For any other species, numerical strength implies biological success and any strategy which leads to increased numbers is a winning strategy. Survival of the species depends upon successful breeding within the natural constraints of available resources. The name of the game is to proliferate as fast as possible to maintain quantity. Nature imposes quality control with ruthless efficiency. But for humans, the situation is different. Numbers alone do not ensure success since we have left that stage of evolution a few thousand years ago with the advent of technology and the need to effectively exploit the environment.

The concept of disposable resources comes into the game. Any resources which are not strictly required for the basic needs of food, clothing and shelter, is available for purposes which are uniquely human. The surplus is available for education, scientific research, technological development and the pursuit of art and recreation. All of these activities ideally improve the quality of human life and also change the survival game in favor of those who have an excess at their disposal.


There exists, unfortunately, the notion of bonded labour. These are people who through circumstances are in perpetual debt and whose earning capacity is so low that they cannot ever hope to have any excess with which to repay their debts. Lacking any disposable resources at all, they continue to barely survive using all their earnings and don’t have any hope of ever breaking free of the cycle of poverty.

Consider, if you will, India. So we have a very large population of poorly educated people a large majority of which live at or below subsistence levels. All the available resources are used in trying to desperately survive and there is virtually no surplus. There is nothing left over for investing in those areas which are the most productive like education, social uplift and technological development. India has to buy from other nations some of the things that it needs and these tend to be costly because of a number of reasons.

Let us dispassionately look at the trade situation between India and say a developed country like the USA. They, USA, export to India products which are high cost, like weapons, software, airplanes, etc. These products are high in price and capital intensive. India, in return, exports to the USA products which are labour intensive, low cost and low value. So, we have the import of say a single airplane costing millions of dollars which a small number of people in the USA produced. In exchange for that airplane, we have to export the output of millions of Indians in say industries like stone, leather, carpets, etc., at a low price to the USA. The rate of exchange is naturally set by the forces of supply and demand. There are numerous sources from which USA can import all the labour intensive products that they need. But for India, the options are limited for high tech goods. To compete in the world market, therefore, a steady devaluation of Indian goods have to be maintained. The terms of trade continue on a trend adverse to the poor country and this is reflected in the steady devaluation of the local currency relative to the foreign currency.

The vicious cycle inexorably continues. The rich nations have the means to produce high value, high demand goods. They continue to have a surplus which they invest in technologies which are more productive and the gap increases. India has no surplus to invest in technological advancement and it continues in this race constantly falling behind. Any advantage gained is quickly dissipated in maintaining a burgeoning population through the import of essential goods like fuel and other scare commodities.

In effect, India is like a nation of bonded labourers with no recourse. The exploitation of this nation is inevitable given the circumstances however unfair it may appear to be. It is unfair that 20 percent of the world’s population consumes 80 percent of the world’s resources. It is unfair that India with 16 percent of the global population uses only 3 percent of its resources. But who is responsible for this imbalance and who are we going to complain to? Unfortunately, we have no one to thank but ourselves for the situation that we find ourselves in. Finally, what are we going to do about it?

The Persistence of Poverty

Economic analysis can be broadly categorized as either ‘positive’ or ‘normative.’ Positive analysis refers to the investigation of how things are, whereas normative analysis is concerned with how things should be. The former is supposed to be value-neutral whereas the latter is necessarily an expression of one’s values. A study by the UN determined that about a billion people around the world live in absolute squalor in the world’s cities and that every third person will be slum dweller within 30 years. That is a positive statement. The Guardian reports:

One in every three people in the world will live in slums within 30 years unless governments control unprecedented urban growth, according to a UN report. The largest study ever made of global urban conditions has found that 940 million people – almost one-sixth of the world’s population – already live in squalid, unhealthy areas, mostly without water, sanitation, public services or legal security.

The report, from the UN human settlements programme, UN-habitat, based in Nairobi, found that urban slums were growing faster than expected, and that the balance of global poverty was shifting rapidly from the countryside to cities.

Africa now has 20% of the world’s slum dwellers and Latin America 14%, but the worst urban conditions are in Asia, where more than 550 million people live in what the UN calls unacceptable conditions.

The emphasis on the word ‘unacceptable’ is mine. The UN in labeling something unacceptable is making a normative statement, not a positive statement. Meaning, the UN is saying that so many people living in slums should be unacceptable. Normative statements arise only in cases where the normative and the positive diverge. That is, when what is is not what should be. Here I argue that the reason that the reason so many people do live in squalid conditions is precisely because it is acceptable by all parties concerned.

Before you reject this seemingly idiotic stance, consider what it means for something to be unacceptable. If I accept something, I clearly cannot find it unacceptable. If I don’t totally and unconditionally reject it and somehow reluctantly accept it, it means that I don’t find it unacceptable. It is not ideal but it is not unacceptable either. If something were truly unacceptable, I would not accept it. So now consider the statement “550 million people living in unacceptable conditions.” They not only find it not unacceptable, but given that their numbers grow, they thrive in there. So slum dwellers find the slums acceptable in the strict sense of the word. So also, the rest of world which does not live in slums finds the existence of slums acceptable as well. If it were not acceptable, then they would have done something about it. There are ample resources in the world which if it were equitabley distributed would have resulted in a different outcome. The fact that this alternative distribution is feasible but not chosen reveals that the world as a whole prefers the unequal distribution. Therefore it is acceptable in the strict sense of the word.

I have just used what is called a revealed preference argument. If you really want to know what the preferences of an economic agent is, just note what they do rather than what they say. I don’t need to ask you whether you prefer tea or coffee at a particular time if I can simply observe you choosing tea over coffee when both were available to you. You would have revealed that you prefer tea over coffee by your choosing tea. The world has a billion people living in slums. The people of the world could choose an alternate state of being in which no one is forced to live in slums. The world chooses the former over the latter and therefore reveals its preference for the current setup.

The point I would like to stress is this: if poverty were truly unacceptable, then it would not exist given the technology and resources at the disposal of the global community. Both the poor and the rich are implied in this global community. The poor tolerate poverty as much as the rich do. I think I can explain why the poor accept poverty. I believe it has something to do with biology. The urge is for survival and therefore we adjust to unimaginably difficult conditions. People in concentration camps survive horrible deprivation. Slums are economic concentration camps. People survive. Life is Hobbesian (nasty, petty, mean, brutal, and short) but sufficiently large numbers survive so as to produce the next generation of slum dwellers. The poor breed poverty.

The rich and the powerful also tolerate poverty. If they did not, they would have mobilized against it and eradicated it. Poverty is not seen as unacceptable the way terrorism is seen as unacceptable. The US moves rapidly to spend hundreds of billions of dollars at real or imagined areas of terrorism. But it does fancy little for eradicating global poverty. A few hundred billion dollars every year would totally eradicate global poverty. But the US does not choose to wage a war against global poverty like it does against global terrorism. The rich are apparently quite comfortable with the idea of poverty. How else would one explain the persistence of poverty?

Reciprocal Rights and Privileges

From Anish Sankalia:

The President is said to have informed her that according to Section 5 of the Citizenship Act of 1955, she has no right to assume the office of the Prime Minister of India and that he was seeking the advice of the Supreme Court on this issue. Section 5 of the Citizenship Act of 1955 says the rights and privileges allowed to foreigners who become citizens by application (not by birth) are conditional upon the rights and privileges granted to Indians in the country of the concerned person’s origin (in this case Italy).

The President reportedly told Sonia that he had to ascertain the legal position in this matter as there was no confirmation that all the rights and privileges granted to persons of Italian origin are reciprocated by Italy in the case of Indians who become citizens of that country. Sonia is said to have decided not to take the risk after the President’s briefing.

So there. Sort of what happens in commerce — you grant most favored nation (MFN) status to a country only if they grant you MFN. Also, you grant a certain number of landing-slots to the carrier of a foreign country only if they grant you reciprocal rights in theirs.

A naturalized Italian citizen of Indian origin cannot become the municipal commissioner of a third rate town in Italy. India cannot in good conscience reciprocate by allowing a naturalized Indian citizen of Italian origin to become the chief of the executive branch of the government.

Of course, there is a very compelling personal reason for Mrs S Maino Gandhi to not take a shot at the PM’s seat — security. Indian soldiers provide personal security to Indian leaders, not Italian soldiers. At some level deep inside, soldiers have very strong sense of nationality and duty and honor and pride and all sorts of things that make them willing to put their lives in danger for the protection of their motherland. I, as an Indian, would not trust Italian soldiers to keep their guns pointed the right way if I was to somehow get to become the prime minister of Italy.

Be that as it may, it was a pragmatic decision. A challenge in the Supreme Court of India would have been all and she would have been asked to vacate. Better to take the high road and avoid being thrown out, is my guess.

Great Job, Communists!

They are succeeding mightly in dragging India back to where it was, oh say, about 55 years ago so that they can repeat the good old days of dismal 2 to 3% “Nehru Growth rate”. The market went down the tubes and the proverbial stuff hit the big rotating blades as soon as the commies opened their mouths. One feels sorry for the impoverished hundreds of millions who would suffer down the road due to this, of course. But that sorrow is partly mitigated by the realization that to a very large extent, these include those who voted the commies into the driver’s seat. Karma is a bitter pill to swallow, eh? Anyway, for the record, I include two snippets.

Continue reading “Great Job, Communists!”

People Matter: India’s Population Problem

Time to take a look once again at the population-poverty trap.

In 1965, about 40 years ago, there were less than 500 million of us. By 2004, the population of India has more than doubled. The effect of this incredible increase has been a falling standard of living in general, shortages, untold misery and conflict. It is foolish to expect that we can provide a decent standard of living to so many in such a short time. The vast majority of us do not have adequate drinking water, sanitation, health care, education and job opportunities. The preceding statement does not even begin to indicate the amount of human misery and sorrow which it implies. It hides within it the teeming millions who suffer without the slightest hope of ever seeing a future remotely human.

But let us get back to numbers again so that we can have at least an intellectual understanding of the problem before we begin to address the real issues. The population growth rate is a convenient measure of how fast the population is increasing. For India, it is at present 2.2 percent annually. This apparently innocuous looking number has terrible consequences. It implies that the population will double in less than 30 years. By the year 2030, at the current birth rate, India would have 1700 million people, surpassing China to become the most populous nation on earth. For the present, India has an additional 16 million mouths to feed, clothe and educate every year. Even the most optimistic scenario for the future of India is daunting due to demographic momentum. To quote Paul Ehrlich of Stanford University: “Suppose, over the next thirty to thirty-five years, India’s average completed family size dropped from the 1990 level of about 4.3 to 2.4 (replacement level) and remained there, and death rates didn’t rise. India’s population would continue to grow for almost a century, and when it stopped there would be about 2 billion Indians – as many people living in that one nation as populated the entire planet in 1930!”


The numbers above are dry statistics and we are understandably dismissive of them since they have little relevance to more pressing problems at hand. So what’s the big deal? Well, it is a human problem and we have to feel the human issues involved to really understand what the implications are. An account of a personal encounter would be in place here. I walked out of a railway station while waiting in transit not long ago. It was noon time and the road in front of the station was crowded with the mad hustle of cars, buses, cycles, scooters and people. In the middle of the road, over a narrow divider, was the sleeping form of an old woman. She lay there in her rags with her eyes closed, perhaps asleep out of sheer exhaustion, with a stick and a battered tin can near at hand, in the middle of all the noise and fumes of the traffic in the noonday heat.

So here was a human being with all the capacity for love, pain, joy, hope, caring, companionship, contemplation and all those qualities that you and I have in common with every human. Nature had invested as much in her as in any other human on earth. Yet she was just a hopeless bundle of misery existing in a void without comfort or joy. I watched with a sick feeling in my stomach that I couldn’t do anything for her. And for the millions of others in circumstances not too different from her’s. It wasn’t the first time that I had seen something like this. It wasn’t even the first time that day. I am sure that you too have felt the pain. But we have stood by helplessly and turned away finally to cope with other problems.

Perhaps everything terrible is in its deepest being
something helpless that wants help from us.
— Rainer Maria Rilke

We may have unlimited compassion in our hearts but there is a limit to the sizes of our pockets. We have to shut out the dictates of our hearts to turn our attention to the urgent task of surviving. At best we dig out a few coins and hope to alleviate our conscience. The problem remains out of mind even though it is not out of sight. It is a human problem.

At another level of comprehension, it is an economic problem. The value of an entity is ruthlessly dictated by the ratio of supply and demand. We have too many people and hence each individual is valued so little. Pathetic though it is, the fact is that we have devalued human life to the point that millions continue to exist in conditions that afford little dignity and humanity and we are apparently unmoved to do anything about it.

What does this personal account have to do with the larger issue that I was discussing above? Pretty much everything, really, if you care to think about it. When I hear, for example, that so many millions of people live in dire poverty, I don’t really understand what it means. To fully understand it I would have to have the empathy to feel how it is like to be in that old woman’s place. Then to take that painful existence and multiply it a million fold (an impossible task, surely) and then I may have a hint of how much suffering is implied by that statement.

Well, you may say, all this thing about compassion and human pain is a lot of sentimental hogwash and doesn’t really concern you overly. But what if all this has an impact on you, your future and your children? Would you be concerned then? More about this later.

Cargo Cult and Democracy

There is an interesting anthropological curiosity which arose amongst the islands in the South Pacific after the Second World War. It is known as the Cargo Cult. I first came across it in Marvin Harris’s book Cows, Pigs, Wars & Witches many years ago. (By the by, I highly recommend Harris’s book OUR KIND: Who we are, Where we came from & Where are we going — Evolution of Human Life & Culture.)

The islanders had noticed that Europeans had some sort of powerful magic which allowed them to receive stuff from the heavens. The islanders decided that they too must make arrangements to receive stuff. So they faithfully reproduced the artifacts that they saw the Europeans use in magically making cargo appear out of the skies. They cleared a large area in the forest, lit bonfires around this, built a hut close by in which they put a box with antennae sticking out of it, made ‘headphones’ out of coconut shells, and spoke earnestly into a ‘microphone’. Then they waited for cargo to drop out of the skies, just as they had seen the Europeans receive during the war.

It is a fascinating tale and has wide-ranging implications. The islanders were not stupid, merely ignorant. They figured out what we could call the ‘front end’ of the whole enterprise. They did not know that there was a very deep backend to the deal. In their ignorance, they expected a facsimile to work and when it didn’t, they attempted to modify the front end to more accurately reflect the bits they had observed the Europeans use.

The cargo cult is an amazingly important metaphor for our age. Technology is increasingly becoming more complex and the effective use of this complex technology confers immense advantage. However, the more complex the technology, the more its use is dependent on a complex ecology within which it is developed. Transplanting the technology without the supporting ecology is a waste because it does not work as advertised. The technology — whether it is hardware, software, all sorts of institutions — co-evolved with other bits that form an ecological whole which make the whole system function whereas any subsystem in isolation will not work.

Let’s take an institution such as capitalism, for example. Hernando DeSoto in his book The Mystery of Capital: Why Capitalism Triumphs in the West and Fails Everywhere Else outlines the missing bits in the case of capitalism. Another example: why did the shift to a market economy spell disaster for the former Soviet Union. A market economy has a very deep backend. That backend includes institutions such as the legal system which enforces contracts, a flexible labor market, a number of banking and financial intermediation institutions, and so on. Without the supporting institutions, the market institution is a non-starter. It is merely a cargo cult market economy.

In the area of digital technology also, we see the cargo cult mentality. The modern computer evolved in advanced industrialized countries (AIC). AICs have other systems that support the use of computers and these systems also evolved to keep pace with the rapid evolution of computers. Transplanting computers to a place where these systems don’t exist is silly because the computers are then like the props used by the South Pacific islanders. It is no wonder that they don’t work as advertised.

My final example of the cargo cult metaphor is the institution called democracy. Voting every so often to elect representatives that sit in a great big hall to decide matters of national importance is the front end. The deep backend requires an informed public at a minimum. Even under the best of circumstances, aggregating individual preferences is a risky venture as students of public choice theory will appreciate. (See Ken Arrow’s Impossibility Theorem.)

In the case of India, we have a cargo cult democracy. It looks like one with electronic voting machines and election speeches and manifestos, with pollsters and pundits, with election commissioners and voting stations. Only the deep backend is missing. There is no understanding of issues of substance among the people who vote. Put up a name which is recognizable, and they would vote for or against that name. Promise enough freebies (free electricity, for instance) and they will vote for you, never mind that it may bankrupt the state and that eventually it will impoverish the same voting public. For democracy to work, you need accountability — both among those who vote and those who are elected. In an area where the government is seen as a source for endless handouts by the people, and the leaders look upon their stint in the driving seat as an excellent opportunity to steal from the public, democracy is not likely to work. All the talk about the smart voter is so much hogwash that the mind boggles.

The Indian stock market is crashing. People are voting with their pocketbooks and sending an important signal. The signal, as I see it, is that the Indian economy is spinning around in the bowl and will soon be down the tubes as soon as the flush cycle finishes.

It is all karma, neh?

Wrong again, Mr. President of the US of A

There’s a lot of people in the world who don’t believe that people whose skin color may not be the same as ours can be free and self-govern. I reject that. I reject that strongly… I believe that people whose skins aren’t necessarily — are a different color than white can self-govern. [Source]

The above, in case you haven’t figured it out, is the ever articulate President of the United States of America.
Continue reading “Wrong again, Mr. President of the US of A”

The AP results are in: Chandrababu Naidu is out

Andhra Pradesh (AP) election results are in and Chandrababu Naidu is out. He was an unusual CM. He wanted to make Hyderabad into a Singapore, and make AP a shining state. From what I hear, it appears that his stress was on the use of hi-tech for bringing about transformation. I am not too informed about what the game plan was but it appears that the common person did not obviously share his vision and they voted him out. Perhaps he fancied himself to be a Lee Kwon Yew and did not realize that unlike the Singaporean dictator, he had to seek a mandate from the masses. The masses are more interested in the short-run rather than the long-run.

Continue reading “The AP results are in: Chandrababu Naidu is out”

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