Month: November 2004

The Care and Feeding of the Permanent Arms Industry

Don’t let me stop your great self-destruction.
Die if you want to, you misguided martyr.
I wash my hands of your demolition.
Die if you want to, you innocent puppet!
————– Pilate to Jesus at the trial in Jesus Christ Superstar.

Fact: A permanent arms industry requires perpetual wars for its sustenance.

Fact: The most advanced industrialized economies have the most high-tech industries.

Fact: The arms industry is one of the most intensively high-tech industries.

Final fact: The US has the most sophisticated high-tech armaments industry.
Continue reading “The Care and Feeding of the Permanent Arms Industry”

The Trick is not to Mind the Pain

I came across this quote in Myke’s weblog.
T.E Lawrence wrote in the Seven Pillars of Wisdom:

All men dream: but not equally. Those who dream by night in the dusty recesses of their minds wake in the day to find that it was vanity; but the dreamers of the day are dangerous men, for they may act their dream with open eyes, to make it possible.

I recall a scene from the movie “Lawrence of Arabia” where Lawrence puts out a burning matchstick with his bare fingers. Someone tries to immitate him and burns his fingers and asks Lawrence what is the trick. Lawrence replies, “The trick is not to mind the pain.”

The Price of a Revolution


The recently concluded elections in the US gives credence to
what H. L. Menken (1880-1956) predicted when he wrote:


“As democracy is perfected, the office of president represents,
more and more closely, the inner soul of the people. On some great and
glorious day the plain folks of the land will reach their heart’s
desire at last and the White House will be adorned by a downright
moron.”


There is much truth in the saying that a country deserves the
government it gets. It is a chilling realization that India is
not exempt from that general rule and we somehow deserve the
inept government we have had since the country became independent
in 1947. The collorary to the generalization must be that a
change in the quality of government can only come about as a
consequence to an improvement in the quality of the soul of
the people of India.


Fundamental change — whether in an individual or in a people —
is extremely hard. It is sometimes triggered by some external
event, mostly of a negative nature. Only when an individual is
confronted with the dire consequences of his past mistakes does
sufficient momentum for change accumulates and he makes a break
with his past. Wars and other catastrophes, natural or otherwise,
transform societies, and are called revolutions.


If you want to have a revolution, be prepared to pay the price
of a catastrophe.

Corruption and Economic Development: A Reference


Yesterday I claimed that
India is the world’s largest kleptocracy somewhat along
the lines of the claim usually made about India being the
world’s largest democracy (if you use a really flexible
definition of democracy, of course.) One reader, Sudhar, wanted
to know exactly how is it that corruption retards economic
growth. It is a very important question. I could spend a whole
day writing about that but being bone lazy, I am taking the
easy way out of giving you a reference. Why re-invent the wheel,
eh?


So the article you may wish to read is
from the Whirled World Bank
by Paulo Mauro:
Corruption: Causes, Consequences, and Agenda for Further Research.
To quote just a couple of paragraphs:

From economic theory, one would expect corruption to reduce economic growth by lowering incentives to invest (for both domestic and foreign entrepreneurs). In cases where entrepreneurs are asked for bribes before enterprises can be started, or corrupt officials later request shares in the proceeds of their investments, corruption acts as a tax, though one of a particularly pernicious nature, given the need for secrecy and the uncertainty as to whether bribe takers will live up to their part of the bargain. Corruption could also be expected to reduce growth by lowering the quality of public infrastructure and services, decreasing tax revenue, causing talented people to engage in rent-seeking rather than productive activities, and distorting the composition of government expenditure (discussed below). At the same time, there are some theoretical counterarguments. For example, it has been suggested that government employees who are allowed to exact bribes might work harder and that corruption might help entrepreneurs get around bureaucratic impediments.


One specific channel through which corruption may harm economic performance is by distorting the composition of government expenditure. Corrupt politicians may be expected to spend more public resources on those items on which it is easier to exact large bribes and keep them secret–for example, items produced in markets where the degree of competition is low and items whose value is difficult to monitor. Corrupt politicians might therefore be more inclined to spend on fighter aircraft and large-scale investment projects than on textbooks and teachers’ salaries, even though the latter may promote economic growth to a greater extent than the former.


It is a very accessible article and one does not have to be a
genuine economist to gain considerable insight from it.

India, the World’s Largest Kleptocracy

My brother came to visit me at our offices in Lower Parel in Mumbai this afternoon. He was duly impressed by the spanking new buildings that occupy what used to be Morajee Mills land. I guess I can understand why he was impressed because usually he ends up in seedy run-down offices trying to do business. He has a bunch of dealerships for equipment and materials required for large-scale public sector enterprises. As part of his business, he has to visit the offices of his customers who are housed in crumbling offices because state-owned loss-making enterprises are severly resource constrained and cannot afford nice premises.
Continue reading “India, the World’s Largest Kleptocracy”

India and Utility Computing

Stand-alone computing a la PCs delivering “services” is fine for those who can afford that luxury, but is definitely a show-stopper for those who have very little disposable income and yet can make use of those services that PCs deliver. I remind myself repeatedly that people do not want a PC — what they actually want are the services that a PC delivers. As long as we focus on the fact that it is services — and not the hardware nor the software — that matter to people, we will not end up putting the cart before the horse. So if a firm were to deliver those set of services at an affordable price, it is immaterial to the consumer whether the consumer (of those services) uses a PC or some other device. Continue reading “India and Utility Computing”

You might be a third world country if …

Indian roads reflect the amazing diversity that is India, a mix of the modern and the ancient. It is as if a cross-section of the entire history of transportation were displayed for all to marvel at. A huge mass of humanity using every conceivable mode of transportation — from no-wheelers to two-wheelers (powered and otherwise) to three-wheelers to four-wheelers to sixteen-wheelers — moves along at varying speeds on what apparently are roads. I say moves but at times the whole mass merely sits there for hours. That is what happened during one stage of my journey from Mumbai to Pune last week.
Continue reading “You might be a third world country if …”