June 28, 2008

Breaking The Shackles Of Indian Politics

Filed under: Governance,Politics — Bottom's Up @ 11:32 am
Tags: ,

Ramchandra Guha, after his delightful and hugely entertaining history of modern India, continues to display his excellent ability to describe the India around us in this wonderful and well balanced essay in Outlook. Guha is spot on with the points that he asserts are hurting India.

According to Guha, one of the biggest problems facing India today is that of extremism and in this essay, Guha shows equal contempt for that of the right and that of the left. The right wing Hindu extremist brigade continues to use the tactic of making a schism within India through its politics of them vs us. To this extreme wing of India, Muslims and Christians are despicable minorities that need to either accept Hindu superiority or else leave the country altogether. Guha does not delve much on the causes of and contradictions in this political philosophy. For one, identity and divisive politics in the most extreme are more often than not, according to this writer, products of frustration with the status quo and an inability to change one’s own condition for the better. Granted that even if everything is great and people are happy, there would still always be some amount of divisive politics, such being the nature of politics. However, the the degree of absurdity and the lack of discourse on the consequences is usually more prevalent during times of social frustration. With regards to the causes, Guha should have given more ink to the role played by the divisive and appeasement politics indulged in by members of the so called centrist secularists such as the Congress, the SP, the BSP, etc. While it is difficult to say what came first here, the chicken or the egg, it would not be too wrong to say that the Hindutavadis and the appeasement secularists drive each other to new absurdities. He does mention that the fact that extreme fringe elements represent the minorities and a moderate voice gets drowned out from their politics does not help matters either. Coming back to the contradiction of right wing politics which Guha does not touch upon is their claim to work for a stronger India. However in the following two scenarios of a Hindu rashtra, a strong India cannot occur –

  1. Hindus are the superior class of people and the minorities are second class citizens :  When a large chunk of a populace such as that in India (10-15%), albeit a minority is treated as second class, a peaceful and thus prosperous nation is unsustainable long term. A time always comes when equal rights are demanded and peace goes out of the door.
  2. The other option often presented is to no longer have these minorities as a part of the nation : Again when you are talking about close to 150 million people, unless your solution is to convert all of these to your own faith (which is impossible), the idea that such a large mass of people will leave and go somewhere just like that is absurd. The only solution is to give them land where they can migrate to, i.e. a future partition of the very India the right wing claims to care for. An unacceptable option to say the least.

Thus the final goal of the extreme right is but impractical and unachievable. Also, while these extreme elements claim to speak for the Hindus, and try to find religious justification to their political ideology, they can scarcely do so since there is nothing in the religion itself to justify oppression of others.

Guha also mentions something quite relevant and that is the lack of spine and the incompetence of the State when it comes to tackling extremism, both the causes and the effects. Thus the State has time and again been spineless to deal with elements that have tried to destroyed the fabric of Indian social life and spread disharmony. Raj Thackeray never had to worry about consequences, nor did Congress leaders in 1984 or BJP leaders in Gujarat.  Equally importantly, the causes are never tackled and fuel more anti-State sentiments. More often than not, liberation movements – be it the Naxalite movement, the movements in the Eastern States or even the much more complicated Kashmiri movement – can find either the cause or the solution if not both to their woes in greater political and economic participation. While dealing with the anti-State symptoms of these movements of the terrorism kind is important and is something which the State has done, dealing with the cause is just as important and this is where the State has failed miserably over the years.  Dealing with the communist threat – a threat which Guha talks about explicitly here – will be better done by bringing prosperity and participation to these people and not through debacles like Salva Judum and Binayak Sen.

Guha also talks at length of various other issues such as rising inequality and the non existent efficacy of the State to do much about it, failure of State schemes in primary health and education, destruction of the environment and corruption.  These are all equally important and worrisome aspects of the India of today. However, this writer believes that it all boils down to one 500lb gorilla in the room. Indian Politics. We have a politics where the choice is between bad and worse. Competence rarely matters and the idea is to maintain the status quo. Populism has replaced courageous politics. A vibrant and healthy debate on policy issues by its representatives is the hallmark of a healthy democracy. However, in India, politicians rarely know the issues well enough to debate them and bring about policies. Instead a politics that panders to the lowest common denominator at the expense of overall development and progress is the norm. Parties like the Congress are personal fiefdoms of their leaders and have little or no democratic internal institutions so to speak of.  Parties like the BJP may not be fiefdoms but lack a vision or care much about anything more than coming to power. Corruption and  a lack of political will and direction is the hallmark of all parties. The policies of an all imposing center initiated by Mrs Indira Gandhi have resulted in this era of coalition politics where little of consequence ever gets done at the center (For that matter; with her policies of destroying democracy within her party, attempting to make the center all powerful, turning from a politics of courage towards one of populism and turning away further away from free markets at a time when the basic infrastructure had been put into place by the state and India should have espoused free markets; this writer believes Mrs Gandhi has had a negative impact on Indian politics and policy more than any other leader or event).

Till this system of politics changes, India may never reach its full potential to be an influential world power. However, the problem is that the system feeds upon itself. Individuals if they oppose the system do not go very far and manage little.  However, there are a couple of forces in action which give one more reason to hope. One is the rise of media and private institutes. Thus we have seen a spurt of media and watchdog institution activities in bringing the State to task on its failures. Failures by the State in areas such as education and public health are also being made less relevant due to functioning private institutions. The second force is that of the rise of the middle class. As India’s middle class expands and the prosperity of its people increases, we see a rise in expectations from the State. We also see more and more people with not just the desire but also the time and ability to bring about  change in India. Currently this group of courageous individuals is working as a part of the growing non profit sector. From starting with non controversial social issues, more and more people are taking up issues of policy and local self governance. It is but a matter of time when individuals like these enter mainstream politics and try to change the very system itself. Thus some of the political mismanagement is already reducing due to the media and such and a lot of it will change when these neo activists enter full fledged into governance. When that happens, the potential of India will be truly unleashed.


June 15, 2008

Bharat Nirman Intiative

Filed under: Governance — Bottom's Up @ 11:36 pm

Mr Mani Shankar Aiyar and the Congress seem to have started their election campaign as the elections approach. Take for example this recent address at University of Stanford [sic]. This speech should definitely throw some light on what the Congress’ election campaign is going to look like. Yes, they will be quick to take credit for a lot of things. Of course much would be made about equitable growth (a noble idea indeed which has so far been backed by misdirected or non existent policies). Yes, the Aam Aadmi will be talked about everywhere. And a good part of this Government promotion could be the Bharat Nirman schemes (if it is not already).

So lets take a quick look at the Bharat Nirman projects based on the numbers we have so far . A quick perusal of the website(s) for the same seems to turn up some good news, some OK to bad news and some no news. In terms of road building, only about 64% of the target for new roads has been achieved and 82% of the target for road upgrades has been achieved. However, for a Government that talks a lot about the Aam Aadmi, in terms of irrigation coverage only 56% of the target has been achieved. In terms of providing water supply to the citizenry, the target has been exceeded by about 9%. For rural housing projects, the numbers provided are broken down by state and due to time constraints, I have not had a chance to collate the data and analyze the same (getting in touch with the related department for collated numbers did not result in a response). For the number of telephone lines provided and electrification of habitations, a quick perusal seems to not turn up any data at the time of writing this post. Now if we consider anything over 85% as a good performance, we have two cases of bad performance, one of satisfactory performance, one of good performance and two cases of no news. By any standards (except the benchmark of the previous 60 years), this is not a great performance. It is not terrible, but not something that they should be promoting as a great success.

Of course we are not even talking about the quality of the work that has been completed. Maybe these roads in desolate areas would survive a little longer than election time. And maybe the water being delivered to the homes would be more than a token few hours daily.

June 13, 2008

Speculation, schmeculation

Filed under: Economics — Bottom's Up @ 9:03 pm

The NYT has an article on the role of speculation in the commodity markets. The article goes on to talk about various opinions on the same. It even mentions Mr Masters view that speculation is only on the buy side. However, it does not address the contradiction with the first principle of futures markets – that contracts expire and unlike stock and bond markets , unless you dump your holdings you end up with a barrel of oil or a sack of grain or whatever at the agreed to delivery point. And if speculators are indeed forced to dump their holdings pre-delivery (I assume they do not want to hold on to their sacks of grain), there is only so much and so long that speculation can drive up costs. Now, speculation if existing would result in hoarding of commodities. However, as Ajay Shah points out and as Martin Wolf’s graph below shows, global inventories in food grains went down not up.

That and there is this other problem with the speculation on speculation

Thus, a pension fund that wants to put no more than 2 percent of its assets in commodities will have to sell some of its stake when its value rises above that percentage limit.

So, as in other markets, these investors “are stabilizing forces because when the asset goes up in value, they sell some to put their portfolios back into balance,” he said.

As for Mr Masters assertion, when asked about it he said that hedge funds and such were indeed starting to buy commodities for real (and I guess hoard them). So far, we’ve not seen much evidence of this but if he is indeed correct, then it would be a lot easier a problem to fix than if he is not.

June 8, 2008

Hold that trigger yet, Mr. Obama

Filed under: Politics — Bottom's Up @ 9:03 pm

Its been less than a week since the Barack Obama clinched the democratic party’s nomination for the 2008 Presidential elections. And its been a little over a day since Hillary Clinton did a better job at concession than she did the first time. However, the old media, the new media and the blogospehere alike are already abuzz with whether there should be an Obama-Clinton ticket. The crux of the arguments in favor of this are two

  1. Exit polls suggest that at least 10% of Clinton supporters would not want to support Obama – be it because they do not like Obama for various reasons (Obama it too left wing, Obama is too inexperienced or Rev. Wright) or for the simple reason that they feel that Clinton has not been treated fairly (Michigan, Florida, sexism, media bias, etc) and blame the Obama camp for this.
  2. Obama cannot win over the blue collar votes that Clinton can.

Now all these are very valid reasons and have some element of truth to them. However, I believe it is a little too early for the Obama camp to make any decisions.

For the argument that Clinton supporters wont support Obama – yes, some of those wont. However, would these be close to a million that is being thrown around. Right now it is too soon after Clinton’s concession and the emotions are running high for those Clinton supporters who would say they would not support Obama because Clinton was given an unfair hand. Given a few days, these die hards will get back to their lives, sip some margaritas and start looking at their alternatives – John McCain, Bob Barr or maybe just maybe Ralph Nader. They will start comparing policy notes for Clinton and Obama and see that there is hardly any difference. Good chance that a bulk of these would return to the Obama camp.

As for the blue collars, now Obama will be differentiating himself not from someone with the same policies as him, but someone like John McCain with his free market approach to health care, his lack of inroads with the Unions and his reduced capital gains tax (a policy which this writer believes may have some merit). Also, Obama has shown more than once – though not always – that he does have a better chance with people once they have seen more of him and now he is not jumping from one primary to another and has time on his hands. Thus, he has a good chance to make inroads with the blue collars that so far have eluded him in some states. To add to this argument, there is the constituency that would never vote for him for the simple reason that he is not white. This is however a constituency that would not vote for him even if Clinton moved heaven and earth while campaigning for him. The same would be true for those who would not vote for Obama because they cannot relate to his policies, etc and Clinton being on the ticket can affect this only marginally.

Another complication that Clinton has created is that she has openly expressed her desire to be VP and the Clinton supporters are exerting pressure on Obama to accept her on the ticket. An Obama decision to get her on the ticket would make him look weak and easily pressured, something a future president must avoid at all costs.

So what should the Obama camp do at this point in time when it comes to the VP decision? I say – nothing of consequence. They should wait till emotions subside and then do some surveys/look at polls to figure out how strong the anti Obama sentiment remains in the die hard Clinton camp. In the meantime, they should come up with an aggressive strategy to win over the blue collars. This would also give the Clinton camp and Hillary in particular to hit the trail in support for Obama and aggressively campaign for him. Thus if later Obama does in fact offer the VPhood to Clinton, he wont come across as succumbing to pressure and instead rewarding her/making a sound political choice. The time will also help them evaluate how effective Clinton is in bringing her blue collar base over to Obama.

Till then there is plenty of work they can do to highlight some of McCains weaknesses and shattering his infallible foreign policy credentials delusions.

June 4, 2008


Filed under: Business — Bottom's Up @ 11:07 pm

Recently I have found myself spending a little more time in front of the boob tube – either watching some elections coverage or the ever occurring comedy in the financial world on CNBC. A hallmark of the commercials on both CNN and CNBC it seems are ads by companies that everyone likes to hate. Thus you have DOW of Bhopal and Agent Orange fame telling us how they care about the Human element (BTW, the Human element ads are beautiful ads, just that they promote DOWs BS), the oil companies talking about how wonderful they are and helping the world meet its dual challenges of energy production and protecting the environment (they never address how they help protect the environment), the big Pharma companies advertising about their bus that goes to various small towns helping people and giving free medicine and the coal guys talking about how coal is the energy of the future and clean as hell (clean burning smoking hell indeed!!). Turns out they even have a term for this – Greenwashing. And they are now indexing such corporate gems and more.

Some corporation watching guys also have a good article on the new hype in the business world about marketing everything as green (they are of course giving the market what it wants). Of course, when it comes to BS commercials, my favorite are the Budweiser commercials where the dude goes on and on about how they use they best ingredients and processes to create the beer – if it sucks so bad after all this, wonder what would have happened if the best material was not used. And of the Budweiser (or was it Miller) commercial about how they recycle more cans than they produce – how come they do not talk about the grains that go in making beer which would have been used to feed someone in the times of the food crisis.

UPDATE : Found this on NPR.

June 2, 2008

Libertarian Paternalism

Filed under: Governance — Bottom's Up @ 3:09 am

A few weeks back, the LA times carried an interesting article in what is titled ‘Libertarian Paternalism’. The article basically advocates a new form of libertarian governance where people are given choices for various aspects of their lives. However, the difference comes from the fact that the choices put forward are such that the Government can actually have some say in how things are planned and controlled through what is called ‘Choice Architecture’.

Quoting –
The libertarian aspect of the approach lies in the straightforward insistence that, in general, people should be free to do what they like. They should be permitted to opt out of arrangements they dislike, and even make a mess of their lives if they want to. The paternalistic aspect acknowledges that it is legitimate for choice architects to try to influence people’s behavior in order to make their lives longer, healthier and better.

Private and public institutions have many opportunities to provide free choice while also taking real steps to improve people’s lives.

In a nutshell, the approach is

The most important social goals are often best achieved not through mandates and bans but with gentle nudges

Now, choice architecture has indeed been a part of our everyday lives through design of various things where we make choices but this the application of the same to governance is indeed an idea I have not seen publicized much. This does raise to me two issues worth considering

1. Can such a form of governance actually work. Or would it be a form of governance where nothing ever gets done. If this can work, can it work across different types of countries – big/small, homogeneous/heterogeneous, rich/poor, etc. Also, where does benevolent advocacy through subtle means end and Big Brother jump in?

2. At a more fundamental level, is this even fair to the people where the illusion of a choice is indeed given, but the choice given is quite restricted and thus the freedoms are less and delusional?

June 1, 2008

Rising Oil Prices – Don’t You Just Love Them

Filed under: Economics — Bottom's Up @ 11:30 pm

The demand supply pricing love triangle is indeed a wonderful one.

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