Real Money Please

This is for my friends R&G. They seem to be falling for the same trap like many others while trying to assign blame for the current economic woes. For the next few days we will continue to hear more cries for handing over more powers to central planners to “regulate”.

Few things I find amazing.

1) Only in the wonderland of regulation – you find people who had the power to do something, yet they can’t/don’t do what they claim they were supposed to do as our protectors and saviours, screw up badly, then go back to their boss (taxpayers) and say, “I screwed up badly, I need more power, more money, more authority, more ….” This they get to do again and again, and their bosses fall for the trick every time.
2) People who set the fire (dot com bubble, asset bubble, etc. with loose monetary policy and fairyland credits) to the barn (banks and financial institutions) keep pouring more fuel over the still hot embers; now want to play the role of the fire service, with more money, power, people and bigger fiefdom.

I promise you that once you understand monetary policy, your interpretation of world events (at least in the economic sphere) will never be the same again. Check out the following. Very much applicable in India or any other country you live in.

• Private Coinage
• Good and Bad Credit
• The Myth that Laissez Faire …
• Is the Fed an Inflation Fighter or Creator?
• More articles (on money, inflation, credit, crisis) from Frank Shostak

Happy enlightenment!

Earlier attempts: Why International Sanctions Could be Good News for India

One of our earlier attempts at public policy.  Marc and I were
walking around Ann Arbor, Michigan in 1997 or 1998, right after the
nuke blasts in Pokhran.  Much of the opinion in India was in a whining
mood and breaking out into ‘We are the world, we are the victims’ song.
It was as if IMF, World Bank, Japan, US and the rest of the world owed
us their money.

We decided to take a different approach.  Make use of the
opportunity and get rid of politically directed government to
government or quasi-government to government aid. 

The following was published in The Economic times.  Interestingly,
lot of what we said then has come true.  India, from what I understand,
is now a donor to IMF. The immorality of this can be debated elsewhere.
Read on ….

Why International Sanctions Could be Good News for India

by Raj Cherubal and Marc Cooper

The five nuclear tests recently conducted by India have triggered a
wave of international economic sanctions. From the cutoff of aid by
Japan to the pledge of the United States to thwart disbursement of aid
by multilateral agencies such as the IMF and the World Bank, the
international community has determined that India must be punished for
the Pokhran blasts.

Conventional wisdom claims that poor nations require economic
assistance to lift themselves out of poverty and that by depriving a
poor nation of desperately needed capital that nation will suffer
enough economic harm to change its course of action and bend to the
will of the sanctioning nations. We believe that by displacing the need
for private capital inflows and delaying free market reforms, perpetual
international aid usually causes more harm than good. It is also our
contention that the elimination of handouts will, in the long term, not
hurt India, but could actually help by compelling its political leaders
to accelerate economic liberalization measures which will lead to
enhanced growth.

International aid has created a legacy of dashed hopes, arrested
economic development, and dependency. The sorry history of the IMF
highlights some of the many problems that plague the aid industry. As
recently noted by Bryan Johnson and Brett Schaefer of the Heritage
Foundation, more than 50% of the nations receiving funds have shown no
economic improvement and one third are worse off. At some point it must
be acknowledged that not only has years of economic assistance failed
to help these nations, but that it may have even harmed them. Such aid
permits the political leaders of these nations to continue promoting
failed socialists economic practices and avoid implementing vital free
market reforms that would lead to long term economic growth.
Additionally, capital flows which are directed by political means
rather than by the market are all to frequently misallocated and thus
do little to improve the plight of the nations receiving aid.

Also, international aid can be capricious. Donor nations are
primarily driven by domestic political concerns not the requirements of
the needy nations. So aid can be summarily cutoff just when it is most
needed and thus can be an unreliable source of capital. There are also
questions about sovereignty. Aid usually comes with strings attached
and desperate nations are frequently compelled to placate the donor
countries. India finds itself in this predicament. This naked blackmail
is demeaning to a proud nation such as India and also reveals something
about the motives of the donor countries.

India is a poor nation due to lack of capital. A loss of an
important source of capital, unless replaced by other means, will make
India poorer. While this appears troublesome at first glance, we
believe that it could present a positive opportunity. Faced with the
loss of politically directed capital, India must turn to the private
international market to replace this loss. In order to do so, it must
enact key economic reforms to become attractive to investors, and to
assure them that such investments will be safe from capricious
government interference. With its stable democracy, abundant natural
resources, and a huge middle class which is very much Westernized,
India should have no trouble in attracting enough private investment to
more than offset the effects of sanctions, provided that the requisite
economic reforms are implemented

In the past few years, India has taken some encouraging steps in the
direction of economic liberalization. Such steps have resulted in
strong growth of the kind that is necessary to lift the average Indian
citizen out of poverty. Yet poverty remains a persistent problem so
further reforms are required. These reforms include clear and secure
private property rights, relaxed capital controls, reduction in
government interference in the private sector, removal of restrictions
on foreign ownership of Indian companies, etc.

Many of these measures will face intense political opposition, but
this is where the imposition of international sanctions could help
India’s leaders. By claiming that such measures are necessary due to
the sanctions, the Indian government can use the international
community as a scapegoat and gain political cover. This political
dynamic is just what is required to break the stranglehold of
entrenched bureaucratic and protectionist interests and to accelerate
the pace of economic liberalization.

Instead of being viewed as a harbinger of economic troubles, the
sanctions that are being imposed on India could represent an historic
opportunity. The only path to long term economic growth is via capital
accumulation. If sanctions compel India to enact reforms required to
attract private capital and reduce its dependency on international aid,
than sanctions could be a blessing in disguise.

One Wall Down

One Wall Down

Originally uploaded by Chennai City Connect

The wall blocking the footpath near the petrol bunk is down. Was surprised to see it being pulled down, wires/pipes underneath being removed.

I was in line (long) waiting for precious diesel. By the way, Long Live Central Planning! Viva artificial shortages!

I saw a guy (one removing the pipes and wires) explaining to a passerby “the footpath is going from there to there, along this path”. (He was motioning this with his hands. I assume that’s what he was saying. And not, “the people who did this, I will drag their bodies from there to there, through my ex-wall”.)

Picture on the right. Due to my amazing camera work, you can’t see the guy, next to the bike repair guy, who is pulling the wires out. The big man in blue stripes came in between.

One problem though. The “free air” equipment is gone. It used to be on this side of the wall. I have nostalgic memories (redundant?) of waiting in my car while the air guy fills my tires. “34 in the front, 30 in the back”. While waiting for my credit card reciept. Anxiously waiting to hand over Rs 4 coins (sometimes Rs 5) to the “free air” guy when he is done with my front tire on the right. Notice that he finishes that tire last so he can make an extra buck. You also want to show your generous nature to the poor dude so you keep the booty ready. So much in life is pre-planned and we don’t even realise it. Tango at the bunk.

Will those good old days come back? Is this the beginning of the revenge of the Goddess of Wall Things ?

Sign boards (police ones) are gone. BSNL box gone near Shastri Nagar junction. Unfortunately now there is a hole instead. I saw a scooter guy stuck in that hole.

Scooter guy: 1
BSNL: 0

Good to see Corp responding so quickly.
One wall down. Many more barriers to go.

Footpath in the media

Now that we are having a Footpath Bachao Andolan in Chennai, with more and more individuals and groups trying to address this issue, let me add to the mix. Some write ups and media coverage and shameless self promotion by moi. Well anything to be able to walk endlessly and aimlessly, without getting run over or falling into a ditch, in my city.

Corp to accept complaints on footpath woes in The Times of India

300 Kilometers of sidewalk in Chennai Today

Pedestrian-friendly road model taking shape in The Hindu

Lattice Bridge Road in a blog by the same name

Cool Shastri Nagar Junction

Shastri Nagar Junction Reco Full Diagram

Originally uploaded by Chennai City Connect

The diagram on the right is part of the presentation we did for the Commissioner of Chennai Corporation and his team of engineers and officials. Click to enlarge and see other diagrams on our flickr site.

This is our version of what Shastri Nagar Junction in Adyar can look like if redesigned with care. The Commissioner and team were very engaging and encouraging.

For rest of the stretch, from this junction to MG Road Junction, we have detailed notes and suggestions on CAD survey. If interested contact us.

Our team: Dr Murthy Bondada (Fullbright scholar at IITM), Mrs Kavitha Selvaraj (CRN Associates), Ms Sangeeta and Ms Swetha (Architects and ex-Anna Univ grads) and City Connect staff.

We surveyed, photographed, took detailed notes and so on and converted it into nice Powerpoint presentations.

We used some simple principles:

• Try your best to find space for pedestrians, hawkers and others. Come up with a compromise/consensus solution. It does not have to be either/or.
• A footpath can have pedestrians and hawkers, side by side, OR pedestrians and bus stand. Not all three in one place since pedestrians always loose, they get pushed onto the road.
• Give islands to people to wait while waiting to cross the road. (We have proposed an island under the tree you see on the left at the junction.
• The footpath can wind around trees, behind bus stops, etc. It does not have to be a straight line. As far as it is walkable, sloped appropriately for entry and exit, etc.

We also have a set of international standards and do it yourself kit. The idea is that any citizen group should be able to redesign their neighbourhood footpath and related pedestrian facilities using paper, pencil and measuring take.

Our conclusion, at least as far as this stretch is concerned: There is enough space in about 80% or 90% of the stretch to accommodate pedestrians and hawkers. In fact, someone can even build proper structures for hawkers and give enough space for pedestrians to walk and shop.

My hypothesis waiting to be proven:

Hawkers occupy places that are not in use. That is, they don’t sit where people can or are walking. So you don’t clear “encroachment” to make the footpath walkable. You make the footpath walkable to clear the encroachment automatically or prevent it from happening in the first place.

Poetically put, footpath is like the river, pedestrian like a water, hawker like sand. If you place a stone in the river, you obstruct the flow of water, change its dynamics and hence sand accumulates behind the stone.

Similarly, if you make the footpath unwalkable, usually it is build unwalkable from the start by building it a foot high with no sloping at entry and exit, you signal that the space is ready for occupation and “encroachment”. In fact, the encroachers are doing us a favour by utilising precious land in the most efficient manner possible. It would be foolish and wasteful to expect them to leave it unused.

The Corporation is in the process of implementing these suggestions.

Reality of School Education in India

Wanted to assemble some of the interesting articles, data, etc. on schools in India in one place. That way I can forward this link every time I have a discussion/debate with someone on the net.

A typical conversation with an average middle class/rich person about education of poor children will bring up the following questions or stereotypes:

1. Poor parents don’t care about their children’s education
2. Poor kids have no where to go but government schools
3. Private schools for the poor? which private school will take my servant’s child? Private schools discriminate.
4. Hence they need to be regulated and coersed into taking more poor kids
5. Low budget poor school? Are you talking about those fly by night operators, who exploit poor illiterate poor parents and run with their money?
6. Those schools have very poor standards. Also, there are not enough to teach millions of poor kids
7. Private schools for the poor is a joke. It is better for poor kids to go to government schools since they at least have some infrastructure and facilities
8. We need to shut down all these private schools, the ones that are enticing the poor to send their kids. We should file a PIL. Why is the government not doing something to shut them down
9. Poor parents are gullible. They fall for the glitz and glamour of private school. They think uttering some English words is education. They are being fooled.

Start your prilgrimage of discovery, separate reality from myth, at the feet of Shri Tooley baba.  Check out

• Educating Amaretch: Private schools for poor and new frontiers for investors
• Check out first two links on this page by Tooley
• Prof James Tooley’s website at E G West Centre

Note, Tooley did similar research in China, Ghana, Delhi, Hyderabad, etc. The problems and how humans respond to incentives is universal.

Then you have to read my piece (I will find out if you skip this step)

• Choice vs inspector raj

Alternate model: Voucher, Cash Stipend, Tuition Reimbursement Schemes:

• Centre for Civil Society and research page
• More CCS research

Pratham and ASER. Good place for data on education in India

• Note the following is on rural India. ASER (Rural)

May not sound like much. But remember we are talking rural India. Imagine what the numbers are in urban India. And India is only urbanising, not ruralising!

India leads in Teacher absence. How will you solve this, especially if you are not a fan of private schools, competition, vouchers, etc. Check out the paper:

• Teacher Absence in India: A Snapshot

Deal with your myths:
I remember reading that many parents in Bihar chose not to let their kid go to school. Reason: in these schools (read local government schools) there was no one to supervise the kids. Older kids were incharge, whom the parents feared would teach little ones bad habits like smoking. Though the PROBE report is from 1999, it was very influential.

• PROBE

Some interesting articles from The Economist, the most interesting magazine out there as far as I am concerned,

• Sweden and Finland

More Things to Worry About

More things to keep you up at night. Worrying, chewing your nails, tossing and turning. If the bird flu, West Nile virus carrying crows, Ebola you pick up on your all expense covered family vacation to east Africa, Tsunami while you are relaxing on the beach, avalanche while skiing down the Alps, etc. does not get you, Asteroids, Gamma rays and Comets will.

It Came From Outer Space Ronald Bailey is fascinating reading. Puts life in perspective. We are all just specks of dust floating through space for who knows what purpose.

If you were to believe George Carlin, one of the funniest and most foul mouthed comedian ever, who died recently by the way, we exist so nature could have plastics. Now that we have invented plastic, our time is up. Time to go.
I miss George Carlin already!

Check out Will Humanity Survive the 21st Century? by Bailey too. Reconfirms one of my favorite realisations, “the universe is non-linear”.

Global Catastrophic Risks seem to be a bunch of cool, paranoid people. Not sure how they sleep at night. Knowing all the dangers lurking in the night sky. Do some of these guys walk looking at the ground, scared to look up? Just curious.

A third group would argue that since you are slightly bald and limping in the right foot, Section x.y, clause z.r protects your lifestyle.

Fascinating world we live in.

Sounds familiar – I

World over things seem same when it comes to bad public policies, …..

Food Crisis and Restrictive Trade Practices By Thompson Ayodele sounds very familiar. Same messed up agricultural policies, same bad incentives, bans, restrictions, central planners’ micro management, …..  But this time in Nigeria.

Changing the broken wheel

My latest piece Changing the broken wheel in this month’s issue of Pragati – The Indian National Interest Review
makes out the case for liberal nationalism—and that there is a new
opportunity for a politics that champions liberal values, economic
freedom and nationalism that “transcends, but does not displace other
cultures”.

Pragati starts a series of interviews with leading experts in strategic
affairs with a conversation with K Subrahmanyam, discussing geopolitics
of the 21st century, the role of nuclear weapons, India’s national
interests and military modernisation. Look out for a special podcast of
this interview (will be available on our website in the third week of
May).
It has roundups on the issue of Tibet, developments in Nepal,
engagement with Africa and a review of a novel set in East Pakistan in
1971. Also, this month’s filter section puts you abreast of some of the
key analyses coming out of policy think-tanks.

Impressive achievement for a 23 year old!

Pretty impressive achievement for a 23 year old. Especially considering past recipients.

Read more.