Demonetisation in India

My take on the current demonetisation situation:

1. In current political climate it is suicidal to accept that you have made a mistake. BJP government will therefore not admit to any failings. Nevertheless, the implementation and benefits at this stage are unlikely to exceed the costs from current point of view.

2. Let this be a lesson for all leaders who think revolutionary changes are cool/ they can change a large entrenched, rotten system overnight with few, big moves. Ideas of Arthkranti (the guys who gave this idea to Modi), while appealing on paper, have no historical precedence of actually working. Changes need to be incremental, systematic and well thought of. Disruption is not always good and change is always slow & painful.

3. Modi has seriously underestimated the will of 97% people to evade taxes and stay out of the system by any means possible. It is not easy to seek people's direct cooperation to act against their self-interest, even if the move benefits the whole society.  

4. If Modi wants to salvage the situation, he can use the chaos and confusion created by this move to push through serious reforms to tackle root problems. Tax raids, pushing digital transactions, stronger anti-tax evasion rules and marginal tax on gold to enable tracking gold transactions are steps in the right direction. Bringing in the right to service act as envisioned by Dr JP + continual shift towards e-governance will stem more corruption than demonetisation. 

5. It is time to bring in laws to prevent disruption of Parliament

6. I still support Modi as I see him as a leader who intends to change the system for good. I have not seen any alternative leadership that I could trust more. I would happily support any national leader who offers a constructive, reasonable intelligent plan and a leadership and is capable of forming a stable government at the centre.

7. The only people who make mistakes are the ones who try to do something. Nevertheless history rewards only success, as highway to hell is often paved with good intentions. Modi may do well to remember this.

Narendra Modi's Masterplan for Indian Economy

While I don't actually know what NaMo is thinking, given his actions to date I think his plan for the economy is on the following lines: 

1. Market India as an investor friendly country to get in FDI
2. Promote "Digital India" to encourage a part of economy that does not need big infrastructure spend, and use it to promote e-governance
3. Get manufacturing in India at least for domestic consumption (including defence) to create jobs and positive buzz. Defence export are less likely to be sensitive to transport costs (the penalty of poor infrastructure) and can boost Digital India
4. Start building the infrastructure required to ultimately enable India to export manufactured goods 

For the first three to be sustainable, reining in bureaucracy to be more business friendly  and judicial reforms to reduce end-to-end judgement times would be needed. We are already seeing steps to make the bureaucracy toe the line. Whether it will work or not is to be seen.

There is no concrete step on judicial reforms, which is a concern. However, as long as NaMo is in power, a compliant bureaucracy in itself will make a world of difference. If Modi goes out of power, most of the gains are likely to be lost without judicial reforms.

These changes are hard, but step 4 will be the hardest. Indian export in manufacturing at global scale is simply not possible without a highly developed infrastructure, including state of the art container ports, express ways for large container trucks, and a functioning fast freight container rail routes. Privatisation of freight rail, strategic layout of roads, and integrated deep water ports are needed to match the logistics advantage for manufacturing in China. To give you a perspective, right now 7 of the world's busiest container ports are in China, who has strategically invested in its infrastructure to brilliantly support exports. Without doing the same Make in India (for export and not just internal consumption) will never be viable, and digital India+defence exports can take you only so far. 

Even if Modi delivers factually, he needs to up his game regarding communication and rein in a lying, agenda based main stream media. It is time that media houses were held accountable for what they publish as factual news. You can't run a lie to tarnish somebody's reputation as main news for 20 hours and then publish the apology as side news for 2 minutes.

Overall, these steps, if executed reasonably, can provide India a significant boost and actually turn it into a world power. However, it is a difficult battle against entrenched socialist practices/culture of non-performance, corruption, and protectionism. Add in a biased, lying, agenda based main stream media and desperate fight for survival by the existing corrupt order, and this gets even more interesting. Of course some of out neighbours would like to see us derail as well. NaMo alone can do only so much. I just hope it is enough...

Delhi Elections: Myths and Facts

Reading umpteen interpretations of the Delhi elections amuses me. It is funny and surprising how many prominent writers base their writing on 'opinions' rather than actual facts on the ground. Yes, everybody is entitled to have an opinion. However, if that opinion does not agree with reality, it cannot be published as a fact. Fiction and dreams can make good reads, but publishing them as news is irresponsible to say the least. Democracy critically depends on media to perform fact based, real reporting. Like that is going to happen...

Anyway, let us get to myth busting and fact checking. My favorite 5:

Myth 1: All the people rejected BJP and voted for AAP/ people abandoned BJP due to conduct of the right
Fact: BJP got more number of votes than last election. However, all Congress votes got consolidated behind AAP, thanks to their ground work and freebies. People who were supporting BJP did not abandon the party, if the numbers are correct. However, BJP did a poor job of convincing the swing voter. BJP's Delhi campaign was a disaster.

Myth 2: This is a historical election and India has never seen such results, so now AAP will go national for sure
Fact: Nope, sorry to burst your bubble. Many regional parties have attained similar level of results in the past in India. All of them are still regional parties.

Myth 3: AK's anti-corruption/swaraj/charisma led to AAP victories
Fact: A solid ground work by AAP volunteers, given enough time by a clueless BJP Delhi leadership, gave AK enough intelligence to formulate the right mix of promises. He played the game well, avoided confrontational politics, chose candidates carefully, got support from the Congress vote bank, gathered all enemies of NaMo, and spoke nonsense with confidence. It worked. AK played it well politically, and his tactics were excellent. It has, however, nothing to do with AAP's founding ideology.

Myth 4: AK cannot do anything without Modi's help
Fact: Modi's help would be needed for around 30% of his promises. Nevertheless, Delhi has a budget of INR 40,000 crore and clean govenance is always within reach.

Myth 5: It is ridiculous that AAP has a deputy CM and AK does not take any portfolio
Fact: This could prove immensely useful if AK is targeting Lok Sabha. He needs someone to fill the seat of CM once he takes the national stage, so training Sisodia is good strategy. Plus, not taking any portfolio would enable him to escape any blame and keep his reputation intact. It also gives him more time to build his image and unite NaMo's enemies over the next 5 years.

If Arvind Kejriwal Wins Delhi Elections

Much has been made out of Delhi elections by a desperate opposition, who perhaps see Arvind Kejriwal (AK) as their last hope of trying to put down Narendra Modi. Modi is a juggernaut that will not be stopped as easily, no matter if BJP wins or loses Delhi.

For AK, I personally turned against him when he refused to target Congress in the Lok Sabha and virtually fought on an anti-Modi platform. Plus his simplistic but effective rabble-rousing rhetoric, vote bank politics, and confrontational style of operation seriously put me off to the extent that I named him Kanjriwal. With every day he shifts a little more left to the centre, which I think should set the alarm bells ringing for most sensible people in India; especially given that India’s economy has suffered terribly due to years of left leaning politics. Yet I am amazed, surprised, and impressed by so many of my well-educated and well-meaning friends actively supporting AK. I don’t like AK much, but I do admire his ability to command such a high level of loyalty in such a short amount of time. I am not sure how much of that will stay, but it is good while it lasts.

My assessment is that the only reason AK wants to win Delhi elections is to use it as a grand stage to launch his next Lok Sabha (LS) campaign. Now, that is not necessarily a bad aim. However, given his track record so far, I have every reason to suspect that he would go about it in the worst possible way for the country.

If AK wins the upcoming elections, I predict that he will do everything he can to provoke NaMo. If this is about LS 5 years down the line, we will see an AK obsessed with NaMo. He would take every opportunity to be more than a little confrontational, which would seriously impact his ability to get anything done in Delhi. If anything goes wrong, he will blame NaMo, but will take all the credit for anything that goes right. I seriously expect to see a lot of posturing and very little work happening if he becomes the CM. His in-your-face, in-the-media, on dharna style of working will not work. We will just hear conspiracy theories and see lot of nonsense on TV. All the money would be wasted on populist freebies, with no investment for a permanent positive change. The funny thing is that it will be another major strategic blunder by AAP that may actually seal its fate, albeit at cost of 5 years to Delhi. So far AAP has shown that they are good with tactics. However, I am yet to see a comprehensive sensible strategic decision.

However, if AK decides to listen to people outside his comrades circle, he can take another trajectory as well. He can use the next 5 years to actually do something positive for Delhi, to actually demonstrate his ability to get things done. Sure, he can do his dramas and dharnas to get footage and mileage for LS and irritate the hell out of NaMo. At the same time he needs to work to deliver actual results on the ground. To get in businesses, create actual jobs, reduce corruption, and prevent hooliganism from his own cadre.

I will be extremely happy to be proved wrong. After all even Kejriwal’s assessment of not joining hands with Congress did prove to be wrong in the last polls. You never know, sometimes even a leopard can change his spots. 

Building a Party Constitution

One of the biggest challenge on the road to meritocracy will be building a sustainable organisation/ political party to support this change. Making a rough back of the envelope calculation, I would say the party would need 1 active volunteer for every 100 people in the population, and 1 leader/active participant for every 10 volunteers. Therefore, the core group would be ideally around 1% of the target population. That may appear small, but translates to around 10K active volunteers for a population of 1 million. Based on this, the approximate number of active volunteers & leaders needed to take the movement to a national level for some countries would be as follows:

China:  17.7M volunteers, 2M leaders

India: 12.7M volunteers, 1M leaders

USA:    3.2M volunteers, 300k leaders

Brazil: 2M volunteers, 200k leaders

Russia: 1.5M volunteers, 150k leaders

Japan: 1.3M volunteers, 130k leaders

Germany: 810k volunteers, 80k leaders

France: 660k volunteers, 66k leaders

UK:       640k volunteers, 64k leaders

South Africa: 540k volunteers, 54k leaders

Canada: 360k volunteers, 36k leaders

UAE:      100k volunteers, 10k leaders

Luxembourg: 6K volunteers, 600 leaders

United States Department of Defense, the largest employer in the world, employs 3.2 million people. 

The key point that I am trying to make is that the project would involve building an extremely large organisation, and will be harder for bigger countries. To be sustainable, at the minimum it would need a cohesive ideology that appeals to its members (both emotionally and logically), a suitable organisation structure, an effective fund-raising strategy, an effective succession mechanism, a party constitution, and an effective marketing strategy. 

With this view, I hereby begin the first draft for a sample consitution for a party whose sole motto is the progress of the nation based on the principles of meritocracy. The constitution is a work in progress and I will share it with you once it is in a respectable shape. Please feel free to pitch in your suggestions in the comments below, or just email me.

What's New About What I Say About Meritocracy?

Meritocracy, by any stretch of imagination, is not a new idea as you can learn from this Wikipedia page. Then, how is my contribution different, and why the hell am I spending so much time thinking and writing about it?

Most of the ideas about meritocracy that I have come across mainly focus on the "what" (the wise should rule). There are ways of getting smart people involved in governance structures and administrative services, dating back to ancient China. However, the role of meritocracy is often limited to getting the people but not extended to promoting them or rewarding the right behaviour in the long run. The focus on "how" to enshrine meritocracy as  way of life in a complex human society is missing, and often takes a very idealistic view of human nature. I also think that it does not pay enough attention to making the system "fool-proof" i.e. building in safety mechanisms to prevent degeneration. I hope my work will contribute in the direction of implementing a meritocracy on the ground.

The following writers, in no particular order, have inspired my thoughts: 

Ayn Rand (Atlas Shrugged, The Fountainhead)
Chanakya (Arthashastra)
Niccolo Machiavelli (Discourses on the first decade of Titus Livius, The Prince)
Plato (The Republic)
Robert Greene (48 Laws of Power)
Ronald A Heifetz (Leadership Without Easy Answers)
Sri Sri Ravi Shankar (God Loves Fun, etc.)

I have also relied on the political events that I have witnessed or read about during my own life time and my own experiences. Of course I have used the mighty Google to aid me with my little project :).

Top 10 things to watch out on path to merit

A governance structure must guard against some pitfalls if it hopes to successfully implement its goals. Human nature is complex, and both simplistic and overly complex solutions can be exploited and subverted. However, with some safeguards it is possible to achieve and sustain progress. Any architect of meritocracy should keep the following in mind to ensure that meritocracy is sustainable:

1. Transparency is paramount for merit to flourish

For most public related issues, the information should be made available online and the processes need to be made transparent. Without transparency conspiracy theories take hold more easily, and people can come to believe that the meritocracy is not genuine. This can be onerous  and difficult without use of technology.

2. Equality of opportunity will sustain meritocracy

The system should be perceived as fair by people. Without equality of opportunity, meritocracy will degenerate into aristocracy, which will defeat the whole purpose of having a meritocracy.  

3. Too much inequality will destroy the social fabric

Inequality is inevitable. However, if 90% of the population is starving and underfed, then there is something seriously wrong with the governance structure. Meritocracy and a strong nation need wider participation of the population in the economy, which can be jeopardised by poverty. They can also become easy targets for communists and theological preachers, both of which can be a serious danger to the integrity of a country.

4. Too much power in too few hands will destroy the country 

Parallel institutions, sometimes even duplicate institutions can be critical to prevent abuse of power. Checks and balances, backed by a strong constitution can do wonders for a nation (even if it can be a bit chaotic).

5.  Right to accuse needs to be protected, but right to slander needs to be checked

It is important for citizens to be able to accuse and argue to forward their point of view. This would strengthen meritocracy and help weed out unwanted elements. However, slander and malicious propaganda can be used to damage reputation, cause needless fear and disgust in population, and weaken the social fabric. The law has to find a balance between encouraging criticism and preventing calumny. 

6. Rights should not come without responsibilities

In a meritocratic state, all rights (including human rights and voting rights) would need to come with a responsibility.

7. Avoid direct confrontation with religion, but side-line and weaken it

People should be free to follow their religious belief, but nation needs to take the front-seat. This would mean peaceful co-existence, complete stop on missionary activities, and a uniform civil code applicable to all. 

8. Nationalism with spirituality will hold meritocracy together

Every ideology needs a glue to hold it together. For meritocracy, nationalism can be an excellent binder. However, to prevent wars and rise of any kind of supremacists, it would need to incorporate certain degree of spirituality as well. I am open to idea, but in experience meditation and breathing techniques are a good, neutral starting point.

9. Do not expect status quo to roll-over and die

If only it was that simple. Do not underestimate the tenacity of vested interests and the dangers of a revolution. Without political power and a police/army firmly under civilian control, the changes will not be permanent. Managing media and a comprehensive communication strategy will be as critical as doing actual work.

10. Results Results Results

Theory and intention is all well, but if there are no concrete, actual results, the whole thing is meaningless and is probably being done wrong.

This is by no means an exhaustive list, but my top 10 nuggets of wisdom to the one who wants to walk the path. May the force be with you ;)

Starting on the Quest for Meritocracy

The implementation of a meritocratic state can begin with a leader supported by a group of individuals with the determination and the ability to implement a meritocratic state. The whole group would need an above average IQ, reasonable success in private life, nationalism, strong control on emotions, spirituality, ability to deal with own ego, and a reasonably good understanding of human nature. A little power hunger will not harm. It would help having experts (e.g. economics, technology, political science, marketing), leaders with practical work experience in their fields. 

While it is always ideal to have things from the "scratch", I am not an advocate of revolution as it is messy. Reform from within will be better for the society as a whole, but may be more difficult to implement due to entrenched vested interests of existing power centres. Nevertheless it is doable if done slowly but surely (boil the frog). Also, since human life is short, it is advisable to focus on the issues that are likely to have maximum impact and leave something for the next generation.

The ultimate aim would be political/legal/constitutional changes that institutionalise meritocracy. This is the only way to make meritocracy permanent. Economy and education are the primary tools to both work towards it and strengthen it.  However, before that can happen, to first gain traction the team needs to first work at the grass root level. 

This can begin with identify and solving key local problems, and then marketing the success. Consider the following two steps to identify problems to solve:

1. Zero down on a few key issues likely to lead to positive press for meritocracy (4 at most)
Meritocracy is not an established system. To start with, it needs to be in the press and recognised for its excellent results. In the beginning, it is advisable to focus on issues that are easy to market, popular, and doable. This is about picking battles big enough to matter and small enough to win, and important for at least 25% of the population. Surveys and reports, backed by information gained by working amidst people, should help in this. 

2. Analyse the identified issues and zero down on one to target
Consider team resources and expertise, ask for public opinion to identify pain points and possible improvements, analyse short-comings of current system, and prepare a plan of action.

In the beginning, it is advisable to not upset any existing power centres as far as possible. Ultimately they are going to get upset, but the later we upset them the lesser obstacles we would face in implementing our plans. 

In initial years, the aim should be to cultivate image of efficiency, integrity, and no-nonsense to demonstrate the capability of meritocracy. For this the team will have to both do the work and communicate it effectively to people. Get youth involved, use street plays, harness social media, conduct seminars/ talks, organise public/visible debates, create sponsorships for the best and the brightest. In short, get the word out there and back it up with actual, tangible results.

The ultimate aim is to enter the political sphere and change the way things are run. Therefore the core team would need to develop grass root level of cadres and work intensively amidst people: travelling, listening to their problems and aspirations, where possible helping them with their issues, vociferously highlighting identified public problems, and learning about the society. To begin with, for minimum resistance, the team should target an area that is:

• reasonably prosperous and eager to boost its economic dominance; or 
• sufficiently economically desperate and eager to turn-around its fortune. 

The areas with following characteristics could be very challenging and are best tackled at later stages:

• strong religious or caste based influence
• severely affected by militant/terrorist activity
• strong influence of Communism

The group should also create a fund-raising plan and involve industrialists in their plans to ensure adequate financing.

These key steps should help the team to lay down the foundation for a meritocracy. 

Why We Need Meritocracy

It is useless to expect an oak tree to bear apples. Similarly, it is useless to expect governance systems designed to exploit and steal to deliver justice. Even though the world has evolved significantly, it is hard to find genuinely good leaders and 90% of the population is still languishing in poverty. I therefore think that the current governance systems have overall failed miserably to alleviate misery. The key reasons  are affliction with narrow interests, short-termism, mob mentality, and the concept of rights without responsibilities. The systems are well designed to pacify power groups and keep a few in charge of many. They are designed to enslave and not liberate, even if they claim otherwise.

Therefore it is very important for the thinkers and the doers to come together and work towards building a society that is governed by three basic principles:

• always try to get one of the best people to do the job
• rights come with responsibilities
• it is not enough to theoretically endorse the above two principles: they have to be purposefully built into the very fabric of the nation

This, in essence, is meritocracy. And this, in essence, can be a extremely difficult to implement in practice. Even profit oriented corporations often find it difficult to stick to this simple mantra. For a nation it can be devilishly difficult.Nevertheless, it stands to reason that even partial implementation of these ideas should change the fortunes of a country for the better.

In future essays I will try to explore how I think a leader can implement it.

The Time for Merit

From the time human society has started organising itself, it's surroundings, intelligence, and knowledge level have had a profound effect on its governance structures. Through the ages we have seen various versions of rule of a man/ family (despotism, monarchy, aristocracy), rule of God (theocracy), rule of men (democracy, republic, socialism, communism, nationalism), rule of money (capitalism), and even no rule (anarchy). 

The first radical change  came via the advent of the printing press and the corresponding realtively wider availability of knowledge. This steadily eroded ideologies that rely on people's ignorance, and strengthened those that either empower or manipulate them. This ultimately led to the decline of theocracies and monarchies, and the rise of democracies, socialism, propoganda fuelled dictatorships, and capitalism. When combined with older forms of governance, this has produced a wide range of governance structures around the globe.

The knowledge that came with the printed word did not get rid the human race of thirst for power, control, and pseudo-superiority. In fact, it made the quest more sophisticated and destructive. As rulers adjusted to the shock of more informed and combatative subjects, they tweaked their tools of propaganda, terror and division. The same knowledge that developed  life saving drugs also came up with nuclear weapons. Promises of communist utopia often turned out to be despotic hells.

Nevertheless, democracy has slowly become the most common form of governance, and ideas of capitalism and socialism have both become deeply embedded in the system. However, the rise of the Internet, satellites and the ability of the rulers to track their "subjects" closely is changing things in a way that may see revival of totalitarian regimes, with even the current "free" democracies slowly eroding away the freedom of their citizens using propaganda, fear, monetary control, and intimidation.

Having said that, I think that these same technical advancements present an opportunity to build a strong, transparent, and meritocratic country. The happiness and prosperity of nations will be determined by their ability to command an effective economy, to generate superior scientific knowledge, and being militarily strong. This in turn would depend on having better people in top positions, which perhaps can be done more effectively in an inherent meritocratic system. I find the thought pretty appealing, and will write about it as and when I get time in form of similar articles. I hope somebody, somewhere, someday finds it useful and interesting.

AAP and Communism

Communism is a destructive, all-consuming ideology that invariably degenerates into autocracy or dictatorship. Despite its damaging and chaotic effect, it has not only managed to survive to date but there are people who are ready to live and die by it. For example, India risks losing more than 30% of its land to the red forces today. Without an effective command and conquer structure, and a unifying military ideology this would be impossible to achieve. To extend it a bit further, I would argue that what is true for communism is true for any other kind of cult, extremism, or dogma (like theocracy and fascism).

These cancerous ideas need the right kind of environment to flourish. Unfortunately, that is not hard to find or create. At minimum, you need is a perception of injustice and inequality. This can be made worse by corruption, poverty, lack of education, absence of an effective law and order machinery, and high handedness of the officials & the well connected. When people feel that everything is hopeless and there is nothing to lose, a demagogue can easily lead them down the path of a revolution that ultimately benefits nobody except the leader. The fact that such leaders are able to manipulate a large number of people is an indictment on the governance system that lets it happen in the first place.

In our recent history this pattern can be clearly seen in at least two instances.

First, in India a charismatic left leaning leader came to power in the 70s by promising to remove poverty within no time, and then went on to destroy and degrade the standard of politics & business, nearly turning India into a Communist dictatorship. Second, the mass poverty in Nepal enabled Prachanda to come to power, but it has not really made things better for the common people.

Presently, I strongly feel that this pattern is being duplicated by Arvind Kejriwal (AK) to engineer the rise of the Aam Aadmi Party (AAP), based on the promise to eliminate corruption. His tactics (freebies, simplistic solutions, revolutionary mind set, conspiracy theories, romanticization of poverty, and misinformation) would make Hugo Chavez proud. For all we know, Lokpal may be an attempt to introduce dictatorship from the backdoor. Who knows? What is remarkable about AK’s rise is that he has been able to rise despite of having no money power, no dynastic background, and no military background. His meteoric rise indicates a well-thought strategy, overwhelming frustration of Indian public with corruption, luck, and sheer determination/ will power/ charisma of AK. Whether he is successful or not, this is for sure that he is going to be an influential force in Indian politics for time to come unless he makes a major strategic blunder.

AAP and AK are a product of the broken Indian governance system that has let it people down with a dysfunctional justice system and rampant rights without responsibility/ accountability. The weaknesses of the system are now being used against it. It is a wake-up call for the law makers to wake up and make changes, or risk losing it all. Whatever their intentions, AAP has made corruption centre-stage. This should lead to at least some improvement in the quality of legislators and reduce visible corruption. That is already a big step forward. However, this was not by design. In terms of actual intent AAP has offered only simplistic, nonsensical solutions and shown a strong left bent. Its strategy is of a party who wants to win at any cost rather than of a party which is serious about reforming the system. India desperately needs economic development, judicial reforms and government services reforms to both go ahead and contain corruption. Judging by its actions to date, it doesn’t look like AAP is going to deliver it any time soon.

Thinking AK

Arvind Kejriwal (AK) has come up as an important force in Indian politics. Only time will tell whether he will indeed be a force for good. For now, we should give him an opportunity to prove himself. My take on key issues concerning AK:

Water and Electricity Subsidies: Unfortunately, subsidies have become an integral part of Indian politics. Every political party indulges in this game to win votes. AAP has just followed the game and it has paid dividends. However, it doesn’t make it a right, well-thought decision. As a commentator said, if Narendra Modi (NaMo) did this, he would first focus on getting the pipelines and setting up power plants before making such promises. As seen in Gujrat, people are willing to pay if they can get 24x7 access to basic amenities. Instead of trying to solve the problem, AAP simply cashed on it like any other opportunistic political party. This can be condoned if they change course and address the actual problem now when they are in power. We will have to wait and watch.

Corruption: In the next few months AAP should follow-on its promise of making life difficult for the corrupt, irrespective of their status. It should not appear that they are giving Congress any leeway or it will damage their reputation. Targeting big-shots will go a long way in establishing their credibility. This is their true advantage over any political party and they would do well to not let it slip away. Again, we will have to wait and watch.

Economics: Given that it was market liberalization that has given India its current level of prosperity, left leaning instincts of AAP do worry me. If they can find a balance between populism and effective economic policy, only then can they provide India with a long-term solution. Again, here NaMo’s development model and willingness to put development first gives comfort. NaMo is the only politician who seriously talks about development and economic reforms as priority one. AK may as well learn from it and display it during his term as the CM.

AK for PM: AK has made a brilliant debut and only a fool will question his skills in mobilizing people and oration. However, it may be prudent to first let him prove his mettle as the CM before saying that he will be a good PM. He is an unknown quantity. Even though I am sure he will be better than Congress or Third-Front, I am not convinced as of now that he will be better than NaMo. Talk is cheap and we can argue endlessly, but the fact of the matter is that he does not have a track record as far as administration and economics is concerned. Let him show what he can do in Delhi and only then it would make sense to consider him capable enough to handle the responsibility of the PM.

Can't Buy Me Growth

What can £100bn buy? Economic growth, if we are to believe in Mr. Osborne’s £100bn plan for UK economy. If previous quantitative easing programmes have not done that, I wonder what will make this round succeed.

To be fair, quantitative easing can help liquidity and encourage consumption, which would buy us some time. But will that be enough? I think it can do little to revive the economy if not backed by comprehensive changes in government policy. The government will have to make more changes to attract business investors, encourage entrepreneurs, foster innovation, and improve industrial productivity. If not, the government will soon find out that love is not the only thing that money cannot buy.

For the crime of success

Recently, I have been reading a lot about the rising inequality in the US, its possible effects on the upcoming presidential elections, and even fears about the same happening in the UK.

I have two points to make.

Firstly, economic equality, as much as anybody may want it, is an ephemeral chimera that at best can cause frustration in the society and at worst lead to birth of a mediocre, self-annihilating socialist state. Even communists, with all the bloodshed and programs, were unable to achieve it. Are we really thinking of achieving it in an apparently capitalistic society? Nevertheless, we can (and should) aim for absolute equality before law and possible equality of opportunity for everybody, without fear or prejudice. That means making corporate lobbying and graft difficult. It also means making employment laws more meritocratic and employment process more transparent. It does not mean demonising the successful and ramming down their throat socialist taxes for the crime of being successful.

Secondly, it will be a mistake to make the current state of US economy a matter of class-warfare or a matter of punishing corporate America in the upcoming election. In the end, it is corporate America that will create jobs. Instead, the public of Unites States needs to do extensive soul-searching to understand what is blighting a great country. Is it really just greedy corporate? Easy answers are seldom right. If the country of democracy and free-enterprise is held hostage to things like corporate lobbying, excessive litigation, disintegrating social fabric, and a new-found worry about equality, something has gone wrong horribly somewhere down the line. Discouraging industry will only make it worse.

As unions and score of people cry out for good jobs and better pays, I am almost tempted to ask them to pluck it from the bush they think it grows on. Successful people make the jobs possible, demonising them is the worst possible thing that the society can possibly do to itself.

If not Capitalism, then what?

Going through the recent articles in the FT by Ken Costa and Martin Wolf got me thinking: if not Capitalism, then what? In fact, it has been quite some time that I have been reading anti-capitalist articles all over the media and it makes me wonder: how many protestors actually understand what they are protesting against?

If they are protesting against the current system, we are in a continent that has a strong welfare system, difficult employment rules, strong unions, high taxes, generous pensions, and subsidised access to education & health. This is not capitalism, just ways to live beyond our limited means. We live in a system that has increasingly made it difficult for entrepreneurship to prosper, as pointed out by Luke Johnson. A system of greed and entitlement, be it banks, governments, unions or the people, has led us to where we are.

If anything, I would argue we need more of Capitalism if there has to be prosperity. I would argue that in today's world China is more capitalistic than Europe, and the results are for everybody to see. At the same time it is undeniable that comprehensive regulations, fostering a culture of ethics and a well-aware population are necessary for free enterprise to flourish.

Finally, I would like to say that while free-market played its part, it is absurd to blame it for everything. If the West was living beyond its means, are businesses the only ones to blame? Perhaps not, but they do make a convenient target. The truth remains that, given all things equal, Democratic Capitalism produces more prosperity and equality than systems like Communism, Socialism, Monarchy, Theocracy or any other system that the protesters may know about. The big question is still this: if not Capitalism, then what? Reform, not revolution, is the way ahead.

Hunting the Celtic Tiger

I find the letter to FT by Rhodri Morgan (Freakishly low Irish corporation tax is damaging) a bit amusing. Essentially, he seems to be complaining that Wales, Scotland and host of other places lost out to Ireland because of their inability to compete with Ireland's low corporate taxes. He moves on to a discussion about tax havens and asserts that Ireland needs taxes to fund the bail out. What if the whole Europe goes for 12.5 percent, he argues.

One thing is for sure, it is not Ireland's interest or well-being that Mr. Morgan has in mind. Irish problems have resulted from a host of factors, and low corporate tax is certainly not one of them. If anything, FT's article in the same edition (Ireland's Low Corporate Tax Rate Vital to US Business) clearly shows how low corporate taxes have created over 100,000 jobs in Ireland, creating wealth in general. Moreover, if corporate tax was the only reason for choosing Ireland, there are a host of ultra-low tax destinations within Europe that have even lower tax-rates (like Liechtenstein).

Right from German surplus to French protectionism, there is no country in Europe that can possibly adopt a "holier than thou" stance with a straight face. This is not to say that Ireland does not have its problem, but it does seem that its European partners wish to take full advantage of the problem to further their own interests rather than to help the Irish.

Immigration and Difficult Choices

With reference to Tony Barber’s article, “European countries cannot have it both ways on immigration” in FT on September 4, I feel that Europe’s predicament about immigration is self-invented and will only get worse as time goes by.

In an earlier letter to FT I had advocated for a careful immigration policy for UK. I think the same holds true for Europe. Either Europe officially promulgates that it is not open to people who are different from them or they live with the spectre of "open" immigration. Unfortunately, it is perhaps cheaper in terms of wages to get the people who are "unlike" them. Split wide open by contradictory economic and social considerations, sitting on the sharp wedge of human rights declaration with the sword of a dwindling, ageing population hanging over its head, Europe indeed finds itself in a very uncomfortable position.

What I understand is that EU countries wish to maintain a healthy proportion of young, working, tax-paying population so as it is able to finance its generous (and I dare say populist) welfare policies. Immigration is the only viable alternative if fertility rates do not improve (even that would take time and would have to be actively supplemented by immigration). The other unpalatable choice may be cutting benefits wholesale, raising minimum working age, reducing wages, cutting pensions and raising productivity per person. I don’t think that any politician who cares about his career and understands even an iota of economics will even dare to say or implement this, or, for that matter, even people will not accept it. There would be strikes, riots and the like. So, Europe is pretty much stuck with immigration whether it likes it or not. Try as it may, its demographics will change, its social structure will change, its politics will change; as is already happening. Whether the change is for better or worse will depend on the countries and their ability in successfully integrating the immigrant population.

The Hedge Fund Manager and the Economy

Even though I have no problem with hedge-fund managers paying more taxes, I am not sure what it has to do with fixing the economy. Yes, to a socialist mindset the appeal may simply be the effect of “equalizing” it a bit more, but in practical terms I would say it is nowhere near top-priority. Politics can make a show of “fixing” the problem by finding a scapegoat and then getting back to business as usual, but will this solve the problem of an economy living precariously on the edge? Is this the best that the Government can do? Will we ever see more concrete policy changes instead of populist posturing which can think of nothing but CEO pays, Wall Street bonuses and “equalizing”? I wonder.

If CEOs are Accountable, so is Tony Blair

With reference to “The hatred of Blair is over the top” by Mr. Gideon Rachman in Financial Times (August 30, 2010), I would like to remind Mr. Rachman that CEO accountability is the norm of the day. The top-leader has to always take responsibility for the mistakes that are committed under his tenure, and the same holds true for Mr. Blair. Labelling it unfair makes no sense. Further, whether UK looks back at the wasteful extravaganza of Blair years, that set the stage for the financial meltdown, with nostalgia or disgust will depend a lot on the effectiveness of spin-doctors and the not-so-remote-possibility of a collective public amnesia. Barring this, the UK may not let off the hook so easily the leader under whose tenure such disastrous policies were implemented and the country went to a meaningless war. And it is no different than holding the CEO responsible for disastrous company policies.

Who Can Overhaul China?

I find Arvind Subramanian's article "India’s weak state will not overhaul China" (August 16, 2010) pretty amusing. It seems that the writer is not happy with India's 8.5% growth as he is not able to truly explain it within the framework of his understanding.

It is true that India is not progressing as fast as China. But then who is? Nevertheless, it is the second fastest growing economy and the fastest growing democratic nation. It is one of the few countries that can make supercomputers, lauch satellites, and build nuclear reactors. It has some truly international corporations and a vibrant capital market. As far as market friendliness is concerned, I would recommend the writer to read Joseph Stiglitz's "Globalization and its Discontent" so as he gets a more balanced view about the "benefits" of textbook liberalization that destroyed economies of Russia, Czech Republic and Argentina, to name a few. India is perfectly justified in taking it nice and easy. Post 1990 it has been wise to avoid the mistakes of star IMF pupils, and the results speak for themselves.

India is a relatively young nation and has its shares of problems, including corruption, terrorism, naxalites and poverty, to name a few. However, to term a nation with the third largest standing army weak smacks of intellectual arrogance. Perhaps India will not overhaul China. But in its current form I doubt if any nation, including US or UK, is capable of overhauling China. What is that supposed to mean?