Below is the latest regurgitation of his own work from Prater Tom (Friedman) in today's NYT.
"I think keeping a constant flow of legal immigrants into our country — whether they wear blue collars or lab coats — is the key to keeping us ahead of China. Because when you mix all of these energetic, high-aspiring people with a democratic system and free markets, magic happens. If we hope to keep that magic, we need immigration reform that guarantees that we will always attract and retain, in an orderly fashion, the world’s first-round aspirational and intellectual draft choices."
One does not have to change a word to have the second sentence apply to in toto to India. Which is why the new bill to allow a few foreign universities into India has merit; someone who never leaves his cultural comfort zone but can leave his intellectual comfort zone may well opt to stay in India.
I note that many commentators in India are now saying that the two tier structure being set up in India will give new entrants a leg up and decimate our current IIT's and IIM's and others much as private airlines decimated Air India, Bharti bombed BSNL and Reliance whacked ONGC and OIL.
None of them mentions the two tier reform that has made much of the current Indian economic miracle possible - that of allowing private banks. True, they have taken a chunk of business from nationalized banks; it is also true that the nationalized banks have themselves reformed under business pressure.
And merit does not matter; so long as overall India has better education, just as it now has better telephone service and more oil and gas, you and I should not care. It is about the nation and not about fairness or certain interests. Of course there will be clever Indian businessmen who make money out of this and the IIT's may die. But that is the way we embraced in 1992.
All we can hope for is that as tax revenues grow and as people are better educated and more involved we can take back the state from our evolving plutocracy. The question of whether we become an America or a Europe is what lies before us. Either is way better than our starting point.
Saturday, March 20, 2010
Wednesday, March 3, 2010
Crying Wolf
I was feeling pretty good about the prospects for the Indian economy, and so about the prospects for my business, where we have just hauled out all the stops for a massive expansion.
Then I read an FT column from Martin Wolf on how he could see India growing at 10% per year for a very long time (http://www.ft.com/cms/s/0/750747e0-262c-11df-aff3-00144feabdc0.html).
Remember, this is the lapsed acolyte of the 'grandeur of finance capitalism school'. If he is as right about India as he was about finance capitalism it may be time to start timing an exit. The only good thing is that any Indian growth is likely to be about making and selling real things, so if Martin runs true to form, the hangover will not be as bad.
I found his recommendation that Britain give up its pretensions and hand over its security council seat to India amusing for another reason. One of my betes noir is how developing countries are always foolishly being told to get into the garment export business. As Britain lapses it can take solace from the fact that it still makes some of the best men's clothes in the world.
Then I read an FT column from Martin Wolf on how he could see India growing at 10% per year for a very long time (http://www.ft.com/cms/s/0/750747e0-262c-11df-aff3-00144feabdc0.html).
Remember, this is the lapsed acolyte of the 'grandeur of finance capitalism school'. If he is as right about India as he was about finance capitalism it may be time to start timing an exit. The only good thing is that any Indian growth is likely to be about making and selling real things, so if Martin runs true to form, the hangover will not be as bad.
I found his recommendation that Britain give up its pretensions and hand over its security council seat to India amusing for another reason. One of my betes noir is how developing countries are always foolishly being told to get into the garment export business. As Britain lapses it can take solace from the fact that it still makes some of the best men's clothes in the world.
Monday, March 1, 2010
Stealing
We live in a very nice building in Bombay that buys tanker water to make up for the shortfall in the city supply.
We are all familiar with these tankers; we see them on the roads all the time, and every one of they leaks water. Today is Holi so the building arranged for extra tankers for the festival and I had the chance to see one up close and measure the leakage which on this tanker was about 3 litre per minute.
The fellows charge 3,000 rupees for 10,000 litres, or .30 per litre.
Assume a 3 hour trip with the water and they owner just blew INR 162, or just over 5% of his take on waste which could be prevented by fitting about 162 INR of valves.
Why does the fellow tolerate a loss of very 5% of revenue when less than 1% of legitimate businesses in this country make even a 15% net margin? Because he is reselling us the water that he has in all probability stolen from the BMC, water that we have paid for.
Poor people naturally pay even more for their meager water supplies which go by hand pulled tanks, so there are fewer economies of scale.
He has in all probability paid for at least some of the diesel that he has used so he whines when the prices of fuel rise. But does he care about the water. Nah.
This is but a small and measurable example of the wretchedness wreaked upon us by our political masters, for masters they are.
The same happens in a much bigger way when the same masters give free electricity but not paid irrigation in order to pump our groundwater dry. They rob the entire country of water, and rob a great many people of their lives.
We are all familiar with these tankers; we see them on the roads all the time, and every one of they leaks water. Today is Holi so the building arranged for extra tankers for the festival and I had the chance to see one up close and measure the leakage which on this tanker was about 3 litre per minute.
The fellows charge 3,000 rupees for 10,000 litres, or .30 per litre.
Assume a 3 hour trip with the water and they owner just blew INR 162, or just over 5% of his take on waste which could be prevented by fitting about 162 INR of valves.
Why does the fellow tolerate a loss of very 5% of revenue when less than 1% of legitimate businesses in this country make even a 15% net margin? Because he is reselling us the water that he has in all probability stolen from the BMC, water that we have paid for.
Poor people naturally pay even more for their meager water supplies which go by hand pulled tanks, so there are fewer economies of scale.
He has in all probability paid for at least some of the diesel that he has used so he whines when the prices of fuel rise. But does he care about the water. Nah.
This is but a small and measurable example of the wretchedness wreaked upon us by our political masters, for masters they are.
The same happens in a much bigger way when the same masters give free electricity but not paid irrigation in order to pump our groundwater dry. They rob the entire country of water, and rob a great many people of their lives.
Two numbers to make a difference - go get them Nilekani
1) UID
2) GST
Why? Because these two numbers will make most things traceable. It will take a decade before the infrastructure is up, and the law able to track a transaction through bank accounts. But it will happen because:
1) GST will reduce the attractiveness of cash in transactions for legitimate businesses of any size. A 12% GST for a cash business could kill all profit if input credit is not taken.
2) GST will therefore dry up the source of black money in business.
3) Anyone want to guess why there is such a clamour to leave real estate out of GST? Because real estate is where politics meets the economy. Even if it is left out there will be a problem for politicians and their familiars, because where will the black money arise? Land speculation does not create money; only banking transactions do.
Add the UID and it is simple to trace money flows to companies, and to and from the accounts of their authorized signatories, directors, officers etc., and because it is already enshrined under Indian law, that of their relatives.
Straightforward software could reconcile the income and expenses of each of these individuals' tax returns to the gross money flow data in their bank accounts. If all sources and uses match the what the taxpayer has provided it is a full return. If they do not then the state has the data to compute a tax return for the missing amounts and send a bill.
Ever wondered why the same man is in charge of the system for both?
I found Mr. Nilekani's book rather a rah rah India bore, but that and his sterling track record got him this job. I hope his success at the numbers game beats his success at Infosys. Now that will be a rah rah India story.
2) GST
Why? Because these two numbers will make most things traceable. It will take a decade before the infrastructure is up, and the law able to track a transaction through bank accounts. But it will happen because:
1) GST will reduce the attractiveness of cash in transactions for legitimate businesses of any size. A 12% GST for a cash business could kill all profit if input credit is not taken.
2) GST will therefore dry up the source of black money in business.
3) Anyone want to guess why there is such a clamour to leave real estate out of GST? Because real estate is where politics meets the economy. Even if it is left out there will be a problem for politicians and their familiars, because where will the black money arise? Land speculation does not create money; only banking transactions do.
Add the UID and it is simple to trace money flows to companies, and to and from the accounts of their authorized signatories, directors, officers etc., and because it is already enshrined under Indian law, that of their relatives.
Straightforward software could reconcile the income and expenses of each of these individuals' tax returns to the gross money flow data in their bank accounts. If all sources and uses match the what the taxpayer has provided it is a full return. If they do not then the state has the data to compute a tax return for the missing amounts and send a bill.
Ever wondered why the same man is in charge of the system for both?
I found Mr. Nilekani's book rather a rah rah India bore, but that and his sterling track record got him this job. I hope his success at the numbers game beats his success at Infosys. Now that will be a rah rah India story.
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