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October 27, 2014

China May Have Higher Incomes, But India Has Freedom and Hope



(p. A11) The author remains generally optimistic about India's prospects. Economic reforms that began in 1991 have quickened growth. On average, GDP has grown nearly 7% a year since then. Thanks to a media revolution that began in the 1990s and has exploded over the past decade, a state-owned monopoly over television news has given way to upward of 450 raucous channels that make Fox News look staid by comparison. The author argues that together these two trends have sparked a kind of virtuous cycle: Better-educated and better-fed Indians are demanding more from their politicians. A take-no-prisoners media will keep them on their toes.


. . .


Educated Indians can't stop complaining about the politicians who lead them. Yet, echoing the historian Ramachandra Guha, Mr. Denyer argues that India's main success since its independence in 1947 has been political rather than economic. It has strengthened its democratic institutions and nurtured religious and cultural pluralism. Despite the fact that the average Indian earned $1,500 last year, less than a fourth of the average Chinese, it is in New Delhi, not Beijing, that you can afford to call the president (or prime minister) a blithering idiot without worrying about a midnight knock on the door.



For the full review, see:

SADANAND DHUME. "BOOKSHELF; Book Review: 'Rogue Elephant' by Simon Denyer; The average Indian earns less than the average Chinese. But it's in New Delhi--not Beijing--where you can call the prime minister an idiot without worrying about a knock on the door." The Wall Street Journal (Mon., July 28, 2014): A11.

(Note: ellipsis added.)

(Note: the online version of the review has the date July 27, 2014, and has the title "BOOKSHELF; Book Review: 'Rogue Elephant' by Simon Denyer; The average Indian earns less than the average Chinese. But it's in New Delhi--not Beijing--where you can call the prime minister an idiot without worrying about a knock on the door.")


The book being reviewed is:

Denyer, Simon. Rogue Elephant: Harnessing the Power of India's Unruly Democracy. New York: Bloomsbury Press, 2014.






November 20, 2013

Companies Do Less R&D in Countries that Steal Intellectual Property




The conclusions of Gupta and Wang, quoted below, are consistent with research done many years ago by economist Edwin Mansfield.


(p. A15) China's indigenous innovation program, launched in 2006, has alarmed the world's technology giants more than any other policy measure since the start of economic reforms in 1978. A recent report from the U.S. Chamber of Commerce even went so far as to call this program "a blueprint for technology theft on a scale the world has not seen before."


. . .


A comparison with India is illustrative. India has no equivalent to indigenous innovation rules. The government also is content to allow companies to set up R&D facilities without any rules about sharing technology with local partners or the like.

These policy differences appear to have a significant influence on corporate behavior. Consider the top 10 U.S.-based technology giants that received the most patents from the U.S. Patent and Trademark Office (USPTO) between 2006 and 2010: IBM, Microsoft, Intel, Hewlett-Packard, Micron, GE, Cisco, Texas Instruments, Broadcom and Honeywell.

Half of these companies appear not to be doing any significant R&D work in China. Between 2006 and 2010, the U.S. PTO did not award a single patent to any China-based units of five out of the 10 companies. In contrast, only one of the 10 did not receive a patent for an innovation developed in India.



For the full commentary, see:

Anil K. Gupta and Haiyan Wang. "How Beijing Is Stifling Chinese Innovation." The Wall Street Journal (Thurs., September 1, 2011): A15.

(Note: ellipsis added.)

(Note: the online version of the commentary has the title "Beijing Is Stifling Chinese Innovation.")


Mansfield's relevant paper is:

Mansfield, Edwin. "Unauthorized Use of Intellectual Property: Effects on Investment, Technology Transfer, and Innovation." In Global Dimensions of Intellectual Property Rights in Science and Technology, edited by M. E. Mogee M. B. Wallerstein, and R. A. Schoen. Washington, D.C.: National Academy Press, 1993, pp. 107-45.


Mansfield's research on this issue is discussed on pp. 1611-1612 of:

Diamond, Arthur M., Jr. "Edwin Mansfield's Contributions to the Economics of Technology." Research Policy 32, no. 9 (Oct. 2003): 1607-17.






September 1, 2013

"Inflexible Labor Laws" Lead Indian Firms "to Substitute Machines for Unskilled Labor"



(p. A19) . . . , India is failing to make full use of the estimated one million low-skilled workers who enter the job market every month.

Manufacturing requires transparent rules and reliable infrastructure. India is deficient in both. High-profile scandals over the allocation of mobile broadband spectrum, coal and land have undermined confidence in the government. If land cannot be easily acquired and coal supplies easily guaranteed, the private sector will shy away from investing in the power grid. Irregular electricity holds back investments in factories.

India's panoply of regulations, including inflexible labor laws, discourages companies from expanding. As they grow, large Indian businesses prefer to substitute machines for unskilled labor.



For the full commentary, see:

ARVIND SUBRAMANIAN. "Why India's Economy Is Stumbling." The New York Times (Sat., August 31, 2013): A19.

(Note: ellipsis added.)

(Note: the online version of the commentary has the date August 30, 2013.)






August 25, 2013

Dubai Has Strong Ruling Clan, But Weak Institutions



DubaiBK2013-08-12.jpg
















Source of book image: http://www.christopherdavidson.net/sitebuilder/images/DVOS_cover-210x300.jpg



(p. 4) For Mr. Davidson, Dubai's greatest weakness lies in its autocratic governing system. Politics in the emirate, as in most of the Middle East, pivots not on institutions but on clans -- a ruling dynasty and its favorites who own and run Dubai in opaque fashion.

True enough, but most of the Middle East is authoritarian, yet Dubai's enlightened despotism and welcoming social environment have stood out for fostering economic advance. Like China, albeit on a tiny scale, Dubai is engaged in an experiment of economic liberalization without political democracy.

Mr. Davidson further contends that unstable neighbors threaten Dubai's success, but here he may have matters reversed. When Egypt and Iran stifle their entrepreneurs, many of them find a wide berth in Dubai. When Saudi Arabia imposes cultural restrictions on its population, Dubai offers a place to drink and let loose. When India and Pakistan have trouble creating jobs for their large populations, Dubai absorbs labor migrants. When Iraq or Lebanon descends into war, Dubai profits from rebuilding them.

In short, until a vast arc of countries from East Africa to Southeast Asia changes substantially, Dubai will remain poised to benefit by providing a relatively open, secure, low-tax, business-friendly alternative.



For the full review, see:

STEPHEN KOTKIN. "OFF THE SHELF; The Glittering Emirate, Revisited." The New York Times, SundayBusiness Section (Sun., December 7, 2008): 4.

(Note: the online version of the review has the date December 6, 2008, and the title "OFF THE SHELF; Dubai, the Glittering Emirate, Revisited.")


The book under review, is:

Davidson, Christopher M. Dubai: The Vulnerability of Success. New York: Columbia University Press, 2008.






June 1, 2013

Cities Provide Children "Options for Their Future"



(p. 85) As Suketu Mehta, author of Maximum City (about Mumbai), says, "Why would anyone leave a brick house in the village with its two mango trees and its view of small hills in the East to come here?" Then he answers: "So that someday the eldest son can buy two rooms in Mira Road, at the northern edges of the city. And the younger one can move beyond that, to New Jersey. Discomfort is an investment."

Then Mehta continues: "For the young person in an Indian village, the call of Mumbai isn't just about money. It's also about freedom." Stewart Brand recounts this summation of the magnetic pull of cities by activist Kavita Ramdas: "In the village, all there is for a woman is to obey her husband and relatives, pound millet, and sing. If she moves to town, she can get a job, start a business, and get education for her children." The Bedouin of Arabia were once seemingly the freest people on Earth, roaming the great Empty Quarter at will, under a tent of stars and no one's thumb. But they are rapidly quitting their nomadic life and (p. 86) hustling into drab, concrete-block apartments in exploding Gulf-state ghettos. As reported by Donovan Webster in National Geographic, they stable their camels and goats in their ancestral village, because the bounty and attraction of the herder's life still remain for them. The Bedouin are lured, not pushed, to the city because, in their own words: "We can always go into the desert to taste the old life. But this [new] life is better than the old way. Before there was no medical care, no schools for our children." An eighty-year-old Bedouin chief sums it up better than I could: "The children will have more options for their future."



Source:

Kelly, Kevin. What Technology Wants. New York: Viking Adult, 2010.

(Note: italics, an bracketed "new," in original.)






February 16, 2013

IKEA Says Government Bureaucracy Slows Job Creation



OhlssonMikaelCEOofIKEA2013-02-03.jpg "The economy 'will remain challenging for a long time,' says IKEA Chief Executive Mikael Ohlsson." Source of caption and photo: online version of the WSJ article quoted and cited below.


(p. B3) MALMO, Sweden--IKEA is poised to embark on a global spending spree, but its departing chief executive says red tape is slowing how fast the home-furnishings retailer can open its pocket book.

With the company set to report record sales on Wednesday, CEO Mikael Ohlsson said the amount of time it takes to open a store has roughly doubled in recent years.

"What some years ago took two to three years, now takes four to six years. And we also see that there's a lot of hidden obstacles in different markets and also within the [European Union] that's holding us back," he said in an interview recently at an IKEA store on Sweden's western coast.


. . .


IKEA plans to invest €2 billion in stores, factories and renewable energy this year. But the company fell €1 billion short of its goal of investing €3 billion in new projects last year, largely because of bureaucratic obstacles, he said. For 10 years IKEA has tried unsuccessfully to relocate a store in France, for example. The company also is challenging German policy dictating what can be sold and where, saying the rules are out of sync with EU legislation.

"It's a pity, because it can help create jobs and investments at a time when unemployment is high in many countries," Mr. Ohlsson said. A new IKEA store creates construction and store jobs for about 1,000 workers, he said.


. . .


The company's highest-profile headaches have come in India, an untapped market where IKEA wants to open a first store in at least five years and roll out an additional three soon thereafter.



For the full story, see:

ANNA MOLIN. "IKEA Chief Takes Aim at Red Tape." The Wall Street Journal (Weds., January 23, 2013): B3.

(Note: ellipses added.)

(Note: the online version of the story has the date January 22, 2013.)






November 28, 2012

Rajan Hired to Open India to Entrepreneurship



RajanRaghuramIndiaSchoolOfBusiness2012-11-20.jpg "Raghuram G. Rajan criticized Indian policy makers during a speech in April at the Indian School of Business. In August, the Indian government offered him a job." Source of caption and photo: online version of the NYT article quoted and cited below.


(p. B3) NEW DELHI -- In April, the economist Raghuram G. Rajan gave a speech to a group of graduating Indian students in which he criticized the country's policy makers for "repeating failed experiment after failed experiment," rather than learning from the experiences of other countries. A week later, he assailed the government again, this time in a speech attended by Prime Minister Manmohan Singh.

But instead of drawing a rebuke from India's often thin-skinned leaders, he got a job offer. In August, Mr. Singh, who has frequently sought Mr. Rajan's advice, called and asked him to take a leave from his job as a professor at the University of Chicago to return to India, where he was born, to help revive the country's flagging economy. Within weeks, he was at work as the chief economic adviser in the Finance Ministry.

Analysts say the appointment of an outspoken academic like Mr. Rajan, along with the recent push by New Delhi to reduce energy subsidies and open up retailing, insurance and aviation to foreign investment, signal that India's policy makers appear to be serious about tackling the nation's economic problems.


. . .


Mr. Rajan said he would like to focus his efforts on three big themes: liberalizing India's financial system; making it easier to do business, particularly for entrepreneurs and manufacturers; and fixing India's dysfunctional food distribution system, which wastes a lot of food even as many of the country's poor are malnourished.



For the full story, see:

VIKAS BAJA. "As Its Economy Sags, India Asks a Critic to Come Home and Help Out." The New York Times (Sat., October 6, 2012): B3.

(Note: ellipsis added.)

(Note: the online version of the article was dated October 5, 2012.)






May 26, 2012

Middle Class "Doesn't Want to Fight Wars. It Has Other Things to Do."



IndiaTradeShowInPakistanCloseShot2012-05-25.jpg "A booth for Motherson International, an Indian company that produces clothes and costume jewelry, at the Indian trade show in Lahore, Pakistan, in February." Source of caption and photo: online version of the NYT article quoted and cited below.




(p. 6) LAHORE, Pakistan -- On the day the Indian trade delegation came across the border, Pakistan was having another political crisis. The prime minister was embroiled in a showdown with the country's Supreme Court. Early elections were rumored. And Islamists had just staged a rally in Karachi to protest "foreign intervention" on Pakistani soil.

Not, perhaps, the perfect moment to hammer out closer trade ties.

Yet Rajiv Kumar, a leader of the Indian delegation, was pleased. It was mid-February, and his business group was staging the first Indian trade show ever held in Pakistan. Tens of thousands of visitors would attend during three days. And Indian and Pakistani business leaders, as well as both countries' commerce ministers, swapped cards, sipped tea and feasted at lavish banquets.

"Look at this!" Mr. Kumar exclaimed as his car rolled up to the convention center here in Lahore, where crowds were thronging for the trade show. "My God! Quite good, I'd say."


. . .


(p. 12) Ashok Malik, a journalist who was one of the writers of an academic analysis of India's private sector diplomacy, said the influence of Indian business is evident beyond the changed relationship with the United States.


. . .


Mr. Malik noted that the rise of India's middle class, as well as the growing domestic influence of the private sector, has created a quiet constituency for easing hostilities with Pakistan. "The growth phenomenon has made the Indian middle class less tolerant of adventurism, lawlessness and war," he said. "It is still worried about terrorism. But it doesn't want to fight wars. It has other things to do."



For the full story, see:

JIM YARDLEY. "INDIA'S WAY; Propelling a Nation Onto the World Stage; Industry Opens Doors to India's Neighbors and Rivals, Including Pakistan." The New York Times, First Section (Sun., April 1, 2012): 6 & 12.

(Note: ellipses added.)

(Note: the online version of the story is dated March 31, 2012 and has the title "INDIA'S WAY; Industry in India Helps Open a Door to the World.")



IndiaTradeShowInPakistanWideShot2012-05-25.jpg "India held its first trade show in Pakistan in Lahore." Source of caption and photo: online version of the NYT article quoted and cited above.







March 9, 2012

Web Sites Expose Petty Corruption



RamanathanSwatiBribeSite2012-03-07.jpg "Swati Ramanathan, a founder of the site I Paid a Bribe, in India." Source of caption and photo: online version of the NYT article quoted and cited below.



(p. B1) The cost of claiming a legitimate income tax refund in Hyderabad, India? 10,000 rupees.

The going rate to get a child who has already passed the entrance requirements into high school in Nairobi, Kenya? 20,000 shillings.

The expense of obtaining a driver's license after having passed the test in Karachi, Pakistan? 3,000 rupees.

Such is the price of what Swati Ramanathan calls "retail corruption," the sort of nickel-and-dime bribery, as opposed to large-scale graft, that infects everyday life in so many parts of the world.

Ms. Ramanathan and her husband, Ramesh, along with Sridar Iyengar, set out to change all that in August 2010 when they started ipaidabribe.com, a site that collects anonymous reports of bribes paid, bribes requested but not paid and requests that were expected but not forthcoming.

About 80 percent of the more than 400,000 reports to the site tell stories like the ones above of officials and bureaucrats seeking illicit payments to provide routine services or process paperwork and forms.

"I was asked to pay a bribe to get a birth certificate for my daughter," someone in Bangalore, India, wrote in to the Web site on Feb. 29, recording payment of a 120-rupee bribe in Bangalore. "The guy in charge called it 'fees' " -- except there are no fees charged for birth certificates, Ms. Ramanathan said.

Now, similar sites are spreading like kudzu around the globe, vexing petty bureaucrats the world over. Ms. Ramanathan said nongovernmental organizations and government agencies from at least 17 countries had contacted Janaagraha, the nonprofit organization in Bangalore that operates I Paid a Bribe, to ask about obtaining the source code and setting up a site of their own.



For the full story, see:

STEPHANIE STROM. "Web Sites Shine Light on Petty Bribery Worldwide." The New York Times (Weds., March 7, 2012): B1 & B4.

(Note: the online version of the article has the date March 6, 2012.)



RaguiAntonyBribeSite2012-03-07.jpg











"Antony Ragui started an I Paid a Bribe site in Kenya." Source of caption and photo: online version of the NYT article quoted and cited above.








January 13, 2012

Indian Middle Class: "The State Is Preventing Me from Doing What I Want to Do"



NagParthoIndianEntrepreneur2011-11-14.jpg"Partho Nag, a childhood friend of Shubhrangshu Roy's who lives in the same New Delhi suburb. Mr. Nag, who runs an IT service company out of his home, joined Mr. Roy and other friends as they volunteered at the Hazare protests. "We've been told since our childhoods, 'Politics is bad, don't get into politics,'" Mr. Nag said. "But the point is that somebody has to clean it up. We can't just scold people."" Source of caption and photo: online version of the NYT article quoted and cited below.


(p. 1) DWARKA, India -- Shubhrangshu Barman Roy and his childhood friends are among the winners in India's economic rise. They have earned graduate degrees, started small companies and settled into India's expanding middle class. They sometimes take vacations together and meet for dinners or parties, maybe to celebrate a new baby or a new business deal.

Yet in August, Mr. Roy and his friends donned white Gandhi caps, boarded a Metro train in this fast-growing suburb of the Indian capital and rode into New Delhi like a band of revolutionaries to join the large anticorruption demonstrations led by the rural activist Anna Hazare. They waved Indian flags, distributed water to the crowds and vented their outrage at India's political status quo.

"I could feel that people really wanted change," Mr. Roy, 36, recalled proudly.

It may seem unlikely that middle-class Indians would crave change. They mostly live in rapidly growing cities and can afford cars, appliances and other conveniences that remain beyond the reach of most Indians. Theirs is the fastest growing demographic group in the country, and their buying power is expected to triple in the next 15 years, making India one of the most important consumer markets in the world.

But buying power is not political power, at least not yet in India. The wealthier India has become, the more politically disillusioned many of the beneficiaries have grown -- an Indian paradox. The middle class has vast economic clout yet often remains politically marginalized in a huge democracy where the rural masses still dominate the outcome of elections and the tycoon class has the ear of politicians.


. . .


(p. 10) "This middle class is less about 'what the state can do for me' than 'the state is preventing me from doing what I want to do,' " said Devesh Kapur, director of the Center for the Advanced Study of India at the University of Pennsylvania.

The Hazare movement rattled India's political establishment because it offered a glimpse of what could happen if the middle class was mobilized across the country. Professionals and college students provided the organizational spine, and money, that brought hundreds of thousands of people of all backgrounds onto the streets in what many described as a political awakening.


. . .


Mr. Roy and his friends, including Mr. Nag, had grown up in New Delhi in the same government housing development. They were all the sons of government bureaucrats who would later offer similar advice: Get a government job.

"He always insisted," Mr. Nag recalled of his father's prodding. "But we had an idea that a government job was too lousy."

They were teenagers in the early 1990s when Indian leaders embarked on the reforms that began dismantling the stifling licensing regulations that had choked the economy. Private enterprise, large and small, would steadily emerge as the engine of Indian growth and the delivery vehicle of growing aspirations. Mr. Nag would open a small IT service firm. Two other friends would start a textile trading company. Mr. Roy would earn graduate degrees and start a consulting firm.


. . .


On a recent afternoon, Mr. Roy pointed to a crude asphalt scar in the road where workers had installed an underground water connection. The scar extended along the road toward Mr. Roy's house, only to abruptly turn left in the direction of another building.

"You see this?" he asked, angrily. "This is a connection that comes here, but it is illegal."

For Mr. Roy, the scar in the street marks the corruption and collusion and the failure of the state to deliver on its end of India's social contract. His family is supposed to get water from a legal connection for $4 a month. Except that water is unusable. For years, his father had paid a fee to fill large jugs from a private water tanker -- until his father slipped while carrying one of them.

Mr. Roy then spent about $1,000 to build an underground water storage tank beside his home. Now, every week a tanker delivers a $30 shipment of water into the tank, while Mr. Roy also buys bottled water for drinking, bringing his monthly bill to about $160. Mr. Roy suspects that local officials, rather than correcting the situation, allow it to continue in exchange for kickbacks from the owners of the private water tankers. In the end, though, he pays.

These tales of petty graft proliferate across India, but especially in cities, analysts say, for the simple reason that cities now have more money.

McKinsey Global Institute, a consulting group, has estimated that India's middle class could grow to nearly 600 million people by 2030. Today, nearly three-quarters of India's gross domestic product comes from cities, where less than a third of India's population lives, an imbalance that correlates with the divide between middle-class economic and political power.

"For politicians, the city has primarily become a site of extraction, and the countryside is predominantly a site of legitimacy and power," Ashutosh Varshney, an India specialist at Brown University, wrote recently. "The countryside is where the vote is; the city is where the money is. Villages do have corruption, but the scale of corruption is vastly greater in cities."



For the full story, see:

JIM YARDLEY. "INDIA'S WAY; Protests Help Awaken a Goliath in India." The New York Times, First Section (Sun., October 30, 2011): 1 & 10.

(Note: ellipses added.)

(Note: the online version of the article is dated October 29, 2011 and has the title "INDIA'S WAY; Protests Awaken a Goliath in India.")





November 11, 2011

Unable to Compete with Cotton "European Textile Workers Bayed for Protection"



(p. 390) Cotton is such a commonplace material now that we forget that it was once extremely precious - more valuable than silk. But then in the seventeenth century, the East India Company began importing calicoes from India (from the city of Calicut, from which they take their name), and suddenly cotton became affordable. Calico was then essentially a collective term for chintzes, muslins, percales and other colourful fabrics, which caused unimaginable delight among western consumers because they were light and washable and the colours didn't run. Although some cotton was grown in Egypt, India dominated the cotton trade, as we are reminded by the endless numbers of words that came into English by way of that trade: khaki, dungarees, gingham, muslin, pyjamas, shawl, seersucker, and so on.

The sudden surge of Indian cotton pleased consumers, but not (p. 391) manufacturers. Unable to compete with this wonder fabric, European textile workers bayed for protection almost everywhere, and almost everywhere they received it. The importation of finished cotton fabrics was banned in much of Europe throughout the eighteenth century.



Source:

Bryson, Bill. At Home: A Short History of Private Life. New York: Doubleday, 2010.

(Note: italics in original.)





June 7, 2011

Government Administrators Steal Money, Food and Benefits from Poor in India



(p. A8) NEW DELHI -- India spends more on programs for the poor than most developing countries, but it has failed to eradicate poverty because of widespread corruption and faulty government administration, the World Bank said Wednesday.


. . .


One of the primary problems, the World Bank said, was "leakages" -- an often-used term in development circles that refers to government administrators and middle men stealing money, food and benefits. The bank said that 59 percent of the grain allotted for public distribution to the poor does not reach those households.



For the full story, see:

"India's Anti-Poverty Programs Are Big but Troubled." The New York Times (Thurs., May 19, 2011): A8.

(Note: ellipsis added.)

(Note: the online version of the story is dated May 18, 2011, has the title "India's Anti-Poverty Programs Are Big but Troubled," is attributed to Heather Timmons, and is considerably more detailed than the published version.)





May 25, 2011

Corruption, Inefficiency, Inflation and Bad Policies Lead to Decline in Foreign Investment in India



ForeignDirectInvestmentGraph2011-05-19.jpg Source of graph: online version of the NYT article quoted and cited below.



(p. B1) While inefficiency and bureaucracy are nothing new in India, analysts and executives say foreign investors have lately been spooked by a highly publicized government corruption scandal over the awarding of wireless communications licenses. Another reason for thinking twice is a corporate tax battle between Indian officials and the British company Vodafone now before India's Supreme Court.

Meanwhile, the inflation rate -- 8.2 percent and rising -- seems beyond the control of India's central bank and has done nothing to reassure foreign investors.

And multinationals initially lured by India's growth narrative may find that the realities of the Indian marketplace tell a more vexing story. Some companies, including the insurer MetLife and the retailing giant Wal-Mart, for example, are eager to invest and expand here but have been waiting years for policy makers to let them.



For the full story, see:

VIKAS BAJAJ. "Foreign Investment Ebbs in India." The New York Times (Fri., February 25, 2011): B1 & B6.

(Note: the online version of the article is dated February 24, 2011.)





May 18, 2011

"For the First 40 Years of Indian Independence, Entrepreneurs . . . Were Looked Down Upon"



(p. 8) Saurabh Srivastava, co-founder of the National Association of Software and Service Companies in India, explained that for the first 40 years of Indian independence, entrepreneurs here were looked down upon. India had lost confidence in its ability to compete, so it opted for protectionism. But when the '90s rolled around, and India's government was almost bankrupt, India's technology industry was able to get the government to open up the economy, in part by citing the example of America and Silicon Valley. India has flourished ever since.

"America," said Srivastava, "was the one who said to us: 'You have to go for meritocracy. You don't have to produce everything yourselves. Go for free trade and open markets.' This has been the American national anthem, and we pushed our government to tune in to it. And just when they're beginning to learn how to hum it, you're changing the anthem. ... Our industry was the one pushing our government to open our markets for American imports, 100 percent foreign ownership of companies and tough copyright laws when it wasn't fashionable."

If America turns away from these values, he added, the socialist/protectionists among India's bureaucrats will use it to slow down any further opening of the Indian markets to U.S. exporters.



For the full commentary, see:

THOMAS L. FRIEDMAN. "It's Morning in India." The New York Times, Week in Review Section (Sun., October 31, 2010): 8.

(Note: the online version of the story is dated October 30, 2010.)






April 19, 2011

To Do Business in India, Bureaucrats Still Must Be Bribed



TataRatan2011-04-18.jpg "In the twilight of his career heading Tata Group, Ratan Tata says he was thwarted in his homeland by arbitrary regulatory decisions and corruption."


(p. B1) NEW DELHI--Ratan Tata has transformed Tata Group into the world's best-known Indian company, the owner of Jaguar cars, the Pierre Hotel in New York and Tetley tea.

But in the twilight of his career as chairman of the $67.4 billion conglomerate, Mr. Tata, 73 years old, is frustrated that he hasn't been able to expand more in his native India. He says bureaucratic delays, arbitrary regulatory decisions and widespread corruption have thwarted his domestic ambitions in such sectors as steel, power, aviation and telecommunications.


. . .


. . . 20 years after . . . reforms began, New Delhi still exerts tight control over large swaths of the economy. All too often, Mr. Tata and other critics say, regulators are picking winners and losers through their decisions, either by delaying certain projects and green-lighting others or by freeing up natural resources for some companies at the expense of others.

"Economically it is a much more open environment. It's one that fosters a fair amount of free enterprise until you need approvals or some kind of sanction to get something done," Mr. Tata said during an interview at the Tata-owned Taj Mahal hotel in New Delhi. "Then you still have problems, and maybe more acute then you did before."


. . .


As chairman, one of Mr. Tata's first goals was to get Tata back into the airline business. The company's former airline had been nationalized to form Air India. He planned a venture with Singapore Airlines. But, he says, aviation ministry bureaucrats held up his application for years despite his constant prodding. An aviation ministry spokeswoman didn't respond to a request for comment.

In 1998, after seven years of government inaction, Mr. Tata withdrew the application. "We went through three governments, three prime ministers, and each time there was a particular individual that thwarted our efforts," he said in a TV interview last fall. He recalled a conversation with a fellow industrialist several years ago. "He said, 'I don't understand. You people are very stupid.... Why don't you just pay?'"

Paying bribes isn't his style, Mr. Tata says. "Maybe I'm stupid or old fashioned, but I really want to go to bed at night saying I haven't succumbed to this."



For the full story, see:

AMOL SHARMA. "India's Tata Finds Home Hostile; Chair of Nation's Best-Known Company Says Bureaucracy Slows Domestic Growth." The Wall Street Journal (Weds., April 13, 2011): B1-B2.

(Note: ellipses added, except for the one after the word "stupid" which appears in the original.)

(Note: in the online version of the article, the final paragraph quoted above reads: "Mr. Tata says paying bribes isn't his style. "Maybe I'm stupid or old fashioned, but I really want to go to bed at night saying I haven't succumbed to this," he says."





July 14, 2010

India Government Spends Billions to Subsidize Fuel Use



IndiaGasDrumOnBike2010-06-29.jpg"An employee filled an oil drum in New Delhi on Friday. India's government has decided to reduce popular fuel subsidies." Source of caption and photo: online version of the NYT article quoted and cited below.


I smiled when I saw the ironic photo that appears above. It seems to imply that with government subsidies, even bicycle riders will buy motor fuel.


(p. B3) MUMBAI, India -- The Indian government on Friday reduced popular fuel subsidies, a long-delayed change that will help policy makers reduce a big budget deficit but one that will also worsen already high inflation.

Policy makers said the government would stop subsidizing gasoline. Diesel, kerosene and natural gas would continue to receive support at a slightly lower level. India spent about $5.6 billion to subsidize fuel in the last fiscal year, which ended in March. State-owned energy companies added the equivalent of an additional $4.4 billion by selling fuel below its cost.

India and other big countries committed to eliminating energy subsidies at a Group of 20 meeting last year, but policy makers here had repeatedly put off the politically difficult change.



For the full story, see:

VIKAS BAJAJ. "India Cuts Subsidies for Fuels." The New York Times (Sat., June 26, 2010): B3.

(Note: the online version of the article is dated June 25, 2010.)





June 20, 2010

Farmers in India Like Wal-Mart



WalMartIndiaFarmer2010-05-20.JPG"Mohammad Haneef, [above], a farmer in Haider Nagar, said that Wal-Mart is better than his previous clients. "You have to establish trust," he said in Hindi. "Wal-Mart has been paying on time. We would just like them to buy more."" Source of caption and photo: online version of the NYT article quoted and cited below. (Note: bracketed word added.)


(p. B1) HAIDER NAGAR, India -- At first glance, the vegetable patches in this north Indian village look no different from the many small, spare farms that dot the country.

But up close, visitors can see some curious experiments: insect traps made with reusable plastic bags; bamboo poles helping bitter gourd grow bigger and straighter; and seedlings germinating from plastic trays under a fine net.

These are low-tech innovations, to be sure. But they are crucial to the goals of the benefactor -- Wal-Mart -- that supplied them.

Two years after Wal-Mart came to India, it is trying to do to agriculture here what it has done to industries around the world: change business models by using its hyper-efficient practices to improve productivity and speed the flow of goods.


. . .


(p. B3) Here in Haider Nagar, in the bread basket state of Punjab, farmers who supply vegetables to Wal-Mart say they like working with the company. It typically pays them 5 to 7 percent more than they earn from local wholesale markets, they said. And they do not have to pay to transport produce because Wal-Mart picks it up from their fields.

Abdul Majid, who sells cucumbers to Wal-Mart, says his yields have risen about 25 percent since he started following farming advice about when to apply fertilizers and which kinds -- more zinc, less potash -- from the company and its partner, Bayer CropScience.

Mohammad Haneef, a farmer in a nearby village, said he had sold to two other companies before Wal-Mart, but one shut down and the other cheated him and paid him late. Wal-Mart is much better, he said, but its buyers are picky, taking the best vegetables and leaving him with inferior ones that he still must truck to wholesale markets.

"You have to establish trust," he said in Hindi. "Wal-Mart has been paying on time. We would just like them to buy more."



For the full story, see:

VIKAS BAJAJ. "Cultivating a Market in India; Wal-Mart Nurtures Suppliers as It Lays Plans for Expansion." The New York Times (Tues., April 13, 2010): B1 & B3.

(Note: ellipsis added.)

(Note: the online version of the review is dated April 12, 2010 and has the title "In India, Wal-Mart Goes to the Farm.")





October 15, 2009

How Government Universal Health Care Works in India



JahanAmirIndianWeaver2009-09-26.jpg "Amir Jahan found her health insurance wouldn't pay for all of her $200 stomach surgery; she continues to work with an untreated tumor." Source of caption: print version of the WSJ article quoted and cited below. Source of photo: online version of the WSJ article quoted and cited below.


(p. A14) PANIPAT, India -- Amir Jahan can spin thick, white thread into magnificent cloth, but the 46-year-old weaver has been unable to unravel her health plan to pay for stomach surgery.

Under a health-insurance program introduced a few years ago, the Indian government has provided health-insurance coverage for the country's hand-loom weavers, a group of 6.5 million workers, 60% of them female, who are mostly illiterate and invariably poor. Yet holding an insurance card hasn't helped Ms. Jahan, who says the coverage only pays for minor ailments and not for major problems, such as the removal of a stomach tumor.

"The health care is all a sham," Ms. Jahan says angrily. "I was refused treatment on grounds of huge expense. I won't ever go to be humiliated again."

Ms. Jahan's health-care issues represent the problems that come with trying to provide insurance to India's poor. Access to quality care remains a distant dream for many in this country of 1.1 billion.

Last year, the Indian government launched the National Health Insurance Program on (sic) promised health coverage of $700 per person for families earning less than $100 a year.

Holders of health cards have to register in their home states to access benefits, thereby precluding a large population of migrant laborers. Those who can get past the complex state-identification and qualification process often can't cope with hospital bureaucracies.



For the full story, see:

VIBHUTI AGARWAL. "Indian Weavers Shun Health Plan." The Wall Street Journal (Sat., Sept., 2009): A14.





August 31, 2009

Creative Destruction Is Scary, but "Inevitable and Probably Even Desirable"



(p. 5) Development is a complicated phenomenon. Decades before he popularized the phrase "creative destruction," Joseph Schumpeter, the Austrian School economist, was honing his ideas about innovation and disruptive change in "The Theory of Economic Development."

Disruptive change, creative destruction, is what I'm living every day. In the big cities, India's economic development can seem so simple. Business thrives, the middle and upper classes are celebrating, and the country is moving inexorably ahead.

But around here, where a way of life is disappearing and no one knows what will take its place, where someone seems to lose for everyone who wins, it's a lot harder to know what to make of India's economic boom. From my vantage point, development seems both wonderful and frightening; it is both inspiring and, at times, dispiriting.

People sometimes ask me how I feel about India's economic development. I tell them the truth. I say I don't know. I say I feel ambivalent about the passing of a world I knew as a child, a transition that I know is inevitable and probably even desirable. But I haven't reconciled myself to it yet.



For the full commentary, see:

AKASH KAPUR. "An Indian Says Farewell to Poverty, With Jitters." The New York Times, Week in Review Section (Sun., August 8, 2009): 5.






June 17, 2009

Cooking with Cow Shit Adds to Global Warming (and Would Be Ended by Economic Growth)



SootFromCookingIndia.jpg"Cooking in Kohlua, India. Soot from tens of thousands of villages in developing countries is responsible for 18 percent of the planet's warming, studies say." Source of photo and caption: online version of the NYT article quoted and cited below.


Economic growth is sometimes seen as increasing pollution. But the article quoted below shows that primitive cooking methods, which occur in the absence of economic growth, cause one of the most damaging forms of pollution: black carbon.


(p. A1) KOHLUA, India -- "It's hard to believe that this is what's melting the glaciers," said Dr. Veerabhadran Ramanathan, one of the world's leading climate scientists, as he weaved through a warren of mud brick huts, each containing a mud cookstove pouring soot into the atmosphere.

As women in ragged saris of a thousand hues bake bread and stew lentils in the early evening over fires fueled by twigs and dung, children cough from the dense smoke that fills their homes. Black grime coats the undersides of thatched roofs. At dawn, a brown cloud stretches over the landscape like a diaphanous dirty blanket.

In Kohlua, in central India, with no cars and little electricity, emissions of carbon dioxide, the main heat-trapping gas linked to global warming, are near zero. But soot -- also known as black carbon -- from tens of thousands of villages like this one in developing countries is emerging as a major and previously unappreciated source of global climate change.

While carbon dioxide may be the No. 1 contributor to rising global temperatures, scientists say, black carbon has emerged as an important No. 2, with recent studies estimating that it is responsible for 18 percent of the (p. A12) planet's warming, compared with 40 percent for carbon dioxide. Decreasing black carbon emissions would be a relatively cheap way to significantly rein in global warming -- especially in the short term, climate experts say. Replacing primitive cooking stoves with modern versions that emit far less soot could provide a much-needed stopgap, while nations struggle with the more difficult task of enacting programs and developing technologies to curb carbon dioxide emissions from fossil fuels.


. . .


Better still, decreasing soot could have a rapid effect. Unlike carbon dioxide, which lingers in the atmosphere for years, soot stays there for a few weeks. Converting to low-soot cookstoves would remove the warming effects of black carbon quickly, while shutting a coal plant takes years to substantially reduce global CO2 concentrations.


. . .


Mark Z. Jacobson, professor of environmental engineering at Stanford, said that the fact that black carbon was not included in international climate efforts was "bizarre," but "partly reflects how new the idea is."



For the full story, see:

ELISABETH ROSENTHAL. "By Degrees; Black Carbon; Soot From Third-World Stoves Is New Target in Climate Fight." The New York Times (Thurs., April 16, 2009): A1, A12.

(Note: ellipses added; the title of the online version is "By Degrees - Third-World Stove Soot Is Target in Climate Fight." )


BlackCarbonMap.jpg





Source of maps: online version of the NYT article quoted and cited above.





May 30, 2009

Honest Indian Economist Wins (Charisma is Not Always What Matters Most)



SinghManmohanAndGandhi.jpg "India's Prime Minister Manmohan Singh, left, and Rahul Gandhi wave to supporters during an election campaign rally in the northern Indian city of Amritsar May 11." Source of photo and caption: online version of the WSJ article quoted and cited below.


(p. A12) "Manmohan Singh will be our prime minister," said Sonia Gandhi, president of the Congress party, at a televised news conference with Mr. Singh. Mr. Singh, in typically low-key fashion, spoke at the same conference in such a quiet voice that his two minutes of remarks were inaudible over the din of the press corps, and he was forced to return to the microphone to repeat them. "The public has expressed faith in Congress," he mumbled.


. . .


Mr. Singh, who earned honors from Cambridge University in economics and a doctorate from Oxford, was an architect of India's economic reforms in 1991 that are credited with setting the nation on course for the economic boom it has had over the past few years but that is now slowing. He is widely seen as honest in a system where bribery of politicians and voters is commonplace and more than 1,000 political candidates in the national elections faced various criminal charges.

The election "is an endorsement of the programs and policies initiated by Manmohan Singh," said Sanjay Kumar, fellow at the Centre for the Study of Developing Societies in New Delhi.




For the full commentary, see:

PAUL BECKETT and VIBHUTI AGARWAL. "Voters Give Singh New Political Life -- and a Mandate; Decisive Re-Election Presents New Opportunity to Indian Prime Minister; Reaching Out to Rahul Gandhi, and Youth." Wall Street Journal (Mon., MAY 18, 2009): A12.

(Note: ellipsis added.)

(Note: the second and third paragraphs quoted above were somewhat different in the print and online versions; the online version is quoted here. The first paragraph is the same in both versions.)





June 30, 2008

The Inefficiency of a Labor Safety Net


IndiaMilkStall.jpg


"Government milk is sold mostly through curbside milk stalls. Some customers don't find the milk stands appealing since they can be dingy and the milk sometimes bad." Source of caption and photo: online version of the WSJ article quoted and cited below.


(p. A1) MUMBAI -- Every workday morning, milkman D.T. Walkar faithfully comes to Worli Dairy to not deliver milk.

Most days, he and his fellow drivers at the government dairy sign in, then move to the rest area. While others read the paper, nap or play rummy, Mr. Walkar likes to do the Sudoku puzzle in the Maharashtra Times, unless someone else has gotten to it first. He then wanders around the complex and talks to friends. The last delivery trucks were sold last year. "The trucks are all gone so we just sit around and talk," says Mr. Walkar, 50 years old. "We are bored."

Once respected civil servants, Mr. Walkar and his 300-odd fellow drivers have been left in a strange limbo. Milk sales at their dairy have plummeted as the state government lost its monopoly on milk and consumer tastes changed. But because Indian work rules strictly protect government workers from layoffs, the delivery men show up for work each morning for eight-hour shifts, as they always did, then proceed to do nothing all day. They rarely, if ever, leave the plant.

. . .

(p. A5) In 2001, the Indian government started opening the dairy market in Maharashtra to competition. Private carriers with higher quality milk swiftly won customers by delivering milk to doorsteps. The government milkmen have always been restricted to delivering mostly to curbside milk stalls so they could cover a greater area.

Customers swiftly deserted. Many switched to heat-treated milk in sealed packages that resist spoiling. Some ditched the government's former best sellers of sweet Pineapple milk and spicy Masala milk for Coca-Cola and Sprite as Indian tastes westernized. Others never found the milk stands appealing -- they can be dingy and the milk sometimes bad.


For the full story, see:

ERIC BELLMAN. "Out to Pasture: India's Milkmen Bide Their Time; No Work, Secure Job Put Them in Limbo; Where's the Sudoku?" The Wall Street Journal (Sat., March 29, 2008): A1 & A5.

(Note: ellipsis added.)


IndiaMilkmenSleepingOnJob.jpg "Because Indian work rules protect government workers from layoffs, 300-odd former milk truck drivers show up at the Worli Dairy for work each morning just as they always did, then do nothing all day. To pass the time, the men do puzzles, yoga or just sleep off the hours. Once, they tried planting a garden." Source of caption and photo: online version of the WSJ article quoted and cited above.




May 3, 2008

Greenspan on Leapfrogging in India


(p. 316) India is fast becoming two entities: a rising kernal of world-class modernity within a historic culture that has been for the most part stagnating for generations.

This kernal of modernity appears to have largely leapfrogged the twentieth-century labor-intensive manuafacturing-for-export model embraced by China and the rest of East Asia.


Source:

Greenspan, Alan. The Age of Turbulence: Adventures in a New World Economic Flexibility. New York: Penguin Press, 2007.




April 16, 2008

The Free Market Works


The story quoted below tells how outsourcing high-tech jobs to India has bid up the salaries of high-tech Indian engineers, thereby reducing the appeal of further outsourcing. Marvelous how the market works!

Another lesson from the story applies to forecasting: mechanical extrapolation of current trends is inferior to prediction that takes account of predictable changes in prices (in this case, salaries).


(p. A15) Around the century's turn, when U.S. companies first began flooding to India for its cheap labor, pundits warned that the subcontinent could increasingly rob the U.S. of high-end white-collar jobs. Debate was especially sharp in Silicon Valley, then in a slump, because India annually turns out nearly 500,000 engineering graduates.

. . .

Several years on, the forces of globalization are starting to even things out between the U.S. and India, in sophisticated technology work. As more U.S. tech companies poured in, they soaked up the pool of high-end engineers qualified to work at global companies, belying the notion of an unlimited supply of top Indian engineering talent. In a 2005 study, McKinsey & Co. estimated that just a quarter of India's computer engineers had the language proficiency, cultural fit and practical skills to work at multinational companies.

The result is increasing competition for the most skilled Indian computer engineers and a narrowing U.S.-India gap in their compensation. India's software-and-service association puts wage inflation in its industry at 10% to 15% a year. Some tech executives say it's closer to 50%. In the U.S., wage inflation in the software sector is under 3%, according to Moody's Economy.com.

Rafiq Dossani, a scholar at Stanford University's Asia-Pacific Research Center who recently studied the Indian market, found that while most Indian technology workers' wages remain low -- an average $5,000 a year for a new engineer with little experience -- the experienced engineers Silicon Valley companies covet can now cost $60,000 to $100,000 a year. "For the top-level talent, there's an equalization," he says.


For the full story, see:

Pui-Wing Tam and Jackie Range. "Second Thoughts: Some in Silicon Valley Begin to Sour on India; A Few Bring Jobs Back As Pay of Top Engineers In Bangalore Skyrockets." Wall Street Journal (Tues., July 3, 2007): A1 & A15.

(Note: ellipsis added.)




March 28, 2008

For First Time, Planet Earth is More Urban than Rural


PushpakExpress.jpg "Sarla Deepak Ire sells guavas on the Pushpak Express, from Lucknow to Mumbai, earning less than $3 a day." Source of caption and photo: online version of the NYT article quoted and cited below.


(p. 3) ABOARD THE PUSHPAK EXPRESS, India -- The man with neatly parted hair stood in the doorway of the hurtling train. And then, at the perfect moment, he jumped.

This was not about suicide, however. It was about tea.

Having popped out of the door, he clung to the knobs and rods of the train's exterior with one hand. His other hand gripped a vat of scalding tea tied to his belt.

He glided like a rock climber across the train's epidermis, from one foothold to the next. He reached the steel beam that connected the cars and walked it like a tightrope. Then, arriving at the next car, he hopped onto more footholds and, at last, ducked inside to utter his sales pitch: "Tea! Tea! Get your hot tea!"

Such acrobatics are not required on most of the world's trains, nor in this train's first- and second-class cars, which are connected with inside passageways. But this was third class on the Pushpak Express, a $6, 24-hour ride ferrying migrants from India's bleak heartland to the thriving coastal megalopolis of Mumbai, formerly Bombay. And in an echo of the ancient caste system, these passengers are physically sealed off from the compartments of the luckier born.

These passengers are also part of a great migration that is changing the world. Goldman Sachs, which has published projections about the Indian economy, predicts that 31 villagers will continue to show up in an Indian city every minute over the next 43 years -- 700 million people in all. This exodus, with a similar one in China, helped push the world over a historic threshold this year: the planet, for the first time, is more urban than rural.

. . .

Sonu Gupta, 15, was one of what the veterans call "new men." With his wiry frame, he looked more like 10. He was traveling with a friend from his village. If he can find work in Mumbai, Mr. Gupta will become his family's breadwinner. "I'm happy," he said, "and I'm scared."


For the full story, see:

ANAND GIRIDHARADAS. "Rumbling Across India Toward a New Life in the City." The New York Times, First Section (Sun., November 25, 2007): 3.

(Note: ellipsis added.)


PushpakExpressIndiaMap.jpg







Source of map: online version of the NYT article quoted and cited above.




November 16, 2007

"India is Outsourcing Outsourcing"

 

   "Infosys employs workers in Brno, Czech Republic."   Source of caption and photo:  online version of the NYT article quoted, and cited, below.

 

(p. A1)  MYSORE, India — Thousands of Indians report to Infosys Technologies’ campus here to learn the finer points of programming. Lately, though, packs of foreigners have been roaming the manicured lawns, too.

Many of them are recent American college graduates, and some have even turned down job offers from coveted employers like Google. Instead, they accepted a novel assignment from Infosys, the Indian technology giant: fly here for six months of training, then return home to work in the company’s American back offices.

India is outsourcing outsourcing.

One of the constants of the global economy has been companies moving their tasks — and jobs — to India. But rising wages and a stronger currency here, demands for workers who speak languages other than English, and competition from countries looking to emulate India’s success as a back office — including China, Morocco and Mexico — are challenging that model.

Many executives here acknowledge that outsourcing, having rained most heavily on India, will increasingly sprinkle tasks around the globe. Or, as Ashok Vemuri, an Infosys senior vice president, put it, the future of outsourcing is “to take the work from any part of the world and do it in any part of the world.”

. . .

(p. A14)  Such is the new outsourcing: A company in the United States pays an Indian vendor 7,000 miles away to supply it with Mexican engineers working 150 miles south of the United States border.

In Europe, too, companies now hire Infosys to manage back offices in their own backyards. When an American manufacturer, for instance, needed a system to handle bills from multiple vendors supplying its factories in different European countries, it turned to the Indian company. The manufacturer’s different locations scan the invoices and send them to an office of Infosys, where each bill is passed to the right language team. The teams verify the orders and send the payment to the suppliers while logged in to the client’s computer system.

More than a dozen languages are spoken at the Infosys office, which is in Brno, Czech Republic.

 

For the full story, see: 

ANAND GIRIDHARADAS.  "Outsourcing Comes Full Circle As India Starts to Export Jobs."  The New York Times   (Tues., September 25, 2007):  A1 & A14.

(Note:  the somewhat different title of the online version was:  "Outsourcing Works So Well, India Is Sending Jobs Abroad.")

 




November 15, 2007

U.S. Jobs Moving "Up the Occupational Chains" to Work that "Is Not as Rules-Based"

 

   Source of graphic:  online verion of the NYT article cited below.

 

(p. C1)  Jeffrey Taft is a road warrior in the global high-technology services economy, and his work shows why there are limits to the number of skilled jobs that can be shipped abroad in the Internet age.

Each Monday, Mr. Taft awakes before dawn at his home in Canonsburg, Pa., heads for the Pittsburgh airport and flies to Houston for the week.

He is one of dozens of I.B.M. services employees from around the country who are working with a Texas utility, CenterPoint Energy, to install computerized electric meters, sensors and software in a “smart grid” project to improve service and conserve energy.

Mr. Taft, 51, is an engineer fluent in programming languages and experienced in the utility business. Much of his work, he says, involves being a translator between the different vernaculars and cultures of computing and electric power, as he oversees the design and building of software tailored for utilities. “It takes a tremendous amount of face-to-face work,” he said.

What he does, in short, cannot be done overseas. But some of the programming work can be, so I.B.M. employees in India are also on the utility project team.

The trick for companies like I.B.M. is to figure out what work to do where, and, more important, to keep bringing in the kind of higher-end work that needs to be done in this country, competing on the basis of specialized expertise and not on price alone.

The debate continues over how much skilled work in the vast service sector of the American economy can migrate offshore to lower-cost nations like India. Estimates of the number of services jobs potentially at (p. C4) risk, by economists and research organizations, range widely from a few million to more than 40 million, which is about a third of total employment in services.

Jobs in technology services may be particularly vulnerable because computer programming can be described in math-based rules that are then sent over the Internet to anywhere there are skilled workers. Already, a significant amount of basic computer programming work has gone offshore to fast-growing Indian outsourcing companies like Infosys, Wipro and Tata Consultancy Services.

To compete, companies like I.B.M. have to move up the economic ladder to do more complicated work, as do entire Western economies and individual workers. “Once you start moving up the occupational chains, the work is not as rules-based,” said Frank Levy, a labor economist at the Massachusetts Institute of Technology. “People are doing more custom work that varies case by case.”

In the field of technology services, Mr. Levy said, the essential skill is “often a lot more about business knowledge than it is about software technology — and it’s a lot harder to ship that kind of work overseas.”

 

For the full story, see: 

STEVE LOHR.  "At I.B.M., a Smarter Way to Outsource."  The New York Times   (Thurs., July 5, 2007):  C1 & C4. 

 

Levy has co-authored a book that is relevant to the example and issues raised in the article.  See:

Levy, Frank, and Richard J. Murnane.  The New Division of Labor: How Computers Are Creating the Next Job Market.  Princeton, NJ:  Princeton University Press, 2004.

 

   IBM engineer Jeffrey Taft (blue shirt) has "local" knowledge of the connection between computer programming and the electric utility business.  Here he is on-site in Houston at the offices of CenterPoint Energy.  Source of graphic:  online verion of the NYT article cited above.

 




November 12, 2007

Strong Global Support for Free Markets

 

FreeMarketsPositiveViewTable.gif   Source of table:  "World Publics Welcome Global Trade -- But Not Immigration." Pew Global Attitudes Project, a project of the PewResearchCenter. Released: 10.04.07 dowloaded from: http://pewglobal.org/reports/display.php?ReportID=258

 

(p. A10) WASHINGTON, Oct. 4 — Buoyed and battered by globalization, people around the world strongly view international trade as a good thing but harbor growing concerns about its side effects: threats to their cultures, damage to the environment and the challenges posed by immigration, a new survey indicates.

In the Pew Global Attitudes Project survey of people in 46 countries and the Palestinian territories, large majorities everywhere said that trade was a good thing. In countries like Argentina, which recently experienced trade-based growth, the attitude toward trade has become more positive.

But support for trade has decreased in recent years in advanced Western countries, including Germany, Britain, France and Italy — and most sharply in the United States. The number of Americans saying trade is good for the country has dropped by 19 percentage points since 2002, to 59 percent.

“G.D.P. growth hasn’t been as dramatic in these places as in Latin America or Eastern Europe,” said Andrew Kohut, president of the Pew Research Center, referring to gross domestic product, the total value of the goods and services produced in a country. “But worldwide, even though some people are rich and some are poor, support for the basic tenet of capitalism is pretty strong.”

 

For the full story, see: 

BRIAN KNOWLTON. "Globalization, According to the World, Is a Good Thing. Sort Of."  The New York Times   (Fri., October 5, 2007):  A10. 

 




October 22, 2006

Indian Infrastructure: "If the Public Sector Cannot Deliver, Let's Try the Private Sector"

BANGALORE, India, Oct. 2 — About 25 miles south of the Chennai airport, past rows of ramshackle shops and pavements crowded with roadside vendors and assorted cattle, a short turnoff leads to a gated modern oasis.

Inside, at complete variance with the chaos of its surroundings, are the lakes, promenades, lush landscaping and security systems of Mahindra World City.  Its modern office high rises already house 4,000 workers with space for several thousand more.

This is the first of India’s special economic zones, or S.E.Z.’s, which could offer a partial solution to the extreme weaknesses in India’s infrastructure:  narrow, pothole-filled roads; erratic supplies of electricity and other utility services; and inadequate communication links.

The zone strategy borrows from China’s playbook, and in many ways, is a means to compete with China.  In fact, if all goes according to government plan, hundreds of these privately run zones will sprout like miniature foreign islands, offering better infrastructure and jobs, increasing exports and attracting investment from foreigners.

 

For the full story, see: 

SARITHA RAI.  "Oases of Modernity Amid India’ s Desert of Public Services."  The New York Times  (Tues., October 3, 2006):  C5.




August 17, 2006

Over-regulating Lenders is a Recipe for Stagnation

MICROFINANCE is based on a simple idea: banks, finance companies, and charities lend small sums — often no more than a few hundred dollars — to poor third world entrepreneurs. The loan recipients open businesses like tailoring shops or small grocery stores, thereby bolstering local economies.

But does microfinance, in fact, help the poor?

To help answer this question, I visited Hyderabad, India, in June.  . . .

. . .

My visit suggested that microfinance is working, but it is often more corporate, more commercial and under more attack than I had expected.

. . .

Near Hyderabad, in the state of Andhra Pradesh, political opposition to microfinance has begun. State officials have fed negative stories to the media. They charge that microfinance debts have driven some people to ruin or perhaps suicide. They call Spandana’s programs “coercive” and “barbaric.” They question whether the “community pressure” behind repayment is sometimes too severe.

The motives behind this campaign are twofold. The state is not a neutral umpire but rather has its own “self-help group” banking model, which lends at the micro level. Spandana and some of the other private microfinance groups are unwelcome competition. More generally, opposition to money lending has been frequent in the history of both India and the West. Not every loan will have a positive outcome, and it is easy to focus on the victims. Not all Indians have accepted the future of their country as an open commercial society with winners and losers.

. . .

The Indian political authorities must decide whether they will allow new businesses to spread, even when commercialization leads to some disappointments or competes with a state interest. The stipulation that no one can be harmed by progress is a sure recipe for stagnation.

 

For the full commentary, see: 

Tyler Cowen.  "ECONOMIC SCENE; Microloans May Work, but There Is Dispute in India Over Who Will Make Them."  The New York Times  (Thurs., August 10, 2006):  C4. 

 




August 14, 2006

25% Increase in Oil by 2015

OilPriceGraphic.gif  Source of graphic:  online version of the WSJ article cited below.

 

Despite fears of "running out" of oil, Cambridge Energy Research Associates' new analysis of oil-industry activity points to a considerable growth in the capacity to produce oil in the years ahead.  Based upon our field-by-field examination of current activity and of 360 new projects that are either underway or very likely, we see capacity growing from its current 89 mbd to 110 mbd by 2015, a 25% increase.  A substantial part of this growth reflects the advance of technology, i.e., the rapid growth in "non-traditional" hydrocarbons, such as from very deep offshore waters, Canadian oil sands, and liquids made from natural gas.  (We are not counting in this increase the additional supplement that will come from ethanol and other fuels made from plants.)

There are important qualifications, however.  First, this is physical capacity to produce, not actual flows, which, as we have seen over the last year, can be disrupted by everything from natural disasters to government decision, to conflict and geopolitical discord.  Second, while prices are going up rapidly, so are costs;  and shortages of equipment and people can slow things down.  Third, greater scale and technical complexity can generate delays.  Still, a 25% increase in physical capacity by 2015 is a reasonable expectation, based upon today's evidence, and that would go a long way to meeting the growing demand from China, India and other motorizing countries.

Admittedly, it may be hard to conceive of this kind of increase when oil prices are climbing the wall of worry, when each new disruption reverberates around the world, when Iranian politicians threaten $100 or $250 oil in the event of sanctions, and when so many geopolitical trends seem so adverse.  All this underlines the fact that while the challenges below ground are extensive, the looming uncertainties -- and risks -- remain above ground. 

 

For the full commentary, see:

Daniel Yergin.  "Crisis in the Pipeline."  The Wall Street Journal  (Weds., August 9, 2006):  A10.   




July 12, 2006

Buffett and Gates Should Strengthen Foundations of Free-Market

If Warren Buffett is as serious about doing good with his wealth, as he was in becoming wealthy, he would ponder the Wall Street Journal's sage editorial page advice:

We can't think of two people less in need of our two cents than Messrs. Buffett and Gates.  But since giving free advice is our business, we'd suggest that they put at least a smidgen of their money back into strengthening the foundations of the free-market system that has allowed them to become so fabulously rich.  There's something to be said for reinvesting in the moral capital of a free society and trying to sustain and export free-enterprise policies.

Capitalism has done very well not just by Mr. Buffett but also by the world's poor, as several hundred million Chinese and Indians might attest.  African nations in particular need property rights and a rule of law as badly as they need vaccines.  On that score we were encouraged by a report this week that the Gateses thanked Mr. Buffett for his gift by presenting him with a book from their personal library:  Adam Smith's "The Wealth of Nations."

 

For the full editorial, see:

"Mr. Buffett's Gift."  The Wall Street Journal  (Weds., June 28, 2006):  A14.




June 10, 2006

"My Merit Is My Caste; What Is Yours?"

NEW DELHI, May 22 — The problem of caste prejudice here is as ancient as the Hindu texts. The efforts to redress it date from the formation of modern India nearly 59 years ago. Today — as India enjoys awesome rates of economic progress and confronts the challenge of spreading the benefits to its needy majority — the nation faces a polarizing totem of public policy: a government plan to extend college admission quotas to certain "backward" castes.

Affirmative action is in some ways an even more emotional issue in India than in the United States. In recent weeks, a proposal to extend quotas for admission to some of the country's flagship, federally financed universities has caused fresh turmoil.

Protests — particularly by medical students who say merit should be the only basis for admission to India's intensely competitive medical schools — have spread across the country and, here in the capital, hobbled public health services. Advocates and opponents of the measure have exchanged often ugly rants.

. . .

Medical students have been particularly outraged because the plan would further restrict the limited number of seats. Medical education in India begins with a five-year undergraduate program, and the proposal could affect students' chances of completing their training.

The central lawn of the All India Institute of Medical Sciences, the pre-eminent public hospital, was occupied Friday by medical students on the fifth day of a strike that began last week and continued on Monday. "My merit is my caste. What is yours?" read one T-shirt.

. . .

The opponents say set-asides would diminish the quality of India's best universities and divide students along caste lines.

"Why after 55 years are we still thinking in terms of caste-based reservation?" demanded Poojan Aggarwal, a third-year student at Safdarjung Medical College here. "We should talk now of total meritocracy. We know on this issue none of the political parties will support us."

 

For the full story, see:

SOMINI SENGUPTA. "Quotas to Aid India's Poor vs. Push for Meritocracy."  The New York Times  (Tues., May 23, 2006):  A3.

(Note: ellipses added.)





March 17, 2006

Ethanol Serves Agricultural Lobby

 

The U.S. imposes a 54-cent-a-gallon tariff on Brazilian ethanol, to discourage competition with domestic ethanol, which receives a 54-cent subsidy from taxpayers. The European Union just slapped new duties on Pakistani ethanol.

This should lay bare the fraud that what's going here has anything to do with energy security. It has only to do with the agricultural lobby masquerading its interests behind foolish and misleading rhetoric about energy security.

Take the pressure for flex-fuel mandates, requiring auto companies to build cars capable of running on 85% ethanol. Unmodified cars can already burn fuel comprised 10% of ethanol. If we were honestly keen on diversifying supply and squeezing out imported oil, we'd throw open our dense coastal markets to ethanol producers in Brazil, India, Pakistan, Nigeria and Thailand, displacing perhaps 10 billion gallons of current gasoline use without any vehicle modification or taxpayer subsidy at all.

 

For the full story, see:

HOLMAN W. JENKINS, JR.  "BUSINESS WORLD; What's Wrong with Free Trade in Biofuels?"  The Wall Street Journal  (Weds., February 22, 2006):  A15.

 




December 13, 2005

Finland Building Europe's First New Nuclear Reactor in 15 Years



Petr Beckmann holding a copy of his The Health Hazards of NOT Going Nuclear. Golem Press, 1976. Beckmann died on August 3, 1993. Source of photo and Beckmann date of death: http://www.commentary.net/view/atearchive/s76a1928.htm


Not all those who are right, live to see their ideas vindicated. Thank you Petr Beckmann, for writing the truth, when the truth was not popular.


. . . when Finland, a country with a long memory of the Chernobyl disaster in 1986 and considerable environmental bona fides, chose to move ahead this year with the construction of the world's largest nuclear reactor, the nuclear industry portrayed it as a victory, one that would force the rest of Western Europe to take note.

But the decision to build the reactor, Olkiluoto 3, Europe's first in 15 years, was not taken quickly or lightly.

. . .

"There is an expectation that others will follow, both because of the way the decision was made and the boosting of confidence in being able to get through all the oppositional fear-mongering," said Ian Hore-Lacy, the director of public communications for the World Nuclear Association, an industry lobbying group.

The United States, which has not had a nuclear plant on order since 1978, is experiencing a groundswell of interest. Taking the first step in a long process, Constellation Energy, a Baltimore-based holding company, announced in late October that it would apply to the Nuclear Regulatory Commission for permission to construct and operate a pressurized water reactor like the kind being built in Finland, possibly in upstate New York or Maryland. The Finnish reactor, designed by Areva, the French state-controlled nuclear power group, is being built by Framatome ANP, a joint venture of Areva and Siemens, a Germany company.

In addition, President Bush signed into law an energy bill in August that offers billions of dollars in research and development funds and construction subsidies to companies willing to build new nuclear plants. Several utility companies have applied for early site permits, a preliminary step toward building reactors.

Worldwide, the resurgent interest in nuclear power is even more pronounced. Twenty-three reactors are under construction this year in 10 countries, most of them in Asia, which has aggressively pursued nuclear energy. India is building eight reactors. China and Taiwan are building a total of four reactors and are planning eight more. Russia is building four and South Korea is planning eight.

...

Nuclear energy's selling points were timely: it does not create emissions, unlike coal, oil and gas, and provides predictable electricity prices, a major bonus for Finnish industries, nuclear proponents said.

"The only viable alternative, if we want to maintain the structure of the economy, maintain our industries and meet our Kyoto targets, is nuclear," said Juha Rantanen, the chief executive officer of Outokumpu, one of the world's largest steel producers and one of Finland's biggest energy users. "We can't have a declining economy. We face huge challenges and an aging population. Something had to be done."

Environmentalists, however, argued that nuclear reactors could never be entirely safe. They are always radioactive, and their waste remains toxic for 100,000 years.

But the designers of Areva's pressurized water reactor, which is costing $3.5 billion to build, helped counter those arguments. In the event of a core meltdown, they said, the nuclear material would flow into a separate enclosure for cooling. They also said that the reactor is being built with enough concrete to withstand the impact of an airliner.

In the end, Finland's largest trade union supported the project, basically sealing the deal.

. . .




Read the full article at:

LIZETTE ALVAREZ. "Finland Rekindles Interest in Nuclear Power." The New York Times (Mon., December 12, 2005): A10.

(Note: ellipses added.)





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