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About the complaints on Obama’s interference in Detroit

with 5 comments

The government has no business involving itself in business.

That is the popular refrain you will hear from fiscal conservatives/libertarians and such. Personally, I don’t disagree with the sentiment. Even in these tough times, I believe that the economy is best served by private enterprise with limited interference from the government. Plus, anyone growing up in India through the 70-80’s  observed first hand how governmental involvement creates inefficiency in business  (e.g. land-line phone companies) and how too much red-tapism destroy entrepreneurial spirits (or limits it to a dedicated or privileged few).  So in general, I am all for the government keeping their fingers off private businesses.

Except, when they have a right to it, by virtue of ummmm…….say few billion dollars invested ! I am of course, referring to all the hullabaloo over Obama’s recent sacking of the GM CEO Wagoner. Predictably, a swathe of right-wing bloggers (even some liberal ones) are upset over what they perceive as the administration’s needless meddling. The Corner sums it up thus:

GM is now Obama’ s company. If it closes, it will be on his say-so. But Obama is a politician, not a CEO. So his first concern is to avoid bad political fallout, which means he will prop up the company for as long as it takes, regardless of what makes economic sense.

This is very much on the lines of emotion expressed by Don Boudreaux in an editorial on USA Today earlier this month (he was talking about bank nationalization, but the idea is the same):

Politicians’ incentives differ radically from those of private owners. Few politicians look past the next election or beyond the familiar interest groups whose support is crucial.

(A very typical line that is often parroted by a certain eminent Indian libertarian blogger as well.)

All this is mildly amusing.  I wonder if people writing these stuff have any idea about the irony: Last time I checked, the current financial mess was created not by politicians, but private businesses, or rather the heads of certain private businesses. And the reason it happened is that these CEOs, just like politicians, were looking at short-term incentives – lining their own pockets with bonuses without considering long-term ramifications of their risky investments.

Similar short-sightedness have contributed to the fall of  the Detroit Big 3.  Rather than compete with foreign automakers by designing better vehicles in terms of quality, reliability and fuel-efficiency, they have been content to sit on the sales of poorly made gas-guzzling SUVs and trucks and lobbying to block any legislation that impact fuel efficiency.

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The problem is that the government should not have been involved in this mess at all (although when such a large number of people’s jobs are on the line, it is difficult for a modern government to be hands-off – and remember that while people are blaming Obama, the major bailouts  were passed by the Bush administration). But now that it is involved having paid the dollars, you cannot complain about its involvement, for good or bad.

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Written by BongoP'o'ndit

March 31, 2009 at 7:53 am

This Nano doesn’t shuffle

with 9 comments

But it can carry you from point A to point B. The Tata Nano.

The much anticipated Nano (a name I don’t really care for much) was unveiled today amidst much fan-fare. Touted by Tata as ‘the people’s car’, it is the world’s cheapest automobile. Additionally, if you are so inclined to think such manners, it is an ‘environmental nightmare’ (even though there seems to be evidence to the contrary) and an assertion of India’s growing economic might [1].

Speaking of global might, it is possible that in addition to the cheapest car, Tata will also own some of the most expensive brands if their bid to buy Jaguar and LandRover goes through. Talk about a spectrum.

[1]: Check the link – even while talking about cars, there is a sly dig at the recent cricket controversies. 🙂

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Jaguar’s potential sale to Tata, however, hasn’t made everyone happy. US car dealers apparently think it will dilute the brand value (of Jagaurs).

“I don’t believe the U.S. public is ready for ownership out of India of a luxury car make,” Ken Gorin, chairman of the Jaguar Business Operations Council, told the Wall Street Journal. “And I believe it would severely throw a tremendous cast of doubt over the viability of the brand.” (link)

Hmmm…..I can imagine the before and after scenes. Pre-takeover:

Customer: I want to buy a luxury car.

Dealer (showing a Jaguar): How about this one. It will break down often, cost you high maintainence, and is generally unreliable. But ….oooooh look……. it is a Jaguar, the Brits make it and Ford owns it.

Customer: hmmmm…..

Dealer: it is enormously expensive and a great status symbol.

Customer: Yay-diddly-doo – thats the one I want then. Where do I sign?

Post Tata takeover of the brands:

Customer: I want to buy a luxury car.
Dealer (showing a Jaguar): How about this one. It will break down often, cost you high maintainence, and is generally unreliable. But ….oooooh….. look it is a Jaguar, the Brits make it and errrr…an Indian company called TATA owns it.

Customer: hmmmm…..

Dealer: it is enormously expensi-

Customer (interrupting): ….wait did you say – India ? Dammit – I don’t know how to drive an elephant.!! And I really wanted something faster……..

Dealer: ….but sir, its still a car, in fact the same car as before – not an eleph-

Customer (interrupting again): and do I have to wear one of them turbans ? I can’t do that – everyone’ll think I am Osama !!!

Dealer: sigh ! forget about it.

PS – here is an even worse piece on Tata’s takeover bid: dripping with post-colonial angst. Will rant about it separately.

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Written by BongoP'o'ndit

January 11, 2008 at 1:14 am

Traveling Ticketless…

with 3 comments

Via Marginal Revolution, this anecdote about ‘ticket insurance’ in Mumbai:

“My favourite ticketing system was in Mumbai, India,” Kim enthuses. “No one actually buys a ticket, but you can buy ‘ticket insurance’ from private entrepreneurs who work at the entrance of the station. The ‘ticket insurance’ is about half the price of a regular rail ticket. It gives you a guarantee that, in the extraordinary event that you are booked by a railways inspector for taking a free ride, your fine will be paid. A relative was once booked and the ticket insurer paid the fine exactly as promised.”

While commenter’s over there are arguing over merits of insurance in such cases etc, I ask – why would you even need an insurance ? Back in the college days in Kharagpur, lots of students commuted regularly on the weekends to Kolkata – a three hour journey on the ‘local train’ that cost about Rs20 (50 US cents). A significant majority would travel ticketless. The fine you had to pay when caught was Rs70 (Rs 50 fine + Rs 20 for the fare) – most figured that you got caught less than 10% of the time, so in the long run you saved lots of money by paying off the occasional fine. So there you go.

For the record, yours truly always traveled with a ticket – for some reason, I was too much of an idealist in those days.

Written by BongoP'o'ndit

August 2, 2007 at 12:23 am

Posted in Economics, India, Life

Of Casteism, Hinduism, Hi-tech Jobs and Cricket

with 9 comments

What does caste, Hinduism, IT jobs and cricket (all with reference to India) have in common ? They feature in two recent examples of rank poor journalism and grossly ignorant (perhaps deliberate) misinterpretation of India by western journalists. Therefore, opportunities to rant !

In brief, exhibit A: according to Paul Beckett of Wall Street Journal, India’s corporate ladder has for years followed the strict Hindu caste systems, which has only been relaxed recently due to India’s economic resurgence (helped of course, by ‘international companies’) and the need to look beyond ‘traditional sources of employees’; and, exhibit B: Scyld Berry in the Sunday Telegraph makes the even more jaw-dropping contention that India’s cricket failure abroad stems from the Hindu fear of traveling overseas!!

Sigh ! How quickly can you say ‘colonial hangover’ ? Anyone ?

Now if you have stopped banging your head against the table or the wall nearest you, read on.

It gets hackneyed, but every once in a while you have to shake your head and marvel at how the mainstream media can resort to astoundingly low, scraping the barrel levels of journalism. Sadly, this is not the TOI or the Rediff comments section, its the supposedly venerable Wall Street Journal and the Telegraph of UK.

Take Beckett first He says:

But India’s rapid economic expansion — and its booming high-tech sector — are beginning to chip away at the historical system that reserved well-paying jobs for upper castes and menial jobs for Dalits. With annual gross-domestic-product growth exceeding 9%, companies that have hired tens of thousands of workers in recent years are looking beyond their traditional sources of employees. High-tech firms, both foreign and domestically based, are at the forefront of that search. As a result, some Dalits are rising into India’s middle class.
……..
Technology giant Infosys Technologies Ltd. now recruits from 700 colleges around India, many of them in semi-rural areas where lower-caste people often live, up from about 50 urban colleges 10 years ago, says T.V. Mohandas Pai, the company’s director in charge of human resources. “Today, a great number of the people whom we hire come from poorer backgrounds both economically and socially,” he says. “It is changing the ground rules in India.”

International companies are also having an impact. “We don’t give a damn about any of these differences in caste or religion,” says Ravi Venkatesan, chairman of Microsoft Corp.’s India unit. “It has made talent the number one issue for all companies.”

(emphasis mine)

Nothing wrong with the primary assertion mind you. With an improving economy, more people will get jobs, become richer and less will be any perceived differences (as pointed out by Amit Varma in this article). The problem is that Beckett insinuates quite wrongly, perhaps for the ‘gasp-factor’ from his American audience, that India’s corporations have actively discriminated against non-Brahminical castes. If that had been the case, none of my non-Brahminical parents and relatives, or grandparents for that matter, would have amounted to anything. If there has been bias, it has been with respect to the poorer sections of the society with little access to good education – both primary and higher (The failure to provide equitable education to all surely lies with the government).

Beckett provides no statistics to back his claims – his central thesis relies on are a couple of juicy anecdotes. And the only piece of hard information used (“An August 2006 study of technology workers at multinationals or sizeable Indian tech companies found that 86% came “from upper castes and/or economically better-off communities.”[see update below]) actually tosses out his hypotheses. There is an altogether total failure to account for economic inequities irrespective of castes in the article.

Perhaps it is stronger elsewhere, but neither in Kolkata, nor in the economically rising Hyderabad-Secunderabad twin cities or the bustling Mumbai (places where I have spent considerable time), have I ever observed caste-based discrimination in job sectors. The only places I have observed its effects is where it has been enforced by the government – in the colleges I attended. Of course, my version is completely anecdotal, that is to say, no different from Mr Beckett’s.

Even while I am a fan of capitalism and free-market economy, the single-minded conservative rhetoric of the WSJ often irritates me. But considering their target audience, I figure that’s how it should be. Additionally, their reporting on India/China etc is much better than the usual, ‘oh look at the poor third world’ New York Times’ condescension. Unfortunately, Paul Beckett’s article goes the NYT way and lacks any kind of serious credibility.

(For additional humor, do check out the helpful cartoons on the side of the article that serves as a ‘Castes for Dummies’ guide.)

[UPDATE]: Rohit pointed me in the direction of the actual study mentioned in the WSJ article . Two points emerge from it. Firstly, the study was conducted with a sample size of 132 software professionals, and in Bangalore only ! And secondly, even the authors of that study acknowledge:

It is no one’s case that the industry deliberately practices discrimination on the basis of regional, community or other such ‘ascriptive’ identities. But it should be recognised that the requirements of a ‘global’ offshore or outsourcing business tend to exclude those from non-urban and less privileged backgrounds, who lack the social and cultural capital required to work in a ‘global’ environment. Industry leaders themselves acknowledge that there is such a filtering process, in that they have repeatedly urged that appropriate ‘soft skills’ be taught in schools and colleges.

Which goes against Beckett’s hypotheses of active discrimination in the work-place. Additionally, before others jump on this, I am not saying that casteism does not exist or is not a problem in India, but pointing out that Beckett grossly exaggerates its effect in the Indian corporate and does not take into account economic conditions or the failure of the government in providing basic education. And all his assertions seem to be based on hearsay.

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The next rant is against this article by Scyld Berry ahead of the India’s cricket tour to England. Berry points out that Indians have been poor tourists with an abysmal away record and that before the arrival of John Wright as the coach, senior players were a pampered lot and got away with bad fitness etc. Sadly, all that is quite true. Where Berry starts going loony is with this insane assertion:

Then there is the attitude to playing away from home, away from their comfort zone of porters and waiters. Wright does not say so, but the Hindu belief that one lost caste when crossing the sea may have helped to set Indian cricket abroad off on the wrong foot, where it has more or less remained ever since.

(via)

Heh ! One wonders if that belief rubs off the Muslim players that accompany the team as well. Also Pakistan is not really ‘overseas’ – but we have a dismal record against them!

But wait, it gets better – apparently India has been ‘saved’ by one Rahul Dravid, who is…

….an urbane south Indian who has played for Kent and Scotland and become a cricketer of the world as well as India’s captain.

Now, pray explain who/what is (a) an ‘urbane south Indian’ – as far as I know the majority of Indian cricketers are from urban areas, with only recently players emerging from non-metropolitan cities; and (b) how does one become a ‘cricketer of the world’ ? Just because that person has played in England (and Scotland) – he gets blessed with the title ? (as Rohit suggested, perhaps playing in England has made him overcome the Hindu fear of overseas).

Apart from the factual inaccuracies in the article, Berry goes overboard in trying to justify Dravid as the savior of Indian cricket. No one is doubting Dravid’s credentials and his immense contributions to the batting line-up and his presence on the field, but to say that he single handedly won the Headingly Test in 2002 is an exaggeration, in a match where Sachin and Sourav lead a savage assault on the English bowlers in the darkness of Day 2 evening (no doubt though about Dravid anchoring the innings early).

Btw, if you read the full report, you will be stuck by Mr Berry’s amazing powers of clairvoyance. He reads the minds of both John Wright (“Wright does not say so, but…”) and Rahul Dravid (“his reply was perfectly correct in what he said, but even more remarkable in what was unsaid…”). One wishes Mr Berry would use such superpowers to better uses.

What bothers me is how the theme in both articles are eerily similar – ah those poor Hindus with their entrenched caste systems and irrational superstitious beliefs etc. Further, how ironical is it that the opinions come from an American, in a country with a track record of slavery and discrimination till very recent times; and from an Englishman, because one wonder which tenets of Christianity makes the English cricket team such poor tourists to India and Pakistan ?

Written by BongoP'o'ndit

June 25, 2007 at 9:14 pm

Posted in Cricket, Economics, India, MSM, Rants

Marketing academic research in India

with 10 comments

An article by Ajit Balakrishnan (CEO of Rediff) in Business Standard has kicked up bit of a storm in the desi blog-circles. The original article talks about difficulties Mr Balakishnan encountered while attempting to start an industry-academia collaboration with a professor of computer science at the Indian Institute of Technology, Mumbai (IITB), Soumen Chakrabarti.

Landing the Soumen catch turned out to be the easy part. Getting to engage IIT Bombay in a commercial relationship was to be a near-impossible task. The process for such an engagement is unchartered territory for Indian academic institutions. We settled on a compromise: we hired two of his star graduate students (or more accurately he persuaded them to join us instead of doing what all their classmates did—emigrate to America). Since then, we have been happily working together; whenever we run into a really tough computer science problem, we could get to Soumen through his students.

Response to the article has been typical. At the libertarian/free market-supporting Indian Economy Blog, Karthik held this up as an example of the failure of academic bureaucracy, lack of incentives and such. In a swift rebuttal, defenders of the anti-free market bastion, Krish and Abi, strongly supported IITB’s policies on collaboration and even laid the blame squarely on Balakrishnan.

IMHO, there is much sweeping generalizations and unsubstantiated statements on both sides. So herein, I try to play my usual role of finding the middle ground.

Firstly, a brief aside on academia-market relationship in the capitalist mecca of US. Even there, from my experience, the academia is usually suspicious of industry (though they usually don’t mind the money that comes from collaborating with it, or the free dinners!). There is something in the mentality of academicians that looks down heavily on business – PhD’s who have moved to the industry are said – in a jocular manner, of course – to have gone to the ‘dark side’ (perhaps the huge disparity in salaries versus educational levels has something to with it – but for now we shall avoid those murky waters). Recently, however, most US universities have setup an office or a whole department devoted to technology commercialization and intellectual property management of their academic research output. Some universities have even started to offer post-graduate courses on it (interestingly, Australia seems to have been way ahead of the game with the university I am with now having started such a unit in the early 80s). The goal of such units is to discover or even create commercialization opportunities for the research in the university laboratories. Universities have been quick to discover this as a good source of revenue at a time of funding crunches from the government. But it is also an important function for these units to ensure that the industry does not take undue advantage of a researcher’s hard work and perhaps prevent recurrence of the University of Rochester’s Cox-2 patent loss to Pfizer.

Coming back to the Indian context, while the regular university does not have much of a research output to speak of, the IITs, especially in disciplines such as Computer Science, Electrical/Electronics etc, have for some years conducted successful research collaborations with the industry. This has happened both at the individual level (ie a Professor acting as a consultant to some industry) or at an institutional levels (an industry providing support for research programs) and also both with private and public sectors (e.g see this for IIT-Delhi). Also, a quick look at the IITB website will show that there are two umbrella organizations, SINE and E-cell that serve as business incubators to foster entrepreneurship (perhaps our diplomatic ex-IITB-ian friend can further enlighten us on the practice of start-ups branching off from research at IITs). Therefore, Ajit Balakrishnan’s or Karthik’s assertion of “process for such an engagement is unchartered territory for Indian academic institutions” sounds rather extreme.

However, the devil is in the details – so even as IITB has a system in place for consultancy (e.g see these informal guidelines by Soumen Chakraborti himself), without first hand knowledge it is difficult to presume how efficient such a system is. One could speculate that for Mr Balakrishnan, going through the IIT system would have taken a few months time, which is eternity in the world of business. In that case, it was certainly a ‘near-impossible’ task for him to get his project kick-started (especially given that it relates to the cutting edge field of web search engines). It is possible too that IIT’s current system is more geared for collaborations with big companies, not for small start-ups. Given the quickly changing technology and economic landscapes, IITs (and other universities too) need to more nimble in responding to such needs. Therefore, there is certainly scope for improvement in bringing academia and industry together through offices of technology commercialization on the lines of US or Australia described above.

Finally, Krish’s childishly written ad-hominies against ‘free market fundamentalists’ merits a more detailed fisking. While I do not have the time or patience to rant in details, let me say that technology eventually needs to come out of the laboratory into the marketplace. There are academics who pursue knowledge for the sake of knowledge (and certainly we need such people and government support for their research), anybody who makes a blank (not to mention extremely naive) statement like “academicians are against the patent system” is living in a fool’s paradise. Most human beings are slaves to incentives, and I cannot believe that providing an additional incentive will harm scientific or technological progress.

(Thanks to Rohit for original article H/T)

Written by BongoP'o'ndit

June 13, 2007 at 1:40 am

Posted in Economics, India, Rants, Science

Pigs Fly: A CEO’s mea cupla

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The CEO of JetBlue airlines, David G. Neeleman, admitted to a failure in communications systems which led to over 1000 flight cancellations for over a week (including a full plane that was stranded on the JFK tarmac for six hours) after last week’s northeast snowstorms.

David G. Neeleman said in a telephone interview yesterday that his company’s management was not strong enough. And he said the current crisis, which has led to about 1,000 canceled flights in five days, was the result of a shoestring communications system that left pilots and flight attendants in the dark, and an undersize reservation system. Until now, JetBlue and its low fares have enjoyed overwhelming popularity and customer satisfaction ratings.

…..

“We had so many people in the company who wanted to help who weren’t trained to help,” he said. “We had an emergency control center full of people who didn’t know what to do. I had flight attendants sitting in hotel rooms for three days who couldn’t get a hold of us. I had pilots e-mailing me saying, ‘I’m available, what do I do?’ ”

The part of the company that locates pilots and flight attendants and directs them to their next flight assignment is far too small for an airline JetBlue’s size, Mr. Neeleman said. He vowed to train 100 existing corporate office employees to work in that area when needed. Within two weeks, the area can be better backstopped, he said, and within 30 days, “flawless.” (link)

Wow – this kind of admission of ‘we screwed up’ is pretty rare for a company CEO. Rarer still is this part:

Mr. Neeleman said he would enact what he called a customer bill of rights that would financially penalize JetBlue — and reward passengers — for any repeat of the current upheaval. He said he would propose a plan to pay customers, after some amount of time, by the hour for being stranded on a plane.

He says knows he has to deliver. “I can flap my lips all I want,” he said. “Talk is cheap. Watch us.”

There is growing sentiment in Congress to pass legislation that would mandate limits on the time passengers can be kept in a plane on the ground and also set compensation standards for stranded passengers. The airline industry hopes to fend off such a measure. Mr. Neeleman said he wanted to make the penalties to JetBlue “more aggressive than any airline lobbyist would let Congress do.”

Of course, he is not exactly a saint and my cynical side says that this is part of a strategy to win back the high customer approval ratings enjoyed by the company. Still, it is refreshing to see someone in the airline industry taking a measure of responsibility.

Personally, I have flown JetBlue a few times and loved their leather seats with personal DirectTV on every seat, the surprisingly friendly service and funky blue chips. They had fallen from  grace when they decided not to respect customer privacy (handing over travel information to DoD contractors) – but perhaps this should mend it.

Written by BongoP'o'ndit

February 19, 2007 at 10:26 pm

Cricket is of “national importance”

with 11 comments

The Government of India, taking some precious time out from watching third-rate British TV shows to save the honor of fourth-rate Bollywood stars, has declared that cricket is of "national importance". 

The Union Cabinet on Thursday approved an ordinance that makes it mandatory for private broadcasters to share live feed, without advertisements, of sporting events of national importance with public broadcaster, Prasar Bharati’s Doordarshan and All India Radio.

The government will introduce a Bill in the Budget Session of Parliament to make the ordinance a law.

This ordinance applies to matches in India and abroad. A committee will be formed comprising members of Prasar Bharati and the Board of Control for Cricket in India to determine the technical feasibility of feed encryption, which restricts the DD feed to India.(link)

And marvel over  this:

"It will now be obligatory for every content-right owner and TV and radio broadcasting service provider to share their live telecast signal without its advertisements for such sporting events as prescribed by the government," said broadcasting minister Priya Ranjan Dasmunshi. (link)

(By the by, PR Dasmunshi, is the gentleman responsible for single-handedly guiding Indian soccer from at least a moderate Asian force to its current 14th from the bottom ranking, a few notches above football powerhouses like Afghanistan and Brunei Darrusalam)

It’s not a long stretch to interpret ‘sporting events’ as ‘cricket’, or more accurately, One Day International cricket, since the five day test matches are obviously too popular and would thereby reduce our national productivity.

But the Test matches would not be shown live.

However, for Test matches, the government has said live feed would be required only for matches played in India while for those played abroad, the highlights would be sufficient.

The impetus for this kind of law-making stems from the fact that a private media company, Nimbus Communications has paid BCCI the rights (in an open bid) for all cricket matches involving India. Nimbus is telecasting these matches through a paid channel not available to a large section of the Indian populace.

As the Eminent Blogger says – such a law is simply government-sanctioned robbery (I also like the IBNLive headline "All matches our property: Govt makes ordinance"). Doordarshan will put in zilch effort, and gain 25% of ad-revenues, which given its reach, is going to be monumental for most cricket matches. As Sambit Bal, wrote in an excellent article for Cricinfo, on the wrangling over broadcast rights with Nimbus:

Nimbus paid a hefty $612 million for the rights and is entitled to fight to protect its territory. Doordarshan has paid nothing, and has nothing to lose. Every rupee it can earn from televising the matches is a bonus. Yet it has chosen, either through sheer negligence and incompetence or because of arrogance and greed, or quite possibly a mix of all the above, not to comply with a reasonable request to encrypt the live feed to ensure that it isn’t freely available for redistribution by cable operators in India and other satellite networks abroad.

The government on the other hand is seemingly saying that watching sports is a public right. Now, it can be argued that for sporting events played in Indian cities, in stadiums and facilities paid for by the Indian tax-payer, the latter does have some right to watch such events [1]. However, as far as my knowledge goes, BCCI is a non-governmental organization that runs on its own, through self-generated revenue. Local cricket stadiums are built by state-associations funded by BBCI. And of course, any such right is moot for games played on foreign soil. If the government is so concerned about people watching cricketsporting events, it should have gotten its act together and made a bid for broadcast rights in the first place. And why the mandate that Doordarshan can carry is own advertisements – that simply smacks of opportunism ?

 Eventually, if there aren’t enough homes in India that can watch live cricket due to the absence of the paid-channel, shouldn’t the popularity of cricket decline anyway ? This in turn should force the cricket board to do something about it.

Anyhow, it is probably good news in a sense – since cricket is now of national importance, the Indian government is obligated to ensure that none of its citizens are deprived from watching the team in action. Therefore, I am sure they will arrange for for the forthcoming World Cup in the Carribeans to be shown free for citizens here in the US. This will teach a lesson to those capitalist pigs, DiretcTV, who want $200 of my hard-earned post-doc money.

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[1]: There is indeed a similar debate in the United States, where DirectTV, a paid satellite provider holds the rights to broadcast all of the American football matches. Only matches of local interest are shown on free-to-air channels. In this case, even though the football league and the teams are privately owned, the games are played on tax-payer subsidized stadiums.

Thanks to Rohit for inputs.

UPDATE: Homer makes a good point: the on-going Ranji Trophy Championship finals between Mumbai and Bengal, featuring players such as Tendulkar, Zaheer Khan, Sourav Ganguly etc., has been deemed not "nationally importan" enough by the venerable Doordarshan.

Also, posts by Nitin, Jagasdish, Gaurav and Yossarin on the topic.

Written by BongoP'o'ndit

February 1, 2007 at 9:54 am

Posted in Cricket, Economics, India, Rants

Global Warming: India, China and the US

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Cross-posted from here. My not so subtle manner of letting people know that I am co-blogging at yet another blog. Details later.

Over at Marginal Revolution, Tyler Cowen outlines various options/scenarios vis-a-vis India and China’s fossil-fuel consumption (and consequent contribution to global warming) and possible responses from the US.

1. China and India are less locked into fossil fuels than is the United States, and as Brazil has done they will take the lead in moving toward energy alternatives. America does not need to get them “on board,” and given their cooperativeness American energy policy will matter at the margin.

2. We can cut a deal with China and India at a suitably presented international convention. China and India will enforce this deal and abide by it, overcoming previous problems they have had ruling their provinces and avoiding excess decentralization.

3. Forget about the international conference, we can pressure China and India by twisting their arms. Like we’ve done with the Chinese currency. We also can threaten them with trade taxes, as has been discussed in Europe.

4. We are best saying nothing to China and India and calling no conference. There is some chance they will act unilaterally, out of pride and the desire to upstage the United States. External pressure will be counterproductive, remember British imperialism and the Opium Wars?

5. China and India will continue to be major polluters. If we tax American-generated carbon we pay a big price in terms of economic growth but make no real progress on global warming.

6. We do not know what China and India will do, but the United States is a world leader and ought to move first, set a good example, and do the right thing.

As noted later in the post, the cost for either India or China to be reduce global warming contribution might not be very high in real terms, but the important problems are institutional.

There are potential incentives (#2) and disincentives (#3), both political and economic, that might compel the two countries to overcome such barriers. But I doubt that either country will act unilaterally (#4) out of pride or to upstage the United States, even if under the remote possibility that USA is able to set a ‘good example’. Conventional wisdom says that while protecting the environment and reducing fossil fuel consumption are noble goals, China and India’s interest at this stage is obviously better served through economic growth and that is where all policy will be directed.

What interests me though is the flip side question: will investment in cleaner energies now actually make the Chinese and Indian economies grow at at a more rapid pace ? I am not an expert by any stretch and would welcome comments from those who are. However, a couple of intuitive points come to mind.

First, cleaner burning systems means more efficient systems, which should be beneficial in economic terms, right ? Second, independence from natural gas might serve the political interests of the country, since it would not have to pander to the interests of oil rich countries to ensure smooth economic growth.

As noted in the original post, Brazil has taken a lead in innovation towards energy independence – would be interested to know if how that has helped the growth of their economy.

Written by BongoP'o'ndit

January 10, 2007 at 12:18 pm

Posted in Economics, Environment

Chewing on trans-fat

with 10 comments

[UPDATED]

The recent decision by New York City’s Board of Health to ban the usage of trans-fat in all restaurants (and catering units) in the city bothers me. Ever since I heard about the initial proposal few months ago, I have not been able to decide whether it is a good or bad idea. 

On one hand, the ban is a classic example of the government poking its nose in matters that should be left to individual choice. It sets you on a slippery slope of nanny-statism and is arguably just a step away from enforcing daily compulsory jogging. On the other hand, since trans-fat does increase the risk of heart-attack and other medical conditions, there is the question of a burden on the public health system (leaving aside the libertarian argument that the state has no business being involved in health-care at all). Even if you have private medical insurance, your falling sick probably raises the overall premium for the population. Besides, you are taking up the time of doctors and nurses who could be treating other patients. 

Two similar examples in this context is the ban on smoking in public places and the mandatory usage of helmets while motorcycling. The ban on smoking is less ambiguous in the sense that one individual’s habit should not affect the health of another directly. In case of helmets, one can argue that chances of a fatal injury requiring intensive medical care is much more probable than the possibility of say an heart attack due to consumption of trans-fat. In both these cases I am in favor of state intervention.

Coming back to the ban on trans-fat, Professor Richard Posner, of the Becker-Posner Blog, performs a crude cost-benefit analysis and in conclusion says  (H/T: Confused):

My cost-benefit analysis is, necessarily, highly tentative. However, it inclines me to a sympathetic view of the trans-fats ban. I anticipate strong opposition from libertarians.

Do read the full post – this is a surprising endorsement from an usually libertarian voice.

Still, one wonders how much purpose the ban will serve. Folks who are diet- and health-conscious (and therefore at low-risks for diseases) already avoid trans-fat as much as possible. And such people are usually of an economic status to be able to make the choice of eating healthy. Those who live sedentary life-styles are at a higher risk for diseases anyway – trans-fat or not. For the urban poor and inner-city population, such a ban will also raise the cost of eating. Besides, one remains free to cook with trans-fat at home.

My personal preference would be to not ban trans-fat altogether, but rather force restaurants using the oils to prominently declare as such. Leave it to the consumer to make the healthy choice.

(Thanks to Confused for inputs and discussion that lead to this post. Stay tuned for his own take which is due to come out soon).

UPDATE: Confused has a post on helmet/seatbelt regulations and safety. It is somewhat related to this discussion as far as individual freedom versus public safety is concerned. He makes a good point regarding mandatory helmet/seatbelt usage:

The trick here is to couple the use of helmets with other public policy initiatives. For example, clearly demarcated road space for bikers or education for car owners that bikers have as much right to be on roads as they have- a fact which sadly enough car owners in India don’t realize. Similarly, seat belts are more useful when heavy penalties are given for other traffic law violations-over speeding or drunken driving. Another very important aspect is proper education: seat-belts/helmets save lives but not in every case!

This was implied but not clearly stated in my post. Simply banning trans-fat might not reduce the risk of all heart diseases – one needs public education too regarding other healthy practices.

Anyway, after reading the comments from Brian, I have to say I am more convinced by the pro-ban arguements – but I can’t get rid of this nagging feeling that somewhere along the line there needs to be more personal responsibility.

Written by BongoP'o'ndit

December 19, 2006 at 2:37 pm

And finally the Peace Prize

with 2 comments

Awarding a ‘Peace Prize‘ in a world full of conflict may sound like a twisted irony to the cynical mind like mine – but it is tough to argue against this year’s awardee. Muhammad Yunus and the Grameen Bank of Bangladesh has been fighting poverty where it really matters – on the ground, at the source – not at rock concerts or meetings at five star hotels over a gourment dinner. Help the poor by providing an opportunity to lift themselves out of poverty through their own will (as opposed to welfare handouts) – that is a credo I strongly believe in and one that the Grameen Bank strives for.

There will of course be some detractors , but in my mind it is a worthy choice.

For the last two weeks, the blog has been obsessed with the Nobel Prize (previous posts here, here and here). Blame that on a busier than usual schedule at my day job and not much in terms of other news that interest me.

Regular irrevence will resume shortly.

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Written by BongoP'o'ndit

October 13, 2006 at 7:58 am

Fisking an economist on football

with 5 comments

I am all for economists like Tim Hartford, Steve Levitt, Tyler Cowen and others popularizing a rather forbidding subject through books and blogs. But at certain times and instances, a line needs to drawn. For example Russell Roberts at Cafe Hayek links to a piece by Allen Sanderson, a lecturer in Economics at the University of Chicago regarding faults with soccerfootball, which is supposedly an economic analysis.

However, written with a prejudiced view, not only of football, but of Europeans and football-fans in general, the article makes unsubstantiated conjectures galore, with nary a reference and expresses a naivete of its author that bordes on silliness. In another words, all set for a good fisking (just like this article that came before).

(click on more to read the rest)
click here for more

Written by BongoP'o'ndit

August 11, 2006 at 2:36 pm

Have you seen this man ?

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……or, more importantly, do you recognize him ? If you do, you could pocket a cool 100 bucks – only if you go up to him and say hi.

Steven Levitt, economist extraordinaire and author of Freakonomics has devised this social experiment to determine if he is an easily recognizable celebrity or not. I really don’t stand a chance (to get the money) – neither will I be in Chicago or Levitt be making a trip down to Chapel Hill anytime soon. Plus, I am bad at faces. I searched up his images on Google, and he looks a little different in every one of them.

Wonder what happens if a local TV station gets wind of this and publicizes the offer on TV ?

Previous post on Freakonomics here.

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Written by BongoP'o'ndit

May 26, 2006 at 11:34 am

Posted in Economics, Fun, Trivia