Zoo Station

While on the topic of Happiness, take a look at the recent issue of Daedalus, a publication by the American Academy of Arts and Science. There is an interesting article which historically surveys how happiness changed from the notion of 'pleasure in virtue' to the notion of 'virtue in pleasure and pleasure in virtue'.

I recommend this Journal for one simple reason - that the journal always has a wonderful collection of articles from people in very different areas with very different viewpoints. The journal has previsouly focused on issues such as Learning, Science, International Justice, Beauty etc.

p.s. While browsing their website, I realised that Senator Paul Sarbanes (of the Sarbanes-Oxley Act) has recently been elected into the Academy. Comments?

Following the trail of blogs by Reuben and Jaideep, here is interesting evidence that compared to Americans, Europeans do have different perceptions of happiness. This academic piece finds that

In Europe, the poor and those on the left of the political spectrum are unhappy about inequality; whereas in the US the happiness of the poor and of those on the left is uncorrelated with inequality. Interestingly, in the US, the rich are bothered by inequality. Comparing across continents, we find that left-wingers in Europe are more hurt by inequality than left-wingers in the US.

The authors conclude that this is consistent with

the perception (not necessarily the reality) that Americans have of living in a mobile society, where individual effort can move people up and down the income ladder, while Europeans believe that they live in less mobile societies.

If the goal of public policy is to make people happier, perhaps one should consciously change (and pay attention to) societal perceptions of success. Not surprisingly, cultures that view effort and talent more important for success than birth, religion, caste and corruption are likely to be happier.

For a while in the 90's, all the talk in global economic and financial circles was about the emergence of the tiger economies of south-east Asia. The meltdown put an end to that. The term "tiger economies" is now enjoying a new lease of life. The players have changed though. It now refers to the Indian and Chinese economies rather than the south-east Asian ones. Morgan Stanley has a new report out called "New Tigers of Asia" which offers a comparison of the growth prospects for the Indian and Chinese economies. Andy Mukherjee excerpts some of the relevant portions of the MS report for Bloomberg.

If the Indian economy grows 8 percent annually, and if Indian households mimic their Chinese counterparts' propensity to own cars relative to incomes, then in a short span of four years India's car market may more than double to rival China's 2003 total of 1.76 million units. In the worst-case scenario -- in which the $575 billion economy expands no more than 6 percent a year, and Indians are more reluctant than the Chinese to splurge on new cars - it will still take only eight years before India becomes the world's fourth-biggest passenger-car market after the U.S., Japan and China.

Telecommunications will be the other industry to watch. Morgan Stanley's best-case estimate is for India to reach China's current level of 295 million fixed-line phones in seven years, up from 46.5 million subscribers at present.

Chetan Ahya and Andy Xie of Morgan Stanley dont paint an entirely rosy picture though.

While India's economy did grow 8 percent last year, there's reason to doubt if that's a sustainable rate for the country that has since 1990 attracted less than 7 percent as much in foreign direct investment as the $480 billion that has poured into China. Besides, India saves only 24 percent of its gross domestic product, compared with a 39 percent savings rate in the most- populous nation -- another reason for India's growth aspirations to remain shrouded by lack of capital.

Almost three-fifths of the power India generates yields no revenue because of theft and distribution of free electricity to farmers. That means industrial power users pay rates that are among the highest in the world, and are double of Chinese levels. That's a big drag on India's export competitiveness.

High customs tariffs in India, amounting to 15 percent of the value of goods imported into the country, curb consumption. In China, where tariffs are only 3 percent of the value of imports, Consumer durables are a third cheaper than in India.

India's labor productivity in manufacturing industries is in disarray because of the country's neglect of basic education. In an eight-hour shift, a Chinese worker produces 35 shirts. An Indian worker manages 20.

Let me make a few quick points about the car market. Until very recently, India sold more cars than China did. The meteoric rise of China's car market is a post-1999 phenomenon. I don't know for sure what the reasons are, but I suspect it may have to do with taxation as much as it does with better transportation infrastructure. The state of roads are a no-brainer. China has much better roads than India does. Tax structures are something the Indian govt could do something about. I think the cost of cars can be brought down dramatically if taxes are brought down and increased competition is encouraged. After all, this is how the mobile phone market took off. Of course, given the current state of tranportation infrastructure in India, it's a valid question to ask whether we really need any more cars on the road.

PS: You can find a more detailed version of the MS report here.

The BBC is carrying a remarkable story of Indian ingenuity when it comes to using condoms for everything but contraception. A fine way for tax-payer money to be spent too, given that condoms are hugely subsidised in India.

The weavers of the holy city, home to the world-famous Banarasi saris, have made the contraceptives a vital part of garment production. The weaver rubs the condom on the loom's shuttle, which is softened by the lubricant thus making the process of weaving faster. The lubricant does not leave any stain on the silk thread which might soil the valuable saris. There are around 150,000 to 200,000 hand and power looms in Varanasi alone and almost all are using the technique. And every loom has a daily consumption of three or four condoms. At first, weavers stocked up on condoms from the family planning department under a government scheme to provide them free of cost. Some weavers even registered with fake identities to get their hands on the precious prophylactics.

Other uses of the prophylatic?

Villagers use them to carry water when working in fields

For waterproofing ceilings: condoms are spread under the cement-concrete mortar

Can be mixed with tar and concrete to give a smooth finish to roads

Can be placed over the ends of guns to protect them in desert sandstorms

Drugs 'mules' swallow condoms filled with drugs to smuggle them across borders

I guess the next time the Indian govt trots out data on increased condom usage, one has every reason to be mighty suspicious.

Francis H.C. Crick, co-discoverer of one of perhaps the five most discoveries of the 20th century -- the double helix structure of DNA, with James Watson -- died in San Diego, of colon cancer.

No, not in terms of actual innovation or world class tech companies, but according to ZD Net, Bangalore is on the verge of overtaking Santa Clara as the world's largest concentration of tech workers. Currently, Bangalore has about 160,000 tech workers compared to 175,000 workers in Santa Clara. In this case, technology is broadly defined as computer design and related services; telecommunications companies; Internet service providers and Web-search portals; data processing, hosting and related services; and computer and electronic product manufacturing.

MK Shankaralinge Gowda, secretary of IT and biotechnology for the state government of Karnataka, said that the number of tech workers in the region will exceed 200,000 between 2004 and 2005, as IT and business process outsourcing companies continue to rapidly hire workers.

The 175,100 figure may not capture all the tech-related jobs in Santa Clara County. Some technology positions may show up in other statistical categories, such as employment services. For example, employment services would include an employment agency that might send programmers to work on a temporary basis for other companies.

Is this bad news for Silicon Valley? Not really.

Ruth Kavanagh, peninsula labor market consultant for Santa Clara County at the EDD, said that despite the Bangalore claim, Silicon Valley is experiencing employment growth levels similar to those in boom years.

"In recent months, we have seen significant improvement in the jobs situation. Between May and June [including non-tech jobs], we had growth rates very similar to those in 1998 and 1999. The county is gradually gaining back some of the thousands of jobs lost in the last couple of years," she said. Kavanagh suggested the impact of offshoring may be overstated, referring to a separate report by the nonprofit Joint Venture: Silicon Valley Network earlier this month.The shift of work to lower-wage countries is just one of a number of global forces affecting job creation and loss in the region, according to that organization's report.

In addition, Angry Bear has some data on starting salaries in tech-related industries. CS majors are up almost 5 per cent, while information sciences are up in excess of 8 per cent. Perhaps, the hoopla over outsourcing was a little overblown?

PS: As far as technology goes, I think this is a fairly narrow definition of technology thats being used. So, if one were to include technologies like bio-technology, nano-technology etc, I wonder what the employment numbers would look like. Is there as much bio-tech activity in Santa Clara as in Bangalore, for example?

Is "live to work" a better way to live life than "work to live"? Is the Anglo-Saxon work ethic better than the continental European one? Is the 35-hour work week a threat to economic prosperity? Personally, I have always been conflicted about these questions. While I tend to think intuitively that ideas like the 35-work week might be harmful, the economic evidence seems to suggest that European workers are actually more productive than Americans. In an earlier post, I had pointed out that economies in the EU zone, excluding Germany, grew at least as fast as the American over a decade. Cleary, these questions merit serious attention (since they are not the "slam-dunk" a lot of U.S. policy-makers assume it to be) as they will help with formulating public policies even in the newly emerging markets of the world. Katrin Bennhold addresses some of the issues at stake.

Europe, the standard criticism goes, has not matched the American expansion for most of the last decade and has even fallen behind Japan in recent quarters. Its citizens are on average almost 30 percent poorer than their counterparts on the other side of the Atlantic, according to the Organization for Economic Cooperation and Development, a group of 30 countries committed to democracy and the market economy. Potential growth in the next decade risks being stuck at 2 percent - one percentage point below that of the United States.

Some economists and European officials argue that, rather than reflecting a failure to catch up with its more industrious competitors because of faltering productivity growth, Europe's more modest income level mainly reflects policy choices that have tended to put a premium on leisure and equality at the expense of greater wealth.

Over the last half century, Western Europeans have gradually opted to work less and take longer vacations. They have put in place varying national versions of public universal health care, education and retirement benefits. They have set up a complex web of minimum income legislation, including unemployment subsidies and disability benefits, and basic social welfare, in an effort to limit the risk of destitution.

"The welfare state is an efficiency device against market failure,'' said Nicholas Barr, a professor of public economics at the London School of Economics. "It's a perfectly rational policy to accept lower output for higher welfare.''Or as Joaquín Almunia, European commissioner for economic and monetary affairs, put it, for Europeans, economic growth is a tool, not an end in itself. "We are not in a race with the U.S.,'' he said. "Our goal is not to grow as fast as the U.S. or anybody else, but to do what we need to protect our economic and social model.''

Some economists say Europe's social model is costing it dearly. In a society that prides itself on egalitarian values, too many people are unemployed or outside the labor market, doubly raiding public coffers by not paying taxes and often receiving benefits at the same time. The jobless rate in the European Union's 15 old members rose to 7.8 percent last year, compared with 6.1 percent in the United States, said the OECD. With a growing number of retirees, joblessness is increasingly straining the continent's state-financed pension and health systems: the combined burden is forecast to rise to as much as 8 percent of gross domestic product in most European Union member nations, the European Commission estimates.

A generous welfare state does not only have costs. Europe has less child poverty, a lower incidence of illiteracy and a smaller prison population than the United States, OECD statistics show. Europeans have a slightly higher life expectancy and can hope to spend more of their old age in good health than Americans.

Ultimately, is economic growth about individuals being happier (as a result of economic growth, increased incomes etc) or is economic growth good in and of itself?

According to surveys by the World Database of Happiness, which is run by Prof. Ruut Veenhoven at Erasmus University in Rotterdam, the Netherlands, residents in many European nations are more satisfied with their lives than Americans and residents in more hard-working nations, like Japan, where people have been clocking even more hours than in the United States. More significantly, measures of happiness in the America and Japan has been flat over the last 30 years, while they have been rising in most Western European countries.

Having spent some time at the World Bank myself, this was a question that I found myself asking consistently. Foreign aid and assistance have long been considered an integral part of anti-poverty programs. Whether this is effective or not is open to question. There seemed to be enough evidence floating around of misguided good intentions causing more problems than solving them, not to mention the opportunity cost of money spent on these misguided interventions (bridging the alleged "digital divide" immediately comes to mind). This is partly because there has been no real assessment made of whether these interventions delivered the results they were meant to achieve. Celia Dugger throws light on some new randomized assessment techniques being used.

A small band of development economists, who a year ago founded the Poverty Action Lab at the Massachusetts Institute of Technology, have become influential advocates for randomized evaluations as the best way to answer that question. Such trials, generally regarded as the gold standard in social policy research, involve randomly assigning people eligible for an antipoverty program to get the help or not, then comparing outcomes to see whether those who got the help fared better than those who did not.

It is the same approach that has helped drug companies figure out what medicines are effective and Americans decide how best to reform welfare. Advocates for rigorous evaluations hope to make aid more effective, not by directing money to particular countries, but by spending it on programs proven to work.

Adding an extra teacher to classrooms in rural India did not improve children's test scores. But hiring high-school graduates who were paid only $10 to $15 a month to give remedial tutoring to groups of lagging students in a Bombay slum markedly improved reading and math skills. A series of education experiments in Kenya found that providing poor students with free uniforms or a simple porridge breakfast substantially increased attendance. But giving them drugs to treat the intestinal worms that infect more than a quarter of the world's population was more cost effective, with a price tag of only $3.50 for each extra year of schooling achieved. Healthier children are more likely to go to school. "You can't answer the general question: Does aid work?'' said Esther Duflo, an economist and co-founder of the Poverty Action Lab."You have to go project by project and accumulate the evidence.''

The World Bank, a lumbering giant that employs more than 1,200 Ph.D.'s, is beginning to listen to critics like her. This summer, it is organizing large-scale impact evaluations, including randomized trials, of programs to upgrade slums, improve the performance of schools and keep children healthy and in class. The programs will be tested in dozens of countries.

Rigorous impact evaluations should become part of the bank's culture, he said.That will require deep change. A recent in-house review of bank projects during the past four to five years found that only 2 percent had been properly evaluated for whether they made a difference, according to Mr. Bourguignon.

Tech Review is carrying an incredibly unscentific, yet interesting poll on which country will be the technological leader in the year 2050. Unscientific because estimating the future of technological capability is even more dodgy than estimating economic futures, where some sort of estimate can be made, without accounting for geo-political changes, of course. Nevertheless, the poll is interesting because it reflects the increasing belief that the 21st century will be an Asian one, even if the U.S. maintains its dominance in the early part of the century. When I last checked, the technology pecking order for 2050 was the U.S. (with 25.2% of votes polled) followed by India (23.4%), China (20.8%) and "no clear leader" (12.6%).

One of my ideas of converting ZS to a team blog was to write more about emerging opportunities in India, both for NRI's looking to return and also for folks looking to invest money in India and India-based ventures. In that context, I thought it would be useful for everyone to read this account of the return-to-India phenomenon by Amy Waldman in the Times.

Drawn by a booming economy, in which outsourcing is playing a crucial role, and the money to buy the lifestyle they had in America, Indians are returning in large numbers, many to this high-technology hub.What began as a trickle in the late 1990's is now substantial enough to be talked about as a "reverse brain drain.'' By one estimate, there are 35,000 "returned nonresident Indians'' in Bangalore, with many more scattered across India.

For this still developing country, the implications of the reverse migration are potentially vast.For decades, it has watched many of its best-educated move abroad, never to come back. Now a small portion of that talent is returning, their influence amplified beyond their numbers by their high-level skills and education, new cultural perspective and, in many cases, ample wealth. They are both staffing and starting companies, 110 of which set up shop in Bangalore in just the year that ended in March. In some cases, they are seeking to refashion India implicitly in America's image. It takes leaving and returning, said Arjun Kalyanpur, a radiologist who returned in 1999, to ask, "Why should my country be any less than the country I was in?"

The downside?

Where Indian parents have long worried about how to give their children sufficient exposure to the English language and Western culture, many returnees say they worry more about how to connect their children to India. The returnees describe identities in flux, riddled with continuing questions about what to cook, what holidays to celebrate, what languages to speak, and how to interact with a country that sometimes seems as foreign as the United States once did.

Robert Wright, the author of Nonzero: The Logic of Human Destiny has a new web-based project called Meaning of Life, which includes interviews he has carried out with a bunch of people. The topics of the interviews include Consciousness, the Anthropic principle, Pantheism, Quantum Weirdness, Free Will etc etc. Interviewees include Freeman Dyson, Francis Fukuyama, Steven Pinker, among others.

While on the subject of the Tata group, I had safely predicted that the TCS IPO would create more buzz than anything the Tatas had pulled of earlier. Sure enough, the Tata group are the subject of profiles in the Economist (which focusses more on TCS) and BusinessWeek (which has a more well-rounded look at the group). In addition, BusinessWeek is also carrying an interview with Ratan Tata.

From the Economist...

Founded in 1968, TCS has long been a leader in the development of India's booming information technology (IT) industry. Indeed, it now claims to be Asia's largest IT company, with sales in the latest financial year of $1.5 billion and 28,000 employees of 30 nationalities working in 32 countries. They seem to like working for TCS: it has an unusually low (by Indian standards) employee attrition rate of about 6.5% a year. It pioneered offshore operations when it began working in America in 1973 and now offers services to firms spanning insurance, telecoms, retail and transport.

With clear advantages to be gained from going public, analysts have frequently questioned why Mr Tata did not take the plunge earlier—especially during the late 1990s software boom when the firm's sales were growing at nearly 60% a year, twice the current rate. One concern was that flotation would upset the balance of the group: TCS's expected market capitalisation will be nearly four times that of Tata Motors, one of Tata's leading five companies. But, with the benefit of hindsight, Ishaat Hussain, Tata's finance director, rationalises the delay: Indian tax reforms since the late 1990s have halved the corporation tax that the group must pay on the float and eliminated gift tax. The timing also fits in with Mr Tata's new focus on international expansion.

Now, the motives for TCS's IPO are something I have wondered about. Clearly, Tata Sons gains to benefit from TCS's float. They raise over a billion dollars which they can invest in the cash-gobbling telecom business and for their international expansion plans. What does TCS gain in the bargain? Of course, the other way to look at it is that TCS is finally answerable to its shareholders and if Tata Sons owns most of TCS, then maybe it all makes sense.

From Business Week...

The group's revenues are up 30% since 2002, to $12.8 billion last year, and profits have grown 60%, to $1.2 billion. Stock prices of the group's biggest publicly traded companies, Tata Motors and Tata Steel, have tripled in that period. And this summer, Tata is expected to raise $1.2 billion by selling 13% of Tata Consultancy Services (TCS), Asia's largest software-services player

Ratan Tata isn't satisfied: He wants the world -- not just India -- to embrace Tata products. So for the past four years he has been in global expansion mode. In 2000, Tata Tea Ltd. paid $435 million for Britain's Tetley Tea, a company three times its size, to gain a ready-made international brand. In March, Tata bought Daewoo's commercial truck operation for $102 million, with the idea of using Daewoo technology for his truckmaking operation and establishing a springboard into other Asian markets. In Britain, MG Rover Group Ltd. is selling Tata-built Indica compact cars under its own brand name, while Tata trucks ply roads from Malaysia to South Africa. The lodging division is expanding into luxury and business hotels around the world. And TCS is looking to buy software houses in North and South America.

BW also sheds some light on Tata's social conscience....

The frenetic activity represents a big change of pace for the old-world Tata group. Although the conglomerate has always been run by a Tata, family members own only a tiny stake in Tata Sons, the holding company that controls the group's ownership in the various enterprises. Instead, Tata Sons is run by a pair of trusts that get dividends from the group's operations. That money is deployed for social services such as education grants and health care for the poor. Very little wends its way back into the pockets of Tata family members.

PS: Tata is also strongly rumoured to be placing a $200 million bid for Tyco Global Network's assets.

By now, most of you have heard of the Tata group launching a new hotel chain under the brand name, IndiOne. Clearly differentiated from the upmarket Taj group, IndiOne was born out of a set of ideas promoted by C.K.Prahlad on targetting the lower end of the consumer market (and that I have posted about several times on this blog). IndiOne opened up its first hotel in Bangalore last month with about a 100 rooms. The rooms are priced at about $20 a night, features flat screen colour TV's, wi-fi access, mini-fridges, direct dial etc. In short, everything you would want from a business hotel. What's more, the average manager or executive of a mid-size firm can afford it too. IndiOne plans to open about 100-150 hotels in the next 3-4 years.

Businessworld is carrying an interview with C.K.Prahlad to coincide with the launch of the IndiOne brand. In it, he shares some of the ideas that led to the launch of the brand.

Indian Hotels had hotels that had rooms costing Rs 2,500-3,500 a night. Those were not really low-cost rooms by Indian standards. So, there was always a feeling inside the company that they have not done enough. We did a lot of research by finding out the travel budgets of managers and sales executives in medium-sized companies. The results told us that we needed to offer rooms [at] much lower [prices] than what Indian Hotels had earlier offered. We also found that budget hotels internationally costed about a fifth of the luxury hotels.

We expect to be profitable in the first year itself. Just like our pricing, our margins are also very aggressive - far more than Indian Hotels will make from its luxury project. But there is a catch. The whole idea has been devised under certain strict parameters of cost and design. The success of the project will therefore hinge on how much the management is able to run the business within these parameters. For example, there will be no concept of discounts in this model. How much the sales manager can hold in a slack season and what innovative ways he uses to sell the rooms will make the difference.

The indiOne effort can be thought of as a unique idea for not just Indian Hotels but the whole industry. This represents an important innovation from India in a traditional industry. Also, the ground-up effort by an existing management to execute a complete different model should serve as a unique learning experience in business.

The New York Times magazine has good coverage of some recent 'non-lethal' weapons. Examples include the active denial system (a blast of electromagnetic rays that create a burning sensation), mobility denial system (a slippery goo with a friction coefficent of wet ice that prevents any person or vehicle to cross the sprayed area), vehicle arresting nets and webshots. The article hints at one important reason for the higher interest in, and funding of, these weapons.
 
In an era when the American military increasingly finds itself in situations where civilians and combatants can be difficult to distinguish between, and when the line between soldiering and policy (sic) has blurred, nonlethal weapons could prove useful.

As an example...

Imagine the plight of a soldier guarding a crucial road or a checkpoint in a war zone who sees a truck barreling toward him. The driver fails to heed his calls to stop. Does the soldier let the truck keep coming and risk a possible suicide bombing? Or does he shoot and, as more than one American soldier in Iraq has belatedly realized, kill an innocent driver or even an entire family who bore no ill will but simply didn't understand his warnings?

While some potentially lethal  weapons are labeled non-lethal,  such nonkiller weapons might be especially useful in communal riots.  It could drastically reduce the 'snowball' effect. In a country such as India, where the riots can sprout from a local neighbourhood to engulf large regions, the potential losses avoided could be high.  This might make investments in such weapons economically feasible as well. As far as the definition goes, I only hope there is more atention paid to the reversibility of the damage done.  That would make non-lethal really non-lethal.

It is becoming increasingly clear that Linux, OpenOffice and other free software have become feature-rich, reliable and performant enough that they are alternatives to the commercial platforms in the American market. But in the developing world, they are in fact the only option, because even $100 and $150 are not viable price points. Selling Microsoft's Office or Windows software for $200 in India makes even less sense than selling refrigerators in the land of the Inuit. There is simply no market. A market-based approach is probably not going to be enough to bridge the enormous problem of differences in digital access and literacy in India.

In his letter to Arun Shourie, Rajesh Jain mentions server-based computing, open-source software and free hardware as part of the solution. His letter is worth a read.

1. Develop a 5-year vision for India's IT and Telecom Infrastructure
2. Promote use of server-based computing and open-source software platforms
3. Remove Anti-dumping duty on import of old PCs
4. Standardise Indian language computing efforts
5. Provide a level-playing field for alternative hardware and software solutions
6. Open up the wireless spectrum
7. Change the way we fund Research in India
8. Start a Weblog

FREE SOFTWARE As OpenOffice, Linux and other free software move towards feature-complete product sets, I am moving to a model where I run Linux most of the time, and use Windows only on occassion. That seems to be a good long-term model that tackles the issues of excessive system maintenance, frequent reboots, increasing memory requirements and frequent security updates - problems that have plagued Windows for many years, and ones that I don't see being solved any time soon. I am reasonably tech-dependent, but I haven't yet gotten into a situation where I need an application that I can't get for free on Linux, or on my old version of Windows (I have a copy of Windows XP sitting in a little booklet by the side of my computer. I could upgrade any time I want, but I have simply decided not to). I would think that OpenOffice, Linux and a few other pieces of software alone would prove to be tremendously useful in bringing the computer to the masses .

OPEN SOURCE AND OPEN CONTENT There is no commercial market for Microsoft Windows, Microsoft Word or other application software in developing countries, but there is huge demand in terms of the number of people who want to benefit from software and technology. A way I see Microsoft succeeding in a market like India is by proprietarizing content and creating unportable (or unportworthy) applications on their platform for the Indian market, thereby preventing the emergence of free or other low-solutions. This is a strategy that they have executed well in the past, and there is no reason to doubt that they will try to do so in India but such a strategy will, of course, affect the digitally underprivileged adversely, since a machine with $200 software on it probably represents a couple of years of savings for the average person. The solution then is to encourage the use of open content and open-source software, and to contribute to the software and content.

'FREE' HARDWARE The solution could also involve free hardware, something that could piggyback onto the problem of e-Waste in the developing world. There are tens of millions of computers being discarded every year. According to estimates, the United States alone had about 41 million onsolete computers in 2001, with a projection of about 500 million units becoming obsolete in the period from 1997 to 2007. China discards around 5 million computers every year. The developed nations would probably be happy to have the computers taken off their junk yards, and garages, so that somebody can put them to use. This one is a win-win.

I am watching a program on The Travel Channel on - get this - the World's 10 best Ancient Cultures still in existence today. Japan is number 9, India is number 8, and the entire continent of North America is at number 8. The concept of ranking cultures is quixotic, but oddly suspenseful. Papua New Guinea is at number 2, and I waited to see who was number 1. The envelope, please? And the winner is "Central Asia".

Meanwhile, here is Alok Rai in Outlook with a nice review of Amitav Ghosh's "The Hungry Tide", a story based on what is probably the world's best river delta.

Dreams come easy in this magic land. And part of what is at play in Nirmal's notebook is the contrast between the original utopian impulse that prompted the initial "colonial" settlements of the Sunderbans by Daniel Hamilton in the 1920s, and the subaltern-utopian motivation that underlay the appropriation of Marichjhapi island by doubly displaced Bangladeshis in 1979. Hamilton's is a sort of "Nehruvian" ambition, to make a place where people would shed their atavistic baggage of custom and prejudice and avail of the blessings of modernity.

Nature and bureaucracy - also a kind of Nature? - grind that into the mud, because of course there is little dust in the Sunderbans. Marichjhapi island was settled, briefly, by desperate refugees from the resettlement colony of Dandakaranya. The heroic and ineluctable community of these doubly-distressed Dalits was of little avail against the guns of the "leftist" government of Kolkata, deployed in defence of the "environment" but also, it is strongly implied, against subaltern presumption. Dreams are soon dead, too - in this nightmare land. Nirmal's quondam-leftist yearning for heroic, revolutionary transformation is contrasted with Nilima's modest "liberal" ambition to "make a few little things a little better in one small place... after all these years, it has amounted to something: it's helped people; it's made a few people's lives a little better. But that was never enough for Nirmal..."

Recently the BBC ran a story on the World Bank and the IMF titled “Is reform underway?”, looking at the performance of these institutions over the last 60 years. Although the philosophy behind the creation of these international organizations (IO’s) is rarely questioned, a fundamental paradox still remains as a result of the following policy.

Rightly or wrongly, when lending money to troubled economies, the IMF and the Bank attach conditions. After all, it is their job to make sure the money injected by their shareholders is not squandered by corrupt or incompetent governments.

On the one hand, retaining a significant amount of control in their investment allows these organizations to influence the creation and enforcement of strong laws and institutions, in the best tradition of macro economic principles, which will ensure that their funds are well spent.

However, on the other hand as the article states

There have been several instances where following the institutions' involvement, output and growth rates have fallen, unemployment has risen and the differences between rich and poor have grown. Critics say the conditions are often intrusive, excessive and inappropriate. And many, even among the world's elite, agree.

Due to highly differing legal, political, socio cultural, economic and environmental conditions in various countries, demands made by these IO’s cannot be generic, but must be tailored towards each specific country. Furthermore, not all conditions on a wish-list can be easily met across every country. An over-reliance on macro economic principles at the expense of socio-cultural, socio political and environmental conditions has sometimes led to contract clauses that are both stifling as well as almost impossible to achieve in the local environment.

There is also growing acceptance among shareholders that national governments should be the judges of their social and political priorities,

The call has therefore arisen for the IO’s to meddle less and act more as patrons. In fact the Delhi Metro Rail Corporation, currently engaged in building a subway rail system in Delhi, chose to be funded by the Japanese Bank for International Cooperation (JBIC) and NOT the World Bank, for exactly this reason.

The fundamental dilemma remains – What are the roles of these IO’s? What sort of structural reforms should be undertaken for them to be more effective? A strict enforcer based purely on macro economic principles at the expense of local institutional nuances is perhaps not the solution.

Here's a macabre  beginning.

Kitagawa engages in chilling conversation with indebted salarymen weighing the value of their continued existence vs. a life-insurance payout that would secure the financial future of their families. Says Kitagawa: "I try to tell them the children want their father, not the money."

This not so new BusinessWeek article focuses on the high suicide rates in Japan during the sluggish 90's. In a country where suicides were honorable ( The 'Complete Suicide Manual' was a best seller here), high suicide rates were only to be expected after the Asian finanical crisis.  While the government tries to bring down these numbers, a potentially important instrument is the reforms of personal bankruptcy rules.  The government has made the legal system faster and cheaper in an attempt to increase the numbers of 'effectively' bankrupt individuals to seek legal recourse. While culture remains an obstacle (to some extent the reforms are not attractive enough to overcome this),  this has helped more people come forward.

Now shift to India, especially the south (kerala has one of the highest 'reported' suicide rates in the world) and west bengal,  where personal bankruptcy rules are rigid and rarely used.  Investigating potential reforms (along with changing attitudes on failures) might be useful, if not life saving. 

Time was when Turkey (the Ottoman Empire, to be precise) was called the sick man of Europe. There are probably two countries within the EU today that have earned that epithet in the past 10 years -- Germany and Italy. I will post about Italy some time in the future, but this post is restricted to the moribund state of the German economy (the third largest in the world in nominal dollars and fifth largest at PPP). Germany's GDP has grown by about 1.4% in the past decade, compared with about 2.8% within the EU and 3.3% in the United States. It's income per head has plumetted to one of the lowest in the EU. The number of unemployed remains stubbornly above 4 million. In fact, take Germany out and the EU begins to look good even when compared with the United States's economy.

The reasons have been discussed by several pundits. The inflexible labour market, unwieldy and stifling regulations, high wage costs, high taxes, an over-generous welfare state, demographics are all reasons quoted regularly in the media. Above all though, there is the cost to the Germany economy of reunification, which has really not worked out as planned. Reunification meant that overnight a nation was created with per capita incomes 13%-15% lower than in the former West Germany. And despite over $1.5 trillion being poured into the east since 1990, the high expectations from the time of reunification remains mostly unfulfilled. Mark Landler sheds more light on this in the NYT.

In its zeal to put the east on an equal footing with the west as fast as possible, the German government created a society addicted to welfare and other subsidies. The private sector withered, and by the mid-1990's the gap between east and west began to widen alarmingly. Now, with the jobless rate in some cities topping 20 percent and young people continuing to leave for the west, a national debate has begun over how to heal this limping land.The urgency is being driven in part by the eastward expansion of Europe, which has brought 10 new countries into the European Union. With their energetic workers and low wage levels, Poland, the Czech Republic and Hungary could further erode eastern Germany's position.

Having poured $1.5 trillion into the east since reunification in 1990, many Germans now regard this grand project as a costly failure - one that could drag down the rest of the country. "If we do not address eastern Germany, the financial burdens on Germany will become unbearable in the next 15 years," said Klaus von Dohnanyi, a former mayor of Hamburg. Mr. von Dohnanyi was chairman of a commission formed by the German government to draw up a blueprint for the east. The group submitted a bluntly worded report in June, recommending that the government direct the $110 billion a year it pours into eastern Germany away from public works projects like roads and bridges. Instead, the report said, it should support companies that might provide employment as well as promote research and education.

The reality is that eastern Germany does not need more public swimming pools or renovated apartment complexes. It needs more jobs, which would lure back the people who migrated to western Germany in search of work. The population of the five eastern states fell to 15.1 million in 2000, from 16.7 million in 1990.

Georg Milbradt, the prime minister of Saxony, said that Bavaria was able to reverse an exodus of people during the depressed 1950's by turning Munich into a center for the automotive and computer industries. Mr. Milbradt said the east can prosper only if it shakes off Germany's stifling labor regulations. That would drive down wages here and make the region competitive with its eastern neighbors. The trouble, he concedes, is that this would require the government to overhaul not just its policy toward the east, but its entire economic program.

To make a start both swift and weighty, here is a little post on semiotics that I have been saving up.

I first heard the term 'semiotics' on account of a course on rhetoric taught by B. Subramanian at IIT Madras, in the context of Umberto Eco's "The Name of the Rose". I had never heard of semiotics before, much less of a professorship of semiotics. As Eco puts it, semiotics is 'the study of everything that can be taken as a sign'. You wonder if the dude deliberately uses the title of Professor of Semiotics just so that people will ask him what the heck it is.

Consider a country where traffic lights have the green light on top, amber next and red at the bottom (as opposed to the traditional red light on top). This should be fine as far as humans as concerned, but dogs are color-blind. If they are trained to watch the stack of lights from top to bottom, seeing-eye dogs are going to get fooled into waiting every time the light changes to green, and worse, cross the road along with the blind person as soon as the light changes to red. (Seeing-eye dogs are actually trained to watch the traffic, not the lights, so let us call these the 'stack of light' dogs). The elements of sensation are the same in both cases, But consider this : what is seen as a signfied in the environment has nothing to do with the environment itself. It has to do with the observer. The signs that the human reads in the environment are different from what the 'stack of light' dog reads in the exact same environment.

Many animals do not see in the same band of the spectrum as humans do. So, the world they see must be very different from the world we see. This is not limited to sight alone. The other senses are also similarly dissimilar.

John Deely, in this paper from Semiotica, talks about Uexkull's contribution to the field of semtiotics :

What Uexküll uniquely realized was that the physical environment, in whatever sense it may be said to be the ‘same’ for all organisms (we are speaking, of course, of the environment on earth, though much of what we say could be applied, mutatis mutandis, to biospheres on other planets should such eventually be found), is not the world in which any given species as such actually lives out its life. No. Each biological life-form, by reason of its distinctive bodily constitution (its ‘biological heritage’, as we may say), is suited only to certain parts and aspects of the vast physical universe. And when this ‘suitedness to’ takes the bodily form of cognitive organs, such as are our own senses, or the often quite different sensory modalities discovered in other lifeforms, then those aspects and only those aspects of the physical environment which are proportioned to those modalities become ‘objectified’, that is to say, made present not merely physically but cognitively as well.
...

He then uses the idea of different spectrums of vision to illustrate the idea of 'objects' in his example below, and to further, explain the concept of an Umwelt :

If my eyes are normal and a traditionally equipped classroom is lighted, I cannot fail to see the black rectangle against the lighter background that I will interpret as a blackboard affixed to a wall. But what my eyes objectify and what my mind makes of that vision remain as distinct as sensation as such in contrast to perception which alone transforms sensations into objects experienced, like dark rectangles against lighter surfaces ‘seen’ to be blackboards on walls.
...

Great logical exposition. I love the way Deely goes on about 'objects' and 'things', though. The dude has his moments of unintended humor.

Now there is a great difference between an object and a thing. For while the notion of thing is the notion of what is what it is regardless of whether it be known or not, the notion of object is hardly that.

Q : So, there is this thing called a thing, and this thing called an object?
A : No, an 'object' is different from a 'thing'.
Q : So, an object is not a thing?
A : The 'object' may or may not be a thing.

There is humor in that paper after all, but seriously, folks, the article is complex and scholarly, but it requires no previous background. It is certainly worth reading in full, just for John Deely's sheer brilliance of exposition, and especially if '[the term Umwelt] is destined (such is my guess) to become a term of general use in philosophy and intellectual culture.' I wouldn't bet on it, though :)

Zoo Station awoke this morning from uneasy dreams to find itself transformed on its host into a fabulous team blog.

Folks, I have been threatening this for some time now -- to convert Zoo Station into a team blog in order to prevent lags in blogging when I am busy, to increase the diversity of content and so on. I had been talking to several people about the possibility of contributing to ZS on a regular basis and that process has resulted in this team blog. Joining me on Zoo Station today are...

Amit Chakrabarti -- Assistant Professor of Computer Science at Dartmouth

Ashwin Mahalingam -- Ph.D. candidate in Civil and Environmental Engineering at Stanford

Anand Manikutty -- Senior member of technical staff at Oracle

Vinay Nair -- Assistant Professor of Finance at the Wharton School at UPenn

Abraham Thomas -- Director of G7 trading at Simplex USA, a hedge fund in Princeton

Jaideep V.G. -- Editor-in-chief for Rave, the premier Indian entertainment magazine

Though the tone of ZS will probably remain the same, there will be a slight shift of focus as we look to concentrate more on India. This does not mean less international news and perspectives nor does it mean less entertainment, reviews etc. It simply means there will be more of India.

When I started this blog, I never expected it would last this long leave alone expecting it to transmogrify into a team blog. I hope the new bloggers on ZS will enjoy blogging on here as much as I have. You, dear reader, will almost certainly have better content at your disposal from today. Enjoy.

Will Microsoft change China or will China change the way Microsoft does business? That is the question. I have watched with great interest MS's repeated attempts to crack the world's second largest software market. MS has been pouring money into various projects in China -- $750 million to train software and hardware developers, $10 million to wire local schools, developing computer courses at 36 universities etc etc. All in the hope that the Chinese consumer will get hooked to MS products and to ward off the real threat of China going the Linux way. As Steve Ballmer said in a moment of candour, China is the one country/economy that can threaten established global computer standards.

Throw India into that mix and it does seem like MS will need to do something quick to establish a foothold in the two largest emerging economies. During my stay in India, I saw many, many more commercials in the newspapers for both laptops and desktops with Linux on-board than I have ever seen in the United States. In addition, most of India's home computer market is grey in colour and pirated software is the order of the day. Under the circumstances, what is Microsoft to do? Newsweek throws some light.

Microsoft doesn't break down its China numbers, but Beijing tech analyst Huang Yong estimates that the company is in fact losing money in China on yearly revenue of $200 million to $300 million (out of $35 billion worldwide).

For Microsoft, the problem with doing business in China comes down mainly to one thing: piracy. Touts line the street outside a new $80 million Microsoft research center in Beijing, steering customers through alleys to run-down apartments where bootleg copies of Microsoft Office and Word are peddled for about $1, at least $199 less than the global retail price. Ninety percent of Microsoft products used in China are pirated, and for years the company battled back with its signature mix of bullying and intimidation. But in China the government has been sympathetic to the pirates, openly hostile to the Microsoft monopoly and officially embraced Linux, the free rival to Windows. Cheap software has been critical to China's economic boom, and Beijing saw no upside to forcing citizens with an average annual income of $1,000 to spend much of it on Windows.

The new Microsoft China strategy attempts to create a constituency for full-price software, starting with the political and business elite. This means improving customer support for big Chinese companies, helping Beijing develop a domestic software industry trained on and tied to Microsoft products, sharing more technology than it normally would and easing up on buyers of pirated software (but not on pirates).

To me, the central problem seems fairly straight-forward -- MS is trying to sell $200 software in a country where the per-capita annual income is about $1,000 (they refuse to bring prices down). Look guys, software is a high fixed-cost, low-marginal cost business. So, price discrimination seems like the only trick that will work in China and India, if you want to have a realistic chance of fighting off the pirates and Linux. I dont know what an ideal price point in China would be, but I can guarantee that at $200+, most sane people (in India and China) are not going to bite, especially since real alternatives exist. The Windows OS for $10 perhaps? Office for another $10?

Shanghai's booming economy (growth of 14.8% in the first 6 months of 2004) has begun to create a unique set of problems, according to the BBC. Shanghai is reeling under a heat wave, with temperatures rising above 38 Celsius, meaning that use of air-conditioning has reached all-time highs. Obviously electrical supplies are strained and the authorities are having to ration electricity in order to prevent wholesale power cuts. As a result, a few thousand Shanghai businesses have been asked to shift operations from day to night to ease the strain on power supply. Clearly, the economy could use some cooling down.

There are serious lessons India can learn from Shanghai's predicament. After all, 38 celsius may be bloody hot in Shanghai, but its just a pleasant summer's day in Delhi (where temperatures go over 45 celsius fairly frequently). And China has a real winter, unlike most parts of peninsular India. So, it would probably help if planners start thinking of encouraging the building of energy-efficient "green" buildings to avoid massive power-cuts, electricity rationing and so on. To that extent, it is great news that the world's greenest building is now in Hyderabad. It would also help to spend some research dollars on innovative new means of captive power generation. Captive hydel power generation anyone?

The Wall Street Journal has an interesting editorial on the importance of sound immigration policies in keeping America's powerful economy going. Obviously, the editorial has a right-of-centre slant (given that its the WSJ), but it does make some interesting points, some of which have been mentioned on this blog before.

So much of today's contentious immigration debate focuses on those arriving from Latin America to work in agriculture or take low-level service jobs that Americans tend to spurn. But a new study by Stuart Anderson of the National Foundation for American Policy reminds us that the contributions of skilled foreign-born professionals and their offspring are no less important to the U.S. Without them the country would be hard pressed to maintain its world-wide advantage in such fields as math and science.

The report, titled "The Multiplier Effect," will be released on Monday and available at www.nfap.net. Here are some highlights:

-- More than half of the engineers with Ph.D.s working in the U.S., and 45% of the nation's computer science doctorates, are foreign-born.

-- Children of immigrants comprise 65% of the 2004 U.S. Math Olympiad's top scorers (13 of 20) and 46% of the U.S. Physics Team (11 of 24).

-- At this year's Intel Science Talent Search, which recognizes the nation's top math and science students, 60% of the finalists and seven of the top 10 award winners were immigrants or their children. Last year, three of the top four awardees were foreign-born.

While the whiz kids and their parents hail from nations as far-flung as India, Romania, China, Vietnam, Israel, Turkey and Russia, many are here on a very limited number of H-1b visas that are reserved for immigrants with technical skills. These visas are given out to fewer than 100,000 foreigners each year, which is less than .04% of the 293 million individuals who live in the U.S.

At the same time these findings help illustrate that our economy benefits substantially from immigration, in particular from H-1b visa recipients and their children. Any policy that would depress the influx or close off our borders altogether is not in America's long-term interest, especially in a world where economic growth and competitiveness will depend above all on human capital. If we had listened to the anti-immigration crowd over the past 20 years, says Mr. Anderson in an interview, "we would have wiped out two-thirds of the top future scientist and mathematicians in the United States because we would have barred their parents from ever entering America."

In an earlier post, I had made a passing reference to some excellent new music I had been discovering in the past few years. Right at the top of that heap is Zero 7, the English electronic outfit. I first listened to the awesome track, Destiny, at the Launch website for new videos and have been a fan since. Zero 7 are two studio engineers turned musicians from London, Henry Bins and Sam Hardaker, backed by soul vocalists like Mozez, Sia Fuller and Sophie Barker. They made their mark remixing for acts like Radiohead and Lenny Kravitz, but ever since Simple Things went platinum, they have had others remixing their music.

When it Falls is Zero 7's second album and it proves that "Simple Things" was no fluke. With its chillout meets electronica meets downtempo meets trip-hop meets acid-jazz meets soul feel, this is one of the best albums I have listened to this year. In particular, check out the title track, which really gives trippy music a very good name indeed. Forget what the reviewers are saying (and most of it is good) and go listen for yourself.

PS: As an aside, a track of the new album "Somersault" was the 100 millionth download at the Itunes website.

PPS: If you want to test-drive Zero 7 before you buy, you could either download Destiny for free or watch a bunch of free videos here.

I had made a post in March about the fledgling migraton of foreigners into Bangalore -- a very welcome trend I had been observing every time I visited Bangalore. I had also made the point that this increasing cosmopolitanism seemed to preclude Americans for some reasons, since most of the people I kept running into were Europeans, not Americans. In this profile of an outsourced American working for Infosys in Bangalore, Joshua Bornstein, Amy Waldman makes similar points.

He has become a member of a cosmopolitan village that has formed as multinational companies flock here, and Indian companies try to become multinationals. The city is full of foreigners - 10,000 to 12,000 are registered here with the government's office of foreign registration. At some bars, the crowds are so mixed they look as if they could be in London. The foreigners are staffing multinational companies and filling five-star hotels to overflowing. Those here for longer stints are living in exclusive housing complexes, and international schools are springing up for their children.

Few Americans are among them, even though previous generations of young American graduates have pursued literary careers in Paris or tried to take capitalism and democracy to Russia and Eastern Europe. India would seem a logical next choice, given an economy that grew by 8.2 percent last year, a software and services sector that grew by 28 percent last year and the way outsourcing is rewriting the rules of the American and the global economy.

Yes, its a soft profile, but still worth reading to get an idea of the sort of changes that are taking places in at least three cities I have visited in the recent past -- Bombay, Bangalore and Hyderabad. I presume Delhi belongs in the same category too, though I cannot be sure.

The McKinsey Quarterly has a good piece on mass-transit systems in its latest issue. The piece primarily addresses the sources of operating deficits among public-transit agencies and examines what can be done to increase productivity and reduce these deficits. According to the authors of the piece, operating deficits originate from two primary sources -- the trade-offs between the system's public-service goal and operational efficiency; factors like fleet maintenance, labour management and fare collection. While the first source has long-term solutions (if the political economy issues can be sorted out), the second has plenty of room for short-term improvements (operating costs could fall by 15-20 per cent) if less efficient agencies learn from global best practice.

The most productive bus systems have drivers at the steering wheel for up to 95 percent of their working hours; meanwhile, many subway and commuter rail operators struggle to deploy drivers for more than half of the time they are at work. Driver utilization rates can fall dramatically if routes and round trips keep drivers idle during significant parts of the workday or don't take account of the time required for mandatory breaks or of the fact that drivers must check their vehicles at the start of each shift. In many cases, it is utilization, rather than wages, that represents the greater improvement opportunity.

Best-practice operators have increased utilization levels through measures such as better overtime management and dynamic staffing (deploying drivers in full- and part-time shifts according to real-time analysis of passenger demand). Other transit agencies have improved utilization levels by taking simpler steps, such as splitting shifts into two four-hour periods to cover the rush hours, with an unpaid break during the day, and cross- training maintenance and clerical workers so that they can drive trains and buses during unexpected spikes in demand.

In maintenance, the challenge is threefold: to improve labor productivity, to define the right maintenance schedule, and to prevent every transit operator's nightmare—breakdowns. To avoid the disruptions they cause, many operators keep extra vehicles and staff standing by, an extremely expensive insurance policy. One North American bus operator with a poor maintenance strategy is so plagued by frequent breakdowns that it keeps nearly 500 extra buses, worth a total of $125 million, either in the shop being serviced or sitting in depots waiting to replace the next breakdown.

Best-practice agencies understand that decisions about a vehicle's operations—which routes it runs, how often, and when—must be coordinated with, and should help to define, the maintenance schedule. They also mine operational and maintenance data to predict replacement cycles for specific components (such as brakes and doors) and schedule maintenance during off-peak times at night or on weekends to minimize conflicts with passenger service. One European rail operator has mined these data so successfully that it has reduced its spare ratio (the number of vehicles kept on standby) virtually to zero during peak hours by improving the reliability of its vehicles. If the most poorly maintained fleets reached average levels, the operators should be able to increase their fleet utilization levels and cut their maintenance costs by more than half.

Paper tickets and monthly passes are relatively inexpensive to issue but require significant station and onboard labor, which for some operators can represent more than $1 a ride. Systems that control access to platforms (by using turnstiles or other barriers to collect fares through tokens, cash, or magnetic cards) must have capital for ticket-vending machines and barriers but require little or no onboard labor. Those using self-validation (or "honor") systems, in which passengers carry proof of payment throughout the journey, can use fewer conductors onboard but need the legal authority to impose stiff fines during spot checks.

Some agencies have deployed new smart-card technologies that can improve service significantly. Hong Kong's Octopus card allows passengers to change modes seamlessly (from bus to rail to subway to ferry), makes it possible to collect passenger data that can be used to improve customer service and to plan routes as well as to develop customer-relationship-management opportunities such as targeted discounts and automatic debit services to replenish fares. Where smart cards are not feasible in the short term, self-validation systems offer a reasonable alternative: they reduce onboard labor costs by 30 to 40 percent and, in Europe at least, have surprisingly resulted in less revenue leakage than many operators initially feared.

The current UPA govt in Delhi has announced several steps to boost the public health system in India, especially to tackle the crisis of HIV/AIDS which is threatening to reach African proportions (5 million plus HIV infections at last count). The steps include increasing spending on health from the current 0.9% of GDP to 2-3% of GDP (compare with 11% in Germany and almost 15% in the U.S.), focussing on primary health care and making ARV drugs available at reasonable costs (compare with Brazil that offers universal free access to ARV drugs). Though one cannot say for sure whether the govt can pull off what it promises, the need for these steps are pressing as India's health system gets biased even further towards private provision. This Panos Features piece provides some numbers.

While health care facilities have grown substantially since the 1990s, they are mostly in the private sector – often beyond the reach of the poor. According to the Central Bureau of Health Intelligence at the Ministry of Health and Family Welfare, the private sector accounted for 57 percent of the 11,174 hospitals that existed in 1991. In 2000, however, the proportion of privately-run hospitals grew to 75 percent of a total of 18,218 hospitals.

Only 17 percent of all health expenditure is borne by the government, which makes India’s health sector one of the most privatised in the world. The World Health Organization standard for expenditure on public health is five percent of GDP. India’s 0.9 percent expenditure of GDP is less than the average for poor countries – 2.8 percent. Some critics say India’s health took a knock in the 1990s – the era of economic liberalisation, when stagnant public health budgets and decreasing government expenditure in public health facilities were worsened by the introduction of user fees at various levels of public health facilities.

The piece also has details on the three-by-initiative announced by the previous NDA govt specifically to provide access to ARV drugs.

After the Three by Five initiative the then health minister Sushma Swaraj declared a strong policy-cum-programme commitment to provide free ARV treatment to 100,000 AIDS patients. This began in April 2004. Government hospitals were to provide treatment in six high-prevalence states, and within them to three vulnerable groups: HIV-positive mothers; HIV-positive children below the age of 15 years; and AIDS patients who seek treatment in government hospitals. The number of patients who had received ARV treatment till June 10 was 874.

Not a very successful program, is it?

Current official estimates are that there are 5.09 million HIV-infected people in India – up from 3.58 million in 1998, 3.72m (1999), 3.86m (2000), 3.97m (2001) and 4.58m (2002). “These figures are a cause of increasing concern to the government because people infected with HIV during the 1980s and 1990s will progress to AIDS, resulting in a steep increase in the number of AIDS patients,” admits Datta Ghosh. Today access to treatment has become the subject of a major debate in India, fuelled by a public interest litigation filed in India’s highest court last August demanding treatment for HIV/AIDS patients and provision of infrastructure.

Shruti Pandey, a lawyer working for the human rights group that filed the petition, says: “Our principle prayer was that the government should provide ARVs within the public health system and create an infrastructure, as sticking to the regimen is important.” But the government’s position, Pandey says, is ambiguous: “It has not spelt out measures on how it plans to maintain confidentiality and manage toxicity (of drugs) and neither is it clear on how they plan to raise the resources.” “Where are the attempts to build a conducive atmosphere for AIDS patients?” asks Pandey. “Everyday, we hear of some instance of discrimination against HIV-positive people. They are being treated like untouchables. Their right to employment is being denied and the orphaned children are not given any support.”

These are urgent questions in India, which, along with China, is expected to emerge as the biggest Asian AIDS hot-spot in the coming years.“Ninetyfive per cent of people with AIDS are poor, and most of them do not even know about the first line regimen,” says Ricki Tombing from the state of Manipur – one of the six focus states in the government’s AIDS strategy.

In this seemingly bleak situation, any attention that the UPA govt manages to focus on public health is better than none at all. Here's hoping.

The New York Times is carrying a very interesting profile of Magazine Luiza, a retailer in Brazil that specialises in selling in rural areas and to the urban poor. Conventional wisdom would have that selling to the poor is a very unprofitable business model. Fact is Magazine Luiza is the third largest non-food retailer in Brazil today with sales of about $477 million for the current fiscal. By September, Magazine Luiza will have 235 stores and 5,700 employees across 6 of Brazil's 27 states.

Through the store's strategy of selling in installments and providing affordable credit in a country with some of the world's highest interest rates, Mrs. Rodrigues, 52, has managed to bolster the spending power of the poor in Latin America's biggest consumer market. And by requiring customers to return to the store each month to make payments in person, this strategy has enticed many to make new purchases with a steady diet of blowout sales - prices can be reduced by as much as 70 percent - on wares that include furniture, refrigerators and other household goods. In a country where almost half the population does not have a checking account, the retailer also provides services - including personal loans and insurance policies - that would otherwise be out of reach to many customers.

About 35 percent of Magazine Luiza's profit comes from financial services, and 80 percent of the chain's sales are on credit. But the default rate of its clients is 50 percent lower than the average for Brazil's retailers, and its customers are fiercely loyal. Almost two-thirds of shoppers are repeat customers.

Critics say that retailers like Magazine Luiza and its larger rivals, Casas Bahia and Ponto Frio, prey on the poor by burying steep interest rates in their payment plans. But the lending policies of the three are roughly in line with - or more generous - than the norm here. For example, Magazine Luiza charges average monthly interest of 4 percent, while credit card rates can surpass 13 percent a month, far more than most Brazilians can afford.

long before Brazilians were familiar with shopping on the Internet, Mrs. Rodrigues delved into electronic commerce. Aiming at rural towns and poor urban neighborhoods, Magazine Luiza started opening stripped-down versions of its department stores with showrooms empty except for banks of computers, which sales representatives used to help customers view the chain's merchandise. Everything from washing machines to baby strollers is available through these "virtual stores" via high-speed computers connected to the company database, with home delivery guaranteed in 48 hours.

These stores, which require just 15 percent of the investment needed to set up a conventional store, also offer free Internet service and a variety of courses, from cooking classes to basic computer training. And thanks to a partnership with Unibanco, a large Brazilian bank, most of the virtual stores have a bank teller on site. People can also pay their utility bills there. The overall idea, Mrs. Rodrigues says, is to draw potential customers into her stores.

Until now, Magazine Luiza has managed to grow by steering clear of Brazil's two biggest cities, São Paulo and Rio de Janeiro, where its competitors are already firmly entrenched. Mrs. Rodrigues, however, intends to open her first stores in São Paulo this year, taking the virtual store model to blue collar neighborhoods on the city's outskirts in hopes of breaking into Brazil's largest consumer market.

Stories such as this (and Grameen Telecom) serve as reminders that the only reason why the world's poor remain untapped is because of a lack of creative thinking within business communities. Innovation and the lowering of transaction costs are key. After all, just about anything can be sold or bought at the *right* price. Finding that right price point is the tricky part in untapped/rural markets.

PS: On another note, I wonder sort of credit/risk assessment system Luiza uses. Clearly, a very large part of the transactions are credit-based and they claim an excellent repayment rate. Question then is how credit-worthiness is assessed among people who are not likely to have credit histories. If anyone has a clue, let me know.

The Science Direct journal, Futures, has a special (August-September 2004 issue) on Indian futures. The papers included in the issue are...

"Plural dreams: India in the 21st century" [editorial]
"The futures of the colonised"
"Visions of development: the inevitable need for alternatives"
"A 20-20 Vision for India: targets, policies and implementation"
"The Indian economy in 2040"
"The future of India’s economic growth: the natural resources and energy dimension"
"The future of food: countering globalisation and recolonisation of Indian agriculture"
"Technologies for the people: a future in the making"
"Futures India: society, nation-state, civilisation"
"Dalit vision of India: from bahishkrut to inclusive Bharat"
"Future of secularism in India"
"Land, conflict, identity in India’s north-east: negotiating the future"
"My vision of a better India"
"Role of the intellectuals in governance"
"The curse of globalised culture: the fall of Indian cinema foretold"
"India’s strategic future: 2025"

The authors include Bibek Debroy, P.V. Indiresan, N.Vittal and Vandana Shiva, among others. As you can imagine, it's a subscribers-only journal, but if anyone is interested in reading a specific paper, let me know and perhaps I can e-mail you a copy.

The Indian Express has posted online a full transcript of last weekend's episode of "Walk the Talk" on NDTV, which featured the chief editor of the Express (Shekhar Gupta) interviewing Montek Singh Ahluwalia, one of the mainstays of PM Manmohan Singh's dream economic team. Here are some excerpts.

In my view, everything that we have seen suggests that in the area of the modern side of the economy — industry, the process of globalisation, opening up the economy to trade — by and large, the economy has responded well to the government’s initiatives. I think that if you see, we have got new sectors where we’ve shown competitiveness, not just software, the farmer, auto components — you know the modernisation of the automobile industry is the result of a series of measures taken in the early 1990s and as a result what you have got is an auto-components industry which is largely homegrown. These are smaller firms now producing world-class auto-components.

I think we are at the beginning of what could be a phase, where many more Indian suppliers will enter what is called the ‘‘original equipment market’’ in the automobile sector in the world. Those are measured gains. And I think those policies have worked well. Of course, you need to continue some of the financial sector reforms — capital market etc. where we are lacking and there are some important gaps. Number One: You can’t have your 7-8 per cent growth, you can’t start trying to catch up with China with the infrastructure we’ve got. I mean India’s infrastructure is sub-standard. Let’s be clear about it. Until we recognise that, we are going nowhere. This is one big area. Infrastructure is both rural and also aiming at the modern economy.

Rural infrastructure is not going to come except through public investment. Let’s be clear about that. On the other hand, and some of the modern infrastructure, like, the major road networks — we can introduce certain elements of market economy like tolling of roads. But in my view, an overwhelming part of the major road networks in India will have to be built in the public sector through the existing mechanism. But remember, we are talking about four-laning the Golden Quadrilateral — go to China and see what they do.

If we are aiming at 7-8 per cent growth, if India is to going to be a major emerging market economy, four-laning is ground level zero. We ought to be planning now for six- and eight-laning, not the whole quadrilateral, but the densely traffic portion. The other class of areas...there is a lot of modern infrastructure where we have to bring in private investment. It can’t, and shouldn’t, all be done by the public sector.

we have been experiencing a deceleration of growth in the 1990s. In the first several years after the reforms began, we achieved a growth rate which averaged more than 6 per cent. Since then, in the second half of the ’90s, the average growth decelerated. I mean last year was very good — 8.1 per cent — very good. But the average shows a deceleration. So really, the target is how do we get from what is an average of less than 6 per cent to something like 7-8 per cent. This is where the hard decisions would be needed. Now, I would suggest the following: No. 1, I don’t believe we can get the faster trajectory unless we take care of what are now glaring deficiencies in the social sectors of health and education. As I said, this is going to require two things: One, more resources which the CMP talks about. It also requires restructuring the way the services are delivered and in that sense, the way the plan is organised.

Montek sort-of addresses the issue of a market economist heading an anachronistic sounding agency known as the Planning Commission (which does sound like a dreadful Soviet/Orwellian nightmare).

You know the Planning Commission, the name may sound very old, but there are some key tasks, which either the Planning Commission, or somebody, would have to perform. What are those tasks and what do we use planned resources for? The amount is huge. I mean, India’s total planned resources through the budget is, to give it a global flavour, more than twice the total lending the World Bank does for the whole world. So, the issue of how this money is used...

Who hasnt received one of those scam e-mails from Nigerian con-men posing as everyone from Miriam Abacha to Joesph Kabila. This has been an ongoing prank, which would be rather funny if it werent for the fact that some naive sorts have actually lost money by believing these scams. Apparently, one of these 419 e-mail scamsters has got his comeuppance. The BBC has the details with photographic evidence in tow. And it is hilarious. Here is a quick sample of some of the back-and-forth between the scamster (Prince Joe Eboh) and the scam-buster (Mike, alias Father Hector Barnett).

Dear Sir,
I would dearly love to help you. If you ever decide to join our faith then of course I could help you both with my experience and financial support. I wish you well in your endeavour my brother. Yours, Father Hector Barnett

Dear Father Hector,
If joining your faith is what it takes to help me of course, I am ready to join you. I'm from a good Christian family. I will do anything you want me to do in the faith. Don't forget that I have to transfer the money to your account as urgently as possible. Send me your account details. I hope to read your mail soon. Prince Joe Eboh

Dear Joe,
Our ministry was founded in 1774 by a wonderful lady by the name of Betsy Carrington. She spent many of her first preaching years in Kenya, spreading the holy gospel amongst the local people there. She was the first person male or female to promote Christian texts and beliefs to the Masai warrior tribe. The most famous account is when as a test she had to remove the top part of her clothes and paint the top half of her body and breast with the red Masai war-paint as a gesture of faith and belief to them so that they would accept her and trust her. She was almost immediately accepted by them and was one of the most trusted westerners known at that time.

As a qualification to enter the Holy Church of The Order of The Red Breast, all followers must go through the initiation procedure that Miss Carrington made so famous. I have attached a photograph of four of our young inductees going through the procedure. Please use this picture to enable you to make the same marking on yourself. I have also attached a small picture showing the design in more detail. I look forward to welcoming you into our membership my brother. Father Hector Barnett Financial Development - Holy Church of The Order of The Red Breast.

Dear Brother Hector,
I want to thank the Almighty God himself for the opportunity I have to be a member of this great church The Holy Church Of The Painted Breast. I'm looking forward to establishing a branch of the Church here. But I'll like us to finish everything about the business proposal, which I sent to you earlier...

"He then tried to hit me for $18,000 for processing fees for transferring millions," Mike says. He wrote back as Father Hector, saying that the church had plenty of money, but there was a withdrawal fee of $80. "I persuaded him to send me the $80, which he did, inside a birthday card, by courier," Mike says. Father Hector of the Church of the Painted Breast then entered a troubling period of religious uncertainty.

Dear Joe,
This is your good friend Hector Barnett. Please do not be alarmed that I am contacting you from a different e-mail address. I will explain what has happened. I have been troubled recently after the death of a dear friend of mine, Minnie Mowse. She was a very, very dear friend indeed, and her death affected me greatly and started to make me question my faith. I have decided to leave the church and join a travelling circus. I have already made two very good friends, and tomorrow I will be starting my circus training with them...

It's much better with the photographs and more context :)

(Via Thomas) Time-pass doesnt get much funnier than this. Atom Films has a series of short films *loosely* based on the Star Wars movies (in fact the first part won the George Lucas Selects Award in the 2003 Star Wars Fan Film Awards). The first part is called Pink Five and the second part is called Pink Five Strikes Back.

Part 1 -- Ever wonder how the Rebel Alliance would have fared if a Valley Girl was at the controls of an X-wing fighter during the daring raid on the Death Star? Now you can answer the troubling questions that arise from this very concept!

Part 2 -- The "totally awesome" saga of Stacey, the Pink Five fighter pilot continues as she treks to Dagobah, where Master Yoda trains her to be a Jedi. Kinda.

Cant get enough? Apparently, the third installment, called (what else) "Revenge of Pink Five" is in the works. I personally think these Pink Five movies are better than the new installments of the Star Wars series (at least the humour is intentional). Perhaps Lucas should learn from his fans how its done :)

Business Week is running a special section where it profiles the top 25 stars of Asia, in fields ranging from policy making to entrepreneurs to managers to opinion makers. The 3 Indians on the list are Sonia Gandhi, Ratan Tata and Kiran Karnik.

Other interesting profiles include Tony Fernandes (the founder of the pioneering Malaysian low-cost airline, Air Asia), Kim Soon Taek (CEO of Samsung SDI) and Miao Wei (CEO of emerging Chinese automotive giant, Dongfeng, which plans to enter the U.S. market soon with 2 models).

Notable absentees include India's software CEO's, the Hong Kong-based father-son duo of Li Ka-Shing and Richard Li (PCCW), CEO's of emerging Chinese multinationals like Haier and Lenovo and Softbank's Masayoshi Son.

Just got back from watching Jehane Noujaim's (she of "Startup.com" fame) new documentary, Control Room, which offers a fascinating glimpse into the world of Al-Jazeera. This was a movie that grabbed me at so many different levels -- as the level of someone who did some amount of journalism, at the level of someone who is a student of communications and propaganda and just at the level of someone who was opposed to the Iraq war from the beginning.

Though sympathetic to Al-Jazeera, it also portrays in Lt. Josh Rushing (the coalition's media man), the decent and human face of the United States military. The good thing about Al-Jazeera's reporters is that they make no bones about their biases (clearly they think the war is a disaster) unlike certain American reporters who insist that they're being "fair and balanced" when they're nothing but the government's propaganda machine. In fact, Lt Rushing, in a moment of candour admits that Al-Jazeera performs the same function in the Arab world that Faux News does in the U.S. They even touch upon an old debate on what objective reporting is supposed to mean and whether there exists such a thing.

The two highlights of the movie, for me, were the killing of the Al-Jazeera reporter by U.S. jets and the less exaggerated version of what actually transpired when Saddam Hussein's statue was pulled down on April 9th (the moment that was supposed to symbolize the moment of Iraqi liberation). Though the rumour that the event may have been stage-managed has been doing the rounds of the blogging world for a long while, this is the first time one gets to see how much of a made-for-TV event it truly was.

The benefit of hindsight allows for some pretty funny moments (mostly unintentional) especially when Donald Rumsfeld holds forth on compassion, honesty, truth, prisoner abuse (this was before Abu-Ghraib) and so on. Everything coming out of Rumsfeld's mouth reminds one of the bit about living in glass houses and throwing stones.

All in all, I think this is a movie that "Fahrenheit 9/11" could have been, if only Mike Moore were a little more intellectually honest and wasn't as carried away as he is by his hatred of the Bush administration. I would definitely recommend "Control Room" to just about everyone (including fans of Team Bush) and if you don't believe me, check the critic's ratings on Rotten Tomatoes. It has an unbelieveable 97% freshness rating.

Once again, the pundits have been all over this one. Questions on whether the Chinese economy is overheating, whether a hard-landing is inevitable etc have occupied the minds of international economists for a while now. With good reason too. China has been a big contributor to world economic growth the past few years. So, I read with some interest Martin Wolf's take that the Chinese economy could in fact do with some overheating.

Last year, fixed investment grew by 26 per cent in real terms (see chart). In the year to the first quarter of 2004, it grew at more than 40 per cent. In the long run, investment cannot grow 2 1/2 times as fast as the economy, let alone four times. Since the share of investment in gross domestic product reached an almost incredible 47 per cent in 2003, that long run must come soon, if not now. The growth of investment will have to slow sharply, as it did in the second half of the 1990s.

Even the view that there is a deep imbalance between the medium-term rates of growth of investment and consumption is open to question (see chart). About one-third of the fixed investment last year was in property (see chart). But a good part of this was investment in residential property. This, then, is investment in consumer durables. Once one makes an adjustment for this, argues Jonathan Anderson of UBS, the pattern of expansion looks far better balanced.

Yet there is a still more fundamental point: overheating and higher inflation may be not the problem but the solution. China has a pegged exchange rate against the US dollar. Since the middle of 2001, China has enjoyed a real depreciation of about 11 per cent, according to J P Morgan, as the dollar has tumbled. But last year China had a current account surplus of Dollars 46bn (Pounds 25bn), an inflow of Dollars 47bn in net direct investment, and reserve accumulations (before the bank recapitalisation) of Dollars 162bn. The overall balance of payments surplus (the sum of the current account and net capital inflow) was about 11 per cent of GDP. Under a fixed exchange rate, monetary expansion, excess demand, higher prices and an appreciation of the real exchange rate are the mechanism for eliminating such a disequilibrium. The obvious objection to this mechanism is that it is wasteful. But to this concern, legitimate though it is, there is a simple answer: try as the authorities might, these destabilising consequences of being a member of the dollar area cannot be avoided. If they cannot stand the heat, they should move to a different kitchen. The conclusion then is that, while some slowdown is inevitable, there is no reason whatsoever to wish for a brutal one. China can do with some overheating.

This leads us to the second question: have the authorities chosen the right mechanisms? They have used a series of administrative measures that target excesses in particular sectors. The most important are controls on the release of land for construction and on credit-creation by the banks. Many economists would argue that the authorities should have used higher interest rates instead.

The arguments in favour of higher interest rates are evident, particularly since central bank interest rates are only about 3 per cent (and so negative in real terms). Yet there are also arguments against them. One is that higher interest rates would curb borrowing by the relatively efficient private sector but not the profligate local governments and state enterprises. A still more important argument is that significantly higher interest rates are likely to encourage greater capital inflow, further reserve accumulations and so greater monetary expansion. Monetary policy is an ineffective tool for macroeconomic policy in a country with a fixed exchange rate, unless it possesses effective controls on capital inflows.

This leads us to our third question: have the measures been applied too sharply? Xia Bin, of the Development Research Center of the State Council, has argued that the envisaged growth of credit, at 17 per cent, is too slow. In the year to the first quarter growth of investment was 43 per cent. By the fourth quarter, according to HSBC, this should be down to 15 per cent. But HSBC argues that next year it will be less than 10 per cent. Such a sharp decline would reduce GDP growth to 7 per cent. For most economies 7 per cent growth would be no hard landing. For China and its trading partners, it would feel like one.

This brings us to the final question: is a sharp slowdown now inevitable? The answer is: "almost certainly yes". Last year, investment must have generated about 10 percentage points of GDP growth, on its own. If investment growth were to fall to 10 per cent next year, this contribution would more than halve. Given the weight of investment in GDP, big changes in its growth must have a powerful impact on the growth of the economy.

A slowdown is now inevitable, but a sharp one is undesirable. China does need more fixed capital and fast growth. Its real exchange rate also needs to appreciate. The big issue is not so much overheating as the inefficiency of Chinese investment. The right question is whether investment is being allocated sensibly. Until the market mechanism is further extended, the answer must, in large part, be "no".