Zoo Station

There are lots of people in India who, for inexplicable reasons, downplay the significance of AIDS to the country and her economy. Unfortunately, several of the nay-sayers also happen to be policy makers. The nay-sayers should pay a visit to Marginal Revolution, where Alex Tabarrok has put up an excellent chart that dramatically shows the terrible impact HIV/AIDS has had on life expectancies in Botswana, Zimbabwe, South Africa, Uganda and Kenya. It's pretty mind boggling really, and as they say, sometimes a picture conveys a message more powerfully than any amount of written words can.

On this blog, we have time and again discussed how China's emergence will alter geo-politics as we know it today. For some reason (eurocentrism, short-sightedness etc), the West does not seem to have realised what the full implications of China's economy being larger than two G-7 members (Canada and Italy) is and what it portends for the future. The fact that China has been remarkably quiet while it expands its economic footprint probably adds to the sense of complacency. Over the weekend, the Washington Post had an excellent feature on China's steady rise in S.E.Asia, in some cases displacing the United States as the predominant power in the region.

The shift in status, increasingly clear over the past year, has changed the way Chinese officials view their country's international role as well as the way other Asians look to Beijing for cues. In many ways, China has started to act like a traditional big power, tending to its regional interests and pulling smaller neighbors along in its wake. Japan, whose economy surpasses China's by a large margin, in some ways has been the Asian country most uncomfortable with China's rising stature. The oil sources and sea lanes increasingly seen as vital by China and its traders have long been viewed the same way by Japan. In that light, Japan's government has tightened strategic cooperation with the United States, and in December, it issued a 10-year defense program that identified China as a potential threat.

Chinese officials and foreign policy specialists emphasized in interviews that they had no intention of challenging the U.S. role as Asia's main military power, a fact of life here since World War II. U.S. power was on vivid display in East Asia after the Dec. 26 tsunami in southern Asia, with a U.S. carrier group dispatching helicopters to deliver food and medicine to hard-hit Indonesian towns while China's navy was nowhere on the horizon. But with 1.3 billion people, 3.7 million square miles of territory and a $1.4 trillion economy, China is the rising regional leader in other fields. This view has come into focus particularly over the last year, when U.S. diplomacy has seemed preoccupied with Iraq or anti-terrorism and China increasingly has asserted its pre-eminence.

China's foreign relations establishment has long adhered to an adage offered by the late Deng Xiaoping: "Never be a leader." In deference to that concern, Foreign Ministry officials recoil when the word leadership is used to describe what they are doing. Nonetheless, as the country's economic strength has grown, so has the confidence of its foreign policy and a recognition that the United States is no longer the only country on which others in Asia rely for leadership. "China has sensed that there is an emerging transition of power in East Asia between China and the United States," said Shi Yinghong, who heads the People's University Center for American Studies in Beijing. Outside Asia, China's most immediate foreign relations concern has become an appetite for oil and other raw materials needed to sustain the economic boom.

In the final installment of the series, Victor Mallet addresses an issue that was brought up in a previous ZS post as well -- the search for oil, as both countries look to secure their energy sources to keep the engines of economic growth humming well into the future.

With world energy supplies already tight, the question is not whether the rising demand from India and China will bring them into commercial competition with each other and with other big importers such as the US and Japan: that is already happening. The question is whether it will lead to diplomatic tension and ultimately increase the risk of military conflict in the Asia-Pacific region. For the moment, the competition for resources is fierce but not hostile. The main evidence of concern is that Beijing, nervous about the possible use of US and Indian naval power to control oil supplies from the Middle East in the event of conflict, is rapidly strengthening its own navy.

There is no doubt that India and China, which together account for more than a third of the world's population, must greatly increase their imports of oil and gas if their economies are to continue growing at annual rates of 6-10 per cent. China was once an oil exporter but is now the world's biggest oil consumer after the US and is increasingly dependent on imports: already, a third of its oil is imported. India, although its economy and its energy needs are smaller than China's, is even more dependent on imports than its dynamic neighbour. Mani Shankar Aiyar, petroleum minister, reckons India's import dependency will increase from 70 per cent of consumption this year to 85 per cent in 15 years.

He dismisses the idea that the tussle may become a new version of the "Great Game" for influence between rival 19th century imperial powers, saying he plans to visit Beijing later this year for consultations. One of his aims is to avoid damaging competition between Indian and Chinese oil companies for the overseas energy assets coveted by both countries. "India and China don't have to go through fratricide in order to arrive at the conclusion that it is better to co-operate on energy security," he says. "Of course there will be competition where the market dictates."

The need for governments to co-operate on long-term infrastructure projects thus points at least to the possibility of improved relations between previously hostile states. "People are getting pragmatic," says one Asia-based strategist at a big international oil company. he energy squeeze is not so good for human rights or environmental protection, in central Asia or countries such as Burma. Governments in oil importing countries typically care more about energy security than the politics of the exporter. Democratic India has forged close relations with Burma's military junta and all but abandoned support for the pro-democracy opposition led by Aung San Suu Kyi. Like China, India is prepared to sacrifice other goals in the search for energy security.

One consequence of competitive bidding is to push up the price of assets, which is likely to hurt an Indian company more than a typically bigger one from China. Observers also say Indian companies' aggressive bids in exploration auctions reflect a readiness to accept a lower rate of return than western companies in order to secure a strategic asset. Some observers are sceptical, however, arguing that, while it is in the Indian companies' interests to seek co-operation, the cash-rich Chinese can afford not to.

All the more reason for Mani Shankar Aiyar to move quickly on merging the Indian oil majors into a single large entity that can compete effectively with the cash reserves of Petro China, CNPC, CNOOC etc.

In the second installment of the series, Edward Luce and Richard McGregor say that both countries stand to gain immensely from trade. In manufacturing, where China has a huge headstart; in services, where India has considerable prowess and also in sectors where the two Asian giants compete directly.

From only Dollars 1.8bn in 2001, bilateral trade will hit Dollars 14bn during India's current financial year, which ends next month. By Chinese standards the numbers are still small - its exports are more than Dollars 300bn. But in the next two years China is set to overtake the European Union to become India's largest trading partner, having been its ninth largest in 2001. Until 2002 there were no direct flights between India and China: now there are five a week with the number set to rise in the next year.

India and China are even exploring ways of joining forces to find cheaper sources of supply and boost their competitiveness. There is increasing awareness - especially in India - that, far from competing in a zero sum game, both countries are growing at such a speed that there is enough room for each to accommodate greater productive capacity. "People used to say it was China and not India, then it was China against India - but if you look at any number of sectors the real story is more likely to be China and India," says N. Srinivasan, head of the Confederation of Indian Industry.

In textiles, too, the two countries look to be able to compete side by side. China is far ahead of India, with about five times the volume of textile exports. But India is second only to China in reaping the benefits of last month's abolition of the global Multi-Fibre Arrangement, which had imposed quotas on developing country textile exports to the developed world. Last month India's overall exports were 33 per cent up on the previous January, driven mostly by Indian garment makers making the most of the abolition of quota ceilings.

The two countries are also tentatively exploring areas of co-operation, for example as partners for joint purchases in markets such as energy and commercial aircraft. Such a prospect - which Boeing or Airbus would not welcome - is so far not much more than talk. Nevertheless there is a determination in both capitals to consider the unmatchable economies of scale that would be available to them as joint buyers of some of the materials and technology that both countries lack.

Over the past week, FT has been running a three-part series comparing India and China. I have excerpted the relevant parts of these stories and posted them here as three separate blog posts. However, if any of you want to read the full stories, send me a note and I'll send it to you. The series kicked off with an analysis of the growth trajectories of the Indian and Chinese economies, by Martin Wolf. In particular, he tries to answer why China has had a far superior growth performance.

Both are the heirs of great civilisations. But China's civilisation is inseparable from its state, while India's is inseparable from its social structure, above all from the role of caste. This difference permeates the two countries' histories and contemporary performance. As Lord Desai of the London School of Economics has noted, "for India, the problem (is) achieving unity in diversity". China, however, is a "unitary hard state, which can pursue a single goal with determination and mobilise maximal resources in its achievement".*

These political and social differences explain, in large measure, the contrasts between the two development strategies. China has largely replicated the growth pattern of the other east Asian success stories, though its financial system is still weaker and its economy more open to foreign direct investment than those of Japan and South Korea. Its growth is based on high savings, massive investment in infrastructure, universal basic education, rapid industrialisation, an increasingly deregulated labour market and an internationally open and competitive economy.

India's pattern of growth has been extraordinarily different, indeed in many ways unique: it has been service-based and apparently jobless. Savings are far lower than in China, as is investment in infrastructure. India's industrialisation has hardly begun. Literacy is low, while elite education is well developed. India's formal labour market is among the most regulated in the world. Regulations and relatively high protection against imports continue to restrict competition in the domestic market.

China has accepted both growth and social transformation. India welcomes growth but tries to minimise social dislocation. The Chinese state sees development as both its goal and the foundation of legitimacy. Indian politicians see the representation of organised interests as their goal and the foundation of their legitimacy. Chinese politics are developmental, while India's remain predominantly clientelist.

If China's growth does remain rapid, can India match it? The optimistic view has been well expressed by Vijay Kelkar, a former senior civil servant. Mr Kelkar argues that India's political stability, well-entrenched democracy, relatively effective financial system, deepening international economic integration and improving environment for provision of infrastructure augur well for future growth. More fundamentally, India enjoys a greater demographic dividend, with the population of working age expected to rise as a share of the total until 2050, unlike in China, while the quality of the labour force is also improving. The private savings rate should continue to rise as living standards improve and the child dependency ratio falls. Finally, the growth of productivity has been reasonably good in India since 1980, with total factor productivity (the rise in output per unit of input of labour and capital) increasing at about 2 per cent a year.

Yet India, too, suffers from many constraints. Public sector dis-saving imposes a significant limit on capital formation. The political and legal systems, though well developed, are also cumbersome and inefficient. Politics lacks a focus on development. Hitherto, in addition, the growing supply of labour has not been matched by a rise in demand. As a result overall employment has risen at only 1 per cent a year over the past decade. Literacy remains too low.

Keeping up with the pre-budget thread of how things are changing in India in the infrastructure sector, have a look at this op-ed piece by T.N.Ninan in the Business Standard. Ninan makes the point that recent moves to open the skies will save the Indian consumer at a minimum a billion dollars. What's more, this billion will be saved by the 6 million Indians who travel abroad and does not include the savings that will accrue to the 19 million who travel domestically.

It is funny how protectionist policies work, because they usually protect the guy you didn’t have in mind as a beneficiary. Take a look, for instance, at the spate of announcements on reduced air fares and you realise who was benefiting the most from the policy of restrictive aviation rights: not our national champions Air India and Indian Airlines, but British Airways and Lufthansa and Emirates and all the others who have been milking Indian passengers.

Waking up to the threat of fresh competition from newly recognised players like Jet and Sahara, and realising that the Indian customer will now have the benefit of genuine choice, most of the established airlines have slashed fares by up to 50 per cent, so that you can now fly to London for less than Rs 20,000. Even after making allowances for the fact that this is the slump season (being also the exam season in India), and that traffic will pick up in the summer months (and fares might go up then), it seems reasonable to assume that the average fare will have dropped by about 25 per cent simply because the skies have been opened up by a civil aviation minister who understands business.

Some 6 million Indians travel overseas each year. If you take the average fare that each of them pays as being about Rs 30,000 (the off-peak cost of a round trip to London), and assume a 25 per cent saving on this fare from now on, we are looking at shaving off travel costs by about Rs 7,500 per head; or, a total of Rs 4,500 crore (i.e. a billion dollars) being saved by all 6 million people.

Now, a billion dollars each year is money saved mostly in foreign exchange. It is enough to buy all the new planes that the new airlines have been talking of, so in a national accounting sense the country is getting its new aircraft free. Then there is the additional benefit that will flow from cheaper fares on India routes: more foreign travellers will drop by, instead of flying on to Bangkok. This will be helped by new airports and a proper tourism infrastructure (whenever they come), but the important point just now is that India is seen as an expensive destination and that can change.

Mani Shankar Aiyar made his name as an articulate spokesman in Rajiv Gandhi's PMO. I, for one, was pleased when he was inducted into the cabinet even if it wasn't in his preferred portfolio of rural development. Instead he got oil and gas, a ministry that for inexplicable reasons was considered a backwater, until he took over. As the Economist puts it, Aiyar has transformed a department better known for out-of-turn allotments of petrol pumps into a significant player in the global energy market.

In mid-February Mr Aiyar floated his dream of an Asian gas grid to an international gas-users conference. He then went to Moscow, seeking investment in India's oil and gas. Earlier this month the Indian cabinet told him to start talks on bringing natural gas from Iran, Myanmar and Turkmenistan. In January, he was host at an inaugural 12-nation conference, which gathered Asian energy-users, including China and Korea, and Middle Eastern suppliers, such as Kuwait and Saudi Arabia.

His aim is to secure foreign energy supplies to fuel economic growth of 7-8% or more. By 2020, India's oil imports are expected to rise from 70% to 85% of consumption. As demand for natural gas soars, substantial imports of it will also be required, even though 90% of current consumption is met from domestic output. The Oil and Natural Gas Corporation, which is spearheading the search, has invested some $5 billion over the past four years in countries that range from Russia and Iran to Vietnam and Myanmar.

In January Mr Aiyar succeeded in persuading Bangladesh, which since the late 1990s has resisted selling India gas from its 948 billion cubic metres of potential reserves, to agree in principle to become a partner in a pipeline that would bring gas from Myanmar to India. The pipeline might also pick up some Bangladeshi gas, and supplies from India's north-eastern states.

Mr Aiyar says his job is to dream: one of his dreams is that an Asian energy grid might follow the trajectory of the European Coal and Steel Community, which grew into the European Union.

Before dreaming the big dreams, Aiyar would do India a great favour if he could merge all the major Indian oil companies. Right now, the biggest problem facing Indian oil companies is competition from China in oilfields ranging from Angola to Sudan. One way for the Indian oil companies to compete effectively with China would be to consolidate into one mega firm -- a $75 billion firm called Petro India, an idea mooted in the past by who else, but Mani Shankar Aiyer.

First came the story about the ancient equatorial ice ocean discovered by the European space agency's Mars Express space craft, as reported in the National Geographic. Then came the story about frozen organisms right here on earth.

A U.S. scientist claims to have thawed out a new life form, which he said raises questions about possible contemporary life on Mars. The organism froze on Earth some 30,000 years ago, and was apparently alive all that time and started swimming as soon as it thawed. The life form -- a bacterium dubbed Carnobacterium pleistocenium -- probably flourished in the Pleistocene Age, along with woolly mammoths and saber-tooth tigers, said Hoover.

He discovered the bacterium near the town of Fox, Alaska, in a tunnel drilled through permafrost -- a mix of permanently frozen ice, soil and rock -- that is kept at a constant temperature of 24.8 degrees Fahrenheit (minus 4 degrees Celcius). "When they cut into the Fox tunnel, they actually cut through Pleistocene ice wedges, which are similar to structures that we see on Mars," Hoover said in a telephone interview.

The ice wedges contained a golden-brown layer about a half-yard (half-meter) thick, and this layer contained a group of microscopic brownish bacteria, Hoover said. When he looked at a small sample of this bacteria-laden ice under a microscope, Hoover said, "These bacteria that had just thawed out of the ice ... were swimming around. The instant the ice melted, they started swimming. They were alive ... but they had been frozen for over 30,000 years."

Combine the two discoveries and the odds of actually finding some form of life (most likely bacterial) on Mars improve dramatically.

Andrew Pollack, writing for the New York Times, covers a trend in the biotech/pharma business that I believe will become pretty significant in the next couple of years -- offshoring research and development to India. As with IT, you can hire biotech and pharma experts in India at a fraction of what they cost in the U.S. Etc. Etc. I personally know a few people from Bangalore setting up offices in the U.S. to facilitate this offshoring of research, and they seem very optimistic about the prospects.

The life sciences industry, with its largely white-collar work force and its heavy reliance on scientific innovation, was long thought to be less vulnerable to the outsourcing trend. The industry, moreover, is viewed as an economic growth engine and the source of new jobs, particularly as growth slows in other sectors like information technology. While life sciences jobs may be less vulnerable to outsourcing than jobs in information technology, industry officials say many companies are looking at that option as pressures mount to control drug prices and cut development costs.

The outsourcing of some life sciences jobs could be seen as evidence that American biotechnology companies, like their counterparts in other industries, are doing nothing more than building global connections that help make them more competitive around the world. So far, the job movement has been small. According to the most recent data compiled by the Commerce Department, less than 6 percent of American companies with biotechnology operations employed contract workers abroad in 2002, but industry specialists say that percentage has increased in the last three years.

There are some factors that suggest life science jobs will be slower to migrate offshore than those in information technology. For one thing, drug companies face less pressure to cut costs than, say, computer disk drive manufacturers because pharmaceuticals have relatively high profit margins. "We're not trying to eke out another percent of operating margin," said Kevin Sharer, chief executive of Amgen, the largest biotech company, which is based outside Los Angeles. Also, life sciences companies often prefer to be near the best university research, which, for now, is largely in the United States because of ample funding from the National Institutes of Health.

While on the topic of civil aviation in India, this post from Sepia Mutiny is worth a read. They have some interesting stats on Jet Airways' recent IPO in India.

An Indian airline is now worth more than American Airlines and United Airlines combined. Jet Airways’ IPO on the Bombay stock exchange last Friday was like a hipster concert: sold out in ten minutes and 50% oversubscribed. The ~$400M IPO (~$1.2B in buying power) values the company at ~$2.2B at a price-to-earnings multiple of 21.5. That’s a higher valuation than NASDAQ darling JetBlue ($1.9B), American Airlines ($1.5B), Delta ($653M) and the bankrupt United ($142M), but lower than Southwest ($11B).

Hopefully, the IPO will provide Jet with the requisite funds for expanding its fleet, its flight routes and so on. I, for one, cannot wait for Jet to start services to JFK.

The advent of Air Deccan represented the first time Indian aviation players seemed to have understood and capitalized on a huge opportunity -- the very large number of Indians who could be convinced to fly rather than travel by train if the price point was right. By following the Southwest/Ryan Air model, Air Deccan managed to be profitable right from year one. The success of Air Deccan has led on the one hand to the major carriers (Sahara, Jet, Indian Airlines) becoming more competitively priced, and on the other paving the way for many more low-cost carriers. By the end of this year, Kingfisher Air, Spice Jet etc should all be offering the Indian customer excellent deals. The Washington Post takes note of the very fertile ground India is becoming for low-cost flying.

With Air Deccan offering fares as low as $11 -- and other airlines scrambling to catch up -- many Indians now have an alternative to the dirty and overcrowded trains that have long been synonymous with travel in this vast nation of more than 1 billion people. A similar phenomenon is taking hold in Brazil and other developing countries, where the emergence of low-cost carriers is democratizing air travel and linking far-flung communities in a trend with significant implications for social and economic development. China, where regulatory barriers have delayed the arrival of no-frills service, is slated to get its first such carrier this year. For the 12-month period ending March 31, the number of people taking domestic flights in India is projected to surpass 19 million, an increase of nearly 30 percent over the previous year, according to Kaul. Five new low-cost carriers have announced plans to begin operations during the next year.

What inspired Air Deccan founder, G.R.Gopinath to start a budget airline?

While passing through Phoenix, he said, he discovered that its airport handled about 100,000 passengers per day. "It suddenly shook me," he recalled. "I just did the numbers. It came to 30-odd million passengers a year," roughly twice the number that flew each year in all of India. "The thing that came to my mind was, just imagine what a billion seats would mean," he said. "That is 300 million people traveling three to four times a year. That is in the realm of reality. We have a middle class that is roughly equal to the population of Europe." India, he decided, was ripe for its first low-cost airline.

Skeptics told him it would never work, that the no-frills model did not apply in India because, among other things, Internet access was so limited that the airline would not be able to make enough use of online ticketing to hold down costs. But Gopinath got around that problem by starting a call center to take reservations by phone; for travelers without credit cards, he set up a network of drop-off points for cash payments. The airline also holds down costs by farming out some ground-staff duties to third-party contractors. By eschewing premium services such as frequent-flyer programs and business-class seating, it can carry more passengers per plane than conventional carriers.

The United States, with a quarter of the population of India, handles about 600 million flyers a year compared with 19 million in India. In a way, this indicates the market potential for aviation in India, at the right price point. Realizing this potential will require a significant overhaul of the civil aviation sector, of the sort that was achieved in the telecom sector by Telecom Acts of 1994 and more importantly, 1999.

For all the excitement about its potential, the airline industry in India faces significant obstacles to growth. Among them are limits on foreign investment and dismal, outdated airports that already are operating at full capacity in major cities such as New Delhi and Bombay. While the government of Prime Minister Manmohan Singh has pledged to remove such barriers, it faces strong resistance from established Indian carriers -- which regard greater competition as a threat -- and their allies in the all-powerful bureaucracy. "Aviation is still over-regulated," Kaul said. "We don't realize its social and economic importance. The day we do, aviation will go through a dramatic change."

Mobile PC Magazine has come up with a list of the top 100 gadgets of all time. The gadgets needed moving parts and/or electronics to be included. The list also includes ancient 'gadgets' like the abacus, the sextant, the marine chronometer, the maelzel metronome etc. Also included are the Swiss Army Knife, the Rubik's cube, Zippo lighter and the Ipod.

The top 10 gadgets are all from the last 50 years. At top spot is the Apple Powerbook 100 because it defined how future laptops would look, according to the judges. In second spot is the Zenith Space Command remote control, followed by Sony's Walkman. Tivo series 1 rounds off the top 10.

I think I may have opted for either the remote control or the Walkman at the No:1 spot rather than the Powerbook 100. Your thoughts?

Over at the Becker-Posner blog, Gary Becker and Richard Posner have been debating the immigration issue. Mind you, this is purely theoretical reform (given the political minefield involved) intended to provoke some debate on the issue and they acknowledge it as such. First, Gary Becker proposes a market-based solution.

The best alternative to the present quota system is an ancient way of allocating a scarce and popular good; namely, by charging a price that clears the market. That is why I believe countries should sell the right to immigrate, especially the United States that has so many persons waiting to immigrate. To illustrate how a price system would work, suppose the United States charges $50,000 for the right to immigrate, and agrees to accept all applicants willing to pay that price, subject to a few important qualifications. These qualifications would require that those accepted not have any serious diseases, or terrorist backgrounds, or criminal records.

Immigrants who are willing to pay a sizeable entrance fee would automatically have various characteristics that countries seek in their entrants, without special programs, point systems, or lengthy hearings. They would be younger since young adults would gain more from migrating because they would receive higher earnings over a relatively long time period. Skilled persons would generally be more willing to pay high entrance fees since they would increase their earnings more than unskilled immigrants would. More ambitious and hard working individuals would also be more eager to pay since the U.S. provides better opportunities than most other countries for these types.

These calculations might only indicate that $50,000 is too low an entrance price, and that an appropriate fee would be considerably higher. But with any significant fee, most potential immigrants would have great difficulty paying it from their own resources. An attractive way to overcome these difficulties would be to adopt a loan program to suit the needs of immigrants who have to finance entry. One could follow the present policy toward student loans, and have the federal government guarantee loans to immigrants made by private banks.

And this is Richard Posner's take.

In the first stage, the prospective immigrant would be screened for age, health, IQ, criminal record, English language capability, etc.; the screening need not be elaborate. If the would-be immigrant “passed” in the sense that he seemed likely to add more to U.S. welfare than he would take out, he would be admitted without charge. If he flunked the screening test, an estimate would be made of the net cost (discounted to present value) that he would be likely to impose on the U.S. if he lived here and he would be charged that amount for permission to immigrate.

An alternative, less revolutionary, approach to screening out free-rider immigrants would be, first, to deny immigrants access to Medicaid and other welfare programs until they had lived in the United States for a significant period of time, and, second, to auction off a certain number of immigrant visas to the highest bidders. Immigrants willing to take their chances without access to welfare programs (not that all access could be denied—no one could be refused emergency medical treatment on a charity basis), and immigrants willing to bid high prices in an immigration auction, would be likely to be productive citizens, in the first case, and to cover any costs they would impose on the nation’s health or other welfare systems, in the second case.

Either approach seems to me preferable to a flat fee for all would-be immigrants. A flat fee would not do away with the need to screen, since some would-be immigrants might impose net costs on the U.S. that were greater than the fee; that is why Becker’s approach includes screening. The flat fee would exclude two types of immigrant that should, in a market-oriented approach, be admitted. One type would be “undesirables” willing and able to compensate the United States for the expected costs that they would impose--and so they would not be free riders after all; a very wealthy person on the verge of retirement would be an example of such an “undesirable.” The second type would be highly promising would-be immigrants (for example, persons with a high IQ) who for some reason—perhaps because they reside in extremely poor countries—simply could not pay the down payment on the fee.

The trouble I see with Becker's idea is that a $50,000 fee (or any fee for that matter) will force any would-be immigrant to make a cost-benefit calculation. If the would-be immigrants (especially the highy skilled ones) are from one of the fast growing developing countries (China, India, Brazil etc), the cost-benefit calculation may end up working against the United States rather than for it, as more of them may be tempted to stay home/go home to tap emerging opportunities.

The trouble with Posner's first proposition is that any attempt to screen out relatively less skilled workers may affect the bottomlines of firms that hire them in large numbers, legally or otherwise. Any increase in cost will almost certainly be transferred to consumers. It also seems like both sets of solutions are destined to increase the number of illegal immigrants.

In a surreal bit of news, Hunter S. Thompson, writer extraordinaire, symbol of American counter-culture, Uncle Duke in the Doonesbury strip, and pioneer of gonzo journalism committed suicide by shooting himself.

Maybe we can all watch that crazy Johnny Depp and Benicio Del Toro adaptation of "Fear and Loathing in Las Vegas" again as tribute to the crazy man. For those who came in late, the book is a gonzo compilation of a couple of road trips undertaken by Thompson in the company of a friend and "two bags of grass, seventy-five pellets of mescaline, five sheets of high-powered blotter acid, a salt shaker half-full of cocaine and a whole galaxy of multicolored uppers, downers, screamers, laughers. ...A quart of tequila, a quart of rum, a case of Budweiser, a pint of raw ether and two dozen amyls."

RIP HST.

UPDATE: Here is the last column HST wrote for ESPN, on playing shotgun golf with Bill Murray.

This is hardly a new topic, as traditional Economics has occasionally been blasted for making too many simplifying assumptions, and creating too many abstractions that therefore do not adequately explain reality. However, the current facts are as follows: Global Warming is on the rise, we are fast running out of fossil fuels, Climate Change is happening more rapidly than ever before, and if the work of William Easterly is to be believed, then attempts to eradicate poverty over the last 50 years or so have not met with much success.

So that poses the question - what went wrong with the traditional macro-economic fundamentals, that virtually every democratic government and multilateral organization have based their policies upon, and which every university worth its salt has been espousing for decades? Why are we now in this disastrous position of blindly heading towards a precipice?

Several people have attempted to answer this question - Paul Hawken in his book 'Natural Capitalism' and William McDonough and Michael Braungart in their book 'Cradle to Cradle' start from the Industrial revolution, and argue that with resources seemingly looming in plenty, there was no need to filter in environmental impacts, resource depletion and other issues into traditional policies of production and economics. To be sure, Malthus with his views on resource scarcity, and other discussions on externalities such as pollution have indeed brought such topics into the economic mainstream, but still remain marginalized by more conventional views.

In this interview, Herman Daly, an economist of a different ilk, presents a wonderful critique of traditional economics, and how Homo Economicus, the traditional rational, individualistic view of an economic actor, has suffered from not taking into account the environment, and society. These issues lead directly to why the world is facing the problems mentioned above. This wonderful piece (that I highly recommend) is a great insight into the gaps that contemporary knowledge and thinking need to fill, to move towards sustained and sustainable development in the future.

Watch this space for a discussion of 'Steady-State Economics' as a sustainable alternative to conventional 'Infinite growth' models of development.

New Scientist magazine has a big special report titled India: Knowledge Superpower in its current issue. The introduction in the online version of the magazine reads thus:

There's a revolution afoot in India. Unlike any other developing nation, India is using brainpower rather than cheap physical labour or natural resources to leapfrog into the league of technologically advanced nations. Every high tech company, from Intel to Google, is coming to India to find innovators. Leading the charge is Infosys, the country's first billion-dollar IT company. But the revolution is not confined to IT. Crop scientists are passionately pursuing GM crops to help feed India's poor. Some intrepid molecular biologists are pioneering stem-cell cures for blindness, while others have beaten the odds to produce vaccines for pennies.

And the country is getting wired up as never before. Mobile phone networks have nearly blanketed the country and the internet is even reaching remote villages. Looking skyward, India's unique space programme has fought international sanctions to emerge as key player in India's development. Meanwhile, India's nuclear industry is boldly building cutting-edge fast-breeder reactors. However, there are dramatic problems of poverty and infrastructure. To transform the nation, Indians will have to change their way of thinking about science and technology, take risks in research, and deal with the issues of education, infrastructure, bureaucracy and corruption.

There are special stories on India's space program, nuclear program, GM Crops, generic drugs, astronomy, reversing the brain drain and so on. Some of these online stories are only available to subscribers. Given how many stories there are on various aspects of science in India, I think I will buy the print edition rather than read the limited online version. I'd probably advise those of you living in North America to do the same.

This is just a quick reminder regarding the Bay Area Unites concert today to benefit those affected by the tsunami. The concert is from 2:00 to 5:00 pm at the HP Pavilion in San Jose.

New York Times finally covers the advent of audio blogs, better known as podcasts.

Podcasts are recordings, easily made with a microphone and a computer (or sometimes just a phone), and thanks to a technology barely six months old, can be downloaded to an iPod or any MP3 player to be played at the listener's leisure.

Having been involved with radio for over 5 years, I am excited to see how podcasts are already forcing program directors to think differently about radio. Only the legal hassle of using music remains.

While I hope ZS can use audio posts in the future, I also wish the whole phenomenon wasn't termed Podcast. To me, the term does not sound particularly pleasant and more importantly, gives the IPod more, and unfair, exposure. 'Podcasting' might just turn out to be as big a phenomenon as blogs and while it might be too late to change the use of the term, it might not be a bad idea to look for alternatives - anyone?

Instantaneous conversion is a rare phenomenon. This fact is not remarkable; after all, one's attitudes and beliefs are the product of a myriad different influences which make their effect felt over the course of a lifetime. No single newspaper column, magazine article or television program is likely to outweigh the cumulative impact of years of interaction with friends and family, conversations with classmates
and colleagues, events experienced and ideas shared, books read and places visited.

All the more noteworthy, then, when you read an essay which suddenly and dramatically overturns a conviction which you've long held. This happened to me a few years ago. As most people who know me know by now, I'm a linguistic conservative. I value precision, and abhor sloppy usage; by the same token, I can't stand jargon, and I hate dictionaries that include 'secondary' meanings (born of misuse) on descriptivist grounds. I enjoy discovering and using the occasional neologism, but tend to resist 'cute' coinages. I dislike changes to the language that arise from a desire to be politically correct. And I believe that history and tradition are valid reasons to favour one style of writing over another.

But then I read Douglas Hofstadter's remarkable essay "A Person Paper on Purity in Language". While I still hold to many of the views expressed above, on one fairly significant point my stance has completely reversed itself; indeed, I'm willing to countenance sloppiness, awkwardness and much else, to overturn one particular (historical) aspect of the English language. The credit for this goes entirely to the essay, which, without any further preamble, I encourage all of you to read. Here.

not a topic discussed on ZS - fashion; but then to quote Mr. Wilde "Fashion is a form of ugliness so intolerable that we have to alter it every six months"! The shows that alter fashion however have been affected by global competition and changing consumer tastes. In the fashion industry, where brand consciousness reigns (or reigned?) supreme, here are some trends that shed light on the value of brands.

Handcrafted luxury gowns are no longer en vogue: Only eight Paris fashion houses are participating in the current haute couture shows as demand for the unique creations has dropped over the past few years (During its heydays in the 1950s, 23 Paris fashion houses presented haute couture collections -- soon only seven will be left: Chanel, Christian Dior, Christian Lacroix, Jean-Paul Gaultier, Louis Scherrer, Dominique Sirop and Torrente). Fashion icon Yves Saint Laurent once described haute couture as "whispered secrets passed on from generation to generation." He's since pulled out of the business of selling deluxe dresses -- just like many of his colleagues. Long gone are the days, when fabulously rich ladies ordered haute couture outfits by the dozen. The value of brands is all that's left of the "high art of tailoring."

As in fashion, there remains a motivation to produce high-end expensive products that are endorsed by celebrities - advertising. The brand name can then be used to produce `cheaper' and different products ranging from perfumes and liqeur to chocolates and cigars.

"Producing such a collection costs less money than a global advertising campaign," said Didier Grumbach, president of the French fashion association, the Federation Francaise de la Couture. Fashion houses still invest between €500,000 ($617,000) and €2 million to put on a 20-minute haute couture show.

So whats happening today - cheaper retail outlets use designers with a brand name (Karl Lagerfeld with H&M, Isaac Mizrahi with Target etc.), buy from cheap international suppliers and market it (at a fraction what these things cost historically) in the US. Thats that for fashion and using the brand advantage, no longer to charge higher but to leverage it for the masses!

Daedaulus' winter issue is on Race. Here is something to think about:

In April of 2004, the quarterly newsletter Migration News summarized the most recent data on race and ethnicity from the U.S. Census Bureau: “In 2000, the racial/ethnic makeup of US residents was: White, 69 percent; Hispanic and Black, 13 percent each; and Asian and other, six percent. By 2050, these percentages are projected to be: 50, 24, 15, and 13.” For anyone who has been studying racial trends in America these figures weren’t surprising. But the newsletter’s conclusion certainly was: “It is possible that, by 2050, today’s racial and ethnic categories will no longer be in use.” Migration News is a scholarly publication that “summarizes the most important immigration and integration developments.” It is produced by Migration Dialogue, a group at the University of California, Davis, that aspires to provide “timely, factual and nonpartisan information and analysis ofinternational migration issues.” Migration News cannot by any stretch ofthe imagination be described as fanciful or ideological – and yet in the middle of a summary of census data its authors produced the astonishing prognosis that “by 2050, today’s racial and ethnic categories will no longer be in use.” If Migration News is correct, residents ofthe United States will, within the lifetime ofmany readers ofthis issue of Dædalus, no longer talk of blacks, whites, Asians, Latinos, and Native Americans, but will instead speak of – what?

If you are interested you can proceed to read the author's take on this.

IIT-Kanpur will soon deploy Sun's grid computing solution.

Sun's Compute grid rack system is an ideal solution for compute-intensive applications. It is an integrated solution that delivers high compute performance, excellent price/performance, and high density.

Sun's President and Chief Software Blogger Jonathan Schwartz had blogged on Sun's move into grid computing, and offered IBM a challenge.

We're well aware that grids are inappropriate for many of today's applications or customer environments. But there's a broad market of workloads that are right in our crosshairs, from risk analysis to movie rendering, data warehousing to reservoir simulation. We understand full well that this represents a very small portion of today's computing needs. But we also know that's where the network's headed - that more traditional apps are spilling into the grid, and the market's growing.

So in the spirit of giving IBM an opportunity to respond with greater clarity, here's a table presenting what $1/cpu-hr buys you from Sun.

Sam, we hereby invite you to fill in the blanks

At $1 per CPU-hour and $1 per GB-month, Sun is confident that it has a great price point, but the question is also one of quality - will the Sun grid deliver the same level of performance, scalability, reliability and fault-tolerance as IBM's computing solution?

UPDATE :
[From Sadagopan's blog] David Berlind talks about grid computing on ZDNet, and the different types of applications possible.

The first and perhaps simplest type of grid application is the one that most closely resembles dynamic provisioning, where you dynamically realign system configurations based on the priorities of certain business objectives.

The second type of application concerns array jobs. This is the one that most closely resembles the SETI@home project because of the way multiple machines are working on the same problem, but with independently processable chunks of data.

Since there are different types of grid applications envisioned, what constitutes an appropriate benchmark workload for the grid will depend on what the grid ends up being primarily used for - for array computing, for Condor ClassAd-style load balancing, or for applications requiring tighly coupled systems. I suspect that like the differentiation of the TPC benchmarks into TPC-C and TPC-H, grid benchmarks might also get differentiated, and that it might be nescessary to look at multiple benchmark numbers to evaluate a particular grid.

This is how the Financial Times Deutschland described international aid giving for tsunami relief (see Anand's post below for some current aid levels). Having spoken to several people about the geopolitical consequences of forwarding and accepting disaster aid, it was with great pleasure that I read this essay on the geopolitics of tsunami relief. An excerpt from the essay, of particular importance since the point of India denying aid has been brought up a few times on ZooStation, follows.

India’s policy of preventing any international dimension to the tsunami relief effort at home, as well as its ambivalence towards foreign aid, comes amid several years of relatively high economic growth that prompted New Delhi in 2004 to reduce to six the number of foreign countries permitted to provide aid to India. But many commentators pointed to the real reason behind New Delhi’s new-found policy of self-sufficiency: its desire to project India as an emerging great power in hopes of securing a permanent seat on a reformed UN Security Council.

This is particularly important when one views China's limited role in tsunami-relief.

Indeed, neither China nor Japan –two economic giants that compete for regional influence– were content to be upstaged by the other in responding to the disaster. After much criticism from abroad, embarrassed members of China’s Politburo reluctantly increased an initial pledge of US$2.6 million to US$63 million, the largest lump sum the communist country has ever donated abroad (and carefully calibrated to best the US$50 million pledged by Taiwan, its diminutive rival). But China’s record offering was quickly overshadowed by Japan, which upped its own pledge from US$30 million to US$500 million, half of which will be provided bilaterally. Beijing subsequently raised its pledge to US$83 million, and said it would forgive Sri Lanka’s debt.

China also looked on as American, Australian, British and Indian warships moved quickly into the region to deliver food and supplies to the hardest hit areas. The US undertook its biggest military operation under the Pacific Command since the Vietnam War, and Japan sent the largest-ever contingent of its Self-Defence Forces for an overseas relief mission. By contrast, China still lacks a credible blue water navy. Indeed, Beijing’s primary contribution involved dispatching six medical teams to Indonesia. China then faced criticism that food it donated to Indonesian tsunami victims had passed its expiration date by more than one year.

China was also conspicuously absent from Bush’s ‘core group’, despite Beijing’s rhetoric of playing a leadership role in the region. Adding insult to injury, China’s tsunami pledge ignited debate in Japan over when to stop aid payments to China. Japanese Prime Minister Junichiro Koizumi said he hoped China would ‘graduate’ from Japanese aid, which still makes up more than half of China’s aid total. Japan has already been reducing aid payments to China –the seventh largest economy in the world– by 20% per year since 2000, while at the same time increasing aid to India, China’s main rival. But China has resisted calls for reappraisal of its status as a major recipient of international aid and interest-free development loans from multilateral lending institutions like the World Bank and the Asian Development Bank. Indeed, China’s relatively limited resources are a reminder that the world’s most populous country is still far from being the dominant power in Asia.

...and contrast this with India's role

India’s reaction to the tsunami contrasted sharply with that of China. Within hours of the disaster, India –China’s near equal in terms of population and economic growth– sent cargo aircraft carrying emergency supplies to neighbouring Sri Lanka, immediately staking a claim for itself in the ‘core group’ of donor nations. Moreover, India refused to accept offers of foreign aid, suggesting that such money should be diverted to poorer nations. Reinforcing the message that it could deal with the disaster on its own, India turned down a request by UN Secretary General Kofi Annan to visit the tsunami-affected area of Tamil Nadu.


Whether disaster relief changes geopolitical balance - only time will tell.

[From BoingBoing via Scientific Indian] Google introduces their new feature : Google Maps. Google Maps is another brilliantly engineered site from Google. There are a couple of really cool new features : infinitely scrollable maps, which help you visualize the map or the route much better than Mapquest and other existing mapping sites, and turn-by-turn driving directions with pop-ups that show a zoomed-in map of the turn points.

Google Maps is blazingly fast. It uses absolute URLs for the map, so there is potential for client-side and edge-of-network caching. GoogleMaps also makes innovative use of XML technologies, an area close to my heart. HTTP get's from the browser return XML embedded in the HTML, and Google Maps uses the browser's built-in XSLT processor to apply a stylesheet on the XML returned. Joel Webber talks about what else is going on under the covers at Google Maps in this post. I think Google is where the game is now.

I also think it bears noting that Google is pulling out all the stops to build rich web apps, no matter how weirdly they have to hack the browser to make them go. And I strongly believe that this is a trend that is here to stay -- XHTML Strict/CSS/etc be damned. At the end of the day, what really matters to users is compelling apps that let them get their work done quickly.

President Bush will ask Congress for 950 million in aid for the tsunami-stricken nations. The money will mostly go towads helping Indonesia and Sri Lanka, since India and Thailand have not sought foreign governmental aid. I wonder if the Indian government will reconsider its position in not seeking foreign governmental aid given this 600 million increase. The bill, if approved, would be the single largest pledge made towards any single disaster in US history. This is the sort of the thing that puts compassion into conservativism, and I can only applaud Bush for this move.

President Bush on Wednesday increased the United States tsunami relief pledge to $950 million, nearly tripling America's contribution.

The additional $600 million would put the United States, which was criticized initially as reacting slowly to the disaster, ahead of Australia, which has pledged $750 million, and Germany, which has pledged $680 million, among the top donors.

The relief couldn't come at a better time. Disasters such as the tsunami have a tendency to be quicky forgotten. 'This will also slip away from public memory', said a relief worker in one of the articles Amit Varma wrote on Rediff.com.

"I have been to Orissa (where there was a cyclone in 1999), I have been to Bhuj (earthquake in 2001), and from those experiences I can tell you, long-term rehabilitation is a problem. See, now the tsunami has just happened, the press is everywhere, the government everywhere, volunteers everywhere. But as time passes -- after the immediate emergency needs of the survivors are taken care of -- most of them will go away.

Amit Varma also blogged on India Uncut about his first-hand experiences in Tamil Nadu in the days following the tsunami. (Check out his "India Uncut - The Tsunami Posts") In the article, Amit Varma also mentions AID India's efforts in the tsunami. He refers to AID as 'an organisation [he] can't praise highly enough for their unflagging relief work in the state', and goes on to talk about AID's relief strategy. I know some of the AID people in Austin and the Bay Area, and they are one incredibly motivated bunch of volunteers. Hurrah, AIDers. Way to go!

For all the Bay Area readers of the blog out there, Vamsee Tirukkala brings to our attention a fundraising event happening over the next weekend (Feb. 20th) to benefit victims of the tsunami. From Vamsee's e-mail :

Many bay area communities are coming together like never before to remember the victims of the tsunami disaster and to raise funds for the rehabilitation of its survivors. On Sunday, February 20, join us at the HP Pavilion in San Jose at 2pm for an interfaith service led by Dr. Deepak Chopra and entertainment by Lisa Loeb, Gamelan Sekar Jaya, Shankar & Gingger, Mostly Dylan, as well as a special message from President Bill Clinton, as we unite to support this important cause, benefiting the seven countries hit hardest by the tsunami.

I took a quick look at the brochure. The event looks pretty fabulous with artistes from India, Indonesia, and the United States. A performance by Shankar and Gingger alone should be reason enough to go, but it really trumps everything that the proceeds are going to benefit such a great cause. Beneficiaries will be people affected by the tsunami in Indonesia, Sri Lanka, India, Thailand, the Maldives, Malaysia and Somalia. Tickets starts at $10, plus additional contributions on a voluntary basis. Tickets can be bought out here.

P.S. For bloggers reading this, please do spread the word around if you can. Your help is appreciated.

I know several regular readers of ZS use Bloglines. So, it may come as news to you that Ask Jeeves is planning to buy Bloglines and integrate it into their search system (expected to go live at some point today). Napsterization has some questions about the search strategy.

What they would have trouble doing is getting all the data, structured, organized and pulled, going back more than say, a month. That's because blog posts fall off the front pages (depending on frequency of blogging and how many posts the blogger displays) and go into archives. If you think about how many kinds of blog software exist, which means many different kinds of data structures for the blog post data, which then it's very difficult to get all the various types of data structured into a single database, just imagine how all the variants of those professionally and homegrown blog publishing systems differ for archival posts. Lots of people customize their archives, as I have in MT and other blogs I participate in with Wordpress, Typepad, etc. Spidering and structuring archives is really tough, tougher than getting the stuff on the tops of blogs right. The point is, a comprehensive database of blogs structured well, going back a couple of years, is really valuable. As is the knowledge of how to put that database together, and run it, along with understanding why this kind of search is very different than those done by Google or Ask Jeeves, whose results don't understand the temporal qualities of blog data, or other aspects that make it different.

The big buzz in the computer science world these days is that "Volume Four is coming out." These cryptic-sounding words mean that a forty-year-long wait for the next volume of one of the bestselling and most loved books in the field is finally starting to end. The book in question is Donald Knuth's legendary The Art of Computer Programming, a peerless work that combines basic and sophisticated computer algorithms, mathematics, art, philosophy and pedagogy. The wait is only "starting to end" — rather than "has ended" — because Knuth is breaking up Volume Four into fascicles and plans to release them as they get written.

Announcing the availability, Bookpool comments thus:

Dr. Knuth's original multi-volume work has long been recognized as the definitive description of classical computer science. Not simply a technical instruction manual as we so often see today, this expounds on the philosophy of programming. His work's breadth, clarity, accuracy and good humor has earned him mythical status. Who has not been told "Look in Knuth" when faced with one of the more gnarly computing problems. In fact, he has earned a spot in the Jargon File of hacker slang.

Those with some basic background in computer science should not miss the excerpt (in PDF, available thanks to Bookpool).

[From Sepia Mutiny] Further to my previous post on Hindutva : The New York Times writes on Wendy Doniger's latest book "The Woman Who Pretended to Be Who She Was" :

In India things have become even more serious. Hindutva, a form of Hindu orthodoxy, was enshrined during the Bharatiya Janata Party's reign (from 1998 until this May). But even with that party's fall from power, violence from Hindu groups has grown along with violence from radical Muslims. Scholarship about Hinduism has also come under scrutiny. Books that explore lurid or embarrassing details about deities or saints have been banned. One Western scholar's Indian researcher was smeared with tar, and the institute in Pune where the scholar had done his research was destroyed. Ms. Doniger said one of her American pupils who was studying Christianity in India had her work disrupted and was being relentlessly followed.

In an interview Ms. Doniger explained that this kind of fundamentalism was not new to Hinduism: the strain has run through the religion for centuries, but now it has a political cast. In May, she addressed some of these issues in The Times Literary Supplement, reviewing "Kiss of the Yogini," a book by David Gordon White about the origins of tantric sex. Mr. White argues that Tantra's origins were in a South Asian sexual cult that required the consumption of all manner of bodily emissions, a hypothesis that Ms. Doniger found plausible, if overstated. But, she pointed out, the book also had "political importance" because it was "flying in the face" of a revisionist Hindu tradition that had led to intemperate attacks on European and American scholars.

A couple of comments. One, there seems to be this obsession surrounding the sexual aspect of Hinduism. Speaking for the Indian epics at least, it is clear that their approach to sexuality is a merely an aspect of their holistic approach, and that they approach sex as a natural part of human behavior.

Two, it is certainly possible to have symbolic interpretations of Hinduism, but it is also important not to confine oneselves only with symbolic interpretations. The Mahabharata has been interpreted to represent "the connection and conflict between the different systems of Hindu Philosophy and Religion". A different scholar interpreted the Pandavas in the Mahabharata to symbolically represent the seasons, and Draupadi to represent the earth. But it is hard to argue that the epic is merely an allegory about the seasons. It is not clear why any one (or any set of people) would bother to write an expansive work such as the Mahabharata merely as a representation of the seasons. I think people are not served by viewing the Indian classics, or Hinduism, merely in terms of their symbolic aspects.

Manish rightly points out that among the Hindus, 'there’s also a sense of disenfranchisement over the scholarship of their own religion'. Part of this is Hindus trying to contribute their own understanding of their religion to the debate. As Manish puts it: 'It’s as if the religious studies field had decided that Jesus was gay, and those affirming his straightness were denied an academic microphone entirely.'

Sulekha.com ran an article on Wendy Doniger a little back, which talks about
Doniger's scholarship in perspective.

All these points contribute to one great function of Doniger's writing and teaching. She has helped to disseminate a complex, subtle view of Hinduism in the English-speaking world. She has provided an alternative to the two strains of colonialist Orientalism -- the denigrating strain that sees Indic traditions as degraded, and the romanticizing strain that sees Indic traditions as a source of pure spiritual light. Avoiding these tendencies is no easy matter. Anti-Hindu fanatics see any positive reference to Hinduism as a capitulation to its worst aspects. Hindu nationalists see any criticism as a sign of racism. Doniger has bravely tried to see Indic traditions as human, as manifestations of psychology and culture, like any other tradition. In short, she has tried to avoid the dichotomous options offered by colonialism.

I recently read Prof. Alf Hiltebeitel's book Rethinking the Mahabharata. The book steers away from offensive terminology, while remaining remarkably scholarly and insightful. We need more of these.

In a Technology Review essay bound to provoke controversy, Freeman Dyson argues that species evolution has probably come to an end. He lays the framework for his argument by quoting research done by taxonomist Carl Woese on pre-Darwinian evolution.

He also raises another profoundly important question: when did Darwinian evolution begin? By Darwinian evolution he means evolution as Darwin himself understood it, based on the intense competition for survival among noninterbreeding species. He presents evidence that Darwinian evolution did not go back to the beginning of life. In early times, the process that he calls “horizontal gene transfer,” the sharing of genes between unrelated species, was prevalent. It becomes more prevalent the further back you go in time.

Woese is postulating a golden age of pre-Darwinian life, during which horizontal gene transfer was universal and separate species did not exist. Life was then a community of cells of various kinds, sharing their genetic information so that clever chemical tricks and catalytic processes invented by one creature could be inherited by all of them. Evolution was a communal affair, the whole community advancing in metabolic and reproductive efficiency as the genes of the most efficient cells were shared. But then, one evil day, a cell resembling a primitive bacterium happened to find itself one jump ahead of its neighbors in efficiency.

Dyson then makes his case.

Now, after some three billion years, the Darwinian era is over. The epoch of species competition came to an end about 10 thousand years ago when a single species, Homo sapiens, began to dominate and reorganize the biosphere. Since that time, cultural evolution has replaced biological evolution as the driving force of change. Cultural evolution is not Darwinian. Cultures spread by horizontal transfer of ideas more than by genetic inheritance. Cultural evolution is running a thousand times faster than Darwinian evolution, taking us into a new era of cultural interdependence that we call globalization. And now, in the last 30 years, Homo sapiens has revived the ancient pre-Darwinian practice of horizontal gene transfer, moving genes easily from microbes to plants and animals, blurring the boundaries between species. We are moving rapidly into the post-Darwinian era, when species will no longer exist, and the evolution of life will again be communal.

In the post-Darwinian era, biotechnology will be domesticated. There will be do-it-yourself kits for gardeners, who will use gene transfer to breed new varieties of roses and orchids. Also, biotech games for children, played with real eggs and seeds rather than with images on a screen. Genetic engineering, once it gets into the hands of the general public, will give us an explosion of biodiversity. Designing genomes will be a new art form, as creative as painting or sculpture. Few of the new creations will be masterpieces, but all will bring joy to their creators and diversity to our fauna and flora.

The Economist is also carrying a story on equity market reform in India, something I missed while watching the Telecom FDI cap story. If these pension/provident fund reforms go through, it will almost certainly create more liquidity in the stock markets and make them far less dependant (since only about 1% of Indian household savings are in the equity markets) on the whims and fancies of foreign institutional investors.

From April non-government “provident” funds may invest 5% of their new inflows directly in shares. A further 10% can be put into equity-linked mutual funds. Provident funds manage over 1.5 trillion rupees ($34 billion) in assets—currently, all of it in government-guaranteed securities or in debt instruments issued by government-owned companies and banks. Any money received when earlier investments mature will also be subject to the new rule. According to one observer in Mumbai, over the next 18 months perhaps a quarter of the provident funds' assets are likely to mature. In all, more than 200 billion rupees are likely to be available for investment in the stockmarket, either directly or through mutual funds. About 100 billion rupees can be invested in the first year of the new system.

The country's mutual-fund industry should also benefit. At present, it manages just 300 billion rupees in equity assets, or 1.5% of market capitalisation. (By contrast, American funds' share of their country's stockmarket is perhaps 20%.)Many believe that provident funds, which lack fund-management skills, will prefer to place money with mutual funds rather than buy shares directly, at least at first.

According to Adam Smith, freely set prices are what coordinates the activities of a market economy. Why then are three of the most important prices in the world -- oil prices, interest rates (price of capital) and the price of the dollar -- set by anything but the invisible hand? In this very interesting piece, the Economist Global Agenda investigates the issue.

Thanks to China’s hot economy and America’s cold weather, demand for oil has strengthened over the past month. Thus the rise in the oil price—from $40.25 for a barrel of West Texas Intermediate in early December to over $48 on the eve of OPEC’s meeting—would receive Adam Smith’s blessing: it is the invisible hand at work. But when strong demand drives prices up, high prices are supposed, in turn, to stimulate supply. OPEC, by contrast, is determined to stop oil flowing any faster than it is already. On Sunday, the cartel refused to lift the quota of 27m barrels per day (bpd) that it imposed on its members (with the exception of Iraq) in December. Indeed, it insisted that its members, who are pumping about 500,000 bpd in excess of their quotas, stick to their limits more conscientiously.

OPEC’s complacency depends in part on the Federal Reserve’s credibility. Despite the rise in energy prices, the public is still convinced the Fed has inflation under control. Oil producers can thus enjoy higher prices without fearing the kind of damaging inflationary spiral that afflicted the global economy in the 1970s. Even though energy prices rose by 10.4% at an annualised rate in the last quarter of 2004, core consumer prices, which exclude energy and food, rose by just 2%. The Fed has slowly tightened its grip on the price of money, raising rates by 1.25 percentage points since June. It is expected to raise them another quarter point on Wednesday. But its moves to date have been too light-handed to have much visible impact on the wider cost of borrowing. The yield on American Treasury bonds is a mere 4.1% or thereabouts.

Treasuries are pricey because anyone who wants to buy one must compete with China’s central bank. The People’s Bank of China (PBoC) is, in effect, a “forced buyer” of Treasuries. To keep the yuan pegged at 8.28 to the dollar, it must buy as many dollars as people want to sell at that rate. Despite the controls it maintains on capital inflows, dollars are flooding in. In the last quarter of 2004, the PBoC added another $100 billion to its foreign-exchange reserves. It stores the bulk of these reserves in the official liabilities of America’s government.

According to Brad Setser, a former Treasury official now at the University of Oxford, a dearer yuan would have a more significant effect on capital flows. At the moment, foreign capital is finding its way into China in anticipation of a yuan revaluation. Speculators want to be holding Chinese assets when the currency in which they are denominated jumps in value. The PBoC soaks up this foreign money and recycles large portions of it back into American Treasuries. Once the long-anticipated revaluation actually occurs, the speculation will ebb, and the PBoC will find itself with less money to throw at American assets. As a result, the price of those assets will fall and American interest rates will rise, encouraging Americans to live within their means.

We know that Mars has huge amounts of ice trapped under its polar caps. We also know that Mars was once considerably warmer and wetter than it is today. Several science fiction writers have spent considerable time and energy making life on mars seem plausible. Is it possible for real though? Robert Roy Britt briefs us on some new research to be published this February in the Journal of Geophysical Research-Planets.

The new research suggests that forcing global warming by injecting greenhouse gases may be the best way to terraform, should governments decide to do so. The conditions warming Earth could be harnessed to transform Mars, the scientists determined. Jumpstarting global warming in a planet-sized laboratory would be a boon to science in some respects. "Bringing life to Mars and studying its growth would contribute to our understanding of evolution, and the ability of life to adapt and proliferate on other worlds," says Margarita Marinova, at the NASA Ames Research Center when the study was done. "Since warming Mars effectively reverts it to its past, more habitable state, this would give any possibly dormant life on Mars the chance to be revived and develop further."

The new research modeled how manmade greenhouse gases would affect Martian temperature and melt water ice and carbon dioxide ice at the poles. Artificially created gases could be 10,000 times more effective than carbon dioxide in warming up the Red Planet, the study determined. The gases that would work the best are flourines and could be made from elements readily available on Mars, Marinova and her colleagues found. Adding 300 parts per million of the gas mixture into the Martian air would trigger a runaway greenhouse effect, according to the models. The polar ice sheets that would slowly evaporate. The newly released carbon dioxide would cause further warming and melting. Atmospheric pressure would rise.

This post is intended as an FYI -- Via Sree, I found that Aishwarya Rai is slated to make an appearance on the Late Show with David Letterman on Feb 9th. Here is the relevant portion from the press release.

Bollywood superstar Aishwarya Rai makes her late night television debut on The Late Show with David Letterman on Wednesday night, February 9, to talk about her upcoming film "Bride & Prejudice." Airing on the CBS television network at 11:30pm ET, the Emmy Award-winning program will mark Rai's first appearance as a guest on an American late night interview program.

UPDATE: I just saw a press-release that says the show with Aishwarya Rai has been moved to Tuesday night (Feb 8) from Wednesday night. Ash fans, take note.

Most of you are aware of the SETI @ Home project. In the same spirit of distributed computing comes an attempt to model climate change using the idle capacity of home/office computers to create a super computer of sorts, that may generate part of the enormous computing power required to model climate.

The aim of climateprediction.net is to investigate the approximations that have to be made in state-of-the-art climate models. By running the model thousands of times (a 'large ensemble') we hope to find out how the model responds to slight tweaks to these approximations - slight enough to not make the approximations any less realistic. This will allow us to improve our understanding of how sensitive our models are to small changes and also to things like changes in carbon dioxide and the sulphur cycle. This will allow us to explore how climate may change in the next century under a wide range of different scenarios. In the past estimates of climate change have had to be made using one or, at best, a very small ensemble (tens rather than thousands!) of model runs. By using your computers, we will be able to improve our understanding of, and confidence in, climate change predictions more than would ever be possible using the supercomputers currently available to scientists.

The FAQ's are here and here is a map that shows where clusters of clients using the software are based at.

The Indian telecom industry received an excellent bit of news earlier today when the goverment announced its decision to hike the FDI cap from 49% to 74% as promised in the last budget. This is great news since it will allow telecom companies to tap foreign sources in order to raise the $30 to $40 billion required to reach the average worldwide figure for tele-density (around 15), and to leapfrog past the copper phase straight into ethernet-based networks and so on. The cabinet decision came with some caveats, including one about the traceability of subscribers.

In order to address the concerns raised by the security agencies and the Left parties, the Cabinet has put in place certain conditions "to safeguard the national interest." The conditions specify that the majority directors on the board including the chairman, the managing director and the chief executive officer shall be resident Indian citizens. To ensure monitoring of the network, the companies will not be allowed to transfer sensitive information relating to subscribers and accounts to destinations outside India. These conditions will also be applicable to the companies operating telecom service with the existing FDI ceiling of 49 per cent.

In other news, Warburg Pincus, one of the big investors in Bharti Telecom, sold 3.2% of their share for a very profitable $306 million. This is on top of the 3.35% that Warburg sold in August of last year for $208 million. They still own about 12% of Bharti. Given that Bharti's profits increased by about 131% in the last quarter, Warburg must feel very good about its investment indeed.

UPDATE: Talking about leapfrogging, apparently Tata Teleservices is using lasers to get around last mile connectivity issues. What's more, the laser bridges can route data at pretty impressive speeds (1.2 GBps).

Here is my promised follow-up post. One of the two end-games (A computer and a user pick up virtual sticks) appears to have already been solved in the previous Mindsport. The game has a perfect strategy for the second player, and the solution in the column looks good.

Games with perfect strategy or even a reasonably computable straegy have little appeal, of course. It is interesting how many more games are going the way of tic-tac-toe and checkers. (Chinook became the World Checkers champion way back in 1994. They have a tentative proof on their site that their opening cannot be beaten - the proof is in the form of a Java applet.)

The Mindsport for this week isn't online - they seem to publish it online fairly irregularly. Here is the other endgame and the solution.

ENDGAME

One hundred consecutive three digit numbers are each raised to the hundredth power and added. What are the last two digits of the total? (Submitted by Dr V R Muralidharan, docmurali@yahoo.com)

Romila Thapar writes in Frontline on the Indian classics, history and Hindutva.

In the case of what has more broadly been called Indology (which is often at the root of the present controversy) it would involve examining the early texts - for instance, the Vedas, the Mahabharata, the Ramayana and such like - as well as the commentaries on these texts that were written during the centuries between their composition and now. If we are to study these texts as part of a system of knowledge we have to consider the scholarship and the historical context of the discourse from early times and understand how scholars commenting on these texts analysed them. This requires a degree of expertise not easily available to all.

Associated with this were the variant versions in which the themes of these texts were treated. Why, for example, were there Buddhist, Jaina and multiple other versions of the Ramakatha that differ in significant ways? This was also part of the discourse among scholars of the ancient past and among those who responded to these versions. But in the current discussion of these early texts we marginalise the commentaries and variant versions and refer largely only to 19th century writers. This is an impoverishment of our intellectual tradition. It would be worth examining why our views of these texts are largely determined by 19th century views of the past. Similarly, we are intolerant of attempts to analyse the past crosscurrents of intellectual life and their historical context, using contemporary techniques of analysis. If such discourse is thought to be a Western way of looking at the texts, then surely the logical reaction in terms of advancing knowledge is to discuss these analyses and not merely dismiss them.

Thapar rightly points out that there are problems with looking at the Indian classics from a 19th century Western perspective. I can speak for the Mahabharata. Upon reading commentaries from some of the 19th century scholars today, it is clear that the scholars of the time would today be considered, at best, to be working from highly constrained models at best. Many of these were British scholars interpreting the literature of the ostensibly uncivilized Indians for them. Commentators looking at these opinions today sometimes find that these were not just biased, but completely wrong.

Fortunately, in the case of the Mahabharata at least, things are getting better. There is increasing scholarship from Indians as well as Westerners. Contemporary Western scholarship, not to mention Indian scholarhsip, is fairly sensitive to cultural differences and quite aware of the problems related to interpretation therefrom. Further, given that scholars can now work with the Critical Edition of the Mahabharata (which was completed only around 1970), something both the 19th century Western scholars and the traditional Indian interpretations were working without, scholarship in the field is likely to only be more informed.

A positive aspect of this entire controversy has been the increased interest in Indian history, thanks to the rewriting of textbooks. Thapar talks about some of the problems surrounding this, and how these problems might be addressed. That reminded me of this 2000 Sulekha interview with Subhash Kak, where he too talked about what could be done to fix the problems.

One of the worst things that was done in the Nehru-Indira years was the establishments of entities such as ICHR, ICSSR, and NCERT. These were modeled after Soviet originals, forgetting that the history of these originals-- notorious for rearranging the past to suit the present, not only in books but also in photographs-- was ugly. In history, we should have a multiplicity of perspectives and the government should have no role in that. My advice to the government would be to abolish these entities and replace them with a peer-reviewed system of grants to fund new projects.

Here's something that might be of interest to the photography fans among you. These are some amazing pictures from last week, of Geneva when it quite literally froze over. The city was first hit by 100 kmph winds which caused biggish waves in the Lake of Geneva and these waves crashed ashore. Since the temperature was already in the sub-zero range, this is what happened.

King Gyanendra, whose public standing had already taken quite a beating, sacked the government and declared a state of emergency. The Prime Minister and his cabinet are under house arrest, phone and internet lines have been snapped, the press has been censored and flights into and out of Kathmandu have been cancelled. Given the situation with the Maoist insurgency controlling vast tracts of the country, some action was probably called for, but whether an emergency is the answer, we'll see.

The situation in Nepal harks back to a similar situation in India in 1975, when Mrs Gandhi made the biggest political mistake of her life. That said, the situation in Nepal was/is a lot graver given the stand off between the Maoists and the army. I just hope the situation doesn't get so bad that the Indian Army is forced to intervene to calm the situation in Nepal (and prevent any possible flood of refugees across the border).

UPDATE: In the Indian Express, the Indian defency policy guru, C. Raja Mohan has an analysis of the unfolding situation in Nepal. Key Quote?

King Gyanendra has calculated that when it comes to a choice between the monarchy and the Maoists, India and the international community would have no option but to side with him.

UPDATE: Blogdai is running a blog with seemingly updated posts on the situation in Nepal.

When it comes to comparisons between India and China, pretty much the only sector where India has a commanding lead is in IT services. The possibility that this lead may be eroding has caused considerable heartburn in India. McKinsey did a study of IT services in both countries and the McKinsey Quarterly is carrying a brief analysis of the report. Briefly, the reports sums up China's troubles in one word -- fragmentation.

Signs of healthy expansion abound in China's IT industry. The number of engineering graduates and software-applications professionals has grown considerably in recent years. Since 1997, annual revenues in software and IT services have risen by 42 percent a year, on average, reaching $6.8 billion in 2003.2 Moreover, the number of English-speaking graduates in the workforce—particularly crucial in software outsourcing—has doubled since 2000, to more than 24 million in 2004.

But shortcomings in the structure of China's IT industry prevent it from taking full advantage of these changes. Although revenues from IT services are rising, they are barely half of India's $12.7 billion a year. Growth is driven by domestic demand—most customers are small and midsize Chinese enterprises that want their software customized to their own needs. Moreover, the country's nascent foreign-software-outsourcing business accounts for just 10 percent of the industry's total revenue, compared with around 70 percent for India.

To compete effectively in global outsourcing, China's software industry must consolidate. The top ten IT-services companies have only about a 20 percent share of the market, compared with the 45 percent commanded by India's top ten. Furthermore, China has about 8,000 software-services providers, and almost three-quarters of them have fewer than 50 employees. No company has emerged from this crowded pack; indeed, only 5 have more than 2,000 employees. India, on the other hand, has fewer than 3,000 software-services companies. Of these, at least 15 have more than 2,000 workers, and some—including Infosys Technologies, Tata Consultancy Services, and Wipro Technologies—have garnered international recognition and a global clientele.

Without adequate scale, Chinese players are unlikely to attract top international clients. In general, smaller companies are riskier and less reliable partners. They are more vulnerable to the loss of key personnel, may not have the financial muscle to survive for the duration of a project, and often don't have the capacity or breadth to absorb large projects easily. Fragmentation exacerbates the Chinese industry's other problems, including weak process controls and product management. Only 6 of China's 30 largest software companies are certified at levels five or four of the capability-maturity model (CMM);3 by contrast, all of the top 30 Indian software companies have achieved these rankings.

Chinese software-services providers will also have to manage their talent much better. Most do little to develop their employees, and very few use stock options, training programs, or other incentives to build talent. Among the companies in our sample, annual employee turnover was about 20 percent, compared with an average of 14 percent in the United States, which itself has a very fluid IT labor market. Scale would help—larger companies tend to attract more interesting projects, provide better training opportunities, and offer more generous incentives.