As loathe as I am to admit it, jobs in finance look very sexy on paper. Managing a small business involves running to OfficeMax, the post office, or the bank – nothing that will grab one’s attention. There are no million dollar deals, or headlines in the newspaper announcing the bonus levels of other office managers. During a lunch break, I’ll come across a story about some new merger, or read those stories about the year-end bonuses that will exceed my salary by several degrees. Being a good capitalist, I understand the role that a vibrant financial sector plays in a modern market – allocating capital efficiently, allowing entrepreneurs a new source of investment funds, and rewarding investors who are taking risks with their money.

What I’ve always wondered though, is how prominent should finance be in a nation’s economic profile? You can even go down to the city level – how much role should Wall Street play in New York’s local economy? What role do the futures exchanges play in Chicago today, and what role will they play 20 years from now? For a developing nation like India, how prominent a role can financial firms play? Should the rules governing their behavior be different than in a developed country? Continue reading →

Religion and politics in India make for a combustible combination, but a recent article in The Wall Street Journal on Azim Premi entitled Secular Engineer: How a Muslim Billionaire Thrives in Hindu India raises the matter of religion and economic advancement. The article profiles Premji, and gives a brief history of Wipro – transforming it from a seller of vegetable oil to the IT powerhouse of today.

A couple of things about the article rubbed me the wrong way. Part of it was the mention of religion in the title. Does anyone know of the religious background of billionaires from China, Japan, or Western nations? Only recently did I find out the owner of the Marriott hotel chain is a Mormon.

The article repeats one of the standard explanations of why Indian Muslims are under-performing their neighbors – that after partition, the best and brightest Muslims left for Pakistan. If that is the case, then Pakistan should be further along the development path than India, and there should be a number of world-beating Pakistani (or Bangladeshi) companies. Such is not the case – while both nations certainly have wealthy families, they are more likely to have garnered that wealth through methods usually seen in many developing nations – graft, monopolized markets, government favors, feudal relationships, etc. Continue reading →