Category Archives: Economics

Humanitarian crisis looms

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I’m sure we are all praying right now that humanitarian supplies including food and medicine are able to reach the civilian Lebanese population. Not to take away at all from that situation but since it is being thoroughly discussed elsewhere in the news and on the web, I thought I would divert the attention of SM readers for just a few minutes by speaking out about the looming crisis here in America and among other Diasporic desi communities. Folks, we have a daal shortage that hasn’t received nearly enough attention and it’s not going to be pretty when it all plays out. India West reports:

Soon to be more precious than gold?

Faced with an unexpected crunch in supply of dal and lentils, the staple item of the Indian meal, that’s the advice hapless store owners are giving to worried customers after an Indian ban on exports of lentils (I-W, June 30) has sent prices soaring and supplies dwindling. The Indian government has banned the export of dals and lentils until March 2007 to curb rising commodity prices.

“We advise customers to concentrate more on the vegetable than the dal,” Dinesh Kumar of India Cash and Carry, a busy Indian grocery store in Sunnyvale, Calif., told India-West.

No Indian meal is complete without dal, and it is a critical source of protein for vegetarians. Over the weekend, customers have been flocking to the aisle that stores dal, Kumar said. [Link]

The advice they are giving us is to “concentrate more on the vegetable than the dal?” That’s like asking someone to concentrate more on their job than on love, or to concentrate more on a blogger instead of the doctor or the finance guy. It just isn’t going to happen. As the article points out, daal is a CRITICAL source of protein for vegetarians. Is this some sort of bad karma for when all the vegetarians poked fun at the beef eaters for their mad-cow friendly ways? Now the chief protein source of vegetarian desis has come under threat.

“People are in a little panic for dals right now, even though we are requesting them to not take too many packets,” said Kumar, whose store has set a limit of a four-pound pack per household. People were cooperating, he said.

Prices have shot up. Toor dal, which retailed for less than a dollar a pound a couple of weeks ago, has shot up to almost two dollars a pound. [Link]

When I went to the Indian grocery store on my block last weekend I saw a little boy get trampled by three aunties who all reached for the same package of daal on the shelf. As the paramedics loaded him onto the ambulance he kept crying, “why Bhagwan, why?”

“Demands have gone up way high. Everybody is looking for dal and there is not enough in the market,” Parmar told India-West. “We have to supply each and every store; we have limited quantity to supply…” [Link]

Because of my blogging duties I knew about this looming crisis before most in the media and public. I have been steadily stocking up on daal by filling up one of the storage rooms here in our North Dakota bunker. Even my co-bloggers have remained in the dark about my grand designs. My power and influence in the blogosphere and the world in general will no doubt rise as knowledge of my new wealth spreads.

It’s hard to tell how this would play out, he said. “As of now, the market is in a period of uncertainty,” Soni said. “Nobody knows what’s going to happen in the course of the next month…” [Link]

In a post-apocalyptic world where daal is scarce I will have my choice of a beautiful desi bride in search of protein…or perhaps several brides.

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The Big Payback

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My whole life I have secretly admired the profession of the loan shark. You know the guy I am talking about right? The big knuckled, leather jacket wearing thug in the movies that walks softly, carries a BIG ASS stick, and every so often utters phrases like:

You’d piss your pants if you saw me come calling for my money

“B*tch, you better give me my money”

or

‘Da f*ck you mean you ain’t got my money yet? muthaf*cka you best be comin’ up wit’ my cash or else you know what I’m sayin?… [Link]

Admit it. Even the nice guys/gals among our SM readers have wondered at least once in their lives what it would be like to collect on debts as part of their daily routine, to have people scared out of their minds and start to stutter when you came a calling for yo’ money.

In truth, despite the fact that my wallet does have the words “bad ass motherf*cker” embroidered on it, I am a sweet and non-violent guy. I just don’t have the disposition to be a loan shark, nor do I own a gun with which I can pistol whip anyone…not even some annoying commenters. 🙂

What I can do however is help to change the world one loan at a time. Sitting behind my computer I can provide loans…without being a shark. There is a great new service that has been started by former Paypal employee Premal Shah and others, called Kiva. Kiva allows people like you and I to make loans directly to small business owners in the developing world. By loaning them money you will be helping them to take care of themselves and their family through sustainable means. If the working class entrepreneur that you lend money to succeeds, then it is likely that the economic impact of their business will propagate to some extent throughout their community. At the end of loan period it is likely that you will get your money re-paid in full without having to break anyone’s arm.

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Jharkhand minister gives power to the people

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mahto.jpgYesterday Sudesh Mahto (pictured), the home minister of Jharkhand, wed fiancee Neha, a law student, in her home village of Dimbudih. The “VVIPs” were out in force:

Many of the ‘Who’s who’ of the state along with some of the political bigwigs of the country including Union Home Minister Shivraj Patil, Railway Minister Lalu Prasad [Yadav] and senior BJP leader L K Advani graced the occasion but, Jharkhand Chief Minister Arjun Munda did not attend the function as he was indisposed.

State Road Construction officials worked overtime to construct new roads, Energy Department employees erected electric poles, intelligence sleuths and senior police personnel made tight security arrangements at the venue, which falls in the Naxal-infested zone, with STF jawans keeping a hawk eye vigil.

The festivities, which continue tomorrow with a reception for 50,000 in Mahto’s village Lagam, have brought a flurry of rural development activity to the area. To accommodate the minister’s 300-vehicle motorcade, an all-weather road was constructed between the two hamlets. Places along the route have received electricity for the first time.

‘Thanks to the marriage of the minister our village got connected with roads and we saw electricity,’ said Ganesh Mahto, a resident of Silli.

The villagers are happy for more than one reason. Besides roads and power, many have also got short-term employment thanks to the construction work. Incidentally, the home minister is also in charge of road and construction, so there was no problem in getting funds.

‘We had been making rounds of offices to get electricity connection for the past decade. But the minister’s marriage brought electricity to the village,’ said another villager.

Indeed, the wedding has alerted villagers to a whole new development strategy:

But the best part of the marriage was the glittering, almost blinding electric lights, which villagers saw for the first time since Independence. “May every daughter of this village be married to a VIP,” prayed one of them.

The villagers should not to count on those lights glittering too often. Jharkhand’s power situation is dire. The state electricity board is mired in dispute over reforms, and its two thermal plants generate no more than 10% of their installed capacity. Even importing power from outside, Jharkhand is plagued with power cuts.

Then again, Mahto, a former footballer, has also vowed to “wipe out Naxalism through games and sports.” So perhaps he has an integrated theory of social progress, not just an over-reliance on pixie dust. Social scientists would be wise to stay on the case. Continue reading →

Why you should be nice to call center workers

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This week’s edition of Time Magazine includes a cover story about the world’s next great economic superpower: India (via the News Tab). The cover features a worker from the industry that Americans are most familiar with. She is a representative from the ranks of those much abused call center workers. Similar to Manish’s fine entry, The Anatomy of a genre, I thought I’d take a shot at examing the nuances of this cover picture.

The next time a call center worker calls me about signing up with the Dish Network, I am going to pay a lot more attention…and flirt a little.
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India Fact of the Day

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From the always interesting Marginal Revolution –

One third of the value of Indian fruits and vegetables ends up destroyed or spoiled on the way to market, mostly because of bad infrastructure, most of all bad roads.

When we think about / talk about economic growth, it’s easy to get preoccupied with high geek glamor fields like software and biotech. When push comes to shove however, trucking, Wal-Mart, and logistics have a far greater bearing on quality of life for the masses.

A commentor @ Marginal Revolution notes that the “spoilage” rate in the US is 1/10 of this – or nearly 30% more food available en toto for a given amount of production. As Amartya Sen famously pointed out, modern hunger ain’t about growing more food, it’s about getting it to the market. Continue reading →

Fear of a Brown Magnate

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Mittal-steel.jpgA big current international business story is the attempted takeover of Arcelor, a Luxembourg-based steel manufacturer, by London-based, desi-owned Mittal Steel, the voraciously successful family business of Lakshmi Mittal. Arcelor is itself the result of a merger of European steel firms, a logical consolidation in its day since steel is a sunset industry in Western Europe and many firms enjoyed protections of state ownership or subsidies that EU rules no longer permit. However, European politicians have retained a bit of a proprietary cultural interest, as it were, in firms like Arcelor, since even without state ownership they possess a sort of vestigial patriotic value as “national champions,” and they still employ a fair number of people, if far fewer than before, in depressed industrial areas.

Well, ever since Mittal made his first overtures to Arcelor shareholders (which Manish blogged here in January), followed by a formal takeover bid once he got permission from competitive authorities, Arcelor has done everything possible to wriggle away from its suitor. Fair enough – that’s what companies threatened by hostile takeovers do, especially when it becomes clear that their management don’t enter into the buyer’s plans for the future. But with investment analysts lining up in favor of the Mittal bid, there’s also been, of course, speculation that even though Mittal is a London-based, London-quoted firm, it may just be a little too brown for the comfort of the European industrial bourgeoisie.

All this could be dismissed as reading-ethnicity-into-everything, and to some extent probably is. (Though…) Still, itÂ’s remarkable to see that this week the board of Arcelor found themselves rushing into the arms of what is known in business lingo as an, ahem, white knight, in the form of a Russian firm of the new-oligarch variety. The merger deal with Severstal is framed as a purchase by ArcelorÂ… except that it is funded by an increase in ArcelorÂ’s capital via investment by Alexei Mordachov, SeverstalÂ’s 38-year-old chairman. By funding ArcelorÂ’s purchase of his firm, Mordachov takes a 32 percent interest in the merged firm, which would become the worldÂ’s largest steel producer, ahead of Mittal.

The London business writers are having a field day with this one. “The putrid stink of hypocrisy hangs in the air,” says The Observer‘s Richard Wachman, noting that Arcelor, having criticized Mittal for non-transparency in past business dealings, has found its savior in the land where opaqueness and favoritism are essential components of business success. And The IndependentÂ’s business columnist Jeremy Warner cold lays down the card:

Is it cos I’s brown? The Arcelor board appears so appaled at the prospect of takeover by the Indian-born steel magnate, Lakshmi Mittal, that it will do almost anything to avoid his clutches – right down to surrendering control to the Kremlin. Okay, so I’m exaggerating to make the point, but only a little.

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Meet the asio

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A ToI editorial today bemoans the instability of the U.S. dollar and suggests creating a unified Asian currency as an alternative to the euro. Several years ago, Asiaweek suggested the same:

… it took Europe 10 years to produce the euro, building on three decades of efforts at economic integration. An Asian currency would probably have to be grounded in the yen, while China, because of the socialist foundations of its economy, might need to stay on the sidelines for some time. And the political, economic and cultural differences among Asian nations are greater than those within Western Europe. [Link]

I think the asio is a wonderful idea. Here’s how we’ll get there:

  • India and Pakistan agree to merge economies
  • Japan decides it’s willing to merge the yen with the rupee
  • China and India drop all vestiges of socialist economic intervention
  • Japan, China, India, the Philippines, Malaysia, Indonesia and so on get their economies into the same narrow band of inflation, debt and other key economic indicators
  • China, Korea and Japan allow an Asian Economic Zone common passport and migration without work permits
  • The asio countries choose a bland, centrally-located capital and characterless symbols for the currency which evoke no sense of history or nationalism
  • A new pan-Asian parliament and central bank are created
  • The parliament is held hostage to petty provincial issues by a nation deeply convinced of its innate cultural superiority
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The Kafka index

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The French government has announced it will rate bureaucratic red tape using a ‘Kafka index’:

France has created a “Kafka index” that measures the complexity of a project or law against its usefulness to cut red tape. The index – referring to Franz Kafka’s The Trial, which describes one man’s fight against a nightmarish bureaucracy – is a scale of one to 100 measuring how many hurdles, from forms to letters or phone calls, are needed to win state permits or aid for a project.

“It is an indicator to measure as objectively as possible the most complex procedures so that we can then simplify them,” said a government spokesman. [Link]

I’d have suggested a Brazil index had I not witnessed the following exchange at a Reliance Mobile branch in Bombay last week:

Customer: I closed my account a month ago, but you billed me another thousand bucks.

Rep: Saar, you have to clear an additional 80 rupee charge.

Customer: Where do I go to get the account permanently closed?

Rep: Saar, you must go to the Lilavati branch.

Customer: I’ve been going there for four days now. Every day they say their systems are down.

Rep: Saar, that is the only branch which can close accounts.

Customer: I just came from there!

Rep:

You must go there only.

Customer:

 I just came from there!

Rep: You must go there only.

Customer: I just came from there!

Rep: You must go there only.

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The fanny state

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Every time someone claims that there are no communists left in China, or that the Chinese economy will surpass India’s in the long term, I point out the latest example of China micro-managing its most entrepreneurial sectors. (In contrast, India tends to overregulate old sectors and jumps into new ones, which government babus comprehend dimly, only when the moral police perceive political advantage.)

The Chinese government has now inserted itself into multiplayer game design. Gamers who spend more than three hours online will be stripped of points. Gamers who spend more than five hours online will be kicked off entirely:

The government in Beijing is reported to be introducing the controls to deter people from playing for longer than three consecutive hours… The new system will impose penalties on players who spend more than three hours playing a game by reducing the abilities of their characters. Gamers who spend more than five hours will have the abilities of their in-game character severely limited. Players will be forced to take a five-hour break before they can return to a game. [Link]

… there’s the [South Korean] couple whose infant expired as they played games in an Internet cafe; there is the [South Korean] death that occurred from exhaustion; and there are even murders that have resulted from feuds begun online… [Link]

Even the U.S. may succumb, though more to tax than to nag:

In the near future, the IRS could require game developers to keep records of all the transactions that take place in virtual economies and tax players on their gains before any game currency is converted into dollars. [Link]

I actually see the wisdom in this. Maybe they can implement a one-hour cutoff on bad first dates, a two-hour cutoff on crappy TV, and a six-month term limit on despotic nanny regimes.

Personally I spend too much time in front of my PC. I look forward to the day when they send my ass a parking ticket. On Tuesdays and Thursdays, I’d have to park it on alternate sides of the apartment for seat-sweeping.

Related posts: The tortoise and the hare, The cost of progress, Why isn’t gold farming big in India?, BusinessHype, Fortune cookies, CIA has India surpassing Europe in 15 years, Indian companies hiring engineers in China

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Coolie.uk

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This week, the UK implemented two anti-globalization regulations so anti-Indian in effect that they could’ve been written by the BNP.

First, they’re making Indian companies pay off British workers who lose their jobs to overseas outsourcing — but not to those who lose jobs to Ireland or to automation. Who’s really going to end up paying for this incredible, extrajudicial bit of socialism: British consumers.

New rules on BritainÂ’s existing Transfer of Undertakings (Protection of Employment) regulation or TUPE, will now slap overseas contractors with legal and financial responsibility for the British workers who lost their livelihood when jobs were transferred overseas…

Indian contractors accepting outsourcing contracts from British companies would now be forced to negotiate a proper indemnity against legal challenges for redundancy payments.

… the Indian firm would have to build into its cost structure the risk of being sued in a British court by redundant employees or unions.

The new rules on BritainÂ’s Transfer of Undertakings (Protection of Employment) regulation (TUPE) would result in Indian outsourcing contracts becoming more expensive, thus hacking at IndiaÂ’s definite cost-advantage. [Link]

Hey, I just read a good blog post from London which competes with us for reader attention. Who do I sue for my check?

Second, they’ve banned the National Health Service from training Indian doctors without work permits, unless the NHS proves it couldn’t find a Brit. And the ban is immediate with no phase-in, hosing doctors already in training:

… doctors from outside the EU, including from India, were able to take up NHS jobs under what was called ‘[work] permit free training’ schemes. Their jobs were considered part of training that did not require work permits.

Thousands of Indian doctors were employed under the permit free training scheme and were usually hired for short-term periods of one or two years.

… employers now need to obtain work permits before employing these doctors after making a case to prove that no British or EU doctor can perform the same job. This rule effectively rules out any chance of employment for non-EU doctors. [Link]

In the new coolie economy, you can hire ’em, use ’em and dump ’em the same day. Continue reading →