Environment and Economics …

Posted on September 20, 2017. Filed under: American Thinkers, Business, Guide Posts |

George Monbiot in The Guardian

There was “a flaw” in the theory – this is the famous admission by Alan Greenspan, the former chair of the Federal Reserve, to a congressional inquiry into the 2008 financial crisis. His belief that the self-interest of the lending institutions would lead automatically to the correction of financial markets had been proved wrong.

Now, in the midst of the environmental crisis, we await a similar admission. We may be waiting for some time.

Similarly, Milton Friedman, an architects of neoliberal ideology, put it: “Ecological values can find their natural space in the market, like any other consumer demand.” As long as environmental goods are correctly priced, neither planning nor regulation is required. Any attempt by governments or citizens to change the likely course of events is unwarranted and misguided.

But there’s a flaw.

Hurricanes do not respond to market signals. The plastic fibres in our oceans, food and drinking water do not respond to market signals. Nor does the collapse of insect populations, or coral reefs, or the extirpation of orangutans from Borneo. The unregulated market is as powerless in the face of these forces as the people in Florida who resolved to fight Hurricane Irma by shooting it.

It is the wrong tool, the wrong approach, the wrong system. There are two inherent problems with the pricing of the living world and its destruction.

The first is that it depends on attaching a financial value to items – such as human life, species and ecosystems – that cannot be redeemed for money. The second is that it seeks to quantify events and processes that cannot be reliably predicted.

Environmental collapse does not progress by neat increments. You can estimate the money you might make from building an airport: this is likely to be linear and fairly predictable. But you cannot reasonably estimate the environmental cost the airport might incur.

Climate breakdown will behave like a tectonic plate in an earthquake zone: periods of comparative stasis followed by sudden jolts.

Any attempt to compare economic benefit with economic cost in such cases is an exercise in false precision. Even to discuss such flaws is a kind of blasphemy, because the theory allows no role for political thought or for action.

The system is supposed to operate not through deliberate human agency, but through the automatic writing of the invisible hand. Our choice is confined to deciding which goods and services to buy. But even this is illusory.

A system that depends on growth can survive only if we progressively lose our ability to make reasoned decisions.

After our needs, then strong desires, then faint desires have been met, we must keep buying goods and services we neither need nor want, induced by marketing to abandon our discriminating faculties, and to succumb instead to impulse.

You can now buy a selfie toaster, that burns an image of your own face on to your bread – the Turin Shroud of toast.

You can buy beer for dogs and wine for cats; a toilet roll holder that sends a message to your phone when the paper is running out; a $30 branded brick; a hairbrush that informs you whether or not you are brushing your hair correctly. Panasonic intends to produce a mobile fridge that, in response to a voice command, will deliver beers to your chair.

Urge, splurge, purge: we are sucked into a cycle of compulsion followed by consumption, followed by the periodic detoxing of ourselves or our homes, like Romans making themselves sick after eating, so that we can cram more in.

Continued economic growth depends on continued disposal: unless we rapidly junk the goods we buy, it fails. The growth economy and the throwaway society cannot be separated.

Environmental destruction is not a byproduct of this system: it is a necessary element. The environmental crisis is an inevitable result not just of neoliberalism – the most extreme variety of capitalism – but of capitalism itself.

Even the social democratic (Keynesian) kind depends on perpetual growth on a finite planet: a formula for eventual collapse. But the peculiar contribution of neoliberalism is to deny that action is necessary: to insist that the system, like Greenspan’s financial markets, is inherently self-regulating.

The myth of the self-regulating market accelerates the destruction of the self-regulating Earth. What cannot be admitted must be denied.

Ten years ago this week, Matt Ridley – as chair of Northern Rock – helped to cause the first run on a British bank since 1878. This triggered the financial crisis in the UK. Now, in his new incarnation as a Times columnist, he continues to demonstrate his unerring ability to assess risk, by insisting that we needn’t worry about hurricanes: as long as there’s enough money to keep bailing us out, we’ll be fine.

Ridley, who helped destroy the hopes of millions, is one of the faces of the New Optimism that claims life is becoming inexorably better. This vision relies on downplaying or dismissing the predictions of environmental scientists.

We cannot buy our way out of a process that could, through a combination of heat stress, aridity, sea level rise and crop failure, render large parts of the inhabited world hostile to human life; and which, through sudden jolts, could translate environmental crisis into financial crisis.

The sigh of relief from insurers and financiers when Irma changed course could be heard around the world. In April Bloomberg News, drawing on a Report by the US Federal Mortgage Corporation Freddie Mac, investigated the possibility that climate breakdown could cause a collapse in real estate prices in Florida.

It looked only at the impact of sea-level rise – hurricanes were not considered. It warned that a bursting of the coastal property bubble “could spread through banks, insurers and other industries. And, unlike the recession, there’s no hope of a bounce back in property values.”

The sigh of relief from insurers and financiers when Hurricane Irma, whose intensity is likely to have been enhanced by global heating, changed course at the last minute could be heard around the world.

This year, for the first time, three of the five global risks with the greatest potential impact listed by the World Economic Forum were environmental; a fourth (water crises) has a strong environmental component. If an economic crisis is caused by the environmental crisis, it will be the second crash in which Ridley will have played a part.

They bailed out the banks. But as the storms keep rolling in, you’ll have to bail out your own flooded home. There is no environmental rescue plan: to admit the need for one would be to admit that the economic system is based on a series of delusions.

The environmental crisis demands a new ethics, politics and economics. A few of us are groping towards it, but it cannot be left to the scattered efforts of independent thinkers – this should be Humanity’s Central Project.

At least the first step is clear: to recognise that the current system is flawed.

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Raghuram Rajan …

Posted on September 8, 2017. Filed under: Business, Personalities |

Rajan left the central bank last September after unnerving political leaders with his outspoken nature. Several months later, Modi blindsided the nation by scrapping 86 percent of currency in circulation, saying the move was essential to unearth unaccounted wealth and fight graft. Since then, speculation has raged over who thought up the policy, with the debate getting hotter.

Excerpts from what he said on the launch of his book –

Q – “I do what I do ….” I thought your kids did not like the title. What was in your mind about this title?”

A – “My wife liked it. She did….. We were looking for a title and she has always been a good sounding board and I had something like sort of RBI Days and all that. She remembered this statement that it came from one of the monetary policy press conferences. As it was ending I was asked whether I was dovish like Yellen or hawkish like Volcker.

‘I understood what the reporter was asking, but I wanted to push back on the attempts to pigeonhole me into existing stereotypes. …………… Somewhat jokingly, I started in a James Bond-ish vein, ‘My name is Raghuram Rajan —- To my horror, mid-sentence I realised I did not know how to end in a way that did not reveal more on monetary policy than I intended.

‘So with TV cameras on. came the title of the book ‘I Do What I do’ reflects the serendipitous nature of public life.”

Exactly one year after his term as Governor of the Reserve Bank of India came to an end, Raghuram Rajan published his book with his “commentary and speeches” to convey what it was like to be at the helm of the central bank in “those turbulent but exciting times”.

Rajan has stayed away from the press since. He, however, made an exception recently for the media team at Chicago Booth, where he is currently teaching. During the interview, Rajan touched upon the financial crisis of 2008 as well as his recent stint at the RBI.

When Raghuram Rajan stepped down as the Reserve Bank of India’s governor in September last year, he left a gift for his successor — the gift of silence – to allow the new governor time and space to give voice to his ideas. Rajan has stayed away from the press since.

The man who predicted the 2008 global financial crisis also presaged the damage Prime Minister Narendra Modi’s unprecedented cash ban would cause to India’s economy. Raghuram Rajan was governor of the Reserve Bank of India in February 2016, when he was asked by the government for his views on demonetization, according to Rajan’s book, “I do what I do”, the first time he’s spoken about his experience in the country.

“Although there may be long-term benefits, I felt the likely short-term economic costs would outweigh them and felt there were potentially better alternatives to achieve the main goals,” he writes. “I made these views known “.

Rajan left the central bank last September after unnerving political leaders with his outspoken nature.

Several months later, Modi blindsided the nation by scrapping 86 percent of currency in circulation, saying the move was essential to unearth unaccounted wealth and fight graft. Since then, speculation has raged over who thought up the policy, with the debate getting more divisive last week as a slew of data showed demonetization contributed to a sharp growth drop ..

Raghuram Rajan and the Dosa

Rajan was replying to a question from a Dosa-loving engineering student at a Federal Bank event in Kochi.

“In real life, I have a query on Dosa prices — when inflation rates go up, Dosa prices go up, but when inflation rates are lower, the Dosa prices are not lowered. What is happening to our beloved Dosa, sir?” she asked. His response –

“The technology for making Dosas hasn’t actually changed. Till today that person puts it (Dosa batter) on the tawa, spreads it around and then takes it out, right? There has been no technological improvement there.

“However, the wages that you are paying to that gentleman, especially in a high-wage sort of state like Kerala, are going up all the time,”

“So, what happens is that in an economy which is growing and when there are sectors which are improving technologically while other sectors are not improving their technology, the prices for the goods manufactured by sectors, that are not improving their technology, will go up faster”.


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The Naked Truth re BLACK Money …

Posted on January 18, 2017. Filed under: Business, Indian Thought, Uncategorized |

Captain GR Gopinath …

Almost all of us – politicians and bureaucrats; the low and the elite – have all dealt with black money at one time or another.

When it suits and benefits us we have paid or accepted donations to admit children in good schools, bribed the police if caught driving intoxicated at night to avoid inconvenience and embarrassment, greased the palms of the RTO to get a driving licence, paid the sub registrar under the table through our lawyer to reduce stamp duty while registering our property, paid in cash to avoid VAT while purchasing material for building our house, paid the doctor, lawyer, auditor or architect or bought goods in cash and not insisted on bills, or bribed the income tax assessment officer through the accountant to reduce our tax liability.

Then when the Govt decided to build a dam, the babus, lawyers and sundry facilitators took away most of the farmer’s compensation money. 

Corruption by government officials in cahoots with politicians and middlemen destroyed the lives of millions while it enriched officials, contractors and others. It gradually became common knowledge that if you landed a job as an inspector or an official in the government department it was the easiest and quickest way to wealth.

Black money like cancer devoured the country and ordinary citizens. Like Laxman’s Common Man, Hirannayya’s stories and anecdotes are inspired from stories of the day’s newspapers and journals. An example there is this  Constable who drags a hapless villager to the local police station pushing a bicycle and produces him in front of the sergeant.

The sergeant asks – ” What’s the offence ?” Constable -” Sir, he was riding to the next village without lights. I brought him in to fine him.” Sergeant, surprised – ” But, its only 11 in the morning !” Constable- ” Yes Saar. But when I asked him what time is he returning from the other village, he said 8 at night. So I guessed he will be riding back in darkness without lights. So I hauled him up just to teach him a lesson.”

I took premature retirement and came back to my village and took to farming the remote barren land given as compensation for the land devoured by the waters of the reservoir created by the dam. I was 28 years old after having served 8 years in the Army. I found that fighting the Pakistanis had been easier than battling the bureaucracy and government.

I had to get land records completed, surveys done, approach road to my lands constructed from the irrigation department as it was rehabilitated land and had      obtain electricity. I had to deal with offices of Tehsildar, sub registrar ,state electricity board and other sundry offices. I soon foimd my file would not move an inch unless I gave it a push through ‘speed money’.

Then I bit the big ‘Apple’. I started the helicopter and aviation company with an ex Army pilot. For three years I ran from pillar to post to get an aviation licence. Finally our sheer dogged persistence. It was well known that aviation was and still is, to a great degree operated under a ‘license Raj’. I mean there are a lot of discretionary powers both at the ministry and bureaucratic level which are still happy operating under antiquated cumbersome laws which is the root of corruption.    And if you go with a suit case full of money to the corridors of power in Delhi someone will come and dispossess you of it.

While running the aviation company I was unwittingly at first , wittingly at other times – sucked into dealing with cash of big National political parties, who used our helicopters for election rallies. Most of the money that was paid by all political parties was unaccounted money paid by big business.

It is an open secret. The high and mighty politicians – a few with reputations of being honest and many others known to be corrupt – from all major national and regional political parties – all traveled extensively on choppers and jets, criss crossing the country.

Many politicians reneged on payment after use. Quite a few surprised me by being honorable and kept the commitment and paid in cash. Political parties paid part in cash and part in cheque. We were constantly running to the government for approvals and clearances and the aviation company’s survival hinged on speedy clearances.

I knew, in many instances that I would have won in a court of law against the ministry of aviation and the regulators, but that would have taken years and in the mean time the air craft would have become worthless and the company would have gone belly up. 

I had decided not to bribe in cash. Somehow it felt vulgar and demeaning. But I found a way to cheat myself and offered in kind, by giving my choppers and planes during elections for free or offered free air tickets and guest houses and cars for their vacation.

Politicians flew to meet God Men. God Men jetted and hopped in and out of choppers to meet politicians. Businessmen fell over each other and paid us for the trips of both. I felt diminished for what I did. I washed off my guilt saying to myself I did it to save my company.

Almost the entire educated middle class as well as the small and medium businesses (with rare exceptions) are corrupt in their day to day dealings. The politicians along with the bureaucracy, big corporates and crony capitalists who all have a cozy nexus are in the forefront of the large scale corruption that we see in papers and television.

We all know that they bend the law, are above the law and have been amassing massive fortunes with brazenness and impunity. Educated Indians often talk about our corruption in the country as though it’s part of our inherited genetic disease – a DNA in Indians as a race.

Let me just say all people of all countries are corrupt when there are cumbersome rules, ill conceived policies, high taxes, lack of accountability and NO transparency and when there are institutions without autonomy and there’s laxity in strict enforcement of rule of law.  When society allows rulers to rule with conflict of interest coupled with subversion of democracy.

Historically we have seen similar decline in many countries. Russia, East Germany , China , Argentina are a few examples that come readily to mind. Even in the West many European countries not under communism have seen their rise, fall and rise again.

 Here is what Ralph Waldo Emerson said of America in one of his celebrated essays in the 1850s. – “The young man, on entering life, finds the way to lucrative employments blocked with abuses. The ways of trade are grown selfish to the borders of theft, and supple to the borders (if not beyond the borders) of fraud. The sins of our trade belongs to no class, to no individual. One plucks, one distributes, one eats. Every body partakes, every body confesses, — with cap and knee volunteers his confession, yet none feels himself accountable. He did not create the abuse; he cannot alter it. ..”

We have all partaken the fruits of corruption. In such a state of affairs, where corruption and black money is a way of life, it was naive of Prime Minister Narendra Modi to have expected demonetization in isolation to act like a magic wand and end the scourge of black money. 

If a farmer receives twenty thousand rupees in cash it is legal. It’s white. There’s no tax on his income. If the farmer then goes to a doctor and pays five thousand without bills it becomes black. If the doctor then goes to a five star hotel and spends it on dinner, it is billed and it becomes white again but the doctor hid his income. So black and white are inextricably entwined. We have all been corrupt. Man is selfish and will take advantage of situations and exploit it to his advantage. Gender, caste, color, creed or race – there are no exceptions to temptation of lucre or power. 

That’s why we all, including the best of us , need institutions to keep us in check. That’s why even the judge of highest rectitude and unimpeachable integrity is expected to recuse himself while trying cases of his kin or where there’s a conflict of interest. In India we have the proverbial case of the fence eating the crop. We have to strike at the flow of black money and creation of it , otherwise it will be akin to removing piled up garbage once in twenty years.

Whatever be his failings and the numerous controversies that surround Prime Minister Modi, whatever be the charges of his critics and detractors, he has suffused energy into the moribund economy and infused optimism into the aspiring millions who were in despair and were looking up to a strong leader with a clean image untainted by corruption during the declining years of UPA Two when the nation was plunged into despondency and gloom.

With indefatigable energy and inextinguishable enthusiasm – despite his saffron affiliates often queering the pitch by striking discordant notes and working at cross purposes – he single handedly galvanized world opinion, crisscrossed the world, met world leaders and investors and business magnates – managed to put India on the world map and turned it into the fastest growing economy in the world and got them interested into looking at investing in India even though many of his colleagues were not able to deliver on his promise and often made a sorry spectacle of themselves.

Now with such a dazzling accomplishment in a short span of two years, riding the wave of the fastest growing economy in the world, even after taking into account sceptics who charged that the growth statistics was fudged (even the fearless erstwhile RBI governor Raghuram Rajan known for his highly respected professional and apolitical views, as well as the IMF and World Bank validated India’s preeminent position as the fastest growing economy in the world).

After such a trail blazing feat, despite overwhelming odds, Mr Modi, in one fell swoop undid everything by extinguishing nearly 90 per cent of the currency without first preparing the ground for implementation and without first introducing far reaching reforms for checking the generation of black money starting with the politicians, bureaucrats and police, for demonetization to achieve its intended objectives and carry credibility.

It may be too late to reverse some of the damages already inflicted but it is never too late to pursue the implementation of bold reforms to transform governance and society. Despite the foreign media (the same media that extolled him till recently are now disapproving his demonetization as poorly planned and lacking in comprehending the complex economics of it and being ill advised) despite large sections of the Indian intelligentsia including many reputed economists tearing him apart and calling it harebrained, Modi is still fortunate as he enjoys a fount of good will.

The teeming millions of the poor and the dispossessed who constitute the mute suffering majority are still rooting for Modi and believe in him and his popularity has in fact risen. They see him in mythic imagery, incarnate as the slayer of demons – the demons of black marketeers and hoarders. And combined with that goodwill of the masses , the opposition is in total disarray and are at sixes and sevens. There are hardly any leaders among them of any commanding national stature and credibility.

So Mr Modi can still afford to act swiftly with courage and carry out with speed far reaching structural institutional reforms for achieving the results of demonetization to percolate down to the common people while they are still with him and before the groundswell of support evaporates. 

For that he must set an example and begin his surgical strikes right at the top. Modi may be individually honest, but good governance, – his election campaign credo – can only be achieved through strong autonomous institutions.

Time is running out. May we wish he does it in the New Year.

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US – China Relations under Trump …

Posted on December 6, 2016. Filed under: American Thinkers, Business, Chinese Wisdom |

Shasank Nayak in Quora –

The economic relations between China and the US is remarkably similar to the relations between Japan and the United States. Japan and China both are State Capitalist market economies with export orientation and “strategic” use of Foreign Direct Investment and markets to improve economic growth. Both are heavily dependent on trade and are the chief Capitalist competitors to the United States. Both markets however, remain largely closed to domination by foreign companies.

The United States had up until 1980’s taken a fairly lax view on Japan’s economic policy despite it’s fairly negative impact on American economy especially it’s Industry. Japan used Industrial policy to develop it’s export oriented Industry that had created vast imbalances in form of excess savings in Japan, heavy trade surplus for Japan that made it one of the largest capital exporters in form of foreign direct investment in other countries, over investment and weak domestic demand. The US was becoming very critical of this as this entire policy depended on Japan being a weak country and the US being unquestionably stronger. It was becoming clear that this was no longer the case. The persistent trade surplus had as I mentioned earlier turned Japan into the world’s largest creditor nation in 1985 and the US into the largest debtor nation with it’s liabilities increasing from $81 Billion to $831 Billion. This was economically untenable. The Japanese had been the key exporters of excess goods and capital to their trading partners.

Well, the Japanese were getting very worried that their core strengths were being recognized and that many people were learning too much of it’s secret. Japan employed a trick that Russia would use later (as they did during the recent elections). Use American domestic agenda to influence foreign policy in it’s favor. In case of Japan it was the stressing upon racism in American public whereas for Russia it is isolationist tendency on both left and the right. Whenever any article started occurring that stressed upon Japanese differences, the consulate of Japan would respond very quickly stressing that it was racist and exclusionary to differentiate them from the West. They criticized that “revisionist” writers who were “Japan-bashers,” a barely disguised euphemism for anti-Japanese racists. The local Japanese consul would keep on denying the charges and claim that there were no structural differences in Japan’s economy.This campaign succeeded in silencing many critics. Japan even threatened to sell weapons to China and Russia and this worked until the mid 1980’s.

Nonetheless, the United States then forced Japan to strengthen the Yen (Plaza Accord) which proved disastrous for Japan. The Japanese Central bank cut interest rates which worsened the excess capacity and sent much of the capital into local construction industry and real estate speculation leading ultimately to the bubble burst from which Japan never recovered.

Another important point. When the US stock market crashed in 1987, Japan directly assisted the US by buying a large amount of stocks stabilizing the financial system. This made the US implicitly dependent on the Japanese government. In 1995, the Japanese government succeeded in forcing the US to allow for weakening of yuan to boost it’s exports. There was an implicit threat that Japan would pull out the support that it was providing the US by buying government bonds and other forms of investment. Japan’s low-cost financing replaced America’s virtual dearth of domestic savings and allowed the United States to run huge external deficits without paying any of the usual costs, particularly a catastrophic loss in value of the dollar, while keeping inflation low and American financial markets buoyant. The US agreed and that had a devastating impact on South Asia leading to the East Asian crisis because many of those countries had their currency pegged to US dollar and were also export dependent. Worse, they had carelessly liberalized their currency markets leading to a disaster.

This relation was taken over by China which has replaced Japan as America’s largest trade partner, biggest source of job losses particularly in blue collar areas, biggest investor in American economy in form of buying government bonds and just like Japan, it’s companies are buying American ones which has raised eyebrows during the Obama administration.

There is one major difference however, Japan was an American ally while China is becoming America’s real competitor for geopolitical influence. China has been building very close relations with Latin America (including countries like Cuba) and Africa. This means the same crisis we saw in 1980’s when there was a strong anti Japanese sentiment in the US (see the burning of Japan made cars), we have a strong anti China sentiment.

The policy that President elect Trump is pursuing is in some ways continuation of President Obama’s policy. They have recognized that the United States cannot fight all it’s rivals i.e Russia in Europe, Iran in Middle East and China in Asia at the same time. Obama’s attempt to improve relations with Iran was an acknowledgment of this and one of the reasons why the US has not taken a more muscular approach to Syria that France and Germany have been demanding is precisely because the American “establishment” believes that China is a real threat. Obama attempted to solve this by supporting TPP which was an attempt to improve the competitiveness of American Corporations and business in Asia and Europe.

Trump has changed this in some ways. He wants to improve relations with Russia so as to focus better on threatening and combating Iran and China better. His rejection of TPP leaves only the militaristic threat in the arsenal of the United States. It is in this context, we must view his phone call to Taiwan’s President and “anti China” policy.

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Daring Economic Proposal to Reboot Indian Economy …..

Posted on October 18, 2015. Filed under: Business, Indian Thought |

An Economic Advisory body constituted by a group of Chartered Accountants and Engineers.proposes –

Scrap all 56 Taxes including income tax excluding import duty.

Recall high denomination currencies of 1000, 500 and 100 rupees.

All high value transactions to be made only through banking system – cheque, DD, online and electronic.

Fix limit of cash transaction and no taxing on cash transaction.

For Govt. revenue collection introduce single point tax system through banking system – Banking Transaction Tax (2% to 0.7%) on only Credit Amount

Facts -:

As of today total banking transaction is more than 2.7 lakh crores per day say more than 800 lakh crores annually.

Less than 20% transaction is made through banking system as on today and more than 80% transaction made in cash only, which is not traceable.

78% of Indian population spend less than 20/- rupees daily so why do they need 1000/- rupee note.

Result if All FIFTY SIX Taxes incl income tax scrapped

Salaried people will bring home more money which will increase purchasing power of the family.
All commodities including Petrol, Diesel, FMCG will become cheaper by 35% to 52% .
No question of Tax evasion so no black money generation.
Business sector will get boosted. ie self employment.

Result if 1000/ 500/ 100 Rupees currency notes recalled and scrapped
Corruption through cash will stop 100%.
Black money will be either converted to white or will vanish as billions of 1000/500/100 currency notes hidden in bags without use will become simple pieces of paper.
Kidnapping and ransom, “Supari killing” will stop.
Terrorism supported by cash transaction will stop.
Cannot buy high value property in cash showing very less registry prices.
Circulation of “Fake Currency” will stop because fake currency printing for less value notes will not be viable.

Result if Banking Transaction Tax (2% to 0.7%) is implemented :

As on today if BTT is implemented govt can fetch 800 x 2% = 16 lakh crore where as current taxing system is generating less than 14 lakh crore revenue.
When 50% of total transaction will be covered by BTT sizing 2000 to 2500 lakh crores, Govt will need to fix BTT as low as 1% to 0.7% and this will boost again banking transaction many fold.
No separate machinery like income tax department will be needed and tax amount will directly deposited in State/Central/District administration account immediately.
As transaction tax amount will be very less, public will prefer it instead paying huge amount against directly/indirectly FIFTY SIX taxes.
There will be no tax evasion and govt will get huge revenue for development and employment generation.
For any special revenue for special projects, govt can slightly raise BTT say from 1% to 1.2% and this 0.2% increase will generate 4,00,000 crores additional fund.

Effects of if implemented  :

Prices of all things will come down.
Salaried people will get more cash in hand.
Purchasing power of Society will increase.
Demand will boost, so will production and industrialisation and ultimately more employment opportunity for youth.
Surplus revenue to the govt for effective health/ education/ infrastructure/ security/ social works.
Cheaper and easy loans from banks, interest rate will come down.
Spare money for political system for clean politics,
Prices of land/ property will come down,

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India Shining in Twenty First Century ….

Posted on July 14, 2015. Filed under: Business, Guide Posts, Indian Thought | Tags: , |

This is an edited piece by Avay Shukla, an IAS officer who retired in 2010.

An observer cannot fail to notice the deep rot spread in our polity and society. The cancer has spread through all organs of the state. All the four pillars of a democratic dispensation – legislature, executive, judiciary, press – have developed deep fractures and have been taken over by termites and weevils who have hollowed out the innards of the edifice.

It is my contention that a few families and individuals in these four vital organs have taken them over and have molded them to suit their own purposes.

Consider the political executive. State after state has been commandeered by the likes of the Badals, the Dhumals, Virbhadras, Yadavs, Mayawatis, Patnaiks, Karunanidhis, Jayalalithas, Pawars, Hoodas, Lalls, Abdullahs, Raos and Naidus. The states have become privately owned businesses. It is impossible for anyone not owing allegiance to one or the other of these sicilian-style families to enter the power structure.

Parliament itself is the personal fiefdom of a few dozen families, a franchise of the dominant families; and the franchisees are doing very well, thank you: According to the website of the Association for Democratic Reforms, the average wealth of an MP in the current Lok Sabha is now Rs. 15 crore, up from Rs. 9 crore in the last one. And this is only the declared assets!

The state legislatures are no different, packed with sons, daughters, spouses of the Dons. And so we have the scandalous situation of the Badal family having twelve Ministers in Punjab, and Mulayam Singh has so many of his family in the government that even he probably can’t remember the number.

The judiciary too is not exempt from question marks, the biggest of them being: why is it so keen to retain its choke-hold on appointment of Judges ? In no other genuine democracy do judges appoint judges, but here we have a circus playing out on a daily basis in the Supreme Court where a perfectly reasonable NJAC Act is being scrutinized for its constitutionality, and in the interim all appointments have been put on hold – and that too when as many as 251 posts of judges are lying vacant and more than 40 million cases are pending in the courts. Why?

Maybe the answer lies in the following statistics which a Mumbai lawyer M.J. Nedumpara recently submitted to the Supreme Court, based on information gleaned from the websites of the SC and 13 High Courts – 33% of SC judges and 50% of High Court judges are ” related to higher echelons of the judiciary, which translates to 6 in the former and 88 in the latter.

This has been the result of the existing Collegium system of appointments (which the NJAC seeks to replace) in which vacancies are neither notified/ advertised nor is there any transparency in the appointments. Further, a succession of judgments in the past has ensured that retired judges have almost complete monopoly over appointments to various Commissions and Tribunals, guaranteeing them post retirement sinecures – If this does not smell of an oligarchy or netocracy, I am not sure what does.

Take our so called “free” press or media. Most of our leading newspapers and News Channels are owned / managed by business interests (Bennet Coleman, Mukesh Ambani, Bhartiyas) or politicians (Jayalalitha, the Marans, Rajeev Shukla, Chandan Mitra, the Badals, Karthikeya Sharma). Their agenda is naturally set by these behind-the scenes puppeteers whose sole objective is to preserve the oligarchic status quo.

They will not tolerate any change or any “outsider” trying to crash the party. That explains their almost vitriolic hatred of Narender Modi when he first made his bid for Delhi, or of Arvind Kejriwal even today. Mr. Modi is now acceptable to them partly because they have no choice now that he is the Prime Minister, and partly also because he is gradually getting co-opted into the cosy club himself. But Kejriwal is still fair game for a disgustingly biased reporting because he will not abide by their rules.

Consider India Inc. as our world of business is grandly termed. They are the real plutocrats who pay the piper and call the tune. Protectively nurtured in the license -raj nursery they have now attained adulthood and have claimed their legacy. There are 180,000 of them – dollar millionaires. But the real barons of the business world, the dollar multi – millionaires number 14800 (India Today, 10th November 2014) and they are the real oligarchs.

According to the Credit Suisse Global Wealth Report of October 2014 the top 1% of Indians own 49% of the country’s wealth, and this continues to grow: In 2000 the figure was 36.8%. The top 5% own 65.5%. In contrast the bottom 50% Indians own just 5%! And this in a country where a quarter of the world’s destitutes reside, more than 400 million people still live below the poverty line – now we know why they are there.

Even in a far wealthier country like the UK the top 1% own only 23.3% of the wealth.

These then are the four sub-oligarchies which coalesce into a grand whole which is the democratic republic of India. The four guard their turf zealously, both individually and collectively and also network with each other to ensure that no harm befalls any of them. They do not allow any meaningful action to be taken against any of them and ensure that wrong-doing is never punished.

The Radia tapes exposed the most venal complicity between politics, media and big business but were quickly erased. 2G and Coal allocations were not a one-off mistake or malfeasance: they were part of a mutually beneficial public policy, and many more names than those charge-sheeted are involved but the lid has been hastily lowered on the investigations.

It is common knowledge where the SAHARA moneys came from and where they went, but our oligarchs are certainly not interested in the truth becoming public, so Subroto Roy remains in jail: he will pay the bail amount some day and walk free and everyone will breath easier. Jayalalitha’s bail application is heard in record time while the victims of UPHAAR still wait for their application to be heard even after one year.

Convicted members of our privileged netocracy can get bail within hours while unconvicted under trials rot in dungeons for years. A High Court judge passes a patently illegal order and threatens to register an FIR against his own Chief Justice; another defies the law by refusing to sentence a convicted rapist and instead ordering a “mediation” between the rapist and the victim (!!) – and both continue to serve in the courts, no doubt to pass similar illegal orders in the days to come.

Five thousand poor farmers have committed suicide in the last one year under pressure to repay their loans, but one of our high flying (literally) multi-millionaires who owes more than Rupees seven billion to the banks continues to party in his private jets and Mediterranean villas and produce movies for his son.

The country’s banking system is collapsing under the weight of Rs.300,000 crores (US$ 50 billion) “non-performing assets” which is just a euphemism for loans taken by big business which they just refuse to return, with no consequences for them: of course – you and I have to pay for it by more expensive loans and lower returns on deposits. Official secrets are stolen from central ministries and the companies doing so identified (yes, they belong to our 1% club) but only class four employees and middle level managers arrested – the long arm of the law in India shrinks in direct proportion to the moneys and oligarchs involved. (I can guarantee that we will hear no more of this case).

No less than four retired Supreme Court judges give (paid) legal opinions to help an absconding Lalit Modi, knowing fully well that his case is sub – judice and is likely to come up before the same court they were a part of till the other day. Can money speak any louder?
One can go on ad-nauseam but I think I have made the point intended – viz. that our oligarchs look after their own. In the first place laws and policies are made to suit them. If they still fall foul of them, then the laws are bent to breaking point. If even that doesn’t help then perverse legal interpretations are floated (such as drawing a distinction between an ” affidavit” and a ” disposition” and ” absconder” and ” evader” and so on.) And if, by some miracle, even that is of no avail then the final frontier stares us in the face: an impenetrable thicket of laws and lawyers, judges and judgments, adjournments and appeals that somehow ensures that the innocent is incarcerated and the guilty is freed.

Is it any wonder then how the present Lalit Modi burlesque is playing out? The Congress may be shouting ” thief!” now but it took no action against Lalit Modi when it was in power itself – how could it, when it has been feeding at the same trough in our own Animal Farm? In fact, Mr. Lalit Modi has rendered a great service to this country – he has exposed the putrefied core of our democracy and revealed how every institution meant to strengthen it has actually been undermining it from within. It would appear our tryst with destiny has been postponed indefinitely, for surely it cannot be our destiny to be an oligarchy?

To take another metaphor from ‘Animal Farm':
”The creatures outside looked from pig to man and from man to pig, and from pig to man again: but already it was impossible to say which was which.” The bestial transformation is complete.

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Greece and its Socialism …

Posted on July 7, 2015. Filed under: Business, Searching for Success | Tags: , |

What is happening in Greece is the result of socialism playing out in the city square.

Greece has enacted entitlements which assure the citizens a royal life just because they are born in Greece. For example everybody gets pension. Everybody, means everybody. At the age of 57, you as a private or self employed person retire with full State pension. But there is another catch. If you work in a hazardous profession, you can retire with full pension at the age of 50. There are about 450 professions classified as hazardous. One of them is hairdresser. Yep, you read that right, in Greece, hairdresser is a hazardous profession.

So if you are a hairdresser, you can retire with full state pension at the age of 50.

All other entitlements- healthcare, education, unemployment benefits, housing, etc., of course are there. With these securities in place, Greeks did what all other Europeans have done: They stopped having babies. If government is there to take care of you from cradle to grave, why go to the trouble of maintaining families and having babies? Its fertility rate is just 1.41. (World Bank in fact put the figure at 1.29 in 2013.)

So there are not enough Greek nephews to take care of the old age pensions and medical care of Greek uncles. Greeks are discovering the hard way two inescapable facts of life:

1. Government doesn’t have infinite money.

2. Government has no money of its own.

3. If there are no taxpayers around, government earns nothing.

But Greek uncles say,”We don’t give a damn. We don’t care how you arrange the money. Just keep our Welfare cheques coming. Otherwise we will burn down our own cities.” The dispute right now is that Greeks want their entitlements to continue, to be paid by the rest of Europe, whereas rest of Europeans are not ready to pick up the tab. How cruel of them, those Europeans. They all profess to be socialists but are not ready to take care their poor brethren in Greece.

What is happening in Greece, and in the rest of Europe as well, is that the latest avatar of Socialism-the Welfare State- has also bombed big time.

Socialists through their control of media may put any spin to it, but the fact is that their latest project of collectivizing only incomes (and not means of production or property) has also ended up destroying some of the richest and most advanced countries on the planet- the Welfare States of Europe.

Another issue with Greece is their excessive borrowing from market, which they fail to disclose at the time of their application for joining EU. This means that only way they can survive is by keep borrowing to repay another borrowing. If it gets into crisis, which is likely, tourism will take a big hit.

Their economy was on low wages & good sea connectivity which was the reason why EU got them interested but over years they messed it up thoroughly. They still want to live in aristocratic ways even when they have no money to eat.

Have a Look at This Story ………

MARY is the proprietor of a bar in Dublin. She realises that virtually all of her customers are unemployed alcoholics and, as such, can no longer afford to patronize her bar – she will go broke.
To solve this problem, she comes up with a new marketing plan that allows her customers to drink now, but pay later. She keeps track of the drinks consumed on a ledger (thereby granting the customers loans).

Word gets around about Mary’s ‘drink now, pay later’ marketing strategy and, as a result, increasing numbers of customers flood into Mary’s bar.
Soon she has the largest sales volume for any bar in Dublin — all is starting to look rosy.
By providing her customers freedom from immediate payment demands Mary gets no resistance when, at regular intervals, she substantially increases her prices for wine and beer, the most consumed beverages.
Consequently, Mary’s gross sales volume increases massively.

A young and dynamic vice-president at the local bank recognizes that these customer debts constitute valuable future assets and increases Mary’s borrowing limit. He sees no reason for any undue concern, since he has the debts of the unemployed alcoholics as collateral.
At the bank’s corporate headquarters, expert traders figure a way to make huge commissions, and transform these customer loans into Drinkbonds and Alkibonds. These securities are then bundled and traded on international security markets.
The new investors don’t really understand that the securities being sold to them as ‘AAA’ secured bonds are really the debts of unemployed alcoholics. They have had a ‘rating house’ certify they are of good quality.

Nevertheless, the bond prices continuously climb, and the securities soon become the hottest-selling items for some of the nation’s leading brokerage houses.
One day, even though the bond prices are still climbing, a risk manager at the original local bank decides that the time has come to demand payment on the debts incurred by the drinkers at Mary’s bar. He so informs Mary.

Mary then demands payment from her alcoholic patrons, but, being unemployed alcoholics, they cannot pay back their drinking debts. Since Mary cannot fulfil her loan obligations she is forced into bankruptcy. So she now is broke.

The bar closes and the 11 employees lose their jobs.
Overnight, Drinkbonds and Alkibonds drop in price by 90%. The collapsed bond asset value destroys the bank’s liquidity and prevents it from issuing new loans, thus freezing credit and economic activity in the community.

The suppliers of Mary’s bar had granted her generous payment extensions and had invested their firms’ pension funds in the various Bond securities. They find they are now faced with having to write-off her bad debt and with losing over 90% of the presumed value of the bonds.Her wine supplier also claims bankruptcy, closing the doors on a family business that had endured for three generations. Her beer supplier is taken over by a competitor, who immediately closes the local plant and lays off 150 workers.
Fortunately though, the bank, the brokerage houses and their respective executives are saved and bailed out by a multi-billion euro, no-strings attached cash infusion from their cronies in government.

The funds required for this bailout are obtained by new taxes levied on employed, middle-class, non-drinkers who have never been in Mary’s bar.
Now, do you understand economics in 2015?



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Understanding the Tax System …

Posted on February 19, 2015. Filed under: American Thinkers, Business, Indian Thought, Light plus Weighty |

David R. Kamerschen, Ph.D. Professor of Economics, University of Georgia, put this together to show how our current tax system works based on each segment of our population.For those who understand, no explanation is needed! For those who do not understand, no explanation is possible!This is how it goes.

Suppose that every day, ten men go out for beer and the bill for all ten comes to $100. If they paid their bill the way we pay our taxes, it would go something like this:

The first four men (the poorest) would pay nothing.The fifth would pay $1. The sixth would pay $3. The seventh would pay $7. The eighth would pay $12. The ninth would pay $18. The tenth man (the richest) would pay $59.

So, that’s what they decided to do. The ten men drank in the bar every day and seemed quite happy with the arrangement, until one day, the owner threw them a curve, “Since you are all such good customers, I’m going to reduce the cost of your daily beer by $20. Drinks for the ten will now cost just $80”.

The group still wanted to pay their bill the way we pay our taxes so the first four men were unaffected. They would still drink for free.  But what about the other six men – the paying customers?  How could they divide the $20 windfall so that everyone would get his ‘fair share’.

They realized that $20 divided by six is $3.33. But if they subtracted that from everybody’;s share, then the fifth man and the sixth man would each end up being paid to drink his beer. So, the bar owner suggested that it would be fair to reduce each man’s bill by roughly the same amount, and he proceeded to work out the amounts each should pay.

And so: The fifth man, like the first four, now paid nothing (100% savings).

The sixth now paid $2 instead of $3 (33%savings). The seventh now pay $5 instead of $7 (28%savings).

The eighth now paid $9 instead of $12 (25%savings). The ninth now paid $14 instead of $18 (22% savings).

The tenth now paid $49 instead of $59  (16% savings).

Each of the six was better off than before. And the first four continued to drink for free. But once outside the restaurant, the men began to compare their savings.

‘I only got a dollar out of the $20,’ declared the sixth man.  He pointed to the tenth man,’but he got $10!’ ………… ‘Yeah, that’s right,’exclaimed the fifth man. ‘I only saved a dollar, too. It’;s unfair that he got ten times more than I did!’ …………….. ‘That’s true!!’ shouted the seventh man. ‘Why should he get $10 back when I got only two?  The wealthy get all the breaks!’

‘Wait a minute,’yelled the first four men in unison. ‘We didn’t get anything at all. The system exploits the poor!’ ……….

The nine men surrounded the tenth and beat him up.

The next night the tenth man didn’t show up for drinks, so the nine sat down and had beers without him. But when it came time to pay the bill, they discovered something important. They didn’t have enough money between all of them for even half of the bill!

And that, boys and girls, journalists and college professors, is how our tax system works. The people who pay the highest taxes get the most benefit from a tax reduction.

Tax them too much, attack them for being wealthy, and they just may not show up anymore. In fact, they might start drinking overseas where the atmosphere is somewhat friendlier.

 P.S.  That’s how in India, business funds disappear to Swiss Banks!!! I suppose all your doubts are cleared now?






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The humble Indian Railways …

Posted on January 29, 2015. Filed under: Business, Indian Thought |

They are a 161 years old – 16 April 1853. That’s a long time ago!

The trains got toilets after Indian Railways completed about 50 years! Back then, passengers had to wait till the next station to answer the call of nature! Thank Okhil Chandra for making Indian Railways do the needful. He wrote the letter to Indian Railways and finally, there were toilets in 1909!

Back in the old days, elephants were used to position the carriages.

Before Automatic Point System was installed, hundreds of guards lost their hands and fingers trying to fix it manually. Every time a train got delayed and we complained, an Indian Railways employee probably lost his limbs for us.

If the tracks of Indian railways were to be laid out, they would circle the earth almost 1.5 time.

A massively successful organization – running 11,000 trains. Indian Railways transports almost 2.5 crore passengers daily That’s nearly the total population of New Zealand, Australia and Tasmania put together!

The Rail Museum in Delhi is the largest in Asia. It has working and non-working models both.

The Indian Railways website gets close to 12 Lac hits per minute Hourly traffic on is more than annual traffic of some of the most popular websites. It can support almost 5 million threads at one time. But, we’ve got more people than that.

Loco-pilots (train drivers) are paid more than an average software engineer Salaries are the tune of Rs. 1 Lakh per month and more. No loco-pilot has abandoned the train even in the face of certain death.

The longest running train covers a distance of 4273 km between Dibrugarh and Kanyakumari: It’s called the Vivek Express

The longest tunnel in the country is 11.215 kilometers long! It is the Pir Panjal Railway tunnel in Jammu and Kashmir.

A train covers a distance of 528 km without a single stop. It’s Trivandrum – H. Nizamuddin Rajdhani Express.

Lucknow is the busiest junction in the nation: 64 trains come in and move out, every day

The slowest train goes uphill at the speed of 10 kilometers per hour. You can jump off the train, light up a smoke, take a few drags and climb on the train again. It’s the Mettupalayam – Ooty Nilgiri Passenger train.

Most unreliable train in Indian Railways is Guwahati-Trivandrum Express It is late on an average by ten to twelve hours. Gosh!

The shortest distance covered between two successive stations is 3 kilometers It’s between the Nagpur and Ajni station.

The station with the longest name is Venkatanarasimharajuvaripeta. And it’s sometimes spelled with ‘Sri’ prefixed. Quite a mouthful. The station with the smallest name is called ‘IB ’: It’s in Odisha

 The railway station of Navapur is built in two states; half in Maharashtran and half is in Gujarat

Indian Railways has a mascot – Bholu, the Guard Elephant

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Re Your Safety and Security on the Net …

Posted on July 26, 2013. Filed under: American Thinkers, Business, Guide Posts, Searching for Success |

Mat Honan of Wired magazine wrote a very detailed article last year about security flaws that led to an epic hack of his Twitter, Apple and Google accounts. It is a fascinating read and showcases the relatively straightforward techniques that can enable someone to breach our accounts. The steps outlined above are basic but taken together can seriously protect you and your assets online.

Here are Top 11 tips for online protection from a pro:

1) ALWAYS use strong passwords (combination of capital letter, number and punctuation).

2) Don’t use the same passwords for all accounts and change passwords regularly. This is easier said than done but it’s a necessary evil. You would never use the same key for your house, your car and your bank safe deposit box and the same applies online. 

3) A more secure entry check would be to use a two step authentication process which requires you to receive a session PIN (via SMS). Several web services are beginning to offer this option and it is recommended using this for the most important sites where you have financial and other personally identifiable information (PII) data.

4) The backup accounts used for restoring and resetting your password should be one that you use actively and provide near real-time notifications.

5) Back up your data into multiple and diverse solutions such as an external portable hard drive in conjunction with a secured cloud based backup solution. Don’t rely on a single storage medium for your most important data (family photos, etc.)

6) Basic information like your address and birthday are easily obtainable online. Always use secret questions that are fairly obscure and only you or close family would know.

7) Another good practice is to make sure public profiles on Google or Facebook are controlled and you only share information that you are comfortable the whole world can see. Don’t make it easy for someone to guess your password.

8) Full disk encryption (e.g., BitLocker for Windows, FileVault for Mac OS X, dm-crypt + LUKS for Linux) for your personal machines is critical to secure your data in the event you misplace or lose it. That way, despite the loss of the hardware, it becomes more difficult for someone else to access your data.

9) Be wary of using your credit card or other sensitive information online with websites that are not well known. Always ensure that HTTPS/SSL encryption is used when performing any transaction that requires you to enter sensitive information including your username and password. Look for https on the URL and the padlock icon in the URL. To even be safer, one can click the padlock and ensure the site has a valid certificate (such as Verisign).

10) Enable every alert possible for transaction confirmations, password changes and other notifications. It is one of the best ways to keep on top of any unauthorized change in any online account. Pay attention to the options each site provides and enable as many as possible.

11) Be aware of email phishing scams where a hacker attempts to gather information about you such as your username, passwords, or credit card details by masquerading as a trustworthy entity. Avoid clicking on any suspicious links or providing any data about yourself. Always contact the entity directly using their published contact details to validate if it’s a legitimate request.

I diligently follow these tips but it just so happened that for my PayPal account which had been dormant I hadn’t updated my password in a long time and suffered as a result. I learned my lesson and luckily there was no damage in the end, but it was a good reminder to keep your eye on the ball.

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