Economy
On violence and CEO deaths
The lynching of the CEO of an Italian auto parts manufacturer is bad enough. What’s worse is the Labour Minister Oscar Fernandes’ justification of the violence proportioning the blame on the management that "pushed the employees to the limit." I am no longer shocked at the politician’s lack of tact, and complete callousness. My few years of observing Indian politics has taught me that we cannot expect any better from them. But, what got my goat were a few comments on Nita’s post on the same issue. Especially a comment by Odzer where he pretty much justified the killing because he was a big shot. I agree that we do not hear about the death of the "common man" every day. I also agree that there is so much publicity because he was the CEO of a company. But tell me something. Does the fact that Mr. Chaudhry made a lot of money as the CEO of an Italian firm justify his killing? Does his family not mourn his death as much as the family of a sweeper who dies? Especially when the person was killed?
The problem is not just with this case. The problem lies in the basic distrust of those who make lots of money. This was a trend I noticed during the recent financial meltdown. Most people I spoke to were far from sympathetic to the fact that thousands of investment bankers lost their jobs. In fact, most of them simply said, "They made so much money for so long. It won’t hurt them to be without a job now." What we do not understand is that someone is not making money at someone else’s expense. Life is not a zero-sum game. For CEOs and investment bankers to be successful, a factory worker or an investor does not necessarily have to suffer. Why are we so apathetic towards the plight of a top official? We kept quiet when an engineer from IIT was murdered in Bihar. But, the Singur issue is burning. We all sympathise and empathise with those poor farmers who are being exploited by the tyrannical Tatas. But, we fail to look at the other side of the issue or take into account the loss incurred by Tata Motors. And this is simply because the Tatas are the rich capitalists exploiters. I may sound extremely pissed off. The fact is that I really am. As long as we cling on to feudal and outdated notions of industry, ownership and investment, we will never progress. That’s what the Communists really want right? So that they can blame the big, bad capitalist world for the stagnation? We are a democracy> If we do not progress, if we stagnate and suffer in chronic poverty, it is because we elect people like Oscar Fernandes who will do anything to preserve his vote bank. After all, we only get the governance we deserve.
Education, reservations and reform
Here is a brilliant economic analysis of the reservation policy by Atanu Dey on his blog on development. It is, at first glance, very impressive. He uses economic theory, common sense and impeccable argumentation to prove that reservations are untenable. But, all is not right with his reasoning. I can still spot a few weak links in the arguments, though I am no economist.
First, he states, rather unambiguously, that
“Let’s pause here for a moment to reflect on this: there is no shortage of jobs for qualified candidates. In fact, there is a shortage of qualified people. The shortage arises from the limited supply of seats in educational institutions. That shortage of seats is mandated by the government. The government mandates the shortage and then assigns itself the power to dictate how the rationing of seats will be done. That rationing is motivated primarily by vote-bank politics.”
First things first, as someone points out in the comments section, there is no real shortage of seats as mandated by the government. In fact, thousands of seats are left vacant at the end of counselling for engineering admissions every year in the state of Tamil Nadu. According to Wikipedia, Tamil Nadu has 40 universities. This page should provide more information on the state of education in Tamil Nadu. According to the statistics given above, the state has over 1000 colleges providing professional education, in addition to 255 engineering colleges, and 13 medical colleges. Admittedly, Tamil Nadu is one of India’s more progressive states, but with good governance and political will, there is no reason why even the BIMARU states must not do as well. Secondly, the question of supply of education is a tricky one. Must all education necessarily lead to a degree? What about companies that recruit graduates of arts and science courses and train them to perform the work expected of them efficiently? One good example would be the TAS, which trains and qualifies young recruits. So, actually speaking, the claim that there is an artificially created shortage of education is a myth.
Dey suggests that higher education must be opened up to private enterprise. I agree. But the point here is, it already is. Sure, there are regulations and processes such as accreditation, but that must remain in order to maintain the quality of education. Then is the emphasis on separating education and testing. I agree again. But, that’s what board exams and university exams are all about right? An autonomous arts and science college under the Madras University is free to decide on its syllabus. It’s free to do what it pleases during the academic year. At the end of the semester, the students are tested on what they were taught during the semester. The exam process is overseen and endorsed by the University which then delivers the degree. What more can be done? I don’t really get the point.
Third, the pricing issue. Privatisation of education and a total absence of control will lead to anarchy. Don’t get me wrong. I am not advocating the nationalisation of colleges, or complete government control. Far from it. Education is already quite private, to a very large extent. Prices are sky-high. What the government can do is to provide scholarships, grants and stipends to those who deserve it. To contend that private colleges will charge less than government ones because they run their companies better is both ridiculously short-sighted and foolishly optimistic. I am no fan of government control, but this logic simply does not appeal to my brain. Private companies want profit. So will private colleges. In such a situation, how exactly will they agree to offer education at a lower cost than the government?
I can foresee one negative fallout if Dey’s idea were implemented. India will go the way of the United States. While colleges in the US are some of the best in the world, it a fact that many who finish grad school spend half their lives trying to repay their educational loans, pay off home mortgages and rid themselves of debt. And in a country like India, which is trying desperately to improve its enrolment in institutes of higher education, this is a really bad idea. A situation like this will lead to a decline in overall education levels and India’s already abysmal human development indicators will only fall further.
This said, I do agree when Dey says reservations are a terrible idea. Only, my reasons are entirely different from his. I read in the Times of India yesterday that the cutoff marks at the IIT-JEE had been reduced. While I did not exactly understand the logic behind the marking scheme, I also read that there was to be a 10% relaxation for OBC candidates. Suppose I am an OBC candidate. The normal cutoff mark in an entrance exam is 70%. But, I am given a 10% relaxation because I belong to the OBC category. That means I just need 63% to qualify. So, essentially, the government is telling me this, “Since you are underprivileged, and have been oppressed for centuries, we consider you to be less intelligent than your upper-caste counterparts, and hence incapable of scoring the mandatory 70%. We are being generous and giving you a chance despite your questionable intellect.” I am sorry if I am being hyper-sensitive, but I find the attitude both patronising and demeaning. And that’s the reason I am so against this practice of norm-relaxation.
Cheap garments and irresponsible reporting
I have an idea. Let’s take six well-to-do Indian teenagers to London and make them work at street-corner bakeries for a month. Guess what? It’s horrible, they will say. “They make us wake up at 4 in the morning to knead the dough, make the loaf and bake the bread, ready to open shop at 7. As if that’s not enough, they expect us to knead dough and make bread all day. This is how we imagined a sweatshop to be: dirty, smelly – it’s absolutely horrible. It’s my idea of hell.” Think it ridiculous? Then sample this. The Daily Mail UK takes it upon itself to report conditions in garment factories across India. It might have been a hard-hitting revelation on the condition of India’s workers slogging away at garment factories for less than $5 a day. If, and only if they had bothered to check their facts and not make some grossly unacceptable errors in the process.
Many things are wrong with the way the story has been reported by the Mail. For example, they take six, virtually unskilled, teenagers to India from Britain. They make them work in a garment factory and stitch, lo and behold, collars. My mother and aunts have been in the industry for as long as I can remember. I grew up in garment factories run by my aunt and others for nearly 15 years of my life. As far as I know, and my mother corroborates the fact, collars are the most difficult to stitch in shirts or tops. Collar-stitching, or cuff-stitching is never given to an amateur. The articles claims that the tailors are made to stitch a collar a minute. But elsewhere, it claims that a 4000-strong workforce turns out barely 10,000 garments a day. From what I know, two and a half pieces per worker per day is pathetic. No garment factory worth its salt would allow productivity to slip so low. Least of all, the illustrious Shahi Enterprises mentioned. The means one of two things. Either the first statistic is false, or the second.
Next, it claims that the teens were demoted from the position of tailor to a lowlier-paid position of shirt-ironer. First things first, ironing is not an easy ask. It comes under the category of garment-finishing, and is one of the most important things in the garment-making process. Second, finding a competent ironer is no mean task and they are often paid much more than the tailor who makes the garment in the first place.
Finally, the salary levels. They are blatantly made up. In the early 1990s, the average salary of a competent tailor used to be between 250 and 300 rupees a day. In pound terms it amounts to somewhere between three pounds and five pounds at the current exchange rate. Wages have undoubtedly gone up since then. So, the Mail’s claim that workers survive at less than 2 pounds a day is false. If I am the one who is mistaken, then I would like them to substantiate the values with actual figures.
What exactly is the Mail trying to accomplish? Telling the world that the clothes they buy from H&M and Marks&Spencer’s supports human rights abuses in India by forcing workers to work 18-hour days? I am sorry, but no garment factory can sustain 18-hour workdays. It’s practically impossible to force workers to work such long hours six days a week, especially in an industry that is so labour-intensive. In India, labour laws and worker-friendly, sometimes even called draconian by entrepreneurs. Will the workers shut up and agree to being treated like slaves in such a context?
To me, the attitude of the Mail reflects one of two things. 1) Irresponsible reporting without verifying facts and looking at the other side of the picture. 2) An obvious and disgusting attempt to portray Indian workers and factories in a bad light. For the sake of my peace of mind, I am willing to give them the benefit of doubt and assume it’s simply irresponsible reporting.
Of apples and oranges
Here is a gem from Sitaram Yechury. I mean, who publishes such crap? Oh, a well-known newspaper like Hindustan Times of course. I actually checked if it was published under a satire or humour column or something. But no. I had overestimated their intelligence I suppose. And did you know that our dear Mr. Yechury got his BA (Hons.) in Economics from St. Stephen’s? I find that rather hard to believe after reading the following words.
“…globalisation has given rise to the phenomenon of ‘jobless growth’. The growth of employment has always been lower than the GDP growth rate globally. Both these features put together mean that the purchasing power of the vast majority of the world’s population has been declining.”
Eh? What’s the relation? It’s like putting apples and oranges together and claiming that there is a fall in mango production this year. Ok. Ok. I think it’s time I stop taking any communist seriously. As Amit Varma so succintly puts it,
“Let’s all just stay poor then, so there’s no danger of losing the money we haven’t had a chance to earn anyway.”
Someone teach these guys basic economics please!!
Of stock market crashes and cricket matches…
Hey! That rhymed. I swear I wasn’t trying to make it rhyme. Anyway, on to today’s rants. Yes, they are rants. First, the cricket match. Of course I am talking of the one we won. It was absolutely fantastic to see the famed Aussie batting line-up collapse like a pack of cards. And I, for one, was absolutely delighted to see Mr. Ponting and his men finally taste defeat. Notwithstanding their arrogance, I am tired of seeing the Aussies win all the time. For a sport to be interesting, there must be an element of uncertainty. If the result of the match is known before it ever happens, there is no point in watching the match. What better weekend could I have asked for after the Australian media called India cry babies for whining about the umpiring at Sydney because they could not take a defeat? Take it guys! We can play cricket too.
But while we are on the topic, I came across this article on the Sydney Morning Herald, albeit a few weeks too late. It is extremely irritating to see an Australian whine about having been stripped of the right to veto a decision at the ICC. Don’t you get it guys? Veto power of any kind, in any forum, is fundamentally unequal and unjust. And yes, by any forum, I mean the UN Security Council too. After all, why should the fate of the world be determined by the whim of a select few? So, stop cribbing about how an Indian deprived you guys of your birth right to a veto. The attitude sucks. Here is an excellent blog post on the issue. Greatbong has analysed and argued much better than I could ever hope to.
That said, on the the stock market now. It crashed yesterday. And today. And, it will probably continue to fall tomorrow. I still haven’t understood the cause of the original crash. Dad said it was a technical snag. Whatever the reason, it triggered off a massive fall in the prices of shares and the markets fell by about five percent today. What I don’t understand is this. Why do people choose to sell as soon as there is a problem, and without analysing the underlying cause. As far as I can see, the Indian economy is doing reasonably well. There is nothing seriously wrong with it. The stock markets have been bullish for almost 3 months now. Why then, do people feel the need to dump as many shares as possible on a bad day? After all, India’s is not an export-driven market. It has a huge domestic market to fall back on. If I had shares, I would probably adopt a wait-and-watch policy. The market are sure to rally. They are sure to recover on a few days, weeks, or months. I will probably still be able to cut my losses then. By selling when the markets crash, people only tend to maximise their losses. Correct me if I am wrong here, but my common sense tells me watch the markets closely before selling anything.
And finally, something unrelated to either the markets or cricket. Here is a recipe for Bisibelebath. I have never eaten bisibelebath with ginger-garlic paste in it. Every dish does not have to contain garlic, ginger and fennel seeds. It’s possible to cook without any of it, you know? For a better, and more authentic recipe of the dish, check out my food blog (link in side bar). And for goodness’ sake, check atleast 3 sites before deciding to make anything learnt from the net. Not all internet recipes are authentic, and even fewer taste original.