Choke out River Pollution – a la Robin Hood!
Ganga Prasad G. Rao
gprasadrao@hotmail.com
http://myprofile.cos.com/gangar
What does a 'Green Robin Hood' do for a living? Rob the rich-right to feed the poor on the left? Not exactly, but not far from the truth either! So, what will a 'Green Robin Hood' propose if he is handed charge of controlling pollution in the infamous Cooum river? We're all aware of how rivers run across jurisdictional boundaries and how upstream pollution affects downstream water quality. But what do we do about it – beyond giving a couple of billion rupees to a Singaporean firm to clean it up? What's the prescription?
The Green Robin Hood, as it turns out, also has a modicum of economics. So, he proposes a property-rights solution to solve river pollution. Consider the river basin as the unit, and 'hack' it in to 5 or 10 kilometer cross-sections, or better yet, in to cross-sections each representing a twentieth of the river-length. (The number of divisions would affect transactions cost). Call for a public auction for a multi-year lease of each river cross-section with the condition the auction will proceed upstream from the river mouth. Each lease comes with the right to charge the upstream lessee for 'inlet' pollution, and the obligation to compensate the downstream lessee for the pollution 'transferred' to him. The charges and the compensations could take the form of either a pollution tax, or a pollution license/fee. Additionally, the 'river-mouth lessee' must fulfill standards applicable for waters discharged in to the sea/ocean.
There are several twists of the 'turn-you-livid-with-rage' kind to this proposal. The river mouth parcel and sections immediately upstream are offered to 'Green institutions' (and/or to the poorer sections of the society). The 'green identity-cum-equity' criterion is gradually relaxed as the auction moves upstream (Plainspeak: a Mittal could bid, but only for the upstream reaches of a river). The property-rights are transferable, but only within the 'criterion-class' (a Mittal can sell his upstream lease to Gates, not Rao!). Finally, and given the water-quality impacts adjacent the river, each lessee is liable to compensate owners of adjacent land parcels for ground-water quality degradations due pollution in the river.
The intention and hopefully, the outcome of the auction, will be the bidding up of downstream parcels to what the 'Robinhoods' of the society value the environmental purity of those parcels for, (or the degree to which the society trades off environmental cleanliness for equity). Notice that the auction price of the river-mouth section has a cascading, almost domino-impact upon auctions upstream of it, and upon the taxes/fees charged. For this reason, the stringency of the standards governing discharge of river water to the sea/ocean will be paramount. Under this proposal, each lessee has the incentive to both monitor the quality of water entering/leaving one's jurisdiction and minimize the pollution entering river from any tributary. In turn, polluting industrial and commercial entities will factor in the water pollution levies in their technology and siting decisions, thus bringing about a measure of abatement-efficiency.
The system of taxes/fees/liability is best enforced online with the supervision of the river basin authority. Blah....Blah....Blah.....
Hey, will my grandson ever swim the Cooum?!
Monday, October 18, 2010
Tuesday, June 29, 2010
Hybrid Dividends? In Mutual Funds?
Hybrid Dividends? In Mutual Funds?
Ganga Prasad Rao
gangaprasad.rao@gmail.com
http://myprofile.cos.com/gangar
SEBI recently came out with a ruling that mutual funds may only distribute the 'surplus' appreciation over an arbitrarily-defined benchmark NAV - the NAV of the previous dividend declaration. This has been widely hailed as a financially prudent step in the 'left' direction. It limits the practice of mutual funds garnering fresh subscriptions by declaring large dividends that eat in to the NAV and the networth of existing investors. But it is also a 'retrograde' policy that steps on the toes of the fund managers' freedom who are limited in their decisions concerning the timing and quantum of dividends. The policy also punishes the small investor in funds that declare small dividends just ahead of a big market crash. With another market crash in the offing (hopefully not!), and with the coffers of the 'Investor Education and Protection Fund' overflowing, ain't it the right time to consider, even propose, an alternative?
The proposal is not unlike an inverse-analog of the 'auto-pay' option offered at select fund houses. Under the 'auto-pay' the NAV of the mutual fund holds but the number of units is reduced to issue the dividend; the proposed dividend payout-variant holds the number of units constant, but varies the NAV to accommodate individual dividend needs. The proposal is implemented by conceptualizing a 'hybrid' structure for a mutual fund - a fund that is both open and closed. Open in the sense that investors may make fresh purchases, and closed in the sense that investors may not redeem units. Instead, investors elect to receive differential dividend payouts. The trick behind 'differential dividend payouts' is to declare a 'base rate' of dividend applicable to all investors invested in the 'dividend payout' option, and then permit every investor in the 'differential-payout' option to receive dividend at some multiple or fraction of the declared base rate. Each investor in the payout option will have the right to periodically re-set his dividend 'beta' (the update taking effect a week later/month-end to preclude dividend anticipation, though and given the intent of the proposal, one could argue against such limitation. The fund house would also place restrictions on the number of switches permitted in a year and the minimum balance to be maintained, but those issues have ready solutions.). Since investors differ with respect to their risk-apetite and their view of the market, the mechanism to set a investor-specific dividend-payout rate facilitates participatory-, risk-based decision-making by individual investors that is lacking in the mutual fund market. Fund managers may breathe a tad easier with their decisions concerning the timing and quantum of dividends, comforted by the knowledge investors now have an option to tune their dividend-payout 'betas' to personal preferences, risk-apetite and view of the market.
An illustration would be useful. Assume two investors - one with a higher risk apetite and a long-view of the market, and the other - either a resource-constrained investor and/or with a lower risk-apetite and/or a short-view of the market, invest 1000 units in a Mutual Fund IPO issued at Rs 10 in the dividend payout option. Investor A opts for a dividend payout at half the 'base rate' declared by the fund, while Investor B opts to receive dividend at twice the base rate. When the fund house declares a dividend of Rs 2 on the fund's NAV appreciating to Rs 15, Investor A receives Rs 1000 as his dividend, and Investor B, Rs 4000. The NAVs for the two individuals diverge from that point from Rs 13, the 'benchmark' NAV for the fund. One could fault the proposal for the incremental cost of computing a investor-specific NAVs and dividend payouts, but in these days of gazillion-Hz supercomputing and FIIs and fund houses profiting from every paise of arbitrage, computing investor-specific NAVs - as is prevalent in retirement basket investments - is no hassle at all.
There are definite efficiency advantages to this system. The fund could be closed for the long term - a decade or more, permitting it to be positioned as an 'endowment' or 'lifetime' fund, and thus garnering a share of the inter-generational wealth-planning market. The freedom to vary one's 'payout-beta' even while permitting the fund manager to decide the timing of the dividend declaration is a strategy that optimizes individual preferences with 'group-decisions' (since the fund manager is better-informed, 'better-positioned, and invests for the group). Further, and since investors may change their personal dividend-payout 'beta', the hybrid scheme permits, on one hand, the 'resource-constrained' investor, and on the other, the wealthy and more aware investor to exploit the fund manager's wisdom to one's advantage without playing the 'invest and redeem' cycle - a strategy that has been the downfall of many small investors. The former appreciates the freedom to take a large lump-sum dividend in a year of his or her need by increasing the 'payout-beta', even while the latter - a higher-risk apetite, long-investor - 'goes against the grain' and chooses to bank rather than bleed his dividends in an 'up' year.
This brings us to the question of the investor-composition of these funds and how it affects the fund manager's dividend declarations. Is the fund manager more answerable to the mass of small investors who constitute 95% of the fund members, or to the handful of large investors who constitute 50% or more of the fund's assets? If the former, the manager is likely to declare frequent, if small dividends. If latter, the dividends are likely to be infrequent and strategic (as at the verge of the end of a long bull-run). Now, there are those other issues, notably the tax treatment of 'hybrid dividends' when an individual's dividend erodes in to his invested capital. Also, and truth be said, large investors, with the 'inside' on the stock market, are likely to exploit the features of this scheme to their advantage, but that is as much a problem with the existing system.
A little bit of extra 'wiggle-room' for the fund manager and the hapless small investor won't do any harm to the market, would it? I don't think so. Whatchabouju?
Ganga Prasad Rao
gangaprasad.rao@gmail.com
http://myprofile.cos.com/gangar
SEBI recently came out with a ruling that mutual funds may only distribute the 'surplus' appreciation over an arbitrarily-defined benchmark NAV - the NAV of the previous dividend declaration. This has been widely hailed as a financially prudent step in the 'left' direction. It limits the practice of mutual funds garnering fresh subscriptions by declaring large dividends that eat in to the NAV and the networth of existing investors. But it is also a 'retrograde' policy that steps on the toes of the fund managers' freedom who are limited in their decisions concerning the timing and quantum of dividends. The policy also punishes the small investor in funds that declare small dividends just ahead of a big market crash. With another market crash in the offing (hopefully not!), and with the coffers of the 'Investor Education and Protection Fund' overflowing, ain't it the right time to consider, even propose, an alternative?
The proposal is not unlike an inverse-analog of the 'auto-pay' option offered at select fund houses. Under the 'auto-pay' the NAV of the mutual fund holds but the number of units is reduced to issue the dividend; the proposed dividend payout-variant holds the number of units constant, but varies the NAV to accommodate individual dividend needs. The proposal is implemented by conceptualizing a 'hybrid' structure for a mutual fund - a fund that is both open and closed. Open in the sense that investors may make fresh purchases, and closed in the sense that investors may not redeem units. Instead, investors elect to receive differential dividend payouts. The trick behind 'differential dividend payouts' is to declare a 'base rate' of dividend applicable to all investors invested in the 'dividend payout' option, and then permit every investor in the 'differential-payout' option to receive dividend at some multiple or fraction of the declared base rate. Each investor in the payout option will have the right to periodically re-set his dividend 'beta' (the update taking effect a week later/month-end to preclude dividend anticipation, though and given the intent of the proposal, one could argue against such limitation. The fund house would also place restrictions on the number of switches permitted in a year and the minimum balance to be maintained, but those issues have ready solutions.). Since investors differ with respect to their risk-apetite and their view of the market, the mechanism to set a investor-specific dividend-payout rate facilitates participatory-, risk-based decision-making by individual investors that is lacking in the mutual fund market. Fund managers may breathe a tad easier with their decisions concerning the timing and quantum of dividends, comforted by the knowledge investors now have an option to tune their dividend-payout 'betas' to personal preferences, risk-apetite and view of the market.
An illustration would be useful. Assume two investors - one with a higher risk apetite and a long-view of the market, and the other - either a resource-constrained investor and/or with a lower risk-apetite and/or a short-view of the market, invest 1000 units in a Mutual Fund IPO issued at Rs 10 in the dividend payout option. Investor A opts for a dividend payout at half the 'base rate' declared by the fund, while Investor B opts to receive dividend at twice the base rate. When the fund house declares a dividend of Rs 2 on the fund's NAV appreciating to Rs 15, Investor A receives Rs 1000 as his dividend, and Investor B, Rs 4000. The NAVs for the two individuals diverge from that point from Rs 13, the 'benchmark' NAV for the fund. One could fault the proposal for the incremental cost of computing a investor-specific NAVs and dividend payouts, but in these days of gazillion-Hz supercomputing and FIIs and fund houses profiting from every paise of arbitrage, computing investor-specific NAVs - as is prevalent in retirement basket investments - is no hassle at all.
There are definite efficiency advantages to this system. The fund could be closed for the long term - a decade or more, permitting it to be positioned as an 'endowment' or 'lifetime' fund, and thus garnering a share of the inter-generational wealth-planning market. The freedom to vary one's 'payout-beta' even while permitting the fund manager to decide the timing of the dividend declaration is a strategy that optimizes individual preferences with 'group-decisions' (since the fund manager is better-informed, 'better-positioned, and invests for the group). Further, and since investors may change their personal dividend-payout 'beta', the hybrid scheme permits, on one hand, the 'resource-constrained' investor, and on the other, the wealthy and more aware investor to exploit the fund manager's wisdom to one's advantage without playing the 'invest and redeem' cycle - a strategy that has been the downfall of many small investors. The former appreciates the freedom to take a large lump-sum dividend in a year of his or her need by increasing the 'payout-beta', even while the latter - a higher-risk apetite, long-investor - 'goes against the grain' and chooses to bank rather than bleed his dividends in an 'up' year.
This brings us to the question of the investor-composition of these funds and how it affects the fund manager's dividend declarations. Is the fund manager more answerable to the mass of small investors who constitute 95% of the fund members, or to the handful of large investors who constitute 50% or more of the fund's assets? If the former, the manager is likely to declare frequent, if small dividends. If latter, the dividends are likely to be infrequent and strategic (as at the verge of the end of a long bull-run). Now, there are those other issues, notably the tax treatment of 'hybrid dividends' when an individual's dividend erodes in to his invested capital. Also, and truth be said, large investors, with the 'inside' on the stock market, are likely to exploit the features of this scheme to their advantage, but that is as much a problem with the existing system.
A little bit of extra 'wiggle-room' for the fund manager and the hapless small investor won't do any harm to the market, would it? I don't think so. Whatchabouju?
Tuesday, June 15, 2010
Closed Cycle Economy - Miracle or Myth?
Closed-Cycle Economy - Miracle or Myth?
Ganga Prasad Rao
http://myprofile.cos.com/gangar
If the 9/11s of the world have taught us anything, it is that the human society, ultimately fails not for lack of technology or efficiency, but for equity and enviromental sustainability. Not that economists or sociologists did not anticipate it. Infact, and to the contrary, many have espoused such concepts as a 'closed cycle economy' or a 'technology-driven rama rajya'. So what stands between our egalitarian dreams and the wretched reality - the veritable 'closed-cycle cup and leap'? Greed-based economic systems coupled to 'beggar-thy-neighbor' competition? 'Subsidy-based satisfice-the-voter' economies coupled to 'feed-on-the-growth, forage on the recession' stock markets? or 'Foul the commons and pass the buck' syndrome? Ace, YES, and Sssshhh!
Industrial economists have long espoused the 'closed-cycle economy' - an ideal system in which the society comprising the industry and consumers recycles what it produces/consumes in to new products so the economy need not scour the earth to mine minerals and fill it with unsorted garbage, pollute the air, or turn the oceans of the world so thick with effluents that fishes would rather jump in to the nets and on to your dinner plates than swim merrily in their school! Honestly, the recycling technology is already here. After all, we do recycle metals, bottles, paper and even plastics. The story, however, is in what we do not recycle. And therein lies the problem. How do we get the industry to recycle what they do not find economic to recycle?
One could always tax the polluting activity or subsidise recycling or both. Perhaps that explains the variation in the degree of recycling across economies of the world. But are we willing to tax ourselves to the point that the industry finds it profitable to 'close' its production cycle, even if that means doubling or tripling prices? More to the point, is that the only way out? Perhaps not. If the motive is merely to induce producers and consumers to adopt a certain practice as a profit-maximizing or cost-minimizing alternative, the same can be arranged in a myriad ways. One of those ways is to reward producers, consumers and investors in the stock market. But how?
Since the capital markets around the world are a 'common meeting ground' for producers, consumers and investors alike, (and since in a trade-driven world, the higher cost of closed-cycle production is likely to favor the 'Archaean economy'), it'd be prudent to introduce closed-cycle policies thru the global capital markets so they apply equally to all participants - regardless of which part of the world they are in, what industry or investor they represent. But what form do these incentives take? Who'd pay and why? As the trustees of the global environment, the UNEP, the GEF, the Greenpeace and the WWF would be the sponsors of a system that incentivizes 'closed-cycle' scrips at the stock market with a formula-based valuation upgrade. The formula would require these sponsors to support 'green' scips at a premium determined by their 'degree of closure'. The 'degree of closure' would be an internationally agreed-upon construct that draws upon company-level data on material balances, environmental releases and product attributes to compute a single measure of environmental sustainability (Call it a 'Closed Cycle Sustainability (CCS) index', if you like). The index would be a broad-based construct that subsumes such concepts as degree of recyclability/recycling, environmental degradability/half-life, toxicity, dispersion potential and so on.
For instance, a publicly-listed firm that completely internalizes its environmental releases and recycles its products - whether in its own network or thru the market - would be eligible for a 100% up-grade in its P/E or PEEG. You may wonder what incentives the sponsors have beyond their immediate charter to safeguard the environment. But these are the very same institutions that pay for your oil spills, plastic cleanup in the oceans, remove old cars from the roads, and sponsor 'garbage hunts' along the Himalayan mountaineering routes. It'd stand to reason that their investments in the capital markets, over a period of time, tilt the balance in favor of a environmentally sustainable, closed-cycle economy, and the same results in reduced cost to them over the long term. Stock market participants, looking for returns, would naturally favor those firms and industries with high sustainability index. In turn, these favored firms, finding capital easy to come, would expand at the expense of the 'archaean dinosaurs', and increase the penetration (or the market share) of the closed-cycle economyo. And we would slowly but surely converge to a 'closed- and environmentally-sustainable economy', avoiding along the way, the 'price-hiccups' under a pigouvian tax regime, and the well-known problems of a subsidy regime.
Now if only one could find a way for consumers to favor healthy foods over unhealthy foods in an analogous way (and subscribe to a system of equity driven by a universal scale of character and virtuosity).
Plastic waste recycled to fibre-rich popcorn at prices appropriate to your 'rank' on the virtuosity ladder!
Rama Rajya, Here we come !
Ganga Prasad Rao
http://myprofile.cos.com/gangar
If the 9/11s of the world have taught us anything, it is that the human society, ultimately fails not for lack of technology or efficiency, but for equity and enviromental sustainability. Not that economists or sociologists did not anticipate it. Infact, and to the contrary, many have espoused such concepts as a 'closed cycle economy' or a 'technology-driven rama rajya'. So what stands between our egalitarian dreams and the wretched reality - the veritable 'closed-cycle cup and leap'? Greed-based economic systems coupled to 'beggar-thy-neighbor' competition? 'Subsidy-based satisfice-the-voter' economies coupled to 'feed-on-the-growth, forage on the recession' stock markets? or 'Foul the commons and pass the buck' syndrome? Ace, YES, and Sssshhh!
Industrial economists have long espoused the 'closed-cycle economy' - an ideal system in which the society comprising the industry and consumers recycles what it produces/consumes in to new products so the economy need not scour the earth to mine minerals and fill it with unsorted garbage, pollute the air, or turn the oceans of the world so thick with effluents that fishes would rather jump in to the nets and on to your dinner plates than swim merrily in their school! Honestly, the recycling technology is already here. After all, we do recycle metals, bottles, paper and even plastics. The story, however, is in what we do not recycle. And therein lies the problem. How do we get the industry to recycle what they do not find economic to recycle?
One could always tax the polluting activity or subsidise recycling or both. Perhaps that explains the variation in the degree of recycling across economies of the world. But are we willing to tax ourselves to the point that the industry finds it profitable to 'close' its production cycle, even if that means doubling or tripling prices? More to the point, is that the only way out? Perhaps not. If the motive is merely to induce producers and consumers to adopt a certain practice as a profit-maximizing or cost-minimizing alternative, the same can be arranged in a myriad ways. One of those ways is to reward producers, consumers and investors in the stock market. But how?
Since the capital markets around the world are a 'common meeting ground' for producers, consumers and investors alike, (and since in a trade-driven world, the higher cost of closed-cycle production is likely to favor the 'Archaean economy'), it'd be prudent to introduce closed-cycle policies thru the global capital markets so they apply equally to all participants - regardless of which part of the world they are in, what industry or investor they represent. But what form do these incentives take? Who'd pay and why? As the trustees of the global environment, the UNEP, the GEF, the Greenpeace and the WWF would be the sponsors of a system that incentivizes 'closed-cycle' scrips at the stock market with a formula-based valuation upgrade. The formula would require these sponsors to support 'green' scips at a premium determined by their 'degree of closure'. The 'degree of closure' would be an internationally agreed-upon construct that draws upon company-level data on material balances, environmental releases and product attributes to compute a single measure of environmental sustainability (Call it a 'Closed Cycle Sustainability (CCS) index', if you like). The index would be a broad-based construct that subsumes such concepts as degree of recyclability/recycling, environmental degradability/half-life, toxicity, dispersion potential and so on.
For instance, a publicly-listed firm that completely internalizes its environmental releases and recycles its products - whether in its own network or thru the market - would be eligible for a 100% up-grade in its P/E or PEEG. You may wonder what incentives the sponsors have beyond their immediate charter to safeguard the environment. But these are the very same institutions that pay for your oil spills, plastic cleanup in the oceans, remove old cars from the roads, and sponsor 'garbage hunts' along the Himalayan mountaineering routes. It'd stand to reason that their investments in the capital markets, over a period of time, tilt the balance in favor of a environmentally sustainable, closed-cycle economy, and the same results in reduced cost to them over the long term. Stock market participants, looking for returns, would naturally favor those firms and industries with high sustainability index. In turn, these favored firms, finding capital easy to come, would expand at the expense of the 'archaean dinosaurs', and increase the penetration (or the market share) of the closed-cycle economyo. And we would slowly but surely converge to a 'closed- and environmentally-sustainable economy', avoiding along the way, the 'price-hiccups' under a pigouvian tax regime, and the well-known problems of a subsidy regime.
Now if only one could find a way for consumers to favor healthy foods over unhealthy foods in an analogous way (and subscribe to a system of equity driven by a universal scale of character and virtuosity).
Plastic waste recycled to fibre-rich popcorn at prices appropriate to your 'rank' on the virtuosity ladder!
Rama Rajya, Here we come !
Saturday, May 22, 2010
Simple Simon, Yes, Sam, Ample - Pizza Man, and Gibbous-(the)-Moon Man!
Simple Pieman, Yes, Sam, Ample-Pizza-man, and 'Gibbous (the) Moon man !
Prasad Rao
http://myprofile.cos.com/gangar
'Simple Criminal' met an 'Adept'
Enjoyin' the Sun
Asked the 'Simple' of the 'Adept'
"Pray, What secret you possess?
The Secret that hath made you
twice as rich as I ever dare to be?"
Said the Adept to the Simple
Suno mere bhai!
Jus' make sure there is someone behind,
A 'someone of the future'
who will follow in your path.
Commit any crime, any sin, You may!
You take the cake, he does the time
For he hath no way out!
So it has been for eons now
So shall it be for centuries to come!
Said the 'Simple' to the 'Adept'
Enlightened I am today,
How can I ever repay you
for this priceless 'Gurudakshina'
Said the 'Adept' to the 'Simple'
'Not so easy, and not so soon'
for I must initiate you
to this 'O cult' tradition!
As your Guru, and for a start,
I ordain you 'Satyam vada, Dharmam chara'
Cover for me while I loot as
your Hon'ble Mantri Mahoday !!!
(I'll take turns and lead the pious life when it's your turn at the Ministry!).
Prasad Rao
http://myprofile.cos.com/gangar
'Simple Criminal' met an 'Adept'
Enjoyin' the Sun
Asked the 'Simple' of the 'Adept'
"Pray, What secret you possess?
The Secret that hath made you
twice as rich as I ever dare to be?"
Said the Adept to the Simple
Suno mere bhai!
Jus' make sure there is someone behind,
A 'someone of the future'
who will follow in your path.
Commit any crime, any sin, You may!
You take the cake, he does the time
For he hath no way out!
So it has been for eons now
So shall it be for centuries to come!
Said the 'Simple' to the 'Adept'
Enlightened I am today,
How can I ever repay you
for this priceless 'Gurudakshina'
Said the 'Adept' to the 'Simple'
'Not so easy, and not so soon'
for I must initiate you
to this 'O cult' tradition!
As your Guru, and for a start,
I ordain you 'Satyam vada, Dharmam chara'
Cover for me while I loot as
your Hon'ble Mantri Mahoday !!!
(I'll take turns and lead the pious life when it's your turn at the Ministry!).
Monday, March 1, 2010
Gold ETF se Uranium ETN tak !
Gold ETF se Uranium ETN tak !
(Plis, No Yeenglees !)
Barsat Roww, D Great U Genus!!
http://myprofile.cos.com/gangar
Dekho dekho dekho !!!
Mittal ka Qutb Minar dekho,
RIL-RINRL-NTPC ka 'diamond-triangle' dekho
Ye hai Ambani ka KG-6 mahal
Aur ye raha Deora Doodla pipeline, dekho, Yeow!
Thoda samjho ! … .thoda dekho....!!!
Iron ore export ghotale ke peechche dekho
NMDC FPO ka 'misaal' dekho
CIL ka 'compensate & rehabilitate' policy paddho
Sterlite-Posco 'dual-strategy' dekhooooo
Dekho aur kuch samjho, resource-rent ka matlab samjho !
RBI monetary policy-lajawaab dekho
UPA Government 'stimulus withdrawal' pehchano
Planning Commission se sawaal poocho
Parnab Mukherjee-da-budget dhabha dekho
dekho nahi socho, kuch to socho !
((Ab jo) samne vaale le gaye baazi …...... )
Stock market crash ke odds dekho
Mid-term elections bhi hedge kar do
Double-depression? kuch yaad to karo
Vote to fenkh diye, ab investments kuch bachao !!
Peso fenkho tamasha dekho !!!
(Plis, No Yeenglees !)
Barsat Roww, D Great U Genus!!
http://myprofile.cos.com/gangar
Dekho dekho dekho !!!
Mittal ka Qutb Minar dekho,
RIL-RINRL-NTPC ka 'diamond-triangle' dekho
Ye hai Ambani ka KG-6 mahal
Aur ye raha Deora Doodla pipeline, dekho, Yeow!
Thoda samjho ! … .thoda dekho....!!!
Iron ore export ghotale ke peechche dekho
NMDC FPO ka 'misaal' dekho
CIL ka 'compensate & rehabilitate' policy paddho
Sterlite-Posco 'dual-strategy' dekhooooo
Dekho aur kuch samjho, resource-rent ka matlab samjho !
RBI monetary policy-lajawaab dekho
UPA Government 'stimulus withdrawal' pehchano
Planning Commission se sawaal poocho
Parnab Mukherjee-da-budget dhabha dekho
dekho nahi socho, kuch to socho !
((Ab jo) samne vaale le gaye baazi …...... )
Stock market crash ke odds dekho
Mid-term elections bhi hedge kar do
Double-depression? kuch yaad to karo
Vote to fenkh diye, ab investments kuch bachao !!
Peso fenkho tamasha dekho !!!
Wednesday, December 23, 2009
GP Two-Part Vote
GP Two-Part Vote ?
What's that? A curse? No, in fact, and to the contrary, perhaps deliverance, though not the divine kind! Don't get it? Read on!
Just today, as has happened innumerable times before, the people of Jharkhand gave a fractured mandate with seats split three-, even four-ways. In doing so, they have brought upon themselves the likelihood of a coalition - a result none of them voted for, and a result that, I suspect, many parties were eagerly awaiting for (so much for 'independent platforms and manifestos'), and not for the opportunities to congratulate one another! And that is the crux of this blog. Our voting system, as I have pointed out earlier, does not permit the voter to distinguish between his choice of candidate for his constituency and the choice of the party to form the government.
Is that a problem? Clearly. Every constituency has its popular faces. While many candidates turned popular because they were supported by political parties, there are as many other instances in which a candidate is well-known in the constituency because of his or her family's deep social and business roots. In these instances, the voter is put in a dilemma. Does he or she vote for the candidate who has the regard of people in the constituency, or does (s)he vote for one of the dummies propped up by the political parties irrespective of his or her social roots? What if the candidate's morals/beliefs/lifestyle are/is not in sync with the voters? What if the party 'high-command' shifts political lanes without caring to revise its list of candidates? What if the 'right' candidate is in the 'wrong' party, or, the 'right' party has chosen the 'wrong' candidate, or is in a 'wrong coalition'...? Must the party always seek a 'popular, mainstream' candidate no matter how strong or weak it is in a constituency? Must the voter's choice of candidate be inevitably tied to the choice of party to rule the state? Aren't they different questions that must have necessarily different answers? Why then do we force a 'bundled choice' on the voters?
It occurs to me that, rather than ignore them as moot, irrelevant and impractical questions, we could do something different. Like structure the ballot differently. Since the core problem is the separation of the choice of one's representative from the choice of the party to form the government, why not design a 'two-part ballot' that achieves the same - a ballot that seeks your choice of the representative for the constituency, and your choice of the party to form the government in the state. The voter, freed of evaluating the more complex 'bundled', 'candidate-cum-ruling party' choice, now makes independent decisions as regards his representative, and, as regards the party to form the government. We now have two vote counts. First, the 'constituency votes' that decide the fate of candidates in their respective constituencies, and second, the 'party votes', summed across constituencies, which decides the party that will form the government.
Under the 'two-part ballot', parties that do poorly in constituencies may yet form the majority government. Conversely, a party with 'popular' candidates may win the 'grassroots battle' in the constituencies and yet lose the larger 'war' if voters turn away from nominating it to rule the state. For those academically-minded, the separation of the 'representation question' from the 'power question' enhances efficiency in public choice and enables better matching of candidates to parties and parties to constituencies. And reduces the likelihood of 'coalition' governments.
More Choice, More Freedom, More Democracy! Whatdya say?
What's that? A curse? No, in fact, and to the contrary, perhaps deliverance, though not the divine kind! Don't get it? Read on!
Just today, as has happened innumerable times before, the people of Jharkhand gave a fractured mandate with seats split three-, even four-ways. In doing so, they have brought upon themselves the likelihood of a coalition - a result none of them voted for, and a result that, I suspect, many parties were eagerly awaiting for (so much for 'independent platforms and manifestos'), and not for the opportunities to congratulate one another! And that is the crux of this blog. Our voting system, as I have pointed out earlier, does not permit the voter to distinguish between his choice of candidate for his constituency and the choice of the party to form the government.
Is that a problem? Clearly. Every constituency has its popular faces. While many candidates turned popular because they were supported by political parties, there are as many other instances in which a candidate is well-known in the constituency because of his or her family's deep social and business roots. In these instances, the voter is put in a dilemma. Does he or she vote for the candidate who has the regard of people in the constituency, or does (s)he vote for one of the dummies propped up by the political parties irrespective of his or her social roots? What if the candidate's morals/beliefs/lifestyle are/is not in sync with the voters? What if the party 'high-command' shifts political lanes without caring to revise its list of candidates? What if the 'right' candidate is in the 'wrong' party, or, the 'right' party has chosen the 'wrong' candidate, or is in a 'wrong coalition'...? Must the party always seek a 'popular, mainstream' candidate no matter how strong or weak it is in a constituency? Must the voter's choice of candidate be inevitably tied to the choice of party to rule the state? Aren't they different questions that must have necessarily different answers? Why then do we force a 'bundled choice' on the voters?
It occurs to me that, rather than ignore them as moot, irrelevant and impractical questions, we could do something different. Like structure the ballot differently. Since the core problem is the separation of the choice of one's representative from the choice of the party to form the government, why not design a 'two-part ballot' that achieves the same - a ballot that seeks your choice of the representative for the constituency, and your choice of the party to form the government in the state. The voter, freed of evaluating the more complex 'bundled', 'candidate-cum-ruling party' choice, now makes independent decisions as regards his representative, and, as regards the party to form the government. We now have two vote counts. First, the 'constituency votes' that decide the fate of candidates in their respective constituencies, and second, the 'party votes', summed across constituencies, which decides the party that will form the government.
Under the 'two-part ballot', parties that do poorly in constituencies may yet form the majority government. Conversely, a party with 'popular' candidates may win the 'grassroots battle' in the constituencies and yet lose the larger 'war' if voters turn away from nominating it to rule the state. For those academically-minded, the separation of the 'representation question' from the 'power question' enhances efficiency in public choice and enables better matching of candidates to parties and parties to constituencies. And reduces the likelihood of 'coalition' governments.
More Choice, More Freedom, More Democracy! Whatdya say?
Wednesday, September 16, 2009
Hail Mary Pass !!!!
Hail Mary Pass!!!!
Ganga Prasad Rao
http://myprofile.cos.com/gangar
For once, I am glad I didn't graduate in finance! Why, I'd be burned with flame-mail for the sacrilege I am about to commit!
Much attention has been devoted to the study of volatility in equity markets. Many have reached the conclusion it is the search for short-term 'rents' - overnight profits from 'get-rich quick' derivatives - that is to blame. But greed being what it is, it is inconceivable to mandate the elimination of short-term trading opportunities (though, and at a tangent, I can see why speculators are no longer necessary in 'mature' commodity markets). Many also subscribe to the viewpoint markets should reward those 'enterprising' investors who pay to acquire superior information and do their 'homework' over less agile or less alert investors. So, how do we go about designing a solution that rewards 'good' investment behavior over 'bad'? Read on!
The core idea is that every firm on the stock market annually rewards its long term investors exclusively in some proportion to the holding period of their stock purchases. If a firm disbursed 'shareholder appreciation bonus shares' end of year, then investors would have an incentive to desist from short-term profit-booking. But wouldn't the 'bonuses' dilute the investor's equity capital? The answer? No, not if properly designed. A firm buys 'short shares' in the market and issues them, in whole or part, as year-end bonuses to its 'long shareholders'. There is no dimunition in stock value because shares are not 'created anew' from 'splits' or 'rights''; ie, the equity base of the firm stays unchanged. If all listed firms adopted this program, we would have a market in which the incentives are no longer skewed toward 'here and now' behavior. Short-term traders and trades would very much exist but no longer inordinately influence the broader market. Short trades would likely occur less frequently in response to temporary large arbitrages gaps, or 'hot' information overlooked by or otherwise unknown to the 'ornery investor - opportunities which the short investors perhaps rightfully claim as their 'domain'.
So much for the 'concept'. Now the mechanics made easy. The stock exchange first 'tags' every equity share in every investor's portfolio with a 'w', 'm', 'q', or 'L' according to holding period. That's easy given the electronic transactions records and the massive computing power that we now have at hand (Cloud computing, there's gotta be a use for it, right?!) The 'L' shares are further classified in to 'L1', 'L2', ...., 'L9' and 'L' depending upon the number of years held. Each firm institutes a 'legal' program, if at an arm's distance, that buys the 'w'- , the 'm'- and the 'q'-class shares whenever it feels the value is below long-term value (and sells them in over-heated markets). (This should come as no surprise to the financial whizzes who split stocks or 'buy-back' shares to shore up stock prices). Accumulated shares are 'distributed' end of year (or, by some other schedule) to long-term investors in some proportion to their holding period. Firms participate in the program (and disburse bonus shares) to different extents, consistent with the state of their financial health and their view of long term prospects among other factors. If the firm's arm bought a net of 1 million 'short' shares over the year, and it has a total of, say 100 million-year 'L(x)' shares on its books, it issues 1 share for every 100 'long-share-years' held by the investor. The wizened old guy holding 100 'L' shares (100 x 10 = 1000 long share-years) earns 1/100X1000 = 10 shares as his year-end bonus. The 'short-turned-long investor' with 100 'L1' shares, receives 1 bonus share to start with. 10% bonus for the 'long glasses' ain't something to sneeze upon?
Think about it. You don't have to play the market by the hour, day or week to make an honest return. Hold long and add to your capital. And the bonus shares do not eat in to your capital appreciation either! The proposal doesn't require a massive overhaul of the markets. It is straightforward and easy to implement. There may be a thousand minor details to worry about (in particular, financing of the scheme and its 'legitimacy'), but the core idea stands. Reward the 'long glasses' by exploiting the 'externality' caused by the impatience of the 'short yuppy', and the various opportunities thrown up by the market over the course of the year.
'Long-term shareholder value creation' ain't merely a buzzword in speeches and Annual Reports? Or, is it?
Ganga Prasad Rao
http://myprofile.cos.com/gangar
For once, I am glad I didn't graduate in finance! Why, I'd be burned with flame-mail for the sacrilege I am about to commit!
Much attention has been devoted to the study of volatility in equity markets. Many have reached the conclusion it is the search for short-term 'rents' - overnight profits from 'get-rich quick' derivatives - that is to blame. But greed being what it is, it is inconceivable to mandate the elimination of short-term trading opportunities (though, and at a tangent, I can see why speculators are no longer necessary in 'mature' commodity markets). Many also subscribe to the viewpoint markets should reward those 'enterprising' investors who pay to acquire superior information and do their 'homework' over less agile or less alert investors. So, how do we go about designing a solution that rewards 'good' investment behavior over 'bad'? Read on!
The core idea is that every firm on the stock market annually rewards its long term investors exclusively in some proportion to the holding period of their stock purchases. If a firm disbursed 'shareholder appreciation bonus shares' end of year, then investors would have an incentive to desist from short-term profit-booking. But wouldn't the 'bonuses' dilute the investor's equity capital? The answer? No, not if properly designed. A firm buys 'short shares' in the market and issues them, in whole or part, as year-end bonuses to its 'long shareholders'. There is no dimunition in stock value because shares are not 'created anew' from 'splits' or 'rights''; ie, the equity base of the firm stays unchanged. If all listed firms adopted this program, we would have a market in which the incentives are no longer skewed toward 'here and now' behavior. Short-term traders and trades would very much exist but no longer inordinately influence the broader market. Short trades would likely occur less frequently in response to temporary large arbitrages gaps, or 'hot' information overlooked by or otherwise unknown to the 'ornery investor - opportunities which the short investors perhaps rightfully claim as their 'domain'.
So much for the 'concept'. Now the mechanics made easy. The stock exchange first 'tags' every equity share in every investor's portfolio with a 'w', 'm', 'q', or 'L' according to holding period. That's easy given the electronic transactions records and the massive computing power that we now have at hand (Cloud computing, there's gotta be a use for it, right?!) The 'L' shares are further classified in to 'L1', 'L2', ...., 'L9' and 'L' depending upon the number of years held. Each firm institutes a 'legal' program, if at an arm's distance, that buys the 'w'- , the 'm'- and the 'q'-class shares whenever it feels the value is below long-term value (and sells them in over-heated markets). (This should come as no surprise to the financial whizzes who split stocks or 'buy-back' shares to shore up stock prices). Accumulated shares are 'distributed' end of year (or, by some other schedule) to long-term investors in some proportion to their holding period. Firms participate in the program (and disburse bonus shares) to different extents, consistent with the state of their financial health and their view of long term prospects among other factors. If the firm's arm bought a net of 1 million 'short' shares over the year, and it has a total of, say 100 million-year 'L(x)' shares on its books, it issues 1 share for every 100 'long-share-years' held by the investor. The wizened old guy holding 100 'L' shares (100 x 10 = 1000 long share-years) earns 1/100X1000 = 10 shares as his year-end bonus. The 'short-turned-long investor' with 100 'L1' shares, receives 1 bonus share to start with. 10% bonus for the 'long glasses' ain't something to sneeze upon?
Think about it. You don't have to play the market by the hour, day or week to make an honest return. Hold long and add to your capital. And the bonus shares do not eat in to your capital appreciation either! The proposal doesn't require a massive overhaul of the markets. It is straightforward and easy to implement. There may be a thousand minor details to worry about (in particular, financing of the scheme and its 'legitimacy'), but the core idea stands. Reward the 'long glasses' by exploiting the 'externality' caused by the impatience of the 'short yuppy', and the various opportunities thrown up by the market over the course of the year.
'Long-term shareholder value creation' ain't merely a buzzword in speeches and Annual Reports? Or, is it?
Tuesday, June 2, 2009
'Byte Credits (and Byte Penalties)' – Online Gateway to Social Equity?
'Byte Credits (and Byte Penalties)' – Online Gateway to Social Equity?
Ganga Prasad G. Rao
http://myprofile.cos.com/gangar
With so many email solicitations, pop-up windows for shopping and online survey invitations, it is questionable whether one ever gets to the important stuff on the internet beyond glamor girls, cine awards and afternoon gossip-metamorphosed to late-evening internet chats. You know, stuff like emerging technology, social policy initiatives and documents, financial meltdown, global warming, reports from riot commissions, hygiene and nutrition, advances in medicine, groundbreaking scientific discoveries, theses, court opinions, ... the list is endless. The sad answer, for most of us internet addicts, is No! Despite immediate access, we are limited in what we surf and learn on the world-wide web. In a manner, we are deluged by the inane on the net, and left with little time for the sublime.
Years back, I realized those seeking our participation in surveys on the net had value for our opinions – what economists call 'willingness to pay'. Your response provides valuable information which, with the responses of many others, provides the basis for survey sponsors to formulate plans, designs and strategies, or compile reports and recommendations. Indeed, it is not uncommon to find certain surveys offering a gift or various other prizes – certain, or, by lottery. As alluded above, there is another wide body of internet content for which we individuals have little time for, but which would be socially most useful if we perused it. If we are paid or lured to browse certain content of private or commercial interest, shouldn't the same apply to content of social interest? How then do we achieve this system of incentives (and disincentives)?
I am no freeware/shareware/'open' software provider who keeps afloat with his ingenious ways of earning money for software downloaded free (by the way, how do they survive?). But, if it is our intention to promote certain socially informative and useful content, the Government, as the representative of the people, could set aside a fund and apply it to subsidize socially productive content (rather than implicitly subsidize all content indiscriminately as is perhaps the case today)? With a 'content-based' subsidy we could 'code' internet pages with 'byte credits' for socially beneficial content and 'byte penalties' for 'other content', that the ISP processes in a straightforward way. If every pop-up ad that you 'accept' on your monitor (and 'acknowledge' by returning a 'cookie' back) earns you 'byte credits' on your ISP bill, so would socially beneficial web content - whether RTI forms, health and hygiene information, policy documents or school/library material (with a limit on a monthly basis to exclude misuse). In fact, we could boost public governance by even soliciting surveys broadly from the public concerning national issues on a regular basis.
Sure, it is not as easy as I claim it is. The byte credits would, akin to the prices of goods and services, vary with content and time, and the reputation of the content supplier/host. Certain sites that claim to update information regularly would, justifiably, claim a higher 'byte rate' than those others who follow a 'post and forget' policy. In the case of surveys, 'byte credits' could be coded to vary with the number of pages/questions, and the time spent on it. Over time, the system of 'byte credits' and 'byte penalties' would spawn both the supply of and demand for socially useful content. Search engines would sort search results by various criteria including 'byte credits/penalties', and surfers could use the criterion to selectively choose and view content. True, merely downloading a web page or document in itself does little to add to intelligence or social equity, but it is a start nonetheless**. And, parents who almost risk a stroke on looking up the broadband bill will heave a sigh of relief if their children learn a thing or two under this 'intelligent web world' (IWW).
Now that would be something to look forward to. Right?
** To dissuade downloading large documents merely for credits, and to ensure the document is read in its entirety, large downloads may be split in many parts and credit only offered with the last part contingent on the downloading of all preceding parts.
Ganga Prasad G. Rao
http://myprofile.cos.com/gangar
With so many email solicitations, pop-up windows for shopping and online survey invitations, it is questionable whether one ever gets to the important stuff on the internet beyond glamor girls, cine awards and afternoon gossip-metamorphosed to late-evening internet chats. You know, stuff like emerging technology, social policy initiatives and documents, financial meltdown, global warming, reports from riot commissions, hygiene and nutrition, advances in medicine, groundbreaking scientific discoveries, theses, court opinions, ... the list is endless. The sad answer, for most of us internet addicts, is No! Despite immediate access, we are limited in what we surf and learn on the world-wide web. In a manner, we are deluged by the inane on the net, and left with little time for the sublime.
Years back, I realized those seeking our participation in surveys on the net had value for our opinions – what economists call 'willingness to pay'. Your response provides valuable information which, with the responses of many others, provides the basis for survey sponsors to formulate plans, designs and strategies, or compile reports and recommendations. Indeed, it is not uncommon to find certain surveys offering a gift or various other prizes – certain, or, by lottery. As alluded above, there is another wide body of internet content for which we individuals have little time for, but which would be socially most useful if we perused it. If we are paid or lured to browse certain content of private or commercial interest, shouldn't the same apply to content of social interest? How then do we achieve this system of incentives (and disincentives)?
I am no freeware/shareware/'open' software provider who keeps afloat with his ingenious ways of earning money for software downloaded free (by the way, how do they survive?). But, if it is our intention to promote certain socially informative and useful content, the Government, as the representative of the people, could set aside a fund and apply it to subsidize socially productive content (rather than implicitly subsidize all content indiscriminately as is perhaps the case today)? With a 'content-based' subsidy we could 'code' internet pages with 'byte credits' for socially beneficial content and 'byte penalties' for 'other content', that the ISP processes in a straightforward way. If every pop-up ad that you 'accept' on your monitor (and 'acknowledge' by returning a 'cookie' back) earns you 'byte credits' on your ISP bill, so would socially beneficial web content - whether RTI forms, health and hygiene information, policy documents or school/library material (with a limit on a monthly basis to exclude misuse). In fact, we could boost public governance by even soliciting surveys broadly from the public concerning national issues on a regular basis.
Sure, it is not as easy as I claim it is. The byte credits would, akin to the prices of goods and services, vary with content and time, and the reputation of the content supplier/host. Certain sites that claim to update information regularly would, justifiably, claim a higher 'byte rate' than those others who follow a 'post and forget' policy. In the case of surveys, 'byte credits' could be coded to vary with the number of pages/questions, and the time spent on it. Over time, the system of 'byte credits' and 'byte penalties' would spawn both the supply of and demand for socially useful content. Search engines would sort search results by various criteria including 'byte credits/penalties', and surfers could use the criterion to selectively choose and view content. True, merely downloading a web page or document in itself does little to add to intelligence or social equity, but it is a start nonetheless**. And, parents who almost risk a stroke on looking up the broadband bill will heave a sigh of relief if their children learn a thing or two under this 'intelligent web world' (IWW).
Now that would be something to look forward to. Right?
** To dissuade downloading large documents merely for credits, and to ensure the document is read in its entirety, large downloads may be split in many parts and credit only offered with the last part contingent on the downloading of all preceding parts.
Wednesday, March 18, 2009
Election Days are Here Again, Thumbs Down! Thumbs Down!
Election Days are Here Again, Thumbs Down! Thumbs Down!
Ganga Prasad G. Rao
http://myprofile.cos.com/gangar
Elections are in the air! "Oh, Not again" seems to be the general response, though some 'upstarts' from media journalists and newspapers, corporates/corporate leaders and 'Lead India candidates' have raised their voices to create more awareness of the polls and the import of voting among the masses. There is as much talk of 'gender equality' in political representation, as there is of the corruption and criminalization of politics, and the sham that elections have turned in to. From the post-independence days when the Congress party was the only game in town to those years in the 60s and 70s when political pundits bemoaned the absence of a credible alternative to the Congress, to the present day when every politician of every hue forms a party of his own to extract maximum 'mileage' in coalition government formation, politics has come a long way. In fact, politics is no longer about serving the people by governing, lawmaking and administering on their behalf. It has turned in to a business of representing various ideological and commercial interest groups while enriching party coffers and its supporters.
In the din of election posturing and confusion, there was one suggestion that seemed to offer a glimmer of democratic hope. Negative voting, as it is called, offers the now powerless voters a tool to reject candidates in the fray, albeit as a group. By empowering voters to individually and collectively express their rejection of fielded candidates, negative voting offers voters a tool to communicate their disgust to politicians. But is negative voting in itself enough? The reality is, total boycott has always been an option, but has been rarely achieved. So what are the chances of negative voting, which too requires coordinated action from voters? Yes, the threat of negative voting could irk some party leaders in to pondering about their choices of candidates in rebellious constituencies, but don't they already count on blocks of support promised by their (corrupt) candidate? Besides, in the larger scheme of things, a rare rebellious constituency may not be of interest, or even matter. So, what recourse do the voters have?
If parties impose corrupt candidates with criminal backgrounds upon voters so they may win elections the easy way and rule the roost in the Parliament, why not consider a scheme of things in which they are punished for flouting ethical norms, or equivalently, rewarded for abiding by them? One way to get around criminalization of politics is to offer some sort of 'clean character credits (CCC)' to parties that they could use in the Parliament. Such credits could be offered by a committee constituted of the Election Commission, Judges of the Supreme Court and Chief Justices of State High Courts who meet in the weeks before elections to pass their judgment on candidates, possibly on a scale of 1 to 10. Subject to certain stringent vote thresholds, say, >20% of 'legal' votes polled (and party conduct during elections), these 'Clean Character Credit (CCC)' points would be awarded to political parties after elections. At this stage, it'd be necessary to recognize these CCC points legally in the Parliament. If such credits could be made to count in critical motions and votes in the normal course of Parliamentary business, then parties would have an incentive to field and elect 'clean' candidates. The question is, how do we integrate the CCC scheme in to the scheme of things as exists now? One could conjure up various possibilities, from using these points to decide 'ties' and 'close votes', to including them in specific votes such as the vote on budget, or the vote of no confidence. This list is not exhaustive, but let's not leave it to our politicians (lest it turns in to a joke like the gender quota - incidentally a policy I do not support).
Properly implemented, the CCC incentive, possibly in combination with the negative vote, could push political parties to adopt higher standards of morality both in fielding election candidates and in electioneering, thus bringing about decriminalization of politics.
Surely worth a try?
Ganga Prasad G. Rao
http://myprofile.cos.com/gangar
Elections are in the air! "Oh, Not again" seems to be the general response, though some 'upstarts' from media journalists and newspapers, corporates/corporate leaders and 'Lead India candidates' have raised their voices to create more awareness of the polls and the import of voting among the masses. There is as much talk of 'gender equality' in political representation, as there is of the corruption and criminalization of politics, and the sham that elections have turned in to. From the post-independence days when the Congress party was the only game in town to those years in the 60s and 70s when political pundits bemoaned the absence of a credible alternative to the Congress, to the present day when every politician of every hue forms a party of his own to extract maximum 'mileage' in coalition government formation, politics has come a long way. In fact, politics is no longer about serving the people by governing, lawmaking and administering on their behalf. It has turned in to a business of representing various ideological and commercial interest groups while enriching party coffers and its supporters.
In the din of election posturing and confusion, there was one suggestion that seemed to offer a glimmer of democratic hope. Negative voting, as it is called, offers the now powerless voters a tool to reject candidates in the fray, albeit as a group. By empowering voters to individually and collectively express their rejection of fielded candidates, negative voting offers voters a tool to communicate their disgust to politicians. But is negative voting in itself enough? The reality is, total boycott has always been an option, but has been rarely achieved. So what are the chances of negative voting, which too requires coordinated action from voters? Yes, the threat of negative voting could irk some party leaders in to pondering about their choices of candidates in rebellious constituencies, but don't they already count on blocks of support promised by their (corrupt) candidate? Besides, in the larger scheme of things, a rare rebellious constituency may not be of interest, or even matter. So, what recourse do the voters have?
If parties impose corrupt candidates with criminal backgrounds upon voters so they may win elections the easy way and rule the roost in the Parliament, why not consider a scheme of things in which they are punished for flouting ethical norms, or equivalently, rewarded for abiding by them? One way to get around criminalization of politics is to offer some sort of 'clean character credits (CCC)' to parties that they could use in the Parliament. Such credits could be offered by a committee constituted of the Election Commission, Judges of the Supreme Court and Chief Justices of State High Courts who meet in the weeks before elections to pass their judgment on candidates, possibly on a scale of 1 to 10. Subject to certain stringent vote thresholds, say, >20% of 'legal' votes polled (and party conduct during elections), these 'Clean Character Credit (CCC)' points would be awarded to political parties after elections. At this stage, it'd be necessary to recognize these CCC points legally in the Parliament. If such credits could be made to count in critical motions and votes in the normal course of Parliamentary business, then parties would have an incentive to field and elect 'clean' candidates. The question is, how do we integrate the CCC scheme in to the scheme of things as exists now? One could conjure up various possibilities, from using these points to decide 'ties' and 'close votes', to including them in specific votes such as the vote on budget, or the vote of no confidence. This list is not exhaustive, but let's not leave it to our politicians (lest it turns in to a joke like the gender quota - incidentally a policy I do not support).
Properly implemented, the CCC incentive, possibly in combination with the negative vote, could push political parties to adopt higher standards of morality both in fielding election candidates and in electioneering, thus bringing about decriminalization of politics.
Surely worth a try?
Thursday, January 1, 2009
Neo-Socialist Per-Capita Economics
Ganga Prasad G. Rao
http://myprofile.cos.com/
The prophets of doom have spoken. And for once, the financial meltdown did turn those prophecies true. The stock markets, banks and financial institutions fell like nine pins (and with them, the thick volumes of budget and five-year plan documents) when the big daddies pulled the plug on the bourses. They knew better than to expect 50% returns year after year. (Now is not the time to speak of the small investor who lost his house and family to the crisis by following the 'invest and hold long' strategy. Sucker!!!!!) With the threat of an economic collapse following the financial crisis still in the air, and with the upcoming global warming negotiations already casting their long shadow on the industry, the governments of the world are groping for ideas to grow their economy.
Like? Keynesian Economics? Neo-classical laissez faire? Neo-Keynesian Economy? Been there done that! So what's new? Macro-policies from cutting edge research at Berkeley and MIT? Actually, some old wine in new bottle! Give it a name, will you? Okey, call it 'Neo-Socialist Per Capita Economy'. Bear in mind, this strategy is more than economics. It is crafted by the devil himself and does not brook interference by academics! We first affirm democracy is sacrosanct. Next, we declare all people of the world 'equal' and assign them the same rights to life in its various facets. (One of those rights, in particular, is the right to grow one's family. Yes, good times are-a-coming!) In the meanwhile, the Planning Commission compiles detailed statistics comparing our per-capita consumption for various goods and amenities – water, eggs, iron, housing and floor space, vehicles per family, roads per square kilometer, copper consumption, iron production, credit card usage, and the like, against similar measures for developed nations. Then we allow electoral politics to dig the mass grave necessary to provide the impetus for the growth economy. Election time it is. Time to pander dreams and goodies to the masses. Minimum support prices for every damn agricultural product you can think of. A kilo of rice at Rs2; no Rs1; well, actually free if you care to stand in the line. Subsidized gasoline so you don't take to the streets with sickles and burn effigies while I enjoy my vacation abroad. Low low rates for housing loans (and an 'employment stimulus' to ensure the PSU banks do not go under after distributing them!). Don't you see? A subsidized economy is a growing economy (as long as I am in power). Simple as that! (Ok, OK!, we get the idea. Voters know which side their bread is buttered!)
Time to talk tough (now that I have assumed political office), whether WTO or at the global warming summit. God created us equal, God damn it, we'll consume and pollute in equal. Agricultural subsidies equal to those in developed nations...and equal per-capita emissions - that's what we are entitled to. I must grow my economy, if by polluting and excluding imports that replace domestic production. Banks, you must lower interest rates on business loans, and on home loans. That should induce some groundbreaking ceremonies and purchases of bigger cars by larger families. Don't you think so? (Now you know why we don't push population control). Declare employment, power, housing, water and education fundamental rights .... and put up a proposal for laptops and automobiles as well. Empower citizens to sue if denied those rights. That should get the economy going, help us achieve those per-capita targets and claim equality with the developed nations (How do we have them increase their consumption so we could play this game perpetually? Hmm?). Nevermind the plans and policies have loose ends on them. We can correct them in the next plan, or next cycle, or next yuga....whichever comes later (See, it helps to be a Hindu who believes in rebirth).
As for the mountains of industrial and consumer waste, let them be, until there is money in cleaning them up. Who knows, EPA and/or the GEF might be in the 'mood of giving'. Besides, gotta leave some crumbs for those behind!
Who said politicians are not macro-economists? What say you?
Per capita is our magic mantra, Capital idea it is!
Fits well in to our business plans, stock market manipulations,
even election platforms (Fundamental rights are but an extension of our freedom struggle)
Rights that avert economic doom, rights that grease many a palm,
Rights that gladden the hearts of employers, employees, and investors alike!
Rights that launch our economy and propel us to the stars
Rights advantageous in carbon permit trading and WTO negotiations;
Indeed, rights that let the developed nations off the global warming rap!
(So, who is behind the 'Neo-Socialist Per-Capita Economy'?)
Ganga Prasad G. Rao
http://myprofile.cos.com/
The prophets of doom have spoken. And for once, the financial meltdown did turn those prophecies true. The stock markets, banks and financial institutions fell like nine pins (and with them, the thick volumes of budget and five-year plan documents) when the big daddies pulled the plug on the bourses. They knew better than to expect 50% returns year after year. (Now is not the time to speak of the small investor who lost his house and family to the crisis by following the 'invest and hold long' strategy. Sucker!!!!!) With the threat of an economic collapse following the financial crisis still in the air, and with the upcoming global warming negotiations already casting their long shadow on the industry, the governments of the world are groping for ideas to grow their economy.
Like? Keynesian Economics? Neo-classical laissez faire? Neo-Keynesian Economy? Been there done that! So what's new? Macro-policies from cutting edge research at Berkeley and MIT? Actually, some old wine in new bottle! Give it a name, will you? Okey, call it 'Neo-Socialist Per Capita Economy'. Bear in mind, this strategy is more than economics. It is crafted by the devil himself and does not brook interference by academics! We first affirm democracy is sacrosanct. Next, we declare all people of the world 'equal' and assign them the same rights to life in its various facets. (One of those rights, in particular, is the right to grow one's family. Yes, good times are-a-coming!) In the meanwhile, the Planning Commission compiles detailed statistics comparing our per-capita consumption for various goods and amenities – water, eggs, iron, housing and floor space, vehicles per family, roads per square kilometer, copper consumption, iron production, credit card usage, and the like, against similar measures for developed nations. Then we allow electoral politics to dig the mass grave necessary to provide the impetus for the growth economy. Election time it is. Time to pander dreams and goodies to the masses. Minimum support prices for every damn agricultural product you can think of. A kilo of rice at Rs2; no Rs1; well, actually free if you care to stand in the line. Subsidized gasoline so you don't take to the streets with sickles and burn effigies while I enjoy my vacation abroad. Low low rates for housing loans (and an 'employment stimulus' to ensure the PSU banks do not go under after distributing them!). Don't you see? A subsidized economy is a growing economy (as long as I am in power). Simple as that! (Ok, OK!, we get the idea. Voters know which side their bread is buttered!)
Time to talk tough (now that I have assumed political office), whether WTO or at the global warming summit. God created us equal, God damn it, we'll consume and pollute in equal. Agricultural subsidies equal to those in developed nations...and equal per-capita emissions - that's what we are entitled to. I must grow my economy, if by polluting and excluding imports that replace domestic production. Banks, you must lower interest rates on business loans, and on home loans. That should induce some groundbreaking ceremonies and purchases of bigger cars by larger families. Don't you think so? (Now you know why we don't push population control). Declare employment, power, housing, water and education fundamental rights .... and put up a proposal for laptops and automobiles as well. Empower citizens to sue if denied those rights. That should get the economy going, help us achieve those per-capita targets and claim equality with the developed nations (How do we have them increase their consumption so we could play this game perpetually? Hmm?). Nevermind the plans and policies have loose ends on them. We can correct them in the next plan, or next cycle, or next yuga....whichever comes later (See, it helps to be a Hindu who believes in rebirth).
As for the mountains of industrial and consumer waste, let them be, until there is money in cleaning them up. Who knows, EPA and/or the GEF might be in the 'mood of giving'. Besides, gotta leave some crumbs for those behind!
Who said politicians are not macro-economists? What say you?
Per capita is our magic mantra, Capital idea it is!
Fits well in to our business plans, stock market manipulations,
even election platforms (Fundamental rights are but an extension of our freedom struggle)
Rights that avert economic doom, rights that grease many a palm,
Rights that gladden the hearts of employers, employees, and investors alike!
Rights that launch our economy and propel us to the stars
Rights advantageous in carbon permit trading and WTO negotiations;
Indeed, rights that let the developed nations off the global warming rap!
(So, who is behind the 'Neo-Socialist Per-Capita Economy'?)
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