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?
Wednesday, December 23, 2009
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'?)
Monday, November 3, 2008
Rigged Elections, Boobytrapped Stock Markets? (Yes, I'm Lying. Again!)
Rigged Elections, Boobytrapped Stock Markets? (Yes, I'm Lying. Again!)
Ganga Prasad G. Rao
http://myprofile.cos.com/gangar
Elections are in the news, even as we speak. Elections meant to ascertain from the citizens of a nation its choices as regards alternative futures embodied by the candidates and in their agenda. Elections that chart a nation's course as it competes and cooperates with other nations of the world. One would presume elections are 'free and fair' as the US insists they be when they concern other nations. But, sad to say, even the US itself is not the bastion of freedom and democracy, especially when it comes to elections. I am not talking about the influence of money in campaigning. I am talking about wholesale election rigging that's out on the front pages of your newspapers. Yes, the stock market crash, the liquidity crunch, the financial meltdown, or whatever you name it. What? NOOO!!! Pray how could that relate to US Presidential elections?
No, I have not the credentials of Bob Woodward of Watergate fame with the inside scoop. But, if I had big, I mean very big money at stake, and not just in the US market, I'd protect it from Presidential election politics and especially from the whims and fancies of the masses who vote after a hangover from the TGIF beer guzzling or the 'Munde' night bash on the TV. Now, big strategies involve multiple players. Let's imagine who they could be, shall we? The CIA? Warren Buffet? Bill Gates? Of course. Saudi Sheiks overflowing with petro dollars? Perhaps. 'Republican' money in the stock markets booked on the first flight out at the faintest hint of a democratic victory that could last, God forbid, two terms and more? Likely. So, who is the unlikely darkhorse? I'd say EPA with its 'Superfund' funds and penalties collected over the decades for permitting the poisoning of American lands. That may be so, but where is the conspiracy? Well, if I had the moolah to move stock markets, then it would be to my disadvantage to play the game straight. A no-brainer! Instead I influence policies and events that investors anticipate. Got it? Create coincidences/circumstances, influence 'public opinion' and 'expert opinion' to move the Fed and the Congress in to reacting as one desires. Have the President proclaim populist policies while stepping on funding bills and environmental regulations in the House or Senate. In short, anything that brings about outcomes that one can exploit systematically in the stock market where anticipating events is more the rule than reacting to them.
Consider this scenario. The oil markets of '86 were so weak, crude sold at $9 a barrel, perhaps lower. Oil companies lost money. The industry contracted and shed jobs. Who'd buy in to stocks of US oil companies that had plunged so low crude would ooze out if it got any lower? Lo and behold, the most unlikely white knights – Saudis, the EPA and the rest of the 'rich' pack. But the real nightmare is when these white knights gain political access to the highest corridors of power. It's one thing to enter the market at the bottom, it's another to choose where the bottom should be. Let the market drop until the President himself calls on the phone to invite in 'the big league' investors with their fat pockets. With the ruling party in their pocket, they set out to systematically influence policies that impact the stock markets. The grand strategy? Why anticipate events when we can induce or create them! Ride the boom as the crisis is resolved and populist policies are announced. Then, short the market just as the feeling of euphoria infiltrates the investing community and move in to another distressed sector of the market. First, exploit the technology market boom, then invest in crude with prices in the single digits, rake it in the commodity market as crude explodes to $140. Short commodities and enter the real estate sector just in time for boom-time. And finally, teach global investors a lesson by pricking the housing bubble, knowing it'd have a domino impact on national and the international financial markets with cascading effects on government finances and economic health of the international economy.
But where is the conspiracy? With markets lower than where they were at the start of the Republican regime, voters would think twice, indeed thrice, about voting for Democratic candidates campaigning on the platform of new taxes to massive finance social spending. Now, if voters behaved rationally, they'd avoid democrats with a long stick and return the very party whose President called in on the 'Black Monday'. But if the elections are on the morning after Munde night football in November, odds are stacked against rationality! In either case, the fat pockets have a neat pile of 'ride-the-boom, short-the-bust' money for the next cycle (but only after the call from King Oba' from the White House) even as the financial community braces for a global recession and offers premium stocks at low single digit PEs. Do I hear jingle bells?! Rigging elections and the stock market. Two birds with one stone! How about that? Or, more appropriately, Howzzat??!!
If such conspiracies abound in the US, can India remain insulated? No, I don't mean to suggest that EPA's Superfund and Pension fund monies are chasing an Indian stock market crash to 3000 levels. After all, we have our own 'desi' version of election rigging. The UPA was elected on a common minimum program with the Left. Dr. Singh adroitly managed to sideline them, but surely they are not down and out? Indeed, they did have their say (and their share of the pie?) in the Indo-US nuclear deal. Isn't it time for the Congress to play its cards? And play its cards it will. After all, wasn't it booby-trapped by its detractors half-way through its term to turn back upon its reform commitments? It is now too late to push the mid-term elections 'surprise' button, but surprises come in different varieties. Right?
Here's an entirely imaginary scenario: With the economy rearing its head up after the global melt-down and the spell of double-digit inflation, the Congress booby-traps the economy as it goes to the polls to ensure the BJP does not capitalize on its reforms or gain from the flight of capital from the US to India with Obama's ascendancy to the White House. What 'card' does it hold in its hand to boobytrap the elections? Hindu muslim riots? Perhaps. An economy booby-trapped to nose-dive if steered to the right under the BJP? Yessss!, but how? Consider the GSPC IPO over which the incumbent government has a certain 'right' both as regards its size and timing? If the electoral mood is pro-Congress, the government offers the mega-IPO at a discounted price. The stock market booms with Superfund, Pension fund monies and FII money chasing the soon-to-be-opened insurance sector and not because we signed the Indo-US nuclear deal and intend to participate, if eventually, in the global warming treaty. But if the public is prone to punish the Congress Government at the ballot box, it'd rather crash the stock market, permit the fat cat foreigners to get in at the bottom, and either 'shrink' the GSPC IPO or time it before elections so retail investors predictably shun it. Foreign investors in the stock market and our foreign masters at Sansad Bhawan would then teach India a lesson in economic humility by steering the market toward a 'low-returns' path for the Obama decade even as the newly-elected BJP government scrambles to unravel the subsidy conundrum and undo the innumerable other policy wrongs of the past decades. Any guesses how long that would take?
Ain't this election rigging? What say you?
Ganga Prasad G. Rao
http://myprofile.cos.com/gangar
Elections are in the news, even as we speak. Elections meant to ascertain from the citizens of a nation its choices as regards alternative futures embodied by the candidates and in their agenda. Elections that chart a nation's course as it competes and cooperates with other nations of the world. One would presume elections are 'free and fair' as the US insists they be when they concern other nations. But, sad to say, even the US itself is not the bastion of freedom and democracy, especially when it comes to elections. I am not talking about the influence of money in campaigning. I am talking about wholesale election rigging that's out on the front pages of your newspapers. Yes, the stock market crash, the liquidity crunch, the financial meltdown, or whatever you name it. What? NOOO!!! Pray how could that relate to US Presidential elections?
No, I have not the credentials of Bob Woodward of Watergate fame with the inside scoop. But, if I had big, I mean very big money at stake, and not just in the US market, I'd protect it from Presidential election politics and especially from the whims and fancies of the masses who vote after a hangover from the TGIF beer guzzling or the 'Munde' night bash on the TV. Now, big strategies involve multiple players. Let's imagine who they could be, shall we? The CIA? Warren Buffet? Bill Gates? Of course. Saudi Sheiks overflowing with petro dollars? Perhaps. 'Republican' money in the stock markets booked on the first flight out at the faintest hint of a democratic victory that could last, God forbid, two terms and more? Likely. So, who is the unlikely darkhorse? I'd say EPA with its 'Superfund' funds and penalties collected over the decades for permitting the poisoning of American lands. That may be so, but where is the conspiracy? Well, if I had the moolah to move stock markets, then it would be to my disadvantage to play the game straight. A no-brainer! Instead I influence policies and events that investors anticipate. Got it? Create coincidences/circumstances, influence 'public opinion' and 'expert opinion' to move the Fed and the Congress in to reacting as one desires. Have the President proclaim populist policies while stepping on funding bills and environmental regulations in the House or Senate. In short, anything that brings about outcomes that one can exploit systematically in the stock market where anticipating events is more the rule than reacting to them.
Consider this scenario. The oil markets of '86 were so weak, crude sold at $9 a barrel, perhaps lower. Oil companies lost money. The industry contracted and shed jobs. Who'd buy in to stocks of US oil companies that had plunged so low crude would ooze out if it got any lower? Lo and behold, the most unlikely white knights – Saudis, the EPA and the rest of the 'rich' pack. But the real nightmare is when these white knights gain political access to the highest corridors of power. It's one thing to enter the market at the bottom, it's another to choose where the bottom should be. Let the market drop until the President himself calls on the phone to invite in 'the big league' investors with their fat pockets. With the ruling party in their pocket, they set out to systematically influence policies that impact the stock markets. The grand strategy? Why anticipate events when we can induce or create them! Ride the boom as the crisis is resolved and populist policies are announced. Then, short the market just as the feeling of euphoria infiltrates the investing community and move in to another distressed sector of the market. First, exploit the technology market boom, then invest in crude with prices in the single digits, rake it in the commodity market as crude explodes to $140. Short commodities and enter the real estate sector just in time for boom-time. And finally, teach global investors a lesson by pricking the housing bubble, knowing it'd have a domino impact on national and the international financial markets with cascading effects on government finances and economic health of the international economy.
But where is the conspiracy? With markets lower than where they were at the start of the Republican regime, voters would think twice, indeed thrice, about voting for Democratic candidates campaigning on the platform of new taxes to massive finance social spending. Now, if voters behaved rationally, they'd avoid democrats with a long stick and return the very party whose President called in on the 'Black Monday'. But if the elections are on the morning after Munde night football in November, odds are stacked against rationality! In either case, the fat pockets have a neat pile of 'ride-the-boom, short-the-bust' money for the next cycle (but only after the call from King Oba' from the White House) even as the financial community braces for a global recession and offers premium stocks at low single digit PEs. Do I hear jingle bells?! Rigging elections and the stock market. Two birds with one stone! How about that? Or, more appropriately, Howzzat??!!
If such conspiracies abound in the US, can India remain insulated? No, I don't mean to suggest that EPA's Superfund and Pension fund monies are chasing an Indian stock market crash to 3000 levels. After all, we have our own 'desi' version of election rigging. The UPA was elected on a common minimum program with the Left. Dr. Singh adroitly managed to sideline them, but surely they are not down and out? Indeed, they did have their say (and their share of the pie?) in the Indo-US nuclear deal. Isn't it time for the Congress to play its cards? And play its cards it will. After all, wasn't it booby-trapped by its detractors half-way through its term to turn back upon its reform commitments? It is now too late to push the mid-term elections 'surprise' button, but surprises come in different varieties. Right?
Here's an entirely imaginary scenario: With the economy rearing its head up after the global melt-down and the spell of double-digit inflation, the Congress booby-traps the economy as it goes to the polls to ensure the BJP does not capitalize on its reforms or gain from the flight of capital from the US to India with Obama's ascendancy to the White House. What 'card' does it hold in its hand to boobytrap the elections? Hindu muslim riots? Perhaps. An economy booby-trapped to nose-dive if steered to the right under the BJP? Yessss!, but how? Consider the GSPC IPO over which the incumbent government has a certain 'right' both as regards its size and timing? If the electoral mood is pro-Congress, the government offers the mega-IPO at a discounted price. The stock market booms with Superfund, Pension fund monies and FII money chasing the soon-to-be-opened insurance sector and not because we signed the Indo-US nuclear deal and intend to participate, if eventually, in the global warming treaty. But if the public is prone to punish the Congress Government at the ballot box, it'd rather crash the stock market, permit the fat cat foreigners to get in at the bottom, and either 'shrink' the GSPC IPO or time it before elections so retail investors predictably shun it. Foreign investors in the stock market and our foreign masters at Sansad Bhawan would then teach India a lesson in economic humility by steering the market toward a 'low-returns' path for the Obama decade even as the newly-elected BJP government scrambles to unravel the subsidy conundrum and undo the innumerable other policy wrongs of the past decades. Any guesses how long that would take?
Ain't this election rigging? What say you?
Sunday, October 26, 2008
Buy in to the 'Green Star'!
Buy in to the 'Green Star'!
Ganga Prasad G. Rao
http://myprofile.cos.com/gangar
What does it take to turn the world green - I mean, without poisoning our air, water, and land with toxic residues that perpetuate across time, accumulate in the food chain, reduce sperm count and infiltrate in to mother's milk and foetuses? Food, vegetables, fruit, even opaquely-packaged drinks with preservatives/pesticides and colours that negate any nutritive value they might contain (despite the detailed risk-analysis prepared by the consultant who was compensated with a free 'day-old, returned' Mercedes by the industry!). Toilet cleaners that, going by the composition, smell and color, are likely to turn the Pacific Ocean barren of life. Or, cadmium-doped, brightly colored plastic bags that poison the land they litter (and turn it eligible to receive EPA's Superfund monies! Phew!).
To answer the question, not much. A strong political will, a few economists who will not sell themselves to the devil, and political strength where it matters most – on the floor of the legislatures and at regulatory bodies. I am no expert on the matter, but I do know conventional hazardous consumer products rule the lion's share in the market on account of their scale-derived competitive advantage over competing environmentally-friendly products. In a market where consumers are more conscious of their purses than the impact of their decisions on their children's health, and on the environment we are leaving for them, a few pennies, cents, and paises make the difference between environmental sustainability and a doomed planet. True, there already are environmentally-friendly consumer products. They are costlier – some because they were designed environmentally friendly, others because the constituents are naturally rare and must be specifically grown to manufacture the product. The bottom line? We have a situation where the toxic, but cheaper products attract a huge demand and not because they do not compensate the environment for the damages imposed. Economists call this an externality – wherein one agent, here the producer, undertakes socially sub-optimal private decisions because it is in his interest to minimize cost and thus maximize market share by not taking cognizance of the damages imposed on environment (and public health).
Conceptually at least, a solution is easily designed. Any policy wonk worth his salt would recommend a pigouvian tax equal to the marginal damage imposed by the consumption of the incremental unit as the appropriate incentive to induce manufacturers to internalize environmental damages resulting from the consumption of their products. A tax increases the price paid by the consumer, the margin of the producer and induces both a reduction in consumption and production of the environmentally damaging product. The environmentally damaging product turns relatively costlier to produce and to consume relative to the environmentally-friendly product, thus achieving the objective of the tax.
So, where's the catch? As always, the devil is always in the details. How do we determine which product is bio-degradable and to what extent? Who measures the marginal damage to public health and environment from the various toxic products in our daily life, and how? Let's not pretend. The task is physically unpractical and economically infeasible. Does that mean we don't tax the 'dirty' products? No; where there is will, there is a way. There already is a 'green square' on vegetarian food items on the shelves. Why not a 'Green Star' stamp on bio-degradable consumer products (excluding/including the packaging)? The Government could license the 'Green Star' emblem for bio-degradable consumer products after due certification for which it receives a modest fee. The 'Green Star' stamp would inform consumers, who don't have the time, or the glasses, to read the fine print, as to the bio-degradability of their product. (For those of you who are finicky, the Green star could be further labelled A1, A2 A3....D1, D2, D3 to signify products with different biodegradable contents and 'bio-degradability half-lives', A1 being the most and early bio-degradable product, and D3 being the least and last).
Labeling completed, what we need next is a substitute that mimics a calibrated tax. If environmental damages are assumed proportional to product mass, a weight-based tax could be a reasonable basis for levying the tax. Calibration comes next. Do we tax 'non-biodegradable' products on a linear basis? on a slab basis? Or, on some 'volume/mass-discount/premium' basis? The answer lies in the damage function of product packaging and product constituents – another unknown piece of information. Let's settle for a weight-based tax, say, 2 paise per gram, or twenty rupees a kilo. Such weight-based tax is more onerous on low-priced products than it is on the higher value products – not a bad idea in a market dominated by low-priced, environmentally-inferior consumer products. This turns the environmentally-friendly product relatively attractive to consumers, and increases its market share relative to the environmentally-damaging product. True, the tax is arbitrary, but it is a start nonetheless. Over time, this 'tax-cum-labelling' policy brings about a real shift in consumer taste and shopping patterns, in turn inducing producers to switch to bio-degradable products. A reduction consumption of non-bio-degradable products translates to lesser damage to public health and the environment. Ain't that what we seek?
I emailed this suggestion to the government many, many months ago, if not in this detail. A witness tells me an 'almost-new' Mercedes blew away the paper as the printer spit it out. Lemme know if the Mercedes happens to drive in to your town!!!
ps: And the Green Square shined in the reflected glory of the Green Star (or was it the other way around? Let's find out, shall we?)
Ganga Prasad G. Rao
http://myprofile.cos.com/gangar
What does it take to turn the world green - I mean, without poisoning our air, water, and land with toxic residues that perpetuate across time, accumulate in the food chain, reduce sperm count and infiltrate in to mother's milk and foetuses? Food, vegetables, fruit, even opaquely-packaged drinks with preservatives/pesticides and colours that negate any nutritive value they might contain (despite the detailed risk-analysis prepared by the consultant who was compensated with a free 'day-old, returned' Mercedes by the industry!). Toilet cleaners that, going by the composition, smell and color, are likely to turn the Pacific Ocean barren of life. Or, cadmium-doped, brightly colored plastic bags that poison the land they litter (and turn it eligible to receive EPA's Superfund monies! Phew!).
To answer the question, not much. A strong political will, a few economists who will not sell themselves to the devil, and political strength where it matters most – on the floor of the legislatures and at regulatory bodies. I am no expert on the matter, but I do know conventional hazardous consumer products rule the lion's share in the market on account of their scale-derived competitive advantage over competing environmentally-friendly products. In a market where consumers are more conscious of their purses than the impact of their decisions on their children's health, and on the environment we are leaving for them, a few pennies, cents, and paises make the difference between environmental sustainability and a doomed planet. True, there already are environmentally-friendly consumer products. They are costlier – some because they were designed environmentally friendly, others because the constituents are naturally rare and must be specifically grown to manufacture the product. The bottom line? We have a situation where the toxic, but cheaper products attract a huge demand and not because they do not compensate the environment for the damages imposed. Economists call this an externality – wherein one agent, here the producer, undertakes socially sub-optimal private decisions because it is in his interest to minimize cost and thus maximize market share by not taking cognizance of the damages imposed on environment (and public health).
Conceptually at least, a solution is easily designed. Any policy wonk worth his salt would recommend a pigouvian tax equal to the marginal damage imposed by the consumption of the incremental unit as the appropriate incentive to induce manufacturers to internalize environmental damages resulting from the consumption of their products. A tax increases the price paid by the consumer, the margin of the producer and induces both a reduction in consumption and production of the environmentally damaging product. The environmentally damaging product turns relatively costlier to produce and to consume relative to the environmentally-friendly product, thus achieving the objective of the tax.
So, where's the catch? As always, the devil is always in the details. How do we determine which product is bio-degradable and to what extent? Who measures the marginal damage to public health and environment from the various toxic products in our daily life, and how? Let's not pretend. The task is physically unpractical and economically infeasible. Does that mean we don't tax the 'dirty' products? No; where there is will, there is a way. There already is a 'green square' on vegetarian food items on the shelves. Why not a 'Green Star' stamp on bio-degradable consumer products (excluding/including the packaging)? The Government could license the 'Green Star' emblem for bio-degradable consumer products after due certification for which it receives a modest fee. The 'Green Star' stamp would inform consumers, who don't have the time, or the glasses, to read the fine print, as to the bio-degradability of their product. (For those of you who are finicky, the Green star could be further labelled A1, A2 A3....D1, D2, D3 to signify products with different biodegradable contents and 'bio-degradability half-lives', A1 being the most and early bio-degradable product, and D3 being the least and last).
Labeling completed, what we need next is a substitute that mimics a calibrated tax. If environmental damages are assumed proportional to product mass, a weight-based tax could be a reasonable basis for levying the tax. Calibration comes next. Do we tax 'non-biodegradable' products on a linear basis? on a slab basis? Or, on some 'volume/mass-discount/premium' basis? The answer lies in the damage function of product packaging and product constituents – another unknown piece of information. Let's settle for a weight-based tax, say, 2 paise per gram, or twenty rupees a kilo. Such weight-based tax is more onerous on low-priced products than it is on the higher value products – not a bad idea in a market dominated by low-priced, environmentally-inferior consumer products. This turns the environmentally-friendly product relatively attractive to consumers, and increases its market share relative to the environmentally-damaging product. True, the tax is arbitrary, but it is a start nonetheless. Over time, this 'tax-cum-labelling' policy brings about a real shift in consumer taste and shopping patterns, in turn inducing producers to switch to bio-degradable products. A reduction consumption of non-bio-degradable products translates to lesser damage to public health and the environment. Ain't that what we seek?
I emailed this suggestion to the government many, many months ago, if not in this detail. A witness tells me an 'almost-new' Mercedes blew away the paper as the printer spit it out. Lemme know if the Mercedes happens to drive in to your town!!!
ps: And the Green Square shined in the reflected glory of the Green Star (or was it the other way around? Let's find out, shall we?)
Sunday, September 14, 2008
The Indo-US Nuke Deal is History, How About an Indo-Pak Kashmir Deal?
The Indo-US Nuke Deal is History, How About an Indo-Pak Kashmir Deal?
Ganga Prasad G. Rao
http://myprofile.cos.com/gangar
Now that the nuke deal is done, may we breathe again? That would be like Dr. Manmohan Singh playing the fiddle with Kashmir burning. There are many who would agree that we had our priorities wrong in dealing first with the US while the Dal lake (and lately, our metropolises) turned crimson with blood from planned mayhem. The Kashmir problem has proved a curse for India over the decades since Independence. Despite two wars, loss of thousands of civilians and military personnel, and billions in various aid packages, Kashmir continues to be a proverbial thorn in the flesh for India and Pakistan, costing both nations a significant proportion of the GDP in mis-allocated resources and lost economic opportunities. The problem which was barely regional in dimension, has festered in to a geopolitical crisis with ramifications both for internal security, and for international relations with China, US and nuclear treaties (not to mention the ever-elusive 'peace dividend'!). The present policy of military policing of Kashmiri civilians and a focus on cross-border terrorism has been a resounding failure. Political declarations of success notwithstanding, bilateral accords, including the Simla pact, typically lasted at most through the end of the government term. Their unpopularity was revealed both by the defeat of the leaders at the polls and frequent riots, rebellion, terrorist activity and the like that have been engendered since inking the pact. So what are our options? A 'laissez faire' policy can only mean more of the same: more infiltration, more terrorist attacks, more 'Kargils', more bombing in city centers and markets, and rivers of wasted resources tinged with the blood of our brave jawans, Kashmiris and civilians across the length and breadth of our nation – a terrifying prospect and a future we simply cannot accept for our children. Time indeed for an 'out of the box' solution.
The Kashmir issue could be conceptualized as the re-assertion of territorial rights by the historically majority religious community who seek to translate that in to sovereignty from India. In this regard, it has the explicit support of Pakistan which has supported an independent Kashmir despite holding on to POK, an integral part of a Kashmir solution. India, on the other hand, seeks to enforce its interpretation of property rights as followed from the acquisition of J&K from the royals who ruled prior to Independence from the British. These differing views of territorial (religious and majority) rights are being enforced to extents dictated by military might, political necessities, besides religious and majority might. Frankly speaking, I have never been too kind to any one side in the Kashmir tangle. Despite all our military prowess and defence purchases, Kashmir will never be resolved militarily. I believe each party to the strife can and should be more accommodative of the views of other stakeholders. And, given the circumstances, a compromise is both necessary and the only feasible solution. But where is the elusive 'think out of the box' compromise?
There are four cornerstones to the 'Rao Compromise on Kashmir': a stable peaceful and democratic Kashmir, the avoiding of partition-type violence and mass-displacement of minorities, a participative legislative role for both India and Pakistan, and an overriding military role for international organizations. Under an UN-sponsored 'Statehood dialogue', India and Pakistan would sponsor a Greater Kashmir comprising of both the Indian Kashmir and the POK. Citizens would be offered dual citizenship, either Kashmiri and Indian, or Kashmiri and Pakistani, with restricted rights of movements in India and Pakistan respectively. A proportional representation constitution would be framed with a tri-cameral house. A third of the seats would be allotted to UN representatives and other international political and military organizations on a 'nomination basis', thus offering them a political, (budgetary) and military stake in the state. India and Pakistan would together control a third of the seats, again on a nomination basis. Both nations would be free to choose representatives from within or outside their part of Kashmir. The exact split between India and Pakistan in the combined one-third share of the House would depend on how much they would be willing to offer to Greater Kashmir in terms of budgetary support. Kashmiris would elect representatives for a third of the assembly seats. Political parties would then seek a majority to form the government by approaching Indian and/or Pakistani benches and minorities. The government would control various ministries and the Police, while the UN would take over the military function of the state, securing its borders and facilitating orderly cross-border flow of goods and people. Given the tri-cameral and sponsored nature of the House, different sections of the House would have different voting rights depending on context and scope. Certain decisions regarding changes to constitution, property rights, religious rights, territorial integrity, and minority rights would require at least a four-fifth majority in the House, and in particular the endorsement of the UN, thus enforcing the wishes of the sponsor nations and the will of the international community on those critical matters.
Despite its seeming frivolousness, this 'rabbit out of the hat' solution is likely a superior compromise because it provides a 'meet you half-way' solution between traditional enemies. It affords Kashmiris a much greater degree of territorial rights and self-governance than under a divided Kashmir. A restricted system of dual citizenship offers Kashmiris the opportunity to integrate with the people of their choice; it ensures the safety of minority citizens on either side of the LOC and pre-empts partition-type mass displacement and strife. The compromise proposal offers India and Pakistan an opportunity to shape the destiny of a Greater Kashmir by offering them a legal means to participate in the formation of the state and its governance. Sponsoring the state of Greater Kashmir will reduce tensions and defence expenditures, enabling both nations to divert scarce resources away to more productive ends that enhance the quality of life of its citizens. Reduction in geopolitical tension will reduce terrorism, improve business climate and in turn pave the way for enhanced foreign investment and overall prosperity. Unlike other solutions where they are often relegated to a peace-keeping role that drains resources and inflicts personnel losses, the UN, in this proposal, has a political role beyond its traditional commitments to international peace-keeping. This offers the international community a direct stake in securing regional peace and enhances the credibility of the solution.
Got a better idea?
Ganga Prasad G. Rao
http://myprofile.cos.com/gangar
Now that the nuke deal is done, may we breathe again? That would be like Dr. Manmohan Singh playing the fiddle with Kashmir burning. There are many who would agree that we had our priorities wrong in dealing first with the US while the Dal lake (and lately, our metropolises) turned crimson with blood from planned mayhem. The Kashmir problem has proved a curse for India over the decades since Independence. Despite two wars, loss of thousands of civilians and military personnel, and billions in various aid packages, Kashmir continues to be a proverbial thorn in the flesh for India and Pakistan, costing both nations a significant proportion of the GDP in mis-allocated resources and lost economic opportunities. The problem which was barely regional in dimension, has festered in to a geopolitical crisis with ramifications both for internal security, and for international relations with China, US and nuclear treaties (not to mention the ever-elusive 'peace dividend'!). The present policy of military policing of Kashmiri civilians and a focus on cross-border terrorism has been a resounding failure. Political declarations of success notwithstanding, bilateral accords, including the Simla pact, typically lasted at most through the end of the government term. Their unpopularity was revealed both by the defeat of the leaders at the polls and frequent riots, rebellion, terrorist activity and the like that have been engendered since inking the pact. So what are our options? A 'laissez faire' policy can only mean more of the same: more infiltration, more terrorist attacks, more 'Kargils', more bombing in city centers and markets, and rivers of wasted resources tinged with the blood of our brave jawans, Kashmiris and civilians across the length and breadth of our nation – a terrifying prospect and a future we simply cannot accept for our children. Time indeed for an 'out of the box' solution.
The Kashmir issue could be conceptualized as the re-assertion of territorial rights by the historically majority religious community who seek to translate that in to sovereignty from India. In this regard, it has the explicit support of Pakistan which has supported an independent Kashmir despite holding on to POK, an integral part of a Kashmir solution. India, on the other hand, seeks to enforce its interpretation of property rights as followed from the acquisition of J&K from the royals who ruled prior to Independence from the British. These differing views of territorial (religious and majority) rights are being enforced to extents dictated by military might, political necessities, besides religious and majority might. Frankly speaking, I have never been too kind to any one side in the Kashmir tangle. Despite all our military prowess and defence purchases, Kashmir will never be resolved militarily. I believe each party to the strife can and should be more accommodative of the views of other stakeholders. And, given the circumstances, a compromise is both necessary and the only feasible solution. But where is the elusive 'think out of the box' compromise?
There are four cornerstones to the 'Rao Compromise on Kashmir': a stable peaceful and democratic Kashmir, the avoiding of partition-type violence and mass-displacement of minorities, a participative legislative role for both India and Pakistan, and an overriding military role for international organizations. Under an UN-sponsored 'Statehood dialogue', India and Pakistan would sponsor a Greater Kashmir comprising of both the Indian Kashmir and the POK. Citizens would be offered dual citizenship, either Kashmiri and Indian, or Kashmiri and Pakistani, with restricted rights of movements in India and Pakistan respectively. A proportional representation constitution would be framed with a tri-cameral house. A third of the seats would be allotted to UN representatives and other international political and military organizations on a 'nomination basis', thus offering them a political, (budgetary) and military stake in the state. India and Pakistan would together control a third of the seats, again on a nomination basis. Both nations would be free to choose representatives from within or outside their part of Kashmir. The exact split between India and Pakistan in the combined one-third share of the House would depend on how much they would be willing to offer to Greater Kashmir in terms of budgetary support. Kashmiris would elect representatives for a third of the assembly seats. Political parties would then seek a majority to form the government by approaching Indian and/or Pakistani benches and minorities. The government would control various ministries and the Police, while the UN would take over the military function of the state, securing its borders and facilitating orderly cross-border flow of goods and people. Given the tri-cameral and sponsored nature of the House, different sections of the House would have different voting rights depending on context and scope. Certain decisions regarding changes to constitution, property rights, religious rights, territorial integrity, and minority rights would require at least a four-fifth majority in the House, and in particular the endorsement of the UN, thus enforcing the wishes of the sponsor nations and the will of the international community on those critical matters.
Despite its seeming frivolousness, this 'rabbit out of the hat' solution is likely a superior compromise because it provides a 'meet you half-way' solution between traditional enemies. It affords Kashmiris a much greater degree of territorial rights and self-governance than under a divided Kashmir. A restricted system of dual citizenship offers Kashmiris the opportunity to integrate with the people of their choice; it ensures the safety of minority citizens on either side of the LOC and pre-empts partition-type mass displacement and strife. The compromise proposal offers India and Pakistan an opportunity to shape the destiny of a Greater Kashmir by offering them a legal means to participate in the formation of the state and its governance. Sponsoring the state of Greater Kashmir will reduce tensions and defence expenditures, enabling both nations to divert scarce resources away to more productive ends that enhance the quality of life of its citizens. Reduction in geopolitical tension will reduce terrorism, improve business climate and in turn pave the way for enhanced foreign investment and overall prosperity. Unlike other solutions where they are often relegated to a peace-keeping role that drains resources and inflicts personnel losses, the UN, in this proposal, has a political role beyond its traditional commitments to international peace-keeping. This offers the international community a direct stake in securing regional peace and enhances the credibility of the solution.
Got a better idea?
Thursday, July 3, 2008
NUKE THE ......WAIT!!!! THERE IS HOPE YET!
NUKE THE ......WAIT!!!! THERE IS HOPE YET!
Ganga Prasad G. Rao
http://myprofile.cos.com/gangar
As described by one writer, the Indo-US nuclear deal has seen a path more tortuous than the meandering of deltaic rivers. Yet, as the Bush presidency comes to a close and the UPA government totters at the precipice of inflation and mis-governance, the Indo-US nuclear deal stands out as the one hope in the monsoon of despair. Not that it has been supported within or outside the government. For once, the Left has kept its word, at least on paper. Predictably, it has backed away from the deal when it matters the most. Thankfully, that was no surprise! Manmohan Singh's government now faces the prospect of pushing the deal down the unwilling throats of the BJP and the Left by garnering support from the third-tier parties and marginalized/regional political parties and dissenting members of various political parties. So much for a national consensus on a issue that arguably ranks as one of more important events since Independence.
Much of our argument and debate on this issue has centered around the discriminatory nature of the NSG rules, the ambiguity in the interpretation of the Hyde Act and the power it confers upon the President of US to abrogate the treaty unilaterally merely by not certifying compliance to the Congress. Our approach has been, if anything, aloof, while the US has made repeated overtures that we have misinterpreted as their overzealousness to pull us in to their ranks. Far from being constructive, we have used every tool in the bag of our politicians and bureaucrats to try and hoodwink the US in to granting ourselves a virtual 'equal' status – a status belied by our past record in nuclear compliance, intellectual property(?) and nuclear safety. I am not one who believes in the '6 month window of opportunity' rhetoric advanced by some. A deal should not be rushed through in the lame duck session of governments talking nuclear peace, especially when one government would rather not face the parliamentary vote.
Yet, the fact that we are not overtly friendly to the US need not stop us from being creative and pro-active. If we are interested in a nuclear deal with countries that pioneered and commercialized nuclear technology, we could recognize their contribution to nuclear science and peace. We could, indeed should, recognize and buy in to their nuclear technology patents if that is possible. We should sponsor conferences and join nuclear research coalitions without waiting for the formalities to conclude, perhaps without even expecting its successful conclusion. India could invite senior nuclear scientists and policy makers of IAEA and the NSG club to take part in 'Meet the Public' face-offs that pit our 'technocrats' against them at televised public meetings. (If the nuclear issue does not evoke public interest, I wonder what else will? Belles walking the ramp on the news channel?) Is our democracy limited to articles written by AERB and DAE officials that tow the official line (or, if they take the opposite line, with tacit official agreement)? Are we merely a 'cry baby' nation that seeks the attention and warmth of the developed world and suckles at its nuclear breast?
Let's do something different. Like go one step ahead of the US and nuclear club and propose a serious mechanism for nuclear disarmament - something they would rather not discuss. By that I don't mean another white paper with pious legalese of the bureaucrats raising the principles of 'Panchsheel' from the dustbin. Why not confront disarmament and commercial trade in nuclear fuel, both issues dear to us, in the nuclear deal? After all nuclear power and disarmament on one hand, and nuclear power and global warming are related if not close cousins, if you know what I mean. Let's propose a different deal – a deal that links disarmament, commercial trade in nuclear fuels and CO2 abatement goals together. Properly designed such a deal could offer nations, belonging to the nuclear club and those outside it the incentive and the flexibility to engage either in disarmament, or carbon abatement, or both, to gain the right to reprocess more fuel and/or engage in commercial nuclear trade as permitted by their resources, technology, and political leanings.
Innovative? Yes, Practical? Sure. Turns the earth greener and safer? Yes! What are we waiting for?
Ganga Prasad G. Rao
http://myprofile.cos.com/gangar
As described by one writer, the Indo-US nuclear deal has seen a path more tortuous than the meandering of deltaic rivers. Yet, as the Bush presidency comes to a close and the UPA government totters at the precipice of inflation and mis-governance, the Indo-US nuclear deal stands out as the one hope in the monsoon of despair. Not that it has been supported within or outside the government. For once, the Left has kept its word, at least on paper. Predictably, it has backed away from the deal when it matters the most. Thankfully, that was no surprise! Manmohan Singh's government now faces the prospect of pushing the deal down the unwilling throats of the BJP and the Left by garnering support from the third-tier parties and marginalized/regional political parties and dissenting members of various political parties. So much for a national consensus on a issue that arguably ranks as one of more important events since Independence.
Much of our argument and debate on this issue has centered around the discriminatory nature of the NSG rules, the ambiguity in the interpretation of the Hyde Act and the power it confers upon the President of US to abrogate the treaty unilaterally merely by not certifying compliance to the Congress. Our approach has been, if anything, aloof, while the US has made repeated overtures that we have misinterpreted as their overzealousness to pull us in to their ranks. Far from being constructive, we have used every tool in the bag of our politicians and bureaucrats to try and hoodwink the US in to granting ourselves a virtual 'equal' status – a status belied by our past record in nuclear compliance, intellectual property(?) and nuclear safety. I am not one who believes in the '6 month window of opportunity' rhetoric advanced by some. A deal should not be rushed through in the lame duck session of governments talking nuclear peace, especially when one government would rather not face the parliamentary vote.
Yet, the fact that we are not overtly friendly to the US need not stop us from being creative and pro-active. If we are interested in a nuclear deal with countries that pioneered and commercialized nuclear technology, we could recognize their contribution to nuclear science and peace. We could, indeed should, recognize and buy in to their nuclear technology patents if that is possible. We should sponsor conferences and join nuclear research coalitions without waiting for the formalities to conclude, perhaps without even expecting its successful conclusion. India could invite senior nuclear scientists and policy makers of IAEA and the NSG club to take part in 'Meet the Public' face-offs that pit our 'technocrats' against them at televised public meetings. (If the nuclear issue does not evoke public interest, I wonder what else will? Belles walking the ramp on the news channel?) Is our democracy limited to articles written by AERB and DAE officials that tow the official line (or, if they take the opposite line, with tacit official agreement)? Are we merely a 'cry baby' nation that seeks the attention and warmth of the developed world and suckles at its nuclear breast?
Let's do something different. Like go one step ahead of the US and nuclear club and propose a serious mechanism for nuclear disarmament - something they would rather not discuss. By that I don't mean another white paper with pious legalese of the bureaucrats raising the principles of 'Panchsheel' from the dustbin. Why not confront disarmament and commercial trade in nuclear fuel, both issues dear to us, in the nuclear deal? After all nuclear power and disarmament on one hand, and nuclear power and global warming are related if not close cousins, if you know what I mean. Let's propose a different deal – a deal that links disarmament, commercial trade in nuclear fuels and CO2 abatement goals together. Properly designed such a deal could offer nations, belonging to the nuclear club and those outside it the incentive and the flexibility to engage either in disarmament, or carbon abatement, or both, to gain the right to reprocess more fuel and/or engage in commercial nuclear trade as permitted by their resources, technology, and political leanings.
Innovative? Yes, Practical? Sure. Turns the earth greener and safer? Yes! What are we waiting for?
Thursday, June 5, 2008
The Great Indian Tamasha!
THE GREAT INDIAN TAMASHA!
Ganga Prasad G. Rao
http://myprofile.cos.com/gangar
The hot Indian summer bears down upon New Delhi remorselessly. (And we thought there was nothing worse than Police torture!) But in the air-conditioned building that houses the Ministry of Petroleum and Natural Gas, the esteemed Minister could not control his glee. Times have never been better. Imagine playing God with the various sectors of the Indian economy. In these days of rising demand for energy, the government, through its PSUs or royalty-in-kind shares, owns much gas that it rations (the correct term is 'gas allocation') to consuming industries. And pray, who else but the Minister has the power to make those delicate decisions with acumen that only comes with years of honing one's political skills?
There are, after all, many a factor to consider in allocating gas. The fertilizer sector provides a vital input to the agricultural sector – a sector that cannot be ignored lest farmers turn against the government en masse at the ballot box. But the steel industry is insistent that they be allocated gas preferentially. We are an export industry, they say. The executive from the fertilizer industry association counters it by pointing out the need for raising agricultural productivity, now wallowing in the low single digits. But steel is vital to a country's infrastructure. And if infrastructure is the mainstay of Indian economy, then gas should be offered preferentially to steel. Hmm, true indeed, but infrastructure is built over years, while elections are tomorrow. Besides, the Secretary from the Agriculture Ministry just called up to impress that fertilizer plants are built to utilize gas and must be allocated gas if agricultural targets are to be met. But fertilizer subsidy targets have already been reached and breached. Confusion confusion confusion. Time for a chai. “Arre bhai, chai lana”.
“Saab, Ratan ji se chai”!
Chai notwithstanding, the Minister is perplexed. Did GAIL respond to our directive to increase gas production? And Reliance wouldn't cooperate with more gas? Why? Why didn't the steel trade union leaders call in? I'd have allocated another 'mmscmd' to them. Ratan should know that much! And where are the fertilizer and steel plants located? Did those constituencies vote UPA? How in the world do I juggle Madam Gandhi's CMP, Manmohan's promises, Planning Commission per-capita targets, and Chidambaram's subsidy budget while currying favors with Ratan Tata and fertilizer bigwigs with this amount of gas supply? Wha....What are you suggesting? Leave gas production, pricing and 'allocation' to the market?
And take the fizz out of the 'Great Indian Tamasha'?
ps: The dust gathers on World Bank's recommendations on structural reforms in the Indian economy.
Ganga Prasad G. Rao
http://myprofile.cos.com/gangar
The hot Indian summer bears down upon New Delhi remorselessly. (And we thought there was nothing worse than Police torture!) But in the air-conditioned building that houses the Ministry of Petroleum and Natural Gas, the esteemed Minister could not control his glee. Times have never been better. Imagine playing God with the various sectors of the Indian economy. In these days of rising demand for energy, the government, through its PSUs or royalty-in-kind shares, owns much gas that it rations (the correct term is 'gas allocation') to consuming industries. And pray, who else but the Minister has the power to make those delicate decisions with acumen that only comes with years of honing one's political skills?
There are, after all, many a factor to consider in allocating gas. The fertilizer sector provides a vital input to the agricultural sector – a sector that cannot be ignored lest farmers turn against the government en masse at the ballot box. But the steel industry is insistent that they be allocated gas preferentially. We are an export industry, they say. The executive from the fertilizer industry association counters it by pointing out the need for raising agricultural productivity, now wallowing in the low single digits. But steel is vital to a country's infrastructure. And if infrastructure is the mainstay of Indian economy, then gas should be offered preferentially to steel. Hmm, true indeed, but infrastructure is built over years, while elections are tomorrow. Besides, the Secretary from the Agriculture Ministry just called up to impress that fertilizer plants are built to utilize gas and must be allocated gas if agricultural targets are to be met. But fertilizer subsidy targets have already been reached and breached. Confusion confusion confusion. Time for a chai. “Arre bhai, chai lana”.
“Saab, Ratan ji se chai”!
Chai notwithstanding, the Minister is perplexed. Did GAIL respond to our directive to increase gas production? And Reliance wouldn't cooperate with more gas? Why? Why didn't the steel trade union leaders call in? I'd have allocated another 'mmscmd' to them. Ratan should know that much! And where are the fertilizer and steel plants located? Did those constituencies vote UPA? How in the world do I juggle Madam Gandhi's CMP, Manmohan's promises, Planning Commission per-capita targets, and Chidambaram's subsidy budget while currying favors with Ratan Tata and fertilizer bigwigs with this amount of gas supply? Wha....What are you suggesting? Leave gas production, pricing and 'allocation' to the market?
And take the fizz out of the 'Great Indian Tamasha'?
ps: The dust gathers on World Bank's recommendations on structural reforms in the Indian economy.
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