you cant eat the cake and have it too..

So far I have voted two times in my life for government elections- once for assembly elections and second time for Parliament elections. But since I have a deep interest in reading and knowing stuff related to politics I read a lot on this subject. I have always thought why politicians use petty issue like religion, communism, caste etc and on based on these sentiments they try to win elections? Don’t they have self conscience? But today I got an almost same analogy and I understood the concept in a better sense. Today we had elections for selection of Student Council President and Coordinators for various committees in our college. Even in this highly educated class of MBA’s, issue of casting votes according to class sections raised significantly. It was looking as if section A were fighting against section B or C. Can’t they understand there is much to life beyond a small section boundary? And here I got answers for my earlier questions - When people can raise this section thing just to win a small election what’s wrong if politicians raise such divisive issues to win Parliament or Assembly elections where stacks are really very high. Next thing is even worse - why do people vote for such politicians; why do we constantly select people with corruption and criminal records? When it comes to shouting about the problems we have to face due to poor functioning of government, our people will be in front shouting against government but when time to choose good representative comes they will decide with a MY perspective in mind. Instead of going by merit; people go for - My caste, my religion, my boli (language), my section. We people are big hypocrites; while choosing our representative we will ask for MY, but while looking for performance we want best quality. “cake ko ya to kha lo ya bacha lo- dono kaam ek sath to nhi ho skte.”

who says we learn from history?

Protectionism as a policy is one of those policies which had hurt economies all over the world very severely. But the sad part is people get a feeling that by applying protectionism, government is doing them a favour. Take a recent example of USA government which is putting a condition on bailout companies to take only Americans as their employees (Big story in today’s newspapers on cutting H-1B Visa).

In a way government is saving its people and organizations by providing them a shelter. But what about the cost that the organizations has to take in the form of increased payment (more people would have created an excess of supply and decrease in wages) and loss of quality (less people to select from; leaving talented migrated people), and that too at a time when any organization needs these two things the most.This way USA is protecting economy or digging the hole further?

This reminds me of July ’08 when food prices were on their peak due to shortage of food grains. It so happens that one part of world (which is a significant player in that grain market) may not be able to produce grains due to any reason say drought for argument sake. Now there is a shortage of that particular grain in world market. Prices of that grain starts shooting up and other grains (substitute goods effect) also catch up soon. Countries start feeling scarcity of grains; they tend to go for the policy of protectionism and don’t send their own production out in order to protect their interests. But this creates more scarcity outside and further increase in the prices. Hence other nations also follow the suit (protectionism), and in the process drag market for that commodity into deep trouble. This is exactly what happened which started with Australia where continuous drought for 7 years reduced rice production by around 60-70%. At a time when all economies were supposed to come together and take steps, they were busy in forming protectionism policies for their countries.

Now USA is repeating the same mistake. Who says we learn from history?

Building Infrastructure is NOT a solution to current recession

Governments all over the world are mulling various options to overcome recession. Building infrastructure is candy of eye of all the governments as the solution. . J.M. Keynes, in his book ‘General Theory of Employment, Interest and Money’ argued about the relationship between production, wages and employment. According to Keynes, purchasing power in the hands of people was the most crucial factor for the economy to revive. He suggested that government should pump in money because no private investor would be interested to take risk in turbulent times.
Although the benefits to economy from building the infrastructure cannot be neglected but I have reservations about whether it is a solution to recession. In earlier time (when Keynes has given his theory), building infrastructure was labour intensive. But today it is highly mechanised, using little labour. Dams, power plant, airport, roads etc are capital intensive these days, not labour intensive. With today’s technology, building infrastructure is not a big job creator unless we insist on inefficient, obsolete techniques, a mistake that government of India had committed when it stipulated that 60% of cost of building road under NREGA (National Rural Employment Guarantee Scheme) should go to wages. As a result, we got low quality roads which disappear almost after every monsoon. This approach of forcing the mechanism of building infrastructure can never create good infrastructure.
Also, normally infrastructure projects have a long incubation period. So they have their own time in disbursing money and hence cannot provide Keynesian boost.

social service- what is that?

Today I finished reading Ayn Rand’s Atlas Shrugged. The astounding story of a man who said that he would stop the motor of the world- and did. Tremendous in scope, breathtaking in its suspense, this book is one of the finest books I have read. It is my second book from Ayn Rand and the bad news is that she has written only two fiction books (leave her first attempt towards it- Anthem). What a writer she is! The way she portrays her characters, the way she puts the philosophy through the characters and the way she describes each and every event in detail is just superb. One thing which separates her from normal motivational writers like Robin Sharma, is the way she puts her messages across. She doesn’t throw her preaching directly on the face of reader; instead she builds the way towards it. Whereas her first book Foutainhead was on the theme of invidualism v/s collectivism; this book Atlas Shrugged is on the theme of capitalism. The theme tears off all the veils of the tag of social purpose which people put to protect evil means only. According to her, the true social service is to acquire the expertise in your area of working and hence provide the benefit of efficiency instead of some fancy social service. The ideas and concerns expressed in the book are very much relevant even today although this book was published for the first time in 1957. These days social servicing has become more of a PR activity than a social service. The latest buzz word is CSR ( Corporate Social Responsibilty). Most of the organizations today assign big budget for CSR basically not to remain behind in some kind of high service to society and also it gives a lot of free publicity. With this kind of a huge budget, companies, I think, can do a better service to society by keeping their cost and prices at minimum level. Ultimately where does all this money come from and if saved where will it go in form of less prices? Of course, to the society.