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[Continued from Part 3.] Give me six hours to chop down a tree and I will spend the first four [...]

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19. Dec ‘05 11:19 [...]

Also, on your other point regarding privatization. The success of private telecom and airline players may prove the point that “competition” helps, by providing the customer a wider choice, reduced cost and increased efficiency. But you haven’t made out a case yet that the success was due to “privatization”. With evolution and march of technology certain positive developments were inevitable, with or without privatization. Consider these counter- examples :

1) Not Hindustan Motors with its Ambassadors , not Premier Auto with their Padminis, but it was the public sector Maruti Udyog which brought in new levels of cost efficiency and quality into car manufacture.

2) Ashok Leyland and Telco, both private sector companies, had a free run in the last 4-5 decades and divided the market for bus/lorries between them. Except for a few cosmetic changes, these companies did precious little to innovate or come out with better designs. The bus owner/traveler has seen practically no improvement in comfort, fuel efficiency or aesthetics. In contrast, Indian Railways though functioning as a Govt monopoly has made genuine efforts at enhancing passenger comfort.

3) For decades, Bajaj Auto, an icon of the private sector, thrived on the shortage in the market and refused to ramp up production. Though they kept the ex-factory cost low, they let a black market for scooters flourish.

4) The inefficiency in the power sector is well-documented , yet you can find a BHEL-supplied plant at Vijayawada commissioned in good time and operating at excellent plant load factors, without any incentive or the fear of competition

5) There are several companies in Singapore, Malaysia and Italy, for example, which are Govt owned and which have been performing very well.

My point is that Govt. can do equally well if it brings in an element of competition ( either among its own institutions or with private players) and if it gives these companies a long rope..

2.I don’t agree with either the American commentators or LKY that the inability to be flexible would in any way mar China’s capacity to handle conflicts. And I don’t think that India has managed to handle conflicts any better. Invariably all conflicts howsoever severe are replaced by worse ones and all put in a cold deep storage.

To me, problems in China that result from its high growth rate, like “massive layoffs in the rust-belt provinces, arbitrary local levies on farmers, pervasive official corruption, and toxic industrial dumping”,are purely material ones and even a rigid political system with no freedom of speech can easily handle them.

Culture and Politics have actually no bearing on the economics of a nation, essentially at least. That’s why one keeps on repeating the fact that Politics should keep away from Business. Politics is totally unnecessary to business, and since politicians and politics are so all powerful, whether in a democracy or a dictatorship, our secret and cunning strategy must be, as should our blatant and transparent one be to cajole politicians and politics, to make, of their own volition, policies that keep them away from our economy and businesses.