Stuff is no doubt at the bottom. But without ideas that raw stuff is useless. You may have an oil well underneath your land. Until the technology came into being for extracting and using that oil to some end, you were out of luck. All the raw ingredients in the world will be of little value until you have the recipe. Ideas are the recipe that make something out of the stuff that nature provides.

Ideas have two important characteristics that differentiate it from stuff. First, ideas are non-rival in use, whereas stuff is rival in use. When I consume some amount of stuff, the total amount of stuff available for others to consume grows down. My gain is your loss, given a fixed amount of stuff. But if I use an idea, it does not reduce the total stock of ideas available for others to use.

The other thing about ideas is that they are built upon simpler ideas. Any idea, except for the most basic (the primitives, so to speak) is a combination of other, simpler ideas. So as the stock of ideas grows, the set of potential ideas that are combinations of the elements of the current stock increases exponentially. Of this set of potential ideas, only some will be brought into existence by minds that are sufficiently prepared. That “sufficiently prepared” implies that minds have to understand, or internalize, at least a subset of the existing stock of ideas. In other words, you don’t have to re-invent the idea of a wheel. But you have to know that there is a such a thing—an idea—as a wheel and then you can go on to combine it with the idea of a lever to come up with a complex idea, the wheelbarrow.

No one of us is sufficiently smart to come up with all the ideas all on our own. Even if we were that smart, we are given only a finite amount of time on this mortal plane. Fortunately, ideas are non-rival and therefore ideas invented elsewhere and whenever are available for us to use, provided we are sufficiently smart to adopt them. Anyone anywhere can use the decimal system of arithmetic invented centuries ago by Indian mathematicians. Anyone anywhere can use Einstein’s relativity theory, or Darwin’s theory of evolution through natural selection. Once discovered, an idea is forever.

And from part 2 of Stuff and Ideas:

Economic growth and development is inevitable if human resources are valued appropriately. Conversely, economic growth and development is impossible if human resources are not valued. Let me repeat that: if the set of policies puts human resources center-stage, then it is most likely to work. Otherwise they are doomed to fail sooner or later.

So what are human resources? Before the advent of the industrial age, human resources definitely referred to human labor alone. Human muscle power augmented to some degree with animal muscle power was an important factor of production. But with advances in science and technology, came the increasing ability to harness non-muscle power. There was a shift in the balance of power, so to speak. While the muscles became increasingly less useful, brains began to become more useful in the production process.

There is a sort of poetic justice in this story of the ascendancy of brains over brawn made possible by better science and technology. After all, it was brains that created the science and technology, not brawn. So now in this post-industrial age, human resources basically refers to trained human brains.

I’ll be back with some thoughts on education in a bit. Be well, do good work, and keep in touch.

Benevolent and Predatory Governments

One can assume that the government is comprised of enlightened politicians whose altruistic objective is to maximize social welfare. In other words, the government is benevolent. Or one can take the more realistic albeit extreme position that governments are run by self-interested people whose venality compels them to maximize their private gains at the cost of social welfare. In short, the government is predatory. Still, depending on how long the time horizon of their predation is, predatory governments can be classified into “roving bandits” or “stationary bandits.” The former have a short-term outlook and do not “cultivate” the private economy to maximize their loot. Part of that strategy would be to steal the resources that would have provided public goods. In contrast, the stationary bandit would attempt to maximize the total output of the economy all the better to extract the most over a longer time horizon by providing public goods that complement private goods and private effort.

One can reasonably conclude that in India’s colonial British government was mostly predatory with a short planning horizon and was not benevolent. The interesting question is whether the governments after political independence were roving bandits or stationary bandits. Because India is a democracy of sorts where governments get voted out of office, it imposes a severe endogenously determined short planning horizon and therefore the governments are forced to play the roving bandit role. This could partly explain the lack of adequate amounts of public goods. Any government could reason that there is no point in spending money on public goods instead of just stealing the resources if the rewards of using public resources to provide public goods end up enriching some successor bandit government. This is the classic tragedy of the commons scenario.

Go read it all.

Pakistan has long proved to be adept at diplomatically levering its weakness into strength. Now it is using the threat of its possible implosion to rake in record-level bilateral and multilateral aid.

Bountiful aid has been pouring in without any requirement that Pakistan address the root cause of its emergence as the epicentre of global terrorism — a state-instilled jihad culture and military-created terrorist outfits and militias. Even though the scourge of Pakistani terrorism emanates not so much from the Islamist mullahs as from generals who reared the forces of jihad, rewards are being showered on the procreators of terrorism.

The Pakistani-scripted Mumbai terrorist attacks, far from putting Islamabad in the international doghouse, have paradoxically helped open the floodgates of international aid, even if involuntarily. Between 1952 and 2008, Islamabad received over $73bn as foreign aid, according to Pakistan’s Economic Survey. But in the period since the Mumbai strikes, the amount of aid pledged or delivered to Pakistan has totalled a staggering $23.3bn. This figure excludes China’s unpublicised contributions but includes the IMF’s $7.6bn bailout package, released after the Mumbai attacks.

Just last week, Islamabad secured some $5.2bn in new aid at a donors conference — the first of its kind for Pakistan. At that conference, host Japan and America pledged $1bn each, while the EU promised $640 million, Saudi Arabia $700 million, and Iran and the UAE $300 million each. [Emphasis added.]

Chellaney says, “put simply, Islamabad is being allowed to reap a terrorist windfall.” I would make a stronger assertion: that Pakistan is being rewarded precisely because it promotes terrorism against India.

But the global jihadi terrorism of the type that Pakistan promotes is a more recent phenomenon than the pouring of aid into Pakistan. The explanation of why Pakistan gets enormous amounts of aid is clearly to keep India engaged in a bloody dollar auction game. Of course, Islamic terrorism against India is another arrow in Pakistan’s quiver and it makes Pakistan a lot more lethal to India. Which is why every act of Pakistani Islamic jihadi terrorism against India is rewarded by the US and its allies (which, in this context, included China).

Go read the chilling article by Chellaney. He concludes with

The reason Pakistan can harvest tens of billions of dollars by playing the failing-state card is no different from what endeared it to US policy since the 1950s or made it an “all-weather ally” of China. Pakistan remains too useful a pawn for external powers involved in this region. These powers thus are unlikely to let it fail, even as they play up the threat of implosion to bolster the Pakistani state. It’s no wonder Pakistan seems determined as ever to pursue its “war of a thousand cuts” to turn India — with its aging, toothless leadership — into a failed state.

If you have been following the story of aid to Pakistan from a set of nations called “The Friends of Pakistan”, you know the drill. In a Sept 2008 post, “Why Pakistan is Useful Just the Way it is“, we have a bit more:

The “Friends of Pakistan are “Britain, France, Germany, the United States, China, the United Arab Emirates, Canada, Turkey, Australia and Italy plus the United Nations and the European Union.” Among these are nations — US, China, the Arab states, France, Britain — that give aid to Pakistan. The military component of the aid is what Pakistan uses to initiate and fight bloody wars with India. India, a desperately poor country, cannot afford these costly wars but it has to fight them because the Friends of Pakistan want that India bleeds. Pakistan is the instrument.

I can see the reason why the economic meltdown of Pakistan is certainly not in the interests of the Friends of Pakistan. The biggest dagger stuck in India’s rib would be pulled out and with it will disappear the prospects of selling arms to India, of keeping India engaged in 1,000-year jihads which Pakistan regularly declares against India. The Friends of Pakistan more certainly do not want Pakistan to fail. You too would get worried if the pit bull you have trained for years to attack suddenly is in danger of dropping dead.

The Friends of Pakistan have an interest in keeping the conflict between India and Pakistan alive. Why do I say that? I use the revealed preference argument. Basically it says that by freely choosing something, you reveal what you prefer. If you have the power to choose a “Pakistan Friendly to India” but instead choose a “Pakistan as a Sworn Moral Enemy of India”, you have revealed that you prefer that. I take it is obvious that the Friends of Pakistan could have easily enough told Pakistan that it should stop its belligerence towards India and concentrate on economic development. But they do not and that is why I believe that they have an interest in keeping Pakistan dependent on their money because Pakistan does their bidding.

Please take a look at that post. For your convenience, here’s a bit from it:

Absent the conflict, the Indian subcontinent will develop differently and could in fact become economically prosperous and consequently exert an independent influence on the world. That independent influence could potentially alter the current power structure. As it is, controlling China is out of the question. They have had to make space for China. But they will be damned if India also becomes powerful.

Here’s how I imagine the Friends of Pakistan reasoning:

“Sure, there is a lot of talk in India about India becoming a ’super power.’ (snigger, snigger.) We are fine with India deluding itself into thinking that it is an economic superpower just because it has a lot of software coolies and call center operators. Good for them. It keeps them distracted.

“But let’s not forget that without Pakistan as a mill around India’s neck, India could have a decent shot at actually developing. We cannot afford the disintegration of Pakistan. To keep Pakistan in business is not such a costly affair, in any case. We’re rich enough to chip in a few billion dollars and they will do what we want them to do. The generals are not very expensive anyway. If we had to keep the civilian population happy, it would have been more expensive. But this is much cleaner. We buy the generals and give them shiny new fighter planes and even help with getting them a few nukes to jerk off over. In turn, the generals have the politicians eating out of their hands, and rule the starving population with an iron fist.

“Now let’s just pull together, shall we? The last thing we need is Pakistan disintegrating. We are not always on the same side of the table. But on this one we are as one. Even China needs to be — has to be — on our side. China especially sees the need for containing India. For the greater good, we all, we the Friends of Pakistan, have to make sure that we give just enough to keep the pit bull alive. It should be kept hungry. That dependence on us keeps it obedient to us and savage against India. Remember, not too much though. It should be hungry and mean, not fat and lazy.

“We have plied Pakistan with lots of military hardware. The economic collapse of Pakistan would be disastrous because the same hardware in the hands of the factions within Pakistan would be totally useless against India. It bloody defeats the bloody purpose. That cannot be allowed to happen.”

To be fair, my modeling of a long-lasting global conflict as a dollar auction is just a hypothesis. The model makes predictions and unfortunately all the evidence is consistent with the model’s prediction. This adds confidence in the model’s accuracy.

For more, please see a September 2001 (right after 9/11) post titled “The Looking Glass War” for the beginning of this line of reasoning.

Related posts:

“The Dollar Auction Continues” — Dec 2006.

“Quo Vadis, Pakistan” — Nov 2007.

“The War and the Circus” — Apr 2009.

I did a followup on the information fatness in July 2005 which is worth taking a peek at. Later in October 2005, I explored the necessary consequence of the so-called “information revolution” in an article titled “The Age of Superfluous Information.” I try to distinguish between being information fat and information fit (or healthy.) The follow up to that article I talk about the tradeoff involved between sorting and searching.

In a related post which I did February this year, I distinguish between what I call wide area content (WAC) and narrow area content (NAC). It needs a followup which I think I will do sometime soon.

Yes, I do like that post. So sue me

What have you done to amend the situation, oh armchair intellectual ? Cribbing about the status quo is pointless, if you don’t follow it up with action. If you don’t have a way to put into practice the ideas you espouse, then your ideas are not practical. You seem to have spent a lot of time thinking and writing about “what should be done”, but what have you really done?

I cannot respond to the accusation of being an “armchair intellectual” because I am not sufficiently vain to call myself an intellectual, armchair or not. However, I would like to speak in defense of armchair intellectuals first, then admit that I am basically an armchair critic, then argue why critics are important in the overall scheme of things, and finally explain what I am doing to move beyond just being a mere critic.

The word intellectuals is often used pejoratively by some. They seem to value only activities that appear to move matter on the face of the earth, activities that result in things that you can hold in your hand, take a bite out of, bounce off the walls, see it plainly with unaided eyes. It is born out of a misunderstanding of human nature, human society, human capacity. Humans are primarily distinguished from other life forms on earth by their capacity to think, comprehend the nature of the universe they live in, analyse and solve problems in the abstract, comprehend the notion of time, plan for the uncertain future, etc. What humans produce is not just the result of physical action, but perhaps more importantly it is the result of the cogitation, the non-physical analysing, comprehending, solving and planning which goes on in the background and which superfically appear to be a pointless waste of time.

Ideas matter, both for good and for evil. It is safe to claim that pretty much everything you see around yourself is the result of ideas combined with action. The ideas come out of the intellectualizing of some people. Undoubtedly it isn’t that merely having ideas is sufficient–someone has to translate them into stuff. But ideas are primary, whether they relate to the physical world of objects, or to the abstract world of political economy and psychology. We can do worse than recall the last half of the last paragraph in John Maynard Keynes’s book General Theory of Employment Interest and Money.

” . . . the ideas of economists and political philosophers, both when they are right and when they are wrong, are more powerful than is commonly understood. Indeed the world is ruled by little else. Practical men, who believe themselves to be quite exempt from any intellectual influences, are usually the slaves of some defunct economist. Madmen in authority, who hear voices in the air, are distilling their frenzy from some academic scribbler of a few years back. I am sure that the power of vested interests is vastly exaggerated compared with the gradual encroachment of ideas. Not, indeed, immediately, but after a certain interval; for in the field of economic and political philosophy there are not many who are influenced by new theories after they are twenty-five or thirty years of age, so that the ideas which civil servants and politicians and even agitators apply to current events are not likely to be the newest. But, soon or late, it is ideas, not vested interests, which are dangerous for good or evil.”

Keynes confined his opinion to the ideas of the worldly philosophers (academic scribblers, as he called them) but analogous statements can be made in practically all fields of human endeavor.

Consider an intellectual such as James Clerk Maxwell (1831-1879). Did he build stuff? No, he gave a mathematical formalism to electricity and magnetism. The echoes of his intellectualizing reverbrates through time and touches every aspect of modern society.

A little reflection is all that is needed to realize that intellectuals of all varities — including the armchair ones — matter. How can you tell what is going on inside the brain of an intellectual who is passively sitting in an armchair, and how can you ever imagine what earth-shaking ideas are being formulated within?

I am not an armchair intellectual–I don’t have that brain power. But I believe that I do have the brain power to be a competent critic. Do we need critics? Yes, because we need keen observers to tell us what we may not be fully aware of. The one who tells you that you have spinach stuck between your teeth is a competent critic pointing out something that you need to take action on. Of course, you could berate the fellow and tell him that all he does is point out things but not do anything about it. But then, the critic, at least in this instance, is not empowered to do anything: you are.

We need people (critics) who recognize that things aren’t hunky-dory. Then of course we need people (thinkers) who understand why they aren’t h-d. And then we need people (intellectuals) who know what needs to be done to go from ~(h-d) to (h-d). Finally, we need people (movers) who can do the things that need to be done to effect the actual transformation. It needs all sorts to make a world. It is very rare that you find someone who is good at being a critic, a thinker, an intellectual, and a mover. Good movers build on the work of critics, thinkers, and intellectuals.

One of my fundamental beliefs is that when movers act without basing their actions on the work of competent intellectuals, thinkers, and critics, they quite frequently make things worse. These movers are like the monkey trying to save a fish from drowning by putting it up on a tree. It is very important to comprehend the nature of the problem and only then act on an appropriate set of moves. The Buddha’s directive was clear: First do no harm; then try to do good.

The road to hell, as they say, is paved with good intentions. Very few of the movers who do harm (and their numbers are legion) actually wake up with an evil glint in their eyes and act to make things worse. Most are well-meaning monkeys trying to save fish from drowning. Again, as they say, we should not ascribe to malice what can sufficiently explained as stupidity.

Now on to what is it that I do. I am first of all a critic. Born and brought up in India, I am first and foremost a critic of India because India matters to me. I want it to be better than what it is today. I do believe that India can be better. Next, I try to be a “thinker.” I want to understand why things are the way they are, to understand the root causes of the problems I see around. The time I spent studying economics formally has been of great help to me in this regard. My engineering background had not prepared me for it.

In a few areas that I focused on–namely, rural development and education–I have some tentative solutions. I write and talk about it whenever I get the chance. Most of all, I try to sell my ideas in the marketplace of ideas. Again, as an economist of the neoclassical school, I believe that markets grind out efficient outcomes (subject to conditions, of course) and in the marketplace for ideas, the good ones will survive (subject to some conditions, again.)

Thus I claim that I am a full-fledged “critic,” a somewhat competent “thinker” and a budding “intellectual” as I have defined those types. I am, so far at least, not a “mover.” Can I be a mover? I don’t know. But I am very cautious about making moves. I don’t want to do harm. Most of the time I want to play the role of being a critic, thinker and intellectual to others who are movers. For instance, I have spoken to the movers who are going to implement the Common Service Centers (CSC, a scheme of the eGovernance scheme of the Govt of India). In my capacity as a critic, I think it is a disastrous plan. As a thinker, I have pointed out why it is flawed. I have proposed alternatives.

One area in which I can also be a mover is that of education. But since this post is already so long, I will postpone the discussion for now.

So, coming back to answering Gulab Singh’s question, the answer is that I have not done anything because that is not what my nature — my dharma — is. But as I have argued above, it is not true that only movers add value to society. Even someone like me does have a positive role. They also serve, as the poet said, who only stand and wait.

Here is a thought experiment. Imagine yourself in a commercial jetliner cruising at 500 knots 37,000 feet above the earth’s surface. Who on earth created the contraption which gives you the ability to do something so awesome? Humans. And out of what? Stuff that came out of the earth. You can trace every bit of that plane to its origin, the earth. The metals, the glass, the plastics—you name it—every bit of that aircraft was once in the earth. The raw material has been around for billions of years but only in the last few centuries have humans developed the ability to work the raw materials into sophisticated shapes and forms that extend the reach of humans in unimaginable ways.

Not just commercial jetliners but every human artifact is a combination of raw material and human agency. The computer which I am writing this on—every bit of it was raw material fashioned into a computing device. Everything I see around me – the building I am in, the furniture in this room, the books, the music system, the light bulbs, … the list goes on. Every thing made by humans. But raw materials have existed for billions of years and humans for millions of years. If I were living a million years ago, I would not have all this stuff which enriches my life. I would be poor. Surely, while raw materials and humans are necessary in this whole scheme, it is definitely not sufficient. The magic sauce which completes the recipe is one word: ideas.

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Ideas matter. Over human history, some humans have had ideas on how to do things based on discoveries they or their forbearers made. As the stock of ideas grew, so did the ability of humans to create stuff out of available raw materials increased. Ideas have the peculiar characteristic in that their stock does not diminish from use. Economists call this property “non-rival in consumption.” Ideas multiply the ability of humans to achieve whatever it is that humans desire. The world we live in is one constructed by human will using raw materials—and ideas. What human will can achieve is only limited by the ideas that are available to humans at any point in time. Since there can be no conceivable limit to how large the stock of ideas can become, there is no conceivable limit to what human will can achieve.

To put it another way, every artifact of human endeavor is basically embodied ideas.

Ideas grow on ideas provided sufficient numbers of human minds have access to the stock of ideas. Each individual human life is limited compared to the extended lifetime of human society. No person is smart enough to evolve all the ideas from scratch. Fortunately, each human can potentially take from the stock whatever is best suited to his or her own predilections and build on it.

There is a monotonic increase in the stock of ideas, which of course means that humans collectively know more today than they used to know at any previous time. The wisest person of a thousand years ago did not have access to the stock of ideas that even the average person has today.

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Human welfare depends on ideas. The range is impressive, from meditation to medication and everything in between. The germ theory of disease to the notion that speciation is a consequence of natural selection to the theory of computation to the grand unified theories of the origin of the universe to the notion that the mind and the body are a unity and that they interact and influence each other—all are ideas which have consequences for the well being of people.

Ideas matter. Every object and every institution originated as an idea in some mind. And then it spread to others. It is a marketplace of ideas out there and over time, ideas that confer advantages to those who adopt and use them, survive. The more ideas that enter the noosphere, the more advantage it confers to humans collectively. The sages who composed the Rig Veda recognized this and proclaimed a few thousand years ago, “Let noble thoughts come to us from all universe.”

Ideas are dangerous. They are dangerous because they are harbingers of change which structurally alters society. Those who have a vested interest in the status quo therefore resist new ideas which would dethrone them from their privileged positions that depend on inferior ideas. It is natural for them to prohibit the emergence of ideas however good the ideas may be to general welfare.

To secure their own position, therefore, the strategy adopted is to proclaim that their ideas are the most perfect ones and all other ideas are verboten. Indeed, their insistence on the prohibition of any new ideas is a sure sign that they are not entirely convinced of the superiority of their own ideas. Because if they were so certain of the perfection of their ideas, they would have welcomed competing ideas. Which explains why, for instance, the Catholic church burnt Giordano Bruno at the stake in 1600 CE after incarcerating him for eight years.

Giordano Bruno (1548-1600), was an Italian philosopher and astronomer/astrologer, burned at the stake as a heretic, regarded by some as a martyr to the cause of freedom of thought because his ideas went against the Church doctrine.

Ideas inspire fear. Bruno while receiving his sentence told the Inquisitor, “Perhaps you, my judges, pronounce this sentence against me with greater fear than I receive it.”

Those who are against new ideas are the ones who are afraid that their own ideas are worthless. New ideas, especially those that fundamentally restructure human society, pose the greatest threat to those who have little trust in themselves. One test of a potentially good new idea is to note whether it is opposed by those in power. Burning at the stake, sending people off to gulags, banning books, etc, are time-tested methods of suppressing valuable ideas that threaten the worthless in power.

Societies that encourage the generation of new ideas within and welcome ideas from abroad prosper. The development and growth of societies mirror that of ideas. Institutions, machines, buildings, markets, and a million other things are nothing but embodied ideas.

Ideas arise in human minds. They have to be expressed for them to be conveyed to other human minds. That immediately means that if there are limits placed on the freedom of expression, the increase in the stock of ideas will be curtailed. Worse yet, the good ideas which invariably threaten powerful vested interests will be prohibited and society will lose.

The development and growth of an economy depends on the generation and adoption of good ideas, which in turn depends on the freedom to express ideas. Thus there should not be any limits placed on the freedom of expression for the very practical reason that that freedom has an instrumental role in promoting the development of an economy.

To some, absolute freedom of expression may seem like too much to grant. “Yes, but, shouldn’t there be some limits on what could be expressed?” they may ask. My response is, “Who defines those limits?” Surely the powerful will define those limits, whether individuals or collectives. The record of the powerful in the past when it comes to defining limits has been dismal. Just two examples from the past: the Catholic church and the communists. Every good idea was resisted by those two.

In India, the freedom of expression is severely curtailed. The government is deathly afraid that the truth will come out. Banning of books is only part of the story. The larger story is about what is called “official secrets” which basically shields the powerful from the scrutiny of the people. Politically unpopular views don’t get to see the light of the day. The government censors and prohibits publication of ideas under the guise of “national security.”

India’s development is dependent on absolute freedom of expression.

I don’t think renunciation and self-sacrifice is necessary for a nation to prosper. What is required is the exact opposite — a strong avarice and ambition to promote one’s well-being.

India’s problems are not due a lack of “leaders”. It is due to a lack of people not being allowed to lead themselves. For all your insightful thoughts, you do not seem to be cognizant of this.

I think the comment was in response to the quote from Swami Vivekanand which said:

“Even the least work done for others awakens the power within; even thinking the least good of others gradually instills into the heart the strength of a lion. As you have come into this world, leave some mark behind. Otherwise, what is the difference between you and the trees and stones ? What our country needs are some young men who will renounce everything and sacrifice their lives for their country’s sake. Only such men can do some real work. I too believe that India will awake again, if anyone could love with all his heart the people of the country – bereft of the grace of affluence, of blasted fortune, their discretion totally lost, downtrodden, ever-starved, quarrelsome, and envious. Then only will India awake, when hundreds of large-hearted men and women, giving up all desires of enjoying the luxuries of life, will long and exert themselves to their utmost for the well-being of the millions of their countrymen who are gradually sinking lower and lower in the vortex of destitution and ignorance.”

Swami Vivekanand was no idealistic fool. I think it is worthwhile to read what he actually says very carefully. He is not saying that every person renounce everything. He is not advocating communism. He says that some need to sacrifice for the society as a whole to awake. He says we need hundreds of large-hearted men, not hundreds of millions in a country of hundreds of millions. I will argue here why I agree with Swamiji.

Let me start by asking how many brilliant scientists does a nation need? A few hundred in a nation of a few hundred million would suffice. You really don’t need millions brilliant scientists to meet the needs of the society. Would it not be great if the society of a few hundred million people had a hundred million brilliant scientists? Not necessarily, because a society needs other sorts of people, not just brilliant scientists. Besides brilliant scientists an economy needs brilliant engineers, doctors, business people, actors, authors, programmers, poets, authors, artists, … the list goes on.

A society which consists of millions of poets would be as impoverished as a society of millions of scientists. It is the mix of a lot of small numbers of people brilliant in their respective fields producing whatever that they are good at producing that makes a good society. It is the work of the relatively few brilliant people in their fields that makes the labor of the rest of us non-brilliant people more productive.

Which brings me to the point that Swamiji was making. He says that for the awakening of India, what we need is a few hundred leaders who could dedicate their lives to doing what leaders are supposed to do – to inspire and lead by example. Everyone does not have to be a leader, any more than everyone has to be a programmer. But we do need a bunch of programmers who are so dedicated that they would do what mere mortal programmers cannot do. So also, we need a bunch of leaders that would be capable of doing what thousands of run-of-the-mill leaders cannot do.

It would be silly to advocate a nation full of self-denying ascetics. No one with any bit of sense would do so. But while the vast majority of the citizens should be concerned with their own narrow self-interest, society still needs those handful of men and women who would excel beyond the capacity of the average. And in all fields we need these exceptional people, not the least of which is the field of political leadership.

The works of geniuses in every field – especially in science and engineering – is very useful because the benefit of their work can be widely disseminated through the economy. You do not have to invent the laser or the microprocessor to enjoy their benefits. In a similar sort of way, what a genuine leader does is to inspire people in ways that ultimately benefit the society as a whole. By example, they raise the moral fiber of the people. All else being the same, a society that is composed of ethically handicapped people will fare much worse compared to a society of people who have values that go beyond narrowly selfish goals. A finite multi-person prisoner’s dilemma game’s outcome can lead to a very sorry outcome.

I totally subscribe to the proposition that if everyone of us looked out for our own interests and did so without harming others or preventing others from looking out for themselves, the system will work out what is called a Pareto optimum. But I also believe that it is possible to transcend that if there were a few who were not so narrowly selfish and set an example for others to aspire towards.

India’s leadership sucks. That is not a very sophisticated analysis of Indian leadership but I am sure that it is succinct and accurate. A bunch of narrow-minded bigoted corrupt idiotic people at the top does not inspire very much good in the hundreds of millions of grunts to push themselves. The corruption at the top inspires pervasive petty corruption at the lower levels. This impoverishes the economy. Conversely, a bunch of obviously principled scrupulously honest totally dedicated leaders would inspire us to put in a little more effort, all of which would add up to something good.

Where are they who would inspire? Where are they that when we hear of what they have achieved, we feel a surge of inspiration and become resolved to be better than we are? Where are they that when we hear of their sacrifice and their nobility, we ourselves become more of what we are ourselves capable of?

I long to hear of a story regarding our so-called leaders that would send a chill down my spine and exclaim, “Wow, how amazing that this should happen in my own land and time?” What I read about in the press, instead, is yet another story of unspeakable corruption and moral depravity of our political bosses. I have not come across a single uplifting incident associated with the leaders of this country. Please tell me it ain’t so.

Let me tell you one that is unfortunately not of this place, and more unfortunately, not of this time. It relates to the 30th President of the United States of America, Mr Calvin Coolidge (1923-29). Here is an excerpt from his autobiography:

My own participation [in the campaign] was delayed by the death of my son Calvin, which occurred on the seventh of July. He was a boy of much promise, proficient in his studies, with a scholarly mind, who had just turned sixteen.

He had a remarkable insight into things.

The day I became President he had just started to work in a tobacco field. When one of his fellow laborers said to him, “if my father was President I would not work in a tobacco field,” Calvin replied, “If my father were your father, you would.”…

We do not know what might have happened to him under other circumstances, but if I had not been President, he would not have raised a blister on his toe, which resulted in blood poisoning, playing lawn tennis in the South Grounds.

In his suffering he was asking me to make him well. I could not.

When he went the power and the glory of the Presidency went with him.

The ways of Providence are often beyond our understanding. It seemed to me that the world had need of the work that it was probable he could do.

I do not know why such a price was exacted for occupying the White House.

The fruit does not fall too far from the tree. Calvin junior’s statement tells you who Calvin senior was parsimoniously. Every time I re-read that passage, I can feel the pain of a father who has lost a son who he cared so deeply about and yet is beset with doubt that perhaps if he had not been elected president, his son would have been alive.

President Coolidge inspired more than just his son, I am sure. Read what he has to say about persistence:

“Nothing in the world can take the place of persistence. Talent will not; nothing is more common than unsuccessful people with talent. Genius will not; unrewarded genius is almost a proverb. Education will not; the world is full of educated derelicts. Persistence and determination alone are omnipotent. The slogan “press on” has solved and always will solve the problems of the human race.”

I want to read about the amazing sacrifices that our leaders have done, about the valuable thoughts that they have penned. Instead we have uninspired uninspiring mediocre people making insipid statements and acting like the petty money-grubbing power-hungry morons they are. These are the leaders we have and it is their names that are plastered on every institution and landmark. It is more than a little dispiriting when the person who is the chair of the National Commission on Higher Education is one who did not attend college even. Let’s just go the whole hog and make an illiterate idiot the chair of the National Commission for Nuclear Power Research.

Yes, Seven Times Six, people need to lead themselves. But they also need a few guiding stars to navigate by. And that, dear ladies and gentlemen, is what in our case we have not got.

Goodnight, thank you, and may your god go with you.

I was on the phone with CJ, discussing a series of columns that the Indian Express newspaper has been running called “India Empowered” which as the newspaper puts it, “if there’s one engine that’s today driving a changing India, it’s empowerment. Empowerment of the individual, the family, the neighborhood, the community – and, hence, the nation.”

The series has seen the usual suspects such as President “Dr” APJ Kalam, Dr. Manmohan Singh, Mr LK Advani, etc. and a few unusual ones as well.

“Empowerment seems to be the most critical ingredient that has been missing from the development recipe. Empower everybody and we will be the greatest developed nation in the world,” I said having read all those wise and wonderful people.

I am especially inspired by Bollywood super star Shah Rukh Khan’s way to making Indian empowered which is “Making people wear a smile, giving them what they want.” As long as I get what I want, I am sure that you will not have to make me wear a smile, though. I will smile all by myself.

I told CJ, “You should read what the great Khan has to say. I am sure he is not as ugly has he looks, considering that he is a super mega star. But his pronouncements are stupider than they sound. Malls appear to be at the crux of his evaluation of India. Let me read you a few lines from his column. Quote:

The other day I was talking to my friend Juhi Chawla and she told me that the malls are just as good or bad as in any other country. That’s great.

Things are wonderful in India. The economic structure is rising, technological advancements are making headlines and the social consciousness is also pretty encouraging. We’ve made progress in all spheres. Be it malls in Gurgaon, irrigation in Punjab or computer advancement in Hyderabad: greatness is happening every day.

If there is one column you must read from that series, make it Shah Rukh Khan’s. The least the newspaper could have done is to pay a two-bit journalist to ghostwrite that column. Perhaps the editor thinks that Mr Khan’s pronouncements are utterly profound. Would not surprise me in the least. Mr Khan (or should that be “Dr.” Khan because by now I am sure that some university or the other has granted him an honorary doctorate?) again:

Personally, I’ve a problem with the power of information. I’m not an authority on it but I think somewhere down the line, information has been a huge downside. We can access information anytime but we don’t know what to do with it. So, information creates bottlenecks. We create a flyover to Nehru Place but forget to connect it to Surya Hotel. Likewise, information as a tool is good but its utility is still unclear. Give a person what he wants but don’t bore him.

CJ interrupted me just as I was getting into it.

“Actually what he says is not any different from what the others have said but in more sophisticated language. He says, give people what they want. The newspaper is giving its readers what they want. They want to hear nice empty content-free feel good stories about how wonderful it all is and how even more wonderful it is all going to be. No real inquiry or reason needed. It has no operational content. Let’s just empower everybody, whatever that means, and we are done,” CJ said.

“Well, what do you recommend?”

“I say what India needs is an ownership society. The rest of this talk about empowering this that or the other is meaningless without the fundamental notion of ownership. Empowering villagers with knowledge, as the good “Dr” prescribes, will not have any effect until there is ownership. Remarkable results follow once you identify the problem as not one that is centered on power but on ownership.”

Then CJ proceeded to explain what he meant by the ownership society, how to bring it about, and what will be the effects of that transformation if we are ever able to achieve it.

Power without accountability is at the core of many of India’s problems. In a feudal society, the feudal lord has power but is not accountable to the serfs. He can arbitrarily make laws and do what he pleases. At a higher level of organization, in a kingdom, the king has all the power and again no accountability. At its peak, it is imperialism when the entire country is ruled by colonial decree but the rulers are not accountable. After centuries of feudal rule, followed by centuries of foreign invasions, and culminating in the British colonial rule of about 90 years, the habit of power without accountability has been firmly ingrained in the Indian governing psyche.

History matters. It is all karma, neh?

It is not power that is a problem by itself. You have to have power to accomplish anything. It is power divorced from and bereft of accountability that is a problem. Accountability arises from the idea of responsibility. And in turn, responsibility is a correlate of ownership.

What does it mean to “own” something? Here is a concrete example. I “owned” a product line when I worked in a corporation. I was responsible for its performance and I was accountable when things went wrong. I had the power to influence what happened to the product line and knew that if it performed well, I stood to benefit, and if not, I stood to lose.

That is what economists call incentives. I had the incentive to do the right thing because I owned the product and had all the rights and responsibilities that flow from that notion of ownership.

When the notion of ownership is missing, neglect is the outcome. Public enterprises generally fare worse than private firms because they don’t own what they manage.

This idea of ownership is not fully appreciated and so I will belabor the point a bit. I am sure you have said to yourself, “This gizmo is not mine. I better take very good care of it,” when you borrowed a gizmo from your friend. And you have also perhaps said at other occasions, “This gizmo isn’t mine. I don’t have to be too careful about it” when you were using a gizmo available for public use.

Contradictory? Not at all. It fits in clearly with the notion of ownership. When you borrowed, you got temporary ownership of the gizmo and therefore acquired the right to use and control it but also inherited the responsibility to be held accountable if something went wrong with it. The temporary ownership was as powerful as if you actually owned it. Note that someone has to own it in the first place before another can acquire temporary ownership. If no one owns it, then no one can acquire temporary ownership and thus not acquire the responsibility of accountability with it.

How the process of ownership is acquired in the first place is a matter that we will go into later. It has to do with the other (other than the market, that is) great institution called the Law. What I am attempting to do is to determine where exactly the holes are and how we can go about fixing them. My contention is that ownership is what is missing from the Indian economy. We need to focus on ownership, and go a little easy on the empowerment idea—whatever “empowerment” means.

There are two very important institutions which are quite critical to the functioning of a society. One is the market and the other the law. These are abstract concepts, of course, but the quality of their instantiation in a particular society determines to a very large extent how well the society functions.

Markets essentially provide the discipline that holds economic agents accountable for their actions. What you bring to the market is a bundle of ownership rights and the basic function of a market is to trade those rights with other market participants. The law actually establishes those ownership rights in the first place and protects them. To the degree the legal institution in a society is unable to do that, markets cannot function and thus trades cannot take place. Consequently, gains from trade do not occur and thus the economy does not function sufficiently well.

What exactly is an economy? Just a bunch of people producing stuff and consuming stuff. Since different people are better at doing different things, it is better for us if we exchange stuff that we are good at producing for stuff we are not so good at producing. That is voluntary trade. Voluntary trade makes both parties better off; it is a win-win situation. When due to some reason, a particular trade does not occur, the gains from trade are foregone and we have less stuff produced than otherwise.

For instance, if I know that I will be protected from my apartment being usurped by the renter, only then will I rent it out. If I find that renting my apartment could mean that the renter would refuse to move out after a certain period, and the courts would take about 200 years to hear my case, and even after getting a favorable decision, my descendents will not be able to evict the usurper, I will just not rent the apartment.

Note that you could be the most honest of renters but I have no way of figuring out that before I rent it out. So otherwise honest trades of renting will not occur and the economy suffers. This leads to the sorry state of thousands of vacant apartments and houses lying locked up in otherwise extremely crowded cities around India.

Trade cannot happen unless contracts are enforceable. That is what the laws and courts do. Furthermore, contracts cannot be signed unless it is clear as to who the owner is so that rights can be transferred, as that is what trade is—the transfer of rights. If the property is under dispute, i.e., if it is unclear as to who owns the property, trade cannot take place.

The law makes trade possible. The invisible hand of the market requires the powerful arm of the law to give it the power it has to transform and coordinate the self-interested actions of the many into overall social welfare.

The quality of the law in an economy fundamentally and essentially determines the nature of the economy. That is the bottom line that we have to focus our attention on. It is the law that assigns ownership and it is an ownership society that is a good society. That is what is missing in India. The rest of this essay is an exploration of the basic notion of an ownership society. Remarkable results follow from it and the operational details of how to implement an ownership society—both in the private and public spheres—will naturally evolve.

If we follow the simple logic of what an ownership society is, we will avoid all sorts of dead-end rhetoric of how malls are wonderful and how great India is because shiny malls dot the landscape, or how “empowering” villagers with “knowledge” will solve our problems, or how internet kiosks will transform India, or how yet another employment guarantee scheme will perform the magic of lifting millions out of poverty that many similar schemes that have merely shifted rubble so far failed to perform.

So what exactly does an “ownership” society mean? It means that for every bit of the economy, there is someone who is identified as the owner. I stress the word someone. It has to be a person, not an abstract entity such as a corporation or a government department. There has to be an identifiable person at whose desk is the sign “The buck stops here.” He or she owns that bit, albeit temporarily, and that means two things. First, the person has total control of that bit and, second, that person is accountable for the consequences of exercising his or her control over that bit.

For this to happen, rules have to be agreed upon regarding who will be the owner of a particular bit and what rights that are attached to the ownership, and what will be the consequences of exercise of those rights by the owner. The set of rules form the Law.

Now it is time to get down to brass tacks. Let us distinguish between the private and the public sectors. The private sector first. By its very definition, the ownership issue is clear. You own something, starting with self-ownership. Then you own other bits that are legally yours, whether it be a car or a factory. You have control over it and you are responsible for it totally and unambiguously, and you enjoy the benefits of the control you exercise over it and are liable for any damage you inflict on others as a result of that control. You run over a pedestrian in your car, you pay for the damage. Your factory blows up, you pay for the harm.

Note that the legal system is intimately involved. If the same legal system which grants you the ownership rights and assigns you the benefits of that ownership does not also simultaneously guarantee penalties for the harm arising from that ownership, it is incomplete and will not be effective.

The Law, in short, has to not only grant ownership to you, but also has to provide the appropriate incentives for you to properly exercise those rights. Incentives matter. In most cases involving the private sector, markets impose the discipline that keeps things in check. In the absence of that discipline, we suffer from what in economics is called “moral hazard”—people do not exercise due caution.

Question: should the CEO of a private firm manufacturing hazardous chemicals be a foreigner? No, if the law of the land cannot reach the CEO if the factory could potentially blow up and kill 20,000 people. It happened in Bhopal.

In the normal course of events, the market imposes some degree of discipline on the private sector. For instance, the managers of a private firm, if they are the owners, know that if the firm does not perform, they lose in the marketplace. In the case of firms which have shareholders, the managers of the firm are agents which work on behalf of principals who are the shareholders. The shareholders can reward or punish the managers on their performance. People can get fired for screwing up, and in the extreme case go to jail for misbehavior.

It is the threat of punishment that keeps the agents which manage a private sector firm in check. That punishment must be fully understood by the managers of the firm before they take “ownership” of the firm, and the law should be sufficiently efficient to credibly commit to carrying out the punishment.

Now in the public sector, the same logic applies. Every enterprise must have at every level someone who is held accountable, and the level of accountability should be commensurate with the degree of control the person has over the enterprise.

So here are the rules:

1. The Law should clearly state what rights and responsibilities are associated with the ownership of very bit.
2. Every bit of the economy—private or public—must be owned by someone.

Here is an example I can play with to illustrate what I would do if I were in charge of making the laws. The example comes to mind easily as I sit here in Pune without the benefit of power supply for about four hours every day.

Supplying adequate reliable power is neither an art impossible to master nor is it rocket science. The science and technology of power generation and distribution is fairly generally known and accessible. It is easy enough to figure out using very simple forecasting tools how much power is likely to be required in any particular region sufficiently in advance to account for the long lead times required for installing capacity. Yet, India continues to suffer chronic power shortage and has done so for decades. Before we go into the why of it, let us briefly recall some of the entirely avoidable costs of this failure.

It is economically wasteful. Real resources are diverted to deal with the power shortfall. Every household which can afford it puts in a diesel generator, or at least a “power inverter.” Businesses have to buy expensive generator and UPS systems to keep themselves running and their costs go up. Instead of centrally generating say 100 megawatts of power, it is generated inefficiently by tens of thousands of small generators at many times the cost.

Who is at fault? Clearly it is the fault of the state electricity board which has failed to adequately plan and provide power. Somebody screwed up and they did so at least to a large degree because the rules did not state the consequences of failure. Someone was in control of a huge firm and that someone did not have the right incentives to exercise due diligence and plan for the energy needs.

Imagine for a moment the following rules. The CEO of the state electricity board is given the ownership of that entity. The job description: “provide power now and build capacity so that there is sufficient capacity for the next 5 years” (assuming that it takes 5 years to build capacity.) If the CEO fails to do that, the entire salary paid to the CEO will have to be repaid and the person—who may have left the job by the time the shortfall is detected—will be publicly flogged in the town square.

Now this rule should be made fully clear to the prospective candidates and anyone who takes up the job must know the consequences of failure. It is because people know up front that they are shielded from the consequences of their failures that they fail in the first place.

I really don’t care whether the power I use in Pune is provided by a public firm or a private firm. As long as I know that if I suffer, those who are responsible for my suffering also suffer, I would be quite content. More importantly, I believe that if the penalties are made sufficiently appropriate, these failures will not happen very frequently.

I don’t really care if there is a Ministry for Power in India or not. What I would care about is if there is one, the man or woman who wants to have the power and the glory of being the minister, would also be flogged publicly for any problems that arise as a result of their tenure.

I don’t really care whether the railways are run by the government or not. But if there is a train accident, the rule should be that the railway minister will be flogged publicly and given as many lashes as there are deaths due to that accident.

Public flogging of public officials is the answer to the problem of public officials not taking their charges seriously. Not just corporations. Take politicians. Any election promises they make about how they will change the economy must be taken seriously. And then if they fail to deliver, hold their feet to the fire. Candidate A claims that he will make something happen, then as elected leader A, he becomes the owner of that something. If he does not deliver—you guessed it—public flogging.

Want to be the prime minister of India? No problem. Take ownership of the country and set goals that you say you will achieve. If the goals are not achieved as promised by you, public flogging over an extended period of time. What this will do is to bring the right sort of people into public life. People who know what they are capable of doing and who will not mess with the fate of millions knowing that their behinds —literally— will be on the line.

Flogging is a simple enough measure to implement. It does not require high tech equipment. What it does require is a judiciary that can impose the punishment and carry it out.

Corruption in an organization? Here is my solution which will fix it pretty fast. Suppose Mr A has been involved in corruption. Don’t just flog Mr A, get his boss (Mr B) and his boss’s boss (Mr C) and flog them as well. Why so? Because Mr C will be extra vigilant and keep on Mr B’s case and tell him to be on the lookout that no one under him is into corruption.

What this multi-level flogging does is this. It makes managers liable for corruption in institutions that they control. That is, it give the managers ownership of the organization they control. Irrespective of how deep the organization is, if a person at a certain level is corrupt, include the two higher levels and flog those two individuals as well.

You may think that I am not really serious. But I am. I am dead serious about this. You want to make India the least corrupt economy on earth, get serious about dealing with the problem for just a few years. After a few dozen high level officials have been publicly flogged, corruption will be a thing of the past which children will read about in their history books.

You may say that instead of flogging, why not just impose a fine on them. That would not hit where it hurts. Merely fining someone who has lots of money is not pain enough. The penalty has to have a sting. Here is what I mean. In Finland, the penalty for a moving traffic violation such as speeding is monetary but it is indexed on the income of the person. A dotcom millionaire was fined $93,000 for speeding.

So flogging should do very well in India. Those in high positions value their pride. They depend on their image. If they penalty is public flogging, they would cease and desist from doing what exacts that penalty.

Public flogging of public officials is a proposal which can transform Indian society more than all this talk about empowering the citizens that we are getting dizzy from reading in the newspapers. Everyone and his brother is advancing all sorts of wooly ideas about how to transform India. Here is an idea that will not see the light of the day of course, but it has the real power to transform.

Where did I get this idea from, you might ask. I think it has to do with what John Muir once said. He said that when he was a wee little kid in Ireland, leather was one of the best aids for memory. The prospect of a good belting sufficiently focused the mind to learn his lessons. If little children could be given the proper incentive via a belting, why not give the right incentives to managers with a good public flogging?

I must stress though that you would not really have to spend all your Sundays visiting public floggings. Merely including a credible threat of a public flogging in the rule book will take care of the problem and you will not have to actually carry out many expect the first few.

I am nearing the end of my piece. Some years ago, I had heard a song—A Cowboy Needs a Horse—which parodies the idea of superfluous possessions. It starts off simply enough with what a cowboy needs but then it veers off into never-never land of quadraphonic sound systems and helicopters and Xerox machines. I was reminded of that song when I was half way through reading the series India Empowered written by all those very famous people. I thought to myself, that yes, a cowboy does need a microwave oven and all sorts of gizmos but not essentially. Nice to have but definitely not strictly required. So I asked myself, what are the equivalent in the Indian economy to the horse, hat, and a rope that the cowboy really needs. I realized that it was the market, the law, and the credible thread of public floggings.

The market is slowly coming into being in India. The law has flaws. We need to get the “f” out to get good laws. What that means is we need to get the courts to move. Many trades don’t occur because contracts cannot be enforced by a court system which has a reported backlog of about 300-odd years. Finally, we need to make people owners so that they can properly care for their charge and this they will do only if they have an incentive to perform their duty, which they will do if credible commitments can be made about public flogging.

So why do these famous people talk about empowerment of this that or the other? Because they have power. That is what CJ said right in the beginning. It is all about power. They have power and they are doing pretty well and so they think that all citizens must have power. And hence empowerment.

Power without accountability and responsibility has gotten us where we are. We got here because government officials have power over things that they don’t own. What we need is the precise understanding of who owns what so that we know who to go after for when things don’t turn out as they should.

Will it happen? No, it will not. The last thing they who have power want is accountability and responsibility which comes from ownership. They makes the rules, and they will continue to rule.

It is all karma, neh?

CJ likes to make those kinds of superficially profound statements. We were meeting after a long time. I was in Delhi for a conference and caught up with CJ at the Taj Mansingh Hotel coffee shop. We were discussing the spike in the gas prices.

“Dead or not, seventy dollars a barrel for crude was bad news for India considering that India imports about half of its energy needs. Will slow down the economy a bit, won’t it?” I said.

CJ is a contrarian. Never seen him see an issue the same way that prevailing wisdom indicates. You can count on him to prepare to make hay when the clouds come rolling in.

“I think it is a great deal of luck that oil is peaking,” he said. “That is one of the best things that has happened lately. It is good for the world, and it is going to be excellent for India. The only guys who stand to lose are the bad guys.”

“O yeah? The bad guys are making money hand over fist, aren’t they?” I said.

“That’s alright. It won’t last. In fact, it is a pity that the shock to the system came so late. Shocks are good. Makes things interesting. Every shock to a system makes it stronger. Neitzsche, you know. Everything that does not kill me, only makes me stronger.”

“You mean, that the oil industry will become stronger?” I said.

“No, the shock to the global economy will make the global economy more secure. More and better things will follow. The oil companies will morph into something else as they follow the dinosaurs. Fossil fuel is called so not without a reason.”

“Fossil fuels are not made up of dinosaur bones, you know. It was the carboniferous period that petroleum began its life-cycle,” I said.

“Doesn’t matter. It is the shock to the system that we need to focus on. Shocks make the world go round. The evolution and diversity of life is connected intimately with shocks. Shocks are what I call the Shiva Hypothesis,” said CJ.

“Shiva hypothesis? Isn’t that already taken? Shiva as the Creator and the Destroyer?”

“Let me explain this. At the end of the cretaceous period about 65 million years ago, a pretty big chunk of rock slammed into the earth. That shock killed off the dominant life-forms and cleared the stage for the little rodent-sized mammals to gain a foothold. Dinosaurs exit stage left, mammals enter stage right.”

“I know that. That is like a soft-reboot of a system. Lots of stupid processes running wild and hogging resources. So just kill off those and clean up the system,” I offered.

“Silly analogy,” CJ replied. “What you really need to consider is the economics of the situation. I suppose you have not forgotten Econ 101 now that you have been out of Berkeley for two years.”

“Shall we walk around the shops here?” I asked.

The Mont Blanc shop was right around the corner from the coffee shop. It was brightly lit and tastefully appointed and devoid of any shoppers. The sales lady brightly greeted us and came over to chat.

Here was a nice piece of luggage, a black carry-on. How much I asked. I suppose it was one of those shops where if you have to ask the price, you have no business being there. She said it was a new arrival and was modestly priced around $1000. Pretty good, pretty good, said I as if the idea of a carry-on costing about two years of the average Indian’s annual income was so ho-hum. I am as sophisticated as the next guy. The coin purse under the glass case with a magnifying glass mounted on rails was next on my list of price inquiries. It was an affordable $300. You would have to carry gold coins in it for the coins to match the cost of the coin purse, of course.

The case displaying pens and watches held a watch that I thought I fancied. Only $3,000. I had a thought. I realized that I could spend about $5000 in the shop and walk out without having to haul stuff away in a truck. Here was a place that was alien to me and to about 99 percent of the world’s population.

The economics, as CJ had said a little while ago, is what matters. But I wanted to get back to the oil shock discussion.

“So, CJ, how do you see the economics of the peak-oil business?”

“Simple really. Markets respond by increasing the supply of substitutes when the price of a good goes up. Suddenly the market for alternative energy forms will look pretty good and you will have a substitute for the polluting carbon-based fuels.”

“Yes of course. Solar energy will make a lot more sense if the price of oil is not the ridiculous $20 a barrel,” I said.

“OK, let’s get this thing straight. It is all solar energy. Carbon is just the working medium. Fossil fuel? Came from the sun through photosynthesis. Your own energy? Ultimately you are powered by photosynthesis. Wind energy? Powered by the sun. Tidal? Sun powered.”

“Ah but nuclear energy is not solar in origin. That is perhaps the energy source that originates outside the solar system.” I said.

“You are right, I think. The heavy elements which power nuclear fission reactors originated outside the solar system. But the rest are solar. In fact, fusion could be considered extra-solar as well. Anyway, perhaps now we will move beyond fossil energy. I think that the age of what I call the ‘Direct solar energy’ age is here.

“Instead of photosynthesis, a process which involves carbon dioxide and has its attendant problems of global warming and such, you have to go directly to solar energy. Photovoltaics is going to get a boost. I think the slogan I would promote will be ‘Photovoltaics, not photosynthesis.’ Get some t-shirts printed with that logo, will you?”

“I agree that cutting out the carbon from the middle and going directly to tapping solar energy is a good idea, CJ. But it will take too long. What happens in the meanwhile is what bothers me.”

“The meanwhile will not be a such a long time. The pace of technological change is accelerating at an accelerating pace. Second order acceleration, if you can get your mind around it. It boggles the mind. The smart money will be on developing direct solar energy solutions such as photovoltaics and a few somewhat indirect solar energy solutions such as wind energy. I would say that in the next few years, you will see a gradual shift to alternate technologies available commercially.”

“And that would be good for India?” I asked.

“Actually this is great for all economies that currently depend on imported fossil fuels. Indian movers and shakers don’t have the foresight to actually develop alternative energy solutions. India should have done so years ago. After all, India is a large economy with the energy bill annually running into several tens of billions of dollars. Imagine that India had invested massively in direct solar energy (DSE) research and development. Just a few billion dollars well spent on energy research would have paid enormous returns. A huge domestic market is a given, of course. And the conditions are such in India—280 sunny days a year on average—that direct solar energy makes a heck of a lot of sense.”

“I know what you mean. Investing in DSE research would make a lot more sense than ‘let’s send an Indian to the moon by 2010’. But I suppose Indians lack imagination, primarily. The US has cars and the US has highways and the US has sent people to the moon. So we in India have to have cars, and we have to have expressways, and we have to send a man to the moon. That we should have a good public transportation system instead of cars, a great rail system instead of expressways, a national goal of developing alternate energy source by 2010 instead of sending a man to the moon—that is not part of our thinking. Of course, if I say that I think Indians are collectively stupid, I get called names.”

“You call them names, and it is not surprising that you will get called names. But I wouldn’t worry about being called names. Just words, not sticks and stones, etc. Anyway, here is what I think. Because Indians are too stupid to imagine a different scenario and are fated to ape the westerners, now there is some hope for India.

“Basically, given the pressures of high oil prices, the US and other developed countries will develop the direct solar energy solutions. That is why they are called developed economies, by the way. They develop solutions. The developing economies merely copy the solutions that the others develop. They should be called the ‘me too‘ economies instead of developing economies.

“Then the developed economies will license the DSE to economies like India. Basically, India will import the technology, instead of importing the oil. And that I believe will be cheaper than importing oil and thus supporting jihad around the world. The world wins and except in the short run, even the developing countries win.

“So as I was telling you, fossil fuel is dead. It is direct solar energy that will rule from now on.”

We walked out of the airconditioned comfort of Hotel Taj Mansingh into the steam bath conditions of the midday Delhi sun. I look forward to the day that the smart people in the western world develop the direct solar energy solutions. Until then, we just have to sweat it out in the sun.

Bye, CJ, and have a good trip back home.

Postscript: For another conversation with CJ, see Choosing between WCs and PCs.

What the heck do economists do is a question that does not baffle many people because they “know” what economists do. I know it did not baffle me. I was not taught economics in high school, and had an entirely forgettable few lectures ostensibly on economics sometime during my undergraduate in engineering. Given this ignorance, I had a vague notion that economics had something to do with money. I think I conflated economists with finance people and accountants. But I was not baffled because I was too ignorant.

Later, while reading popular non-fiction works related to ecology and economics, I slowly got introduced to the writings of economists. It started dawning on me that fundamentally economists study human behavior. Money is important but not central to the study of economics, I realized. Economists come in all different shapes and sizes and they provide various functions in an economy, just as doctors come in a wide variety of types and provide a range of functions in the theory and practice of medicine.

There are doctors who do pediatry, and there are doctors who do general practice, and there are surgeons, and there are cardiologists, and so on. Then there are institutions which have something to do with medicine such as hospitals, which employ doctors but they also employ accountants and administrators. Every one who works in the medical industry is not a medical doctor.

I think confusing economists with financial people and accountants is like mixing up doctors, pharmacists, and hospital administrators. Some economists work for banks and financial institutions, and so on. But that is not all that economists do by a very long shot. Also, some study aggregate national-level statistics of course (employment rate, inflation, GDP) and that is what is reported in the popular press. Perhaps this can explain the popular misconception regarding what economists do.

So the question is what exactly do economists do. The short and trivial answer is economists do economics. And the circularity involved in defining economics as what economists do does not help at all. Paul Samuelson’s definition of economics in his famous textbook Economics is a good place to start understanding what economics is.

Economics is the study of how people and society end up choosing, with or without the use of money, to employ scarce productive resources that could have alternative uses–to produce various commodities and distribute them for consumption, now or in the future, among various persons and groups in society. Economics analyzes the costs and the benefits of improving patterns of resource use.

Studying people exercising choice is what makes economics a study of behavior. Behavior – both human and non-human – has to do with rewards and punishments, gains and losses, in other words incentives. To some, the broadest generalizations that a study of economics leads to are, first, incentives matter, and second, markets work. The rest of economics is an elaboration and detailed arguments about those two generalizations. Recalls to mind what Ernest Rutherford had said about physics: “All science is either physics or stamp collecting.” That is, physics is central and the other bits of science are just a collection of facts that are peripheral and mere detail that one should not be overly concerned with.

Economics is all about codified common sense. I think that is what draws me to economics: I like common sense and I am appalled at the lack of common sense I see around the world. Setting aside the question of why common sense is called such when it is so uncommon, one may ask why economics is difficult if what it concerns itself with is apparently so commonsensical. I think it is difficult because its simplicity is deceptive.

To most bright people, the lessons of economics appear obvious and trivially true. The mathematician Stanislaw Ulam once asked Samuelson if there was anything in economics that was both non-obvious and true. Samuelson took several years to arrive at the answer that it was the theory of “comparative advantage.” He said, “That it is logically true need not be argued before a mathematician; that is not trivial is attested by the thousands of important and intelligent men who have never been able to grasp the doctrine for themselves or to believe it after it was explained to them.” [Reference]

I have argued that the most important concept that underlies the lessons of economics is the notion of “opportunity costs” and that that is a fundamental feature of the universe which follows from the nature of time. Using the notion of opportunity cost, you can even support the central idea of comparative advantage and consequently the idea that trade is beneficial and thus support the idea that markets work and incentives matter, and so on.

Among the social sciences, economics appears to have great explanatory power, and holds the analogous position as physics does among the hard sciences. Economics has an explanation of pretty much any social phenomena. Once you know to how to reason economically, it all becomes obvious.

By reasoning economically, I mean two different things. First, the parsimony of the explanation. That is, what are the least restrictive set of assumptions one can make and yet derive a system which has explanatory and predictive power. Second, the reasoning based on a sound understanding of the basic principles of economics.

There is a very good reason to study economics: so that we can understand why the system is the way it is, and what it ought to be. We call the former positive analysis and the latter normative. The “is-ought” gap can be bridged only if one understands the nature of the economics universe. Otherwise one can end up meddling in a system one does not fully comprehend and behave like the monkey who tried to save a fish from drowning by putting it up on a tree.

Gautama, the Buddha, had enunciated the general truth that suffering arises from ignorance. A particular instance of that principle is that the suffering arising from the present state of our economy arises from the ignorance of those who have so far directed it. And as long as ignorant monkeys rule, we the fish will be constantly in danger of being saved from drowning.

Related post: How to Study Economics.

A few days later I wrote a piece for Tehelka (not available anymore, I notice) which I call the Looking Glass War. Not too bad even though I say so myself.

Sitting in the financial district Holiday Inn lobby waiting for A to show up (stop and go traffic, he kept telling us over the many cell phone contacts), the conversation drifted to ‘faith’.

B wanted to know what was it that made people have faith. I confessed that I have absolutely zero faith. P said that he had faith in his ability. B said that he was more interested in the faith that people have in an afterlife and in god and so on. I said that only feeble-minded people need the crutch that faith provides against the terrors of non-existence that follows death.

Marcus Aurelius, the Stoic philosopher and emperor, was not feeble-minded when he wrote in his “Meditations”

What a soul that is which is ready, if at any moment it must be separated from the body, and ready either to be extinguished or dispersed or continue to exist; but so that this readiness comes from a man’s own judgement, not from mere obstinacy, as with the Christians, but considerately and with dignity and in a way to persuade another, without tragic show.

That was the attitude that Carl Sagan expressed when he was dying of cancer. He wrote

“I would love to believe that when I die I will live again, that some thinking, feeling, remembering part of me will continue. But as much as I want to believe that, and despite the ancient and worldwide cultural traditions that assert an afterlife, I know of nothing to suggest that it is more than wishful thinking

. . .the world is so exquisite, with so much love and moral depth, that there is no reason to deceive ourselves with pretty stories for which there’s little good evidence. Far better, it seems to me, in our vulnerability, is to look death in the eye and to be grateful every day for the brief but magnificent opportunity that life provides

 …  Many [people] have asked me how it is possible to face death without the certainty of an afterlife. I can only say that it hasn’t been a problem. With reservations about feeble souls, I share the view of a hero of mine, Albert Einstein: I cannot conceive of a god who rewards and punishes his creatures or has a will of the kind that we experience in ourselves. Neither can I, nor would I want to, conceive of an individual that survives his physical death. Let feeble souls, from fear for absurd egotism, cherish such thoughts. I am satisfied with the mystery of the eternity of life and a glimpse of the marvelous structure of the existing world, together with the devoting striving to comprehend a portion, be it ever so tiny, of the Reason that manifests itself in nature.”

Sagan passed into the great beyond in December 1999. A truly great soul, in a manner of speaking of course. I don’t have faith in soul. I am not one who believes that the universe is made of ‘matter’ and ’spirit’. It is all of one thing — call it matter or call it spirit — take your pick. But you can’t have both.

Sagan is remembered for his great and triumphant attempt at sparking an interest in our wonderous universe in millions of people through his television series COSMOS and his many popular writings. And his trade mark “billions and billions” expression which many people affectionately remember him saying in his COSMOS series (but which in fact he never did.)

He did say billions though and said it many times. But what can you say when you are talking about the age of the universe or the number of galaxies and the number of stars in these galaxies. I dare you to talk about all this without the use of ‘billions.’

When you talk about the length of a Day of Brahma, you have to say billions. One episode of COSMOS focused on India. When asked why so, he remarked that it did so

because of that wonderful aspect of Hindu cosmology which first of all gives a time-scale for the Earth and the universe — a time-scale which is consonant with that of modern scientific cosmology. We know that the Earth is about 4.6 billion years old, and the cosmos, or at least its present incarnation, is something like 10 or 20 billion years old. The Hindu tradition has a day and night of Brahma in this range, somewhere in the region of 8.4 billion years.

He is refering to Mahakalpa the details of which are available here in this journal. One thousand Mahakalpas is equal to one Day of Brahma.

Brahma’s waking period lasts 4.32 billion years. Following that he sleeps for another 4.32 billion years. While asleep, he dreams the world into existence.

We are a dream in Brahma’s mind.

Brahma is running a simulation of the world while asleep. When he awakes, that simulation ends and so on.

We are just a lot of dream stuff.

The ancients in India dreamt all that stuff up, of course. And the physicists of today are dreaming more such stuff. And from time to time, there are surprising convergences between the two. Again Sagan says

As far as I know [India's] is the only ancient religious tradition on the Earth which talks about the right time-scale. We want to get across the concept of the right time-scale, and to show that it is not unnatural.

In the West, people have the sense that what is natural is for the universe to be a few thousand years old, and that billions is indwelling, and no one can understand it. The Hindu concept is very clear. Here is a great world culture which has always talked about billions of years.

Finally, the many billion year time-scale of Hindu cosmology is not the entire history of the universe, but just the day and night of Brahma, and there is the idea of an infinite cycle of births and deaths and an infinite number of universes, each with its own gods.

And this is a very grand idea. Whether it is true or not, is not yet clear. But it makes the pulse quicken, and we thought it was a good way to approach the subject.

It is a cyclic universe.

Big crunches following big bangs following big crunches.

The boom and bust cycle of the economy played on a stage the size of the known universe.

And I am at the center of that known universe. Just as you are of course. And so is everyone else at the center of the known universe.

Everything is at the center of the known universe.

And the universe is perfect at every moment.

It is the perfect dance of Shiva as he dances the Tandava in his form as the King of Dancers, the Nataraja.

Shiva dancing at the “Edge of Forever”. Which is the title of a chapter of COSMOS. Sagan explains

The traditional explanation of the Nataraja is that it symbolises the creation of the universe in one hand and the death of the universe in the other – the drum and the flame – and after all, that is what cosmology is all about. So in addition to being artistically exquisite, the Nataraja provides exactly the kind of symbolism that we wanted.

So there you have it. What we can be certain about is that fact that we are going to die one day, as Bipin pointed out. The rest is uncertain. How did the universe begin? What caused it to come into existence? What is the point in all this?

Big minds can perhaps answer these questions. Or maybe not.

The “Hymn to Creation” of the Rg Veda concludes

Who knows for certain? Who shall here declare it?
Whence was it born, whence came creation?
No one knows whence creation arose;
and whether god has or has not made it.

He who surveys it from the highest regions
Perhaps he knows it, or perhaps he knows not.

Ah, the ultimate expression of agnosticism, of doubt — the first necessary step in the infinite journey of discovery and enlightenment.

The ancients in India conjectured about the origin of the universe and why. The Upanishads say

“. . .in the beginning there was Existence alone —
One only, without a second.
He the One thought to himself:
let me be many, let me grow forth.
Thus out of himself he projected the universe;
and having projected out of himself the universe,
he entered into every being. . .
He is the truth.
He is the Self.
And that, Svataketu,
THAT ART THOU.”

Here is a short Upanishad, the Isa Upanishad.

It is all karma, neh?

[This recycled post is from Nov 2002.]

POST SCRIPT: It is best not to interpret the above to mean that I claim that there is some mystical connection between ancient Hindu thought and modern cosmology. I merely noted that the time scales are similar. Just as I could looking up at the sky point out that the pattern made by the clouds reminds me of a leaping tiger.

I am merely doing a bit of pattern recognition. I just noted a curious co-incidence. I would not stretch it to mean that all sorts of modern physical explanations derive their insights from Hindu metaphysics.

There are lessons by the score that one can learn from the Singapore experiment; lessons that could be arrived at through simple logical reasoning in the abstract but made all the more compelling to see it actually work out in practice. The fundamental lesson to my mind is this: policies — well thought out, rigorously implemented, and single-mindedly enforced — have the power to transform.

Where can these well thought out policies come from? From at least two sources at the opposite ends of a spectrum: the mind of a single intelligent person, or the collective wisdom of an enlightened majority of the population. The latter is possible in theory of course just as it is possible that all the atoms of your body will simultaneously jump two feet vertically in unison (physics does not disallow this) so that you spontaneously levitate momentarily but it is so unlikely as to be dismissed unconditionally. An enlightened majority is in the realm of the possible but not in the realm of the probable.

The other extreme — a single person or a small set of people evolving rational policy — is imaginable. Even given the short history of civilization, some examples of this type exist. The founding fathers of the United States, a small group of people, wrote a constitution that lays the foundation for enlightened policy. More recently, it was one person who formulated rational policies and implemented them with single-minded dictatorial vigor. His name is Lee Kuan Yew.

Lee Kuan Yew is one of the most intelligent leaders in contemporary history. The man is a practical genius. The people of Singapore got lucky when in the random draw from which dictators are drawn, they drew Lee Kuan Yew. India, I cannot but note with sadness and grief, drew from the same random draw and came up with Jawaharlal Nehru. Both dictatorial but one a practical genius and the other . . . well, the less said the better.

There are deep contrasts between India and Singapore. Take for instance the degree of corruption that permeates both public and private sectors. According to Transparency International, India ranks 90th (in the company of such nations as Malawi, Mozambique, Nepal, Russia, and Tanzania) while Singapore ranks 5th (led by Finland, New Zealand, Demark, and Iceland) least corrupt country.

The corrosive impact of corruption on economic development and growth is not a mystery, nor was it unknown fifty years ago. Lee Kuan Yew decided on a zero-tolerance policy on corruption. Corruption at all levels of society had to go. The task was to re-invent the whole culture so that corruption had no place in it. That was the first bit: deciding that corruption was history. The next bit is implementation and enforcement.

To root out corruption you can use all sorts of means. You can lecture school children to take an oath to eschew corruption (as in here), you can prosecute a poor milkman for diluting milk (as in here) — that is, basically you can start at the bottom and implement an idiotic policy of targeting marginal players while shielding the really corrupt. Or you can do it by catching the big fish and handing out exemplary punishments and — this is the important point — publicizing it so that anyone who is even minimally aware understands that corruption is not tolerated by the society no matter how powerful the person is.

This is what I heard. A certain minister, very close to Lee Kuan Yew, in charge of housing (or some such) was involved in some kick-backs. The word went around that the guy will surely get off easy since he was in the inside circle. Lee asked the minister to see him. The meeting was brief. Two days later the minister blew his brains out. The message was clear: zero tolerance.

In India we hear of some high-level bureaucrat or politician robbing the public purse blind with sickening regularity. But we have never heard of even one high-ranking corrupt public official or politician ever being punished for his misdeeds. We have a free press of sorts and people get to know about how the most corrupt get away with murder. The notion that it is OK to be corrupt is internalized and soon enough we justify our own petty corruption by referring it back to those high and mighty whose corruption is legendary and who are never punished. We grow cynical and the society suffers as a whole. Our culture erodes and standards of probity and justice fall until we are a nation of petty thieves ruled by mega-robbers.

To re-iterate once again (as they say in the Department of Redundancy Department), you have to have intelligent policy, rigorous implementation and no-exception enforcement to bring about a radical change. Most policies in India don’t meet the intelligence criterion, and those that do suffer from indifferent implementation and half-hearted enforcement.

Crimes other than corruption are also a brake on economic growth. Singapore controls these without a too visible police force. I only saw a couple of cops during my three-day visit. One of the most impressive people I met while in Singapore (who is an alien in Singapore but runs a very successful business) told me of his informal theory about how they keep crime low. He said that he imagines that in the police headquarters they have a huge wall chart where each crime has a schedule of enforcement. So, for instance, “vandalism” may be scheduled for the week of 15th of August. That week they go out and catch a vandal, prosecute him to the utmost, and plaster his picture on the papers and in the write-up use the word “shame” a dozen times.

Prospective vandals, however irregular they may be in keeping up with current affairs, get to learn about the punishment and decide to curb their impulses. But public memory fades with time. So after a suitable span of time, the police will once again catch a vandal and make an example of him. They repeat this same formula with other routine crimes.

The important bit is that you don’t have to have zillions of cops watching every corner for vandal all round the year. You just catch the one every now and then to put the fear of god into the others and thus prevent vandalism from happening in the first place.

Lee Kuan Yew (I like using his full name because there is a certain something, a rhythm to it) must be a remarkable man. My meeting with him did not happen. I am kidding you, of course. But he is someone I would have liked to meet him and bow deep as a sign of my respect for what he did for Singapore.

Apparently little things, things that one may not consider very important or significant in the grand scheme of things, they too have a transformational impact on the society. Litter and garbage on the streets depresses the spirit and instills a sense of hopelessness and helplessness in the society. Lee Kuan Yew fined people who littered so vigorously that Singapore became clean but earned the reputation of being a “Fine City.”

Of course, the litterbug loses significant freedom in the society. He cannot litter to his heart’s content. But if there is a negative externality of following your heart’s dictates, then you have to be made to stop. Not just littering, but religion as well. They have what I call the “Freedom to use, but not the freedom to abuse.”

Freedom of religion is guaranteed in Singapore but freedom to proselytize is not. Proselytizing essentially says that my religion is better than your religion and that if you don’t accept my god as the One True Savior(TM), you will rot in hell that my god has specially prepared for you. This sows seeds of discord in society and soon the newly converted start asking for special treatment and handouts and in the limiting case, when the bunch grows sufficiently large, ask for a separate state of their own because they cannot bear to live with the other people who are destined to go to hell.

So Singapore is strict about proselytizing. In keeping with their policy of discouraging that anti-social behavior, they caught a meek little Catholic lady who was going door to door peddling her religion and threw her into jail after she was found guilty by the courts. Then they publicized the event. This sent the message to all religious bigots who follow the dictates of their own hearts that bigotry is not ok.

They took care of the mullahs as well. Got them together and told them that if they even make a peep in their weekly religious sermons promoting killing and terrorism, they will have their butts in the sling. Live and let live was the message they got and as rational humans, the mullahs got in line. The last time they had communal unrest was sometime in the late 1960s.

No such luck in India, of course. We have Christian missionaries from all over the world having a grand old time converting heathens and soon enough you have the neo-converts pissing on Ganesh idols to show their new-found faith. News gets around and finally out of desperation and plain old brutality, a few missionaries get roasted and this gives the country an ill-deserved reputation of being intolerant. Madrassas funded by Saudi money flourish by the thousands where apparently the mullahs teach the young that killing kuffars is a pretty practical way of arranging society.

In reaction to this ocassionally, a few of the normally tolerant Hindus band together and retaliate. This hits the international press and India is tarred as a society full of murdering morons.

As I was saying, Singapore does not have those problems because they have the enlightened policy of making proselytizing a crime and then enforce it. Lacking the essential bit that leads to religious disharmony, they avoid the entire series of unwelcome consequences.

~~~~~~~~~~~~~~~~

The essential important faculty that gives rise to good policy — which our leaders lack — is imagination.

Humans, I imagine, are different cognitively from other things in the universe in their capacity to imagine. We can ask “What if” and think through the consequences of a set of actions that are not yet set into motion. We have to be able to foresee the consequence of our present actions to reach a desired future state. Or by backward induction, we can start at a future desired state and work our way back to what we should be doing today to obtain the future state.

Every chronic persistent shortage you see around you in India is the result of a failure of imagination. (I think that this statement should be elevated to the status of a principle. Here is the one of the first axioms, then.)

In Pune, we have power cuts for about 4 hours a day on average. Pune is a city with a population the size of New Zealand’s population — four million people. It is certainly not an obscure little village in the middle of some god-forsaken forest. Power is not a new-fangled fad whose demand could not be foreseen. The growth of the size of the city and the consequent demand for power could have been easily foreseen and actions taken. Power generation is not an esoteric undertaking which the private sector is incapable of doing. Yet there is a shortage and the economy suffers because some idiot in charge did not have the imagination to realize that more power is needed.

Not so the Singaporeans under Lee Kuan Yew. They learnt to use their imagination. They build capacity before they hit shortage. I hear that they have started building the third terminal at the airport even though the second one is not even up to full capacity.

Compare that to India. First a road gets choked with 10 times the number of vehicles than it was designed to handle. Then the realization dawns on people that the capacity has to be increased. On an already congested road, they start making some changes — for instance a bridge. This take about four years to complete (whereas the same work in a different place would have taken four months). By the time the capacity is in place, the traffic has also increased so that once again it is 10 times what the road can handle.

This reminds me of my email inbox. For the last year or so, I am constantly falling behind — the number of messages sitting there increases monotonically. I am forever trying to catch up.

But enough of my woes. I was going on about how smart Lee Kuan Yew was. He has the best imagination of them all, I guess. Take for example his insistence on air-conditioning. Singapore is a hot and extremely humid place around the year. Without AC, you are bound to be less productive than with it. Air-conditioning makes sense if the cost is lower than the increased income from a more productive workforce. He saw the benefits of AC and implemented it.

I don’t know why but some people just draw good cards from the random draw that is life. Singaporeans are lucky. I am sure there are those who will immediately retort that the Singaporeans don’t have the freedoms that are normally associated with a liberal democracy. And I am also sure that the person making that statement is sitting comfortably well-fed in his nice office or home accessing the world wide web for knowledge and entertainment. For the average schmuck in a third world country, he would any day trade in his imaginary freedoms for a decent shot at a full stomach, a roof over his head, and a chance to get his children educated. After the average schmuck has achieved those basic necessities, he would ask for all sorts of goodies that a liberal democracy provides. And that is when the society should become a liberal democracy.

The sequence is important.

{More about Mr Lee Kuan Yew here.}

I have recently, thanks to my colleague Saee at Netcore, added in the right hand column a list of blogs which I read. They are a mixed bunch but have one thing in common: their authors have the good sense to consider me worth reading (ha, ha!) Seriously now, the list is under construction and I would get it all done in a few more days.

I grant you that Friedman writes bestsellers and some of my best friends are huge fans of his. And I think that globalization—the integration of the world’s markets—is not merely a good thing overall but is inevitable and monotonic. In any market integration, there are winners and losers, be it labor market integration or the market for lemons. Be that as it may, what I want to do someday is to write a book called The World is Mad.

“What!?” you would exclaim upon reading the title, “I thought the world was sane. Thanks Atanu, you are a bloody genius.” And then you would proceed to read the book and figure out that indeed the world is mad and that I do not fall into the hasty generalization trap unlike some others I could mention.

Madness suffuses the world around us. Why don’t we perceive it? Because physiologically we have evolved to tune out any background information. We stop taking notice of something that is all-pervasive. The madness I am talking about is so commonplace so as to be taken as normal.

The globalization of madness, like the globalization of trade and stuff, did not begin recently. It has been going on for a bit. I am talking about the 800-pound gorilla in the room which practically everyone is ignoring: the Weapons of Mass Destruction Industry.

The US leads in the globalization of madness just as it leads on practically all other bits of globalization. Check out Ben (of Ben and Jerry’s) on the US nuclear stockpile. It costs $17.6 billion every year to merely maintain it. Let me spell that out: $17,600,000,000. And that is just to keep the stock in readiness. The stockpile of 53,000 nuclear weapons costs much more to build.

Thousands of billions of dollars to build the whole military apparatus, all with the one single objective: kill people. What is worse, this military apparatus kills people whether these weapons are used or not. How? They export part of their obsolete weapons of mass destruction to Third World countries which pay billions of dollars to acquire them. These Third World countries starve their people in order to extract sufficient resources to pay for the weapons. And the madness is so acute that some people in the Third World countries actually rejoice that their governments are acquiring these weapons. I regularly keep getting emails congratulating me that the Indian government is almost surely going to finally get a huge batch of F-16s from the US! To me that is depressing beyond words. It is like someone happily reporting the thrilling news, “Congratulations! Your country will continue to see millions of deaths through starvation and disease over the next 10 years—guaranteed.”

Just because it is all-pervasive madness does not make it sanity. We continue to go about our daily business without paying much attention to this madness. We are in the business of rearranging the deck chairs on the Titanic even as the ship is sinking. I have to remind myself that we don’t necessarily have to be smart; we just have to stop being so stupid. There is one thing that India needs to do if it wants to develop and it has nothing to do with IT this or internet kiosk that: it has to stop spending money on weapons of mass destruction. And that goes with equal force on the other impoverished overpopulated illiterate countries around India.

PS: There is a followup to this post here.

It is a common failing. I call it the If-only-lord-if-only syndrome. If only I had x (where x could be money, power, status, gizmos, etc.), I would be y (where y could be happy, successful, good, etc.) Often enough, x is something that is relatively easy to obtain but does nothing towards the goal of y. Sometimes, after obtaining x, one realizes that y is still out of reach. Then wisdom dawns and one realizes that it is not that x leads to y, but rather y leads to x.

Bertrand Russell was very wise. He claimed that “the happy life is the good life. By that I do not mean that if you are good, you will be happy. But rather that if you are happy, you will be good.” Worth pondering, isn’t it?

The use of high technology (x) is highly correlated with high degree of economic growth and development (y). Correlation, as economists never tire of reminding one, is not causation. Furthermore, even if there is causation, the direction of causation is not always obvious. Two variables x and y may be causally linked; but does x cause y, or does y cause x, or are they two connected through some other hidden variable z?

I am sitting in the University of California at Berkeley. (Hi from Berkeley!) The campus is full of high technology tools. Compared to what UC Berkeley has in terms of computers and bandwidth, the campus of a typical Indian university (Nagpur University, for instance) has very little. So it is tempting to believe that if Nagpur Univ were to be equipped with all the electronic gizmos and Internet bandwidth, then it too will attain the level of a UC. But that is patently absurd. What makes UCB is not the hardware (electronic or otherwise) but human and institutional capital. Human and institutional capital is what matters, not hardware. Just to drive home that point, Nagpur University in 2005 has more electronic hardware and internet bandwidth than UC Berkeley had in 1980. Yet, the capability of UCB(1980) far exceeded that of Nagpur University(2005).

It is not how much hardware or software or information one has that matters; what matters is what you do with it. And what you do with it depends on you and not on the thing. An inept author will not suddenly start writing masterpieces even if equipped with the fanciest word processing software. People will not suddenly become knowledgeable just because they have all the information of the world wide web at their finger-tips.

The $100 laptop being touted by some as the holy grail that will emancipate the poor all over the globe is a striking example of the silliness that pervades the development community. But more about that later.

How shall I go in peace and without sorrow? Nay, not without a wound in the spirit shall I leave this city.

Kahlil Gibran The Prophet

My days in Mumbai are numbered. Strictly speaking, all the days of our lives are numbered. I will soon be saying goodbye to the city that has epitomized to me all that is wrong with India. I know there are people who swear by the city. I think that they are in a minority. But then, one might say that even minorities in Mumbai are pretty large numbers.

Numbers. That is reason number one for my discomfort with the city. Metropolitan Mumbai has about 12 million to call its own. There are European countries with fewer people than Mumbai. Indeed, about 60 percent of Mumbai’s population lives in an estimated 37,000 slums. That is, 7.5 million people live in Mumbai slums, about one and a half times the population of Finland. Finland, a country that I have a very soft corner for, has around 5 million people living in about 384,000 square kilometers. Mumbai’s 7.5 million people are not as fortunate; Slum dwellers occupy only 14 percent of the residential land in Mumbai, which I estimate amounts to about 140 sq. km. Imagine that: a piece of land about 12 kilometer square and then pack one and a half times the population of Finland into it.

I find it absolutely unbelievable. There are more people living in slums in Mumbai than there are people in Finland. A rough calculation leads me to figure that the population density of Mumbai slums is about 500 30,000 times that of Finland. And the income of a Finn is perhaps about 100 times that of a Mumbai slum dweller.

Mumbai is an astonishing metropolitan city where the so-called first, second, and third world co-exist. I call it The Triple Point of the World at Zero Degrees Humanity. You see affluence co-exist on top of the most degrading poverty. I wish I could erase from my memory all the awful sights of very little children — some as small as toddlers — begging on the streets and on local train stations. It is said that living in California makes you soft because living is so easy there. I guess I had grown soft with my over two decades in the San Francisco Bay Area. I hope that the year and a half in Mumbai has not hardened me. I want to retain the humanity that makes me flinch at the sight of suffering.

I feel for the unfortunates in Mumbai. I don’t mean to imply that I alone feel that empathy nor that my empathy is worth particularly much. I have a visceral hatred for the system that creates so much misery so thoughtlessly. I wish those who created, sustained, and continue to control this sorry place did not have the intelligence of scum and the ethical and moral sensitivity of cold tar.

About 10 days ago, they bulldozed 3,000 hutments and reclaimed 8 acres of slum-land, leaving 12,000 people homeless. In the last two months, 120 acres have been reclaimed after 67,000 dwellings were destroyed. [Source: BBC News] I suppose that means about a quarter of a million people who had homes — however modest — do not have a home now. The powers that be have stated that they will remove the slums from 375 acres of government land. In all, I expect that will make about a million people homeless in Mumbai.

A million additional homeless people in Mumbai. About the same number as the total population of Helsinki, Finland.

I grant you that enchroachment is a problem and needs to be dealt with. But why is it that the powers have to wake up so late in the day. Could they not have prevented the problem years ago? How do they justify turning people out of their homes after they have lived there for years, built up their lives around their abjectly modest dwellings, bred children, found employment and built human associations?

There is a lot of breast-beating and wailing and moaning when a natural disaster like the tsunami leaves people homeless. But why the absolute silence when a million people are similarly uprooted by government decree? Losing one’s home to a bulldozer is no different from losing one’s home to a wave, is there?

Why do I feel so strongly about this? Perhaps it is because I am myself a “homeless” person since I don’t have a permanent home and every now and then when I move, I get a feeling of rootlessness and insecurity. But it is more than that. I see this problem as merely a symptom of a larger problem that pervades India. That is the problem of over-crowding arising out of over-population.

A person living in a Mumbai slum finds, at the margin, that living in a crowded slum is preferable to living elsewhere in India. So, unless people systematically err in deciding where they live, for the people living in Mumbai slums, the pain of living elsewhere must be at least as much because there are no barriers to migration in India in the long term. The implication is that the dire situation in Mumbai slums is a good indication of how desperate the situation is around the country. It is that realization that makes me despair about the situation in India.

The existence of slums is a sympton of a deeper problem. Merely addressing the symptom can never solve the problem. One can clear the slums every so often and maybe even build decent low cost housing. But there are more people where the present slum dwellers came from. No sooner than you have moved the present millions of people into decent housing, the slums will reappear as soon as the land is cleared. Indeed, building decent housing for slum dwellers would encourage more to migrate to Mumbai and only worsen an already intolerable situation.

The fact is that slums are just an effect of the unsustainably large population of India and unless we wake up to that problem, we will continue to treat people worse than animals. I think that the powers that be need to live in over-crowded slums for a bit to really appreciate what the population problem is all about.

I believe that there are two factors that explain this unfortunate phenomenon. First, education is a public good. And second, the socially optimal provisioning of public goods require collective action. India is particularly prone to a failure of collective action, which in turn leads to an under-provisioning of public goods, including the most fundamental of public goods — education.

Education is the linch pin

… which holds the entire economic machinery together. It is so fundamental and basic that without an educated population, there is no conceivable way for an economy to prosper. Show me any economy that has ever done well, and I will show you that at its foundation is an educated population. I grant you that for short periods of time due to special circumstances, an economy may flourish without an educated workforce, such as an economy bouyed by a natural resource such as oil. But it is a hollow sort of an economy and cannot survive in the long run.

On the question: Does educational spending promote growth?, my position is this.

… that basic education (not higher education) is a necessary (not sufficient) condition for economic development (not growth). I can well imagine that spending on higher education beyond a certain amount under specific circumstances may not be found to be statistically correlated with economic growth. If an economy is already very rich and economically developed, it may be close to its potential economic growth rate and therefore any extra spending on higher education will not have any significant effect on the growth rate.

India has the largest collection of illiterates and semi-literates in the whole universe. India is also very poor and therefore cannot afford the luxury of going the traditional route as regards education. The tradition route of having fancy classrooms and well-paid teachers is beyond the reach of the majority. What is the way out, then? [Source]

My prescription for India is to invest massively in education. I presented a modest proposal for making India fully literate within three years. I followed that up part two of the proposal where I wrote:

Around 1950, India had about 200 million illiterates. Suppose India had taken a big bang approach and instead of spending $1 billion that year, it had allocated $10 billion each year for 3 years on primary education and make India completely literate. Then the total cost to the public would have been $30 billion and it would have solved the problem once and for all. On top of that, having a literate population from 1953 onwards, it would have developed more rapidly (if the country had not screwed up in other ways), and it would have had a lower population (population of developed nations grow less rapidly), and the aggregate wealth of the country would have been higher, and hundreds of millions of fewer people would have led mean, brutish, nasty, desperate and short lives. And we would not be having this discussion. We could have spent the time reading poetry or playing online games.

In part 3, I argued that information and communications technology tools have to be used to make the task of education tractable and proposed that a regulatory body be constituted for education.

It is my position that to develop, we have to use ICT domestically instead of merely building ICT tools for developed countries to use. I keep repeating the word tool because that is what it is. ICT is a means, not an end. Which means that we need to first figure out what we want to get done and only then seek the tools required for the job. If you go and first purchase an expensive hammer, you are out of luck if what you really need done is make a cup of tea.

Part four of the modest proposal and part five went into some implementation details.

Following a presentation at a conference on development, education and ICT at Bhopal in December 2004, I considered the matter of reinventing education in a brave new world of IT.

Since the dawn of civilization, the store of knowledge has steadily increased. The rate of increase has now accelerated and the stock of knowledge is growing exponentially. This has some major implications for education because unless one has a good handle on the existing stock of knowledge, one cannot meaningfully use it nor add to it.

Education today faces a challenge. Part of that challenge arises due to its past successes. I call it the “supply-side” part: the stock is too huge already and the flow seems to be exponentially increasing. There is a complementary “demand-side” challenge: there are immense numbers of people who need to be educated. The combined effect of two increases the cost of education. In this short series I will explore the use of ICT in meeting the challenge.

In Re-inventing education part two, I noted:

… [that] disruptive technology increases the production possibilities frontier, and to obtain the gains from that technology, you may have to replace the older structure with one that is more consonant with the new technology.

I believe that we have to move from a teacher-centric to a learning-centric education model

… the learning-centric model recognizes these two basic truths: that the universe is connected, and that every student is unique. The model makes available to the student a very rich, deep, and connected set of content which the student navigates through a process which can only be called discovery. Although the basic material is accessible to students is common, the path that a specific student takes is unique to the student. Conceptually, the content is a fully-connected network which can be traversed in a potentially infinite set of ways. One can start from any one of a very large set of nodes, and then move from one node to another till entire structure has been visited.

That is a quick index of some of my posts on this blog dealing with education. I concluded with some musings on what the goal of education to me is: it teaches one how to think, how to fast, and how to wait.

I believe that learning how to think may be something alike to learning a language. It appears that we have a language learning sub-system in our brains which shuts down sometime around age 12 or so. Before reaching that age, you can very easily learn languages; after that, learning languages is extremely hard. So also, I believe that if you catch a kid early enough, you can teach him or her to think. It is as if the brain circuits are just a lot of firmware in early childhood and then as one grows up, the firmware hardens and become hardware that cannot be re-programmed.

Here is my prescription for a good education. Focus primarily on teaching how to think and on teaching how to learn. Teaching how to think is like giving kids a very high powered CPU. Teaching them how to learn gives them control of a very broadband channel through which they can have access to content that the CPU can process. Alternative analogy: good thinking skills is like have a good operating system. And good learning skills is like having a great set of applications.

I hope to coninue to ponder the matter of education more on this blog.

Knowing how to wait is an excellent skill. It is freedom from the universal tyranny of time. A lot can be accomplished by someone who can afford the luxury of patience in a world where both favorable and unfavorable events occur randomly. Only the gods can be totally free with respect to time, of course. I like the story about Indra and the householder. Indra, one of the manifestations of Bramha the Supreme god, was asked by a man what the nature of time was. Indra said that he will tell him but first he needed a drink of water and could the man go and fetch him some. The man agreed and went off to get a glass of water.

The man knocked on the door of a house and a very beautiful girl answered the door. He was captivated by her charm and fell in love with her. He courted her and in a short time they were married. In a few years, he had a wonderful family. His business flourished and for many years, life was without any troubles. Then one day a tsunami hit the land. The giant waves washed away his family and his house and all his belongings. He found himself clinging precariously to a tree as the waters raged around him. In desperation he called out to god, and Indra appeared and said, “Were you able to get me the drink of water I asked for yet?”

Waiting and fasting are skills that enable one to interact with the world external to oneself. The ability to think is, in contrast, a skill that is internal to oneself. With waiting and fasting, one has mastery over others. Only thinking allows one to gain mastery over the self.

The Eight-fold Path, the Fourth Noble Truth set forth by the Buddha, is accessible only to those who have the ability to think. Thinking, not belief in some big daddy in the sky, allows one to follow the eight-fold path: right view, right resolve, right speech, right action, right livelihood, right effort, right mindfulness, and right concentration.

Of the eight, I think the most important is the right view bit.

Depending upon your point of view, you will see things different from the way that others see it. If you clearly perceive the reality (which others see differently from you but not necessarily incorrectly), then you can undertake the right action and apply the right effort.

I think that at a minimum, an educational system must teach people how to think. How to fast and how to wait would be good but perhaps it is too much to ask for right now. Does such a system exist anywhere in the world? I don’t know for sure but I doubt it very sincerely. I realize of course that there are people who have gone through the current educational systems and they are also able to think. But I would be wary of ascribing that result to the present setup. It is more likely that despite the present system, those people have learnt how to think.

I believe that learning how to think may be something alike to learning a language. It appears that we have a language learning sub-system in our brains which shuts down sometime around age 12 or so. Before reaching that age, you can very easily learn languages; after that, learning languages is extremely hard. So also, I believe that if you catch a kid early enough, you can teach him or her to think. It is as if the brain circuits are just a lot of firmware in early childhood and then as one grows up, the firmware hardens and become hardware that cannot be re-programmed.

Here is my prescription for a good education. Focus primarily on teaching how to think and on teaching people how to learn. Teaching how to think is like giving kids a very high powered CPU. Teaching them how to learn gives them control of a very broadband channel through which they can have access to content that the CPU can process. Alternative analogy: good thinking skills is like have a good operating system. And good learning skills is like having a great set of applications.

You recently wrote:

That is why I claim that natural disasters like the recent tsunami cannot hold a candle to the destructive power of humans.

I did a little arithmetic that adds support to your statement from unexpected quarters. This sounds very insensitive but is not really so. Each and every person destroyed by the tsunami is irreplaceable. I was trying to comprehend the enormity of the destruction through comparative numbers, when I was struck by a yet more stupendous scale that boggled the mind.

CIA 2004 India population slope estimates:

Of course, all humans are unique, like everyone else, so these are about numbers alone. It is instructive to note that natural disasters cause disproportionate loss of life in the poorer parts of the world. Earthquakes in California kill a few hundred at most compared to the tens of thousands (even hundred thousands) killed in the developing world by similar magnitude events. Floods in the US kill a few tens of people, while floods in Bangladesh kill in the order of hundred thousand.

I believe that the reason for this disparity can be traced to the greater population densities in the poorer parts of the world. Extreme population pressure forces people to live in dangerous areas. The flood plains of the Ganges river delta is not where you would like to live if you had a choice. When tens of millions have no choice but to live in disaster-prone areas, a natural disaster’s direct impact is amplified and hundreds of thousands perish.

Aside from the direct impact of the disaster itself, the second-order effects are also quite acute. The ecological system comprising of people, land, and other resources is always poised at the edge of criticality. Given the unsustainable population, it is forever tottering on the brink. An event like an earthquake or a flood catastrophically disrupts the system. There is little or no spare capacity for the system to absorb the shock and cushion its impact.

Paradoxically, the system persists for the very same reason as that which induces the horrendous losses: excessive population. First, due to the excessive population, people have to live at the edge. Then, a disaster strikes. It kills a small percentage but a very large number. Finally, the system recovers its lost small percentage of people within a very short time and is back to its earlier critical overloaded state.

Will there be a change? I don’t think so. The rich and the powerful aren’t directly affected since they live in safer areas and even when disaster strikes them, they do have the spare capacity to rebuild. Aside from sending in the odd donation following a disaster, the rich get on with their lives. They don’t have an incentive to address the systemic issues. Perhaps a vague sense of guilt moves most of us to contribute to the disaster relief but that just addresses the symptoms, and does nothing to eliminate the underlying causes. While it would be cheaper on the long run to addresses the causes, it is more convenient in the short run to quickly apply a few patches and cover up the cracks. It is the “band-aid” school of disaster management. (I suppose the rich irony of calling fund-raising concerts “band-aid” is lost amid the hysteria that follows a major headline-making disaster.)

It is all Karma, neh?

You see, CJ is an old friend of mine who lives in Berkeley, California. What the heck would he be doing in the lobby of a hotel in Bhopal, however nice the view of the lake? As it turned out, he too was attending the conference since he was in Delhi and Bhopal was just a short flight away.

CJ is a vagabond and what he uses for money has been a bit of a mystery to me. He likes the good life. If you have been following my scribblings, you may have already come across him in “Do the Taliban have Buddha Nature?”. I like hanging out with CJ because he is a contrarian.

We ended up having a beer at the restaurant that evening.

“So, CJ,” said I, “what’s new in New Delhi?”

“Nothing new. Same old crap. The fog is something terrible. Of course, the bunch of blinkered retards that rule India haven’t figured out that fog is an annual phenomenon. Otherwise they would have installed appropriate equipment at the airport for flights to operate.”

CJ is not a fan of politicians and bureaucrats.

“India has bigger worries than how to operate flights in the Delhi winter fog, you know,” I said. “All the politicians and bureaucrats and NGOs are worried about the digital divide. At this very conference, we are addressing the problem of development using ICT.”

“Digital divide is crap,” CJ responded.

“Well, the Minister for IT doesn’t seem to think so, for your information, CJ. In fact, they are going to make broadband available cheap for the common man,” I said.

“Digital divide is crap,” CJ repeated.

I pulled out a newspaper. “See this item here, CJ, The Broadband Village . It says here: “A village where everyone has easy access to information on agriculture, education, drinking water, electricity and health.” Thousands of such high tech villages will be the norm in two years. How? Through the magic of broadband and PCs. No more digital divide and no more underdevelopment.”

CJ read the article and declared, “That article is more full of crap than the toilets of an Air India jumbo after a transatlantic crossing.”

I was starting to realize that there was going to be a theme to our discussion. Crap. I have amazing powers of premonition, you see.

“Information is good, is it not? So if all villages have information easily accessible to them, surely it would help, wouldn’t it?” I countered.

“Sure, information is good. But what would you rather have? Information on education, drinking water, electricity and health or education, drinking water, electricity and health? These buffoons are probably stupid enough to think that handing out a menu card to a starving poor man is a great substitute for providing him a decent meal. What good will information about water do for them? It is not information on water they lack: they lack water. It is not information on electricity they lack: they lack electricity.”

I said, “Well, they are bridging the digital divide and once that divide is bridged, the rest will fall in place.”

“Perhaps there is a digital divide and maybe someday one should bridge the digital divide. But if you don’t bridge the real divides, no amount of bridging the digital divide will amount to squat. Remember that real resources diverted to bridging mythical divides are not available for bridging real divides.”

“Real divides such as what?” I asked.

“The Crap Gap,” he said. “Crossing the crap gap is more meaningful than bridging the digital divide.”

Like I said, I had a premonition. I allowed him to elaborate.

“Sanitation and clean drinking water are problems that are real and will have a greater impact on the lives of people in urban and rural India than giving them access to information and installing internet kiosks. If you provide them with just those two, you would improve their lives much more and they will suffer much less from diseases. A glass of clean drinking water will help them more than information on the internet about health. A decent place to crap in would help the women in urban and rural areas more than surfing the world wide web.

“Think about this. What would you rather have: access to clean drinking water or access to the internet? Would you rather have an internet kiosk or would you rather not have to go and take a crap on the train tracks in Mumbai? I bet you dollars to donuts that given the choice, every time you would choose a clean glass of water and a decent toilet.

“Drinking water and sanitation has been a greater divide than the digital divide and for much longer. No conferences are held on sanitation because it is not “high-tech” and those who attend these digital divide conferences don’t have the imagination to realize that human dignity is more important than the ability to surf the web.”

I was really not in the mood for more of this talk about crap. “Sure I would take a toilet over a cybercafe any day of the week. But the poor need information access as well,” I said.

“Yes, they do. But we must remember that people need health and dignity as well to live a decent human life. The sequencing of interventions is important. Do the most urgent thing first. Partly it is sheer greed that motivates the bureaucrats to try to bridge the digital divide because there is money in the purchasing of PCs. But partly it is also a basic failure of imagination. A failure to empathize with the lot of the poor. The people who attend these shindigs have toilets and they have PCs and they cannot imagine that toilets are more important than PCs. But give them a choice between WCs and PCs, and you know which one they would first run towards.”

Well, that was it then. The next day after the conference he went off to Delhi and I made my pitch on “The WC Divide Trumps the PC Divide: Why Crossing the Crap Gap is more Important than Bridging the Digital Divide.”

{ Acknowledgement: Originally I had used the phrase “crap chasm” but as Frank pointed out, “crap gap” is more appropriate. Thanks you, Frank, for the suggestion.}

Remarkable results follow from exploring the idea of opportunity costs. The whole theory of comparative advantage — the fundamental reason why trade is a win-win game — pivots around the idea. One could do worse than to sit and consider opportunity costs whenever one contemplates doing something.

In fact, I would go so far as to claim that economics at its most fundamental is the careful systematic study of opportunity costs. Opportunity costs implies choices and tradeoffs, and is itself the consequence of a fundamental physical characteristic of the universe that we live in. That fundamental fact is that this universe has limits. Each one of us has a limited amount of time and other derivative resources at our disposal.

Economics is about making choices and economic policy is about policy choices. How an economy performs depends on the economic policy choices made by whoever is in charge of making choices. All this should be glaringly obvious and you may have started wondering where all this is leading to. I was coming to that.

The last time I wrote about the craziness of the ICT for development brigade. ICT tools are of course relevant for development in certain cases. But mindlessly applying ICT in each and every place is worse than doing nothing. If you spend scarce resources buying PCs for rural areas, you neglect other more relevant areas where those resources would have helped.

Adult education, for instance, is a crying need in rural India. You can, of course, use a variety of means of achieve that, ranging from blackboard and chalk, to radio and TV, to PCs with literacy software. Examining the economics of the situation could well reveal that blackboard and chalk is the most appropriate means. For a total capital expenditure of Rs 500 and an operating expenditure of Rs 1000 per month, you could make 20 adults literate in 6 months. Per capita cost would then be about Rs 325 (about $7.) Let’s do the numbers if you were to use a PC. Cost of hardware and software Rs. 20,000; power supply for the PC: Rs. 20,000; trained manpower and maintenance per month: Rs 3,000. Total cost: Rs 58,000. Per capita cost: Rs 2,900 (about $65.)

Of course, one could always use the PC for a number of uses, not just adult education. Instead of just educating 20 people, one could use it more intensively by say using it 12 hours a day and thus train 5 batches for a total of 100 people. Still, the PC method would cost Rs 70,000 and the blackboard method will cost Rs 25,000. By using the low-tech method, you save Rs 45,000. Here is an idea. Give Rs 450 as an incentive to the people: become literate for free and when you complete the course, you take home Rs 450. Total cost to the state: Rs 70,000, the same as the high-tech solution. Same expenditure but guaranteed different outcomes.

In the low-tech scheme, you give money to the rural adults. This is an incentive to them and better still, they in turn, spend the money locally which stimulates the local village economy. They buy food perhaps which helps out the farmers. Compare that to the high-tech scheme. The money goes to the manufacturers of hardware and software, which basically means Intel, Microsoft, HP and so on.

I hasten to add that rural India has a wide range of problems. Saying that not all of them are amenable to a high-tech solution also means that there are some problems that are the properly addressed by high-tech solutions. Point to point communcations of all sorts — voice, text, video — are best done using high-tech methods. Compared to carrier pigeons and even POTS (plain old telephone system), wireless WiFi and VOIP (voice over IP) will be cheaper.

Here is the point that I am laboring to make. Here is a simple prescription on how to solve problems.

1. First, identify the problem as precisely as you can. For instance, too many illiterate people in rural areas, for example.
2. Diagnose the problem. This step is most often glossed over. What is the cause of illiteracy? Is it because they do not have PCs? Or is it because they don’t have teachers? Or maybe because they don’t have time to go sit in a class because they have to earn a living by toiling in the fields? Or is it because the upper caste people prevent the lower caste people from going to class?
3. Apply the appropriate remedy that fits the diagnosis of the problem. If it was really a lack of PCs in that village that led to illiteracy, then by all means get those PCs Fedexed immediately. But the vast majority (about 99.99recurring percentage) of humanity has become literate without the aid of PCs. So it is unlikely that the lack of PCs is the cause of the illiteracy. It is more likely something else.

There is nothing wrong with very good headache medicine. But very good headache medicine would do fancy little for you if you have an upset stomach. Psychological counseling is great but will not help a broken car. Administrative problems cannot be solved by technological means any more than casting spells fix a balance of payment deficit.

I am delighted that so many NGOs, pundits, and governments are so gung-ho about the use of ICT for development. More power to them. But if their spending on ICT diverts scarce resources to unproductive silly ill-conceived wasteful exercises, it is a pity that the same sort of idiotcracy still exists that brought the country to the sorry state that we find it in today.

But the opinion that ICT will magically transform economically backward regions is widely held. In fact, I am persuaded that precisely because it is a widely held belief that one should start to suspect it. Bertrand Russell warned:

[T]he fact that an opinion has been widely held is no evidence whatever that it is not utterly absurd; indeed in view of the silliness of the majority of mankind, a widespread belief is more likely to be foolish than sensible.

Anyway, I struggle on. It is a futile endeavor, like mud-wrestling with a pig — it is a waste of time because you cannot win and the pig enjoys it. Or even, to put it another way, like trying to teach a pig to sing: it cannot be done and it annoys the pig.

Shariputra asked The Blessed One, “What is the chief lesson that one can learn from a careful study of economics?”

Avalokiteshwara, the Bodhisattva Mahasattva, the Buddha of Infinite Compassion, etc, responded (because the Tathagata often lets others have a go at mundane questions) by saying, “O Shariputra, a careful study of economics reveals to a son or a daughter of a noble family the First Minor Noble Truth.”

Shariputra, the son of a noble family, then asked, “And the First Minor Noble Truth is exactly what?” Then Avalokiteshwara, the Bodhisattva Mahasattva etc etc said, “The First MNT is that Incentives Matter.”

Beholding incomprehension written large on the face of the noble Shariputra, the Compassionate One continued. “Aggregate human behavior in the realm of Samsara is very predictable. At its very core, that is what the study of economics is–the study of aggregate human behavior. Given the right incentives, people who are bound to the Wheel of Becoming, who have not yet gone across, behave accordingly.

“If you want them to be good, then reward them for good behavior and they will behave well. If you want them to stop bad behavior, then give them negative reinforcement and they will reduce their bad behavior. The former is called the carrot approach and the latter is called the stick approach. That’s about the sum of it: carrots and sticks.

“Noble Shariputra, if you consider this for a moment, it is quite simple really. People are motivated by selfish desires in the realm of Samsara. Of course, in the realm of Nirvana, motivation and incentives don’t matter because one has gone beyond, gone completely beyond the Wheel of Becoming.”

Shariputra began to see the light. He then asked, “Avalokiteshwara, I sort of understand that now. But, what is the principle mechanism which coordinates the behavior of the masses so that their aggregate behavior is socially beneficial even through their individual behavior is selfishly motivated?”

Avalokiteshwara, the BMBIC, replied thusly: “Shariputra, SoaNF, the mechanism is called the market and that is the Second Minor Noble Truth: Markets Work. Seemingly enlightened behavior emerges from apparent individual selfish actions–actions that bind one to Samsara and the escape from which was outlined by the Blessed One, the Tathagata, the One Who Has Gone Beyond, in his major work The Four Noble Truths which you may recall if you were paying attention the last time. But we will not digress into them right now because we are discussing the Minor Noble Truths of Samsara.”

Shariputra, clearly the bright-eyed curious student forever questioning the Avalokiteshwara, the BMBIC, said, “But do the markets always work? Are there any conditions under which markets fail and therefore don’t deliver the goods that one would expect? Under which set of conditions do the Fundamental Theorems of Welfare Economics hold? Indeed, what are the Fundamental Theorems of Welfare Economics?”

Avalokiteshwara, with a very weary look but patiently still answered, “O Shariputra, check the World Wide Web and google for those answers in about 2500 years. In about 2500 years, a bunch of bright guys would have mathematically proved the FTs of WE. If you are really interested, get yourself a few credits of economics courses. For now, let me give you a glimpse of what you will learn.

“You will learn that market failures are common because the conditions under which the fundamental welfare theorems hold are rather strict. Information imperfections, for instance, is one of them. But when information technology advances sufficiently, then markets will become more efficient. Of course, the markets will become bigger also. So the information requirements will also increase. All this increase in market size will be due to globalization and globalization will create its own discontents.”

Shariputra was silent for a moment. Then he asked, “Yabbut, in the real world, markets fail. Is there some remedy, however imperfect?”

Avalokiteshwara spoke thus: “O Shariputra, SoaNF, it is the role of an enlightened government–the state– to gently correct for some of the failures. I think that the best governments must use light-handed regulations to fix market failures. Of course, in the real world, government failure is often more harmful than market failures. But that is an imperfect solution in an imperfect world. Why so? Because goverments are not a collection of Buddhas, enlightened beings who have transcended their desires. Governments are not comprised of Bodhisattvas, those enlightened beings who vow to delay their own departure until all sentient beings have attained Nirvana. Quite to the contrary, actually. Governments are collections of equally deluded people generally.

“Talking of people, don’t forget that today we have only 300 million people in the whole planet. In about 2500 years, you will have 6000 million all of whom will be interconnected in a complex web of commerce (some of it on the Internet.) An important side-effect of increase in the number people and increase in market size is that governments will have to increase. In a primitive economy, say the Robinson Crusoe economy, government size can be zero. But in a modern economy, the more complex the market and the economy, the more government is needed.”

Shariputra said, “What you are saying, if I understand you correctly, is that an ideal government would be able to intervene in cases of market failures but that in the real world, ideal governments are as rare as unicorns. And further, that the market usually delivers the carrots and sticks that drive people to behave well but in case the market fails to do so, then the government has to get into the carrots and sticks business. But, according to you, the problem is that governments themselves need carrots and sticks so that they can continue to govern well. Isn’t that a bit of a problem?”

“Quite so, O Shariputra. Use the same principles and apply them to governments. Just like market participants are rewarded for bringing good stuff to the market, so also government employees should be rewarded for delivering good governance and if they fail to do so, they should be given the stick without delay.

“See we are sitting in Bihar, the state that will in about 2000 years become one of the most misgoverned pieces of real estate on the planet. If you take the leaders of the government of the state of Bihar and force them to live for a year under the conditions that the bottom 10 percent of the people of Bihar live, they will quickly come to their senses. It is simply because they who misrule don’t get subjected to the pain of those whom they cause pain to, that they continue to misrule. String up the corrupt bastards and you will soon fix the problem.”

Shariputra was shocked. Avalokiteshwara, the Buddha of Infinite Compassion was advocating summary execution? He could not believe his ears. “O Avalokiteshwara, how can stringing up corrupt officials be a compassionate thing to do?”

Avalokiteshwara, the BMBIC: “O Shariputra, son of a noble family, do you send your children to school and does it not cause them pain at times? But you still do that because of your compassion. You cause them pain now but they will grow up to be worthy citizens and thank you for educating them later. So also, by stringing up the corrupt officials, you are hastening their journey to buddhahood. Not just that, by shortening their present stay in Samsara, you are helping them by not allowing them to accumulate more negative karma. And finally, if they cannot continue their corrupt ways, millions of ordinary citizens will lead more human existences once the corrupt ones have departed this mortal coil. So you will string up say half a dozen of the biggest offenders. Big deal. But that will put the fear of God (imaginary being that many deluded people think exists and who they believe takes a personal interest in their silly matters) into them, to use an expression and deter many from getting started down the road to perdition at all. In short, governments will again be staffed with people who are into doing good stuff, not by people who are in there just to make a fast billion and stash it away in some Swiss bank account.”

At that point, the Blessed One, the Tathagata raised a flower in his hand and said, “Very well said, O Avalokiteswara. You have expressed some of the Minor Noble Truths for now. We should continue to examine this very fascinating subject later. But now it is time to pick up our begging bowls and head off for something to eat. The people of Rajagriha turn in early these rainy days and once they shut the doors, we cannot seek alms and we will have to go to bed hungry. You don’t really want that, do you?”

Hearing the Buddha bring this session to close was a great relief and everyone–the gods, the asuras, the monks–rejoiced.

Thus have I heard.

Anything is one of a million paths. Therefore you must always keep in mind that a path is only a path; if you fell you should not follow it, you must not stay with it under any conditions. To have such clarity you must lead a disciplined life. Only then will you know that any path is only a path, and there is no affront, to oneself or to others, in dropping it if that is what your heart tells you to do. But your decision to keep on the path or to leave it must be free from fear or ambition. I warn you. Look at every path closely and deliberately. Try it as many times as you think necessary. Then ask yourself and yourself alone, one question. This question is one that only a very old man asks. My benefactor told me about it once when I was young, and my blood was too vigorous for me to understand it. Now I do understand it. I will tell you what it is. Does this path have a heart? All paths are the same: they lead nowhere. They are path going through the bush or into the bush…In my own life I could say I have traversed long, long paths, but I an not anywhere. My benefactor’s question has meaning now. Does this path have a heart? If it does, the path is good; if it doesn’t it is of no use. Both paths lead nowhere; but one has a heart, the other doesn’t. One makes for a joyful journey; as long as you follow it, you are one with it. The other will make you curse your life. One makes you strong; the other weakens you.

From time to time, I find myself asking where am I headed. Don Juan is right in his claim that all paths lead nowhere. Lacking any specific distinguishing destination, the journey has to be the destination. The important thing then is the choice of path. The way that has a heart is the one that I should journey on.

I do see myself as a seeker of — what I call for lack of a better term — truth. Jiddu Krishnamurty’s insight that truth is a pathless land is enlightened. That is, there are no hard inbuilt paths which traverse the plane that is the truth. Anyone who claims that there is only one path to the truth — and more importantly that it is the path that they are on that leads to the truth — I summarily reject. Hence my antipathy towards all revealed religions. To me, truth is a pathless land where the path you follow depends on you. Whatever path you freely take, is the path that is for you. Following that path is your dharma, as the Indian spiritual traditions hold.

The ancients of China had another great insight into the path. They called it the Tao or the Way. They realized that the Way — the Tao — cannot be circumscribed or defined. Any attempt at limiting and describing the ineffable was futile. They said therefore

The Tao that can be named is not the Eternal Tao.

The ancients of India also have a way of expressing that same idea. When it came to defining the Truth, they responded neti, neti or “not that, not that.” Whatever you conceive of as the Truth, it is not that. That is the negative conception of the Truth.

There is a positive conception of the Truth that the ancients of India expressed as Tat tvam asi or “I am that“. It is a non-dualistic apprehension of the world — that which is not you is also you. The path and the traveler are the same, the dance and the dancer are identical, the question and the questioner are identical. I am the Bramha and I am the hymn to the Bramha.

Which brings me back to where I started. Does the path that I am on have a heart? It does.

If Islam killed the state of Bengal, it was the communists who, having ruled WB for decades, drove the nails into the coffin and finally buried it. I do not mean to imply that the job is done. Both Islam and communism are still very busy with the death and final destruction of Bengal. But for the grace of god (to use an expression), if my recent ancestors had not moved out of Bengal, I would probably have been a rickshaw puller in Kolkata, or even worse a Bengali Muslim wearing a skull cap and an Arabic beard with a few Arabic-named wives covered head to toe in portable black tents with 14 children living in a slum who went to madrassas where all they did is memorized the Koran in Arabic and bowed in prayer towards Saudi Arabia five times a day and having had no education end up dirt poor and blame the kuffars (non-believers) for their misery.

One wonders what it is in the Bengali psyche that they are so easy prey to such ideological idiocies. Did the poverty come first and then the Islam and communism, or did Islam and communism come first and only then poverty took root? Or is it that they co-evolved? Are they both cause and consequence or did one precede the other? Will West Bengal go the way of Bangladesh (formerly known as East Bengal, and later as East Pakistan) and if so, will it gradually evolve into a Bangladesh in about 20 years or will the transformation happen in a relatively short time, say 5 years? Whatever be the case, the sad inescapable fact appears to be that what Bangladesh is today, West Bengal will be tomorrow. Unless of course, the Bengalis wake up and smell the stink that emanates from every nook and cranny of their pathetic state, and do something about it.

Every year around late October, a magical transformation of Kolkata happens for about a week. We call it Puja. The occasion is the annual visit of a certain daughter to her parents’ abode. Devi Durga comes home with her brood to visit briefly and the people of Bengal lay out the red carpet like nobody’s business. To Bengalis, Durga is the divine Mother. Let me give you a brief background on who she is. In Hinduism, the universal force has two components. The male principle is represented by Shiva, and the female principle is Shakti. Parvati, the wife of Shiva, is the personification of Shakti. Parvati has many incarnations. As the Mahadevi (maha=great, devi=goddess), she is Durga and represents strength. Her other notable forms are Mahalakshmi (lakshmi=goddess of wealth) and Mahasaraswati (saraswati=goddess of learning and knowledge). So Durga represents strength, wisdom, and prosperity.

In Bengali popular iconography, Durga is shown with her children. The daughters are Lakshmi (prosperity) and Saraswati (knowledge), and the sons are Ganesh (learning), and Kartik (I am not sure what he is about but I am guessing he stands for courage.) Durga’s vehicle is a lion; Lakshmi’s mount is an owl, Saraswati’s mount is a swan, Ganesh’s mount is a mouse (nice irony there — an elephant riding a mouse), and Kartik’s choice of wheels a peacock. Durga is represented with ten arms symbolizing multi-dimensional power and she wields an impressive assortment of weapons to fight evil. She is shown riding her lion and in the act of destroying a demon. The idols are made of clay and lavishly decorated. Thousands of installations of Durga spring up in neighborhoods in Kolkata and for five days it is festival time and people pull out all the plugs. On the final day, Bijoya Dashami, the idols are taken and immersed in rivers and lakes. Clay returned to where it came from. The Bengalis wave a tearful goobye to Mother Durga for one year.

I spent the last week visiting Kolkata. Seeing Puja in Kolkata was on my “50 Things I Must Do in 2004″. Be in Kolkata during Puja: Check.

While there, I had a brief meeting with West Bengal Government Minister in charge of Information Technology, and the Secretary for IT. Here is my letter to the Secretary Dr. G. D. Gautama, for the record:

Dear Dr. Gautama:

Thank you for taking the time to meet with me and please convey my appreciation to the Minister for his willingness to engage in debate on the matter of how best ICT can be used for the rural population.

ICT for development and growth is an admirable objective. But I am afraid that powerful vested interests are hijacking the noble goal of development for narrow commercial gains at the expense of poor people. Computers are well and good for a very wide variety of purposes — from laser surgery to engineering design to cost accounting to learning and entertainment. But PCs are complex entities which require a deep infrastructure for them to be effective. The infrastructure required is not just the physical ones such as power and supply channels for all the bits and pieces that go into their operation, but also human infrastructural resources such as a trained manpower to use them and maintain them. Placing PCs in an environment where these things are missing (for whatever reasons) is counterproductive. PCs are expensive playthings that the very rich can afford to misuse and underutilize but a poor economy like India has to be very careful in spending limited resources on buying PCs which end up as expensive doorstops.

The boogey of a “digital divide” is meant to scare people witless so that they can buy the next half a million PCs and enrich the already rich who sell PCs. There are alternative inexpensive technologies which are more appropriate in the Indian context but they get short shrift because the lobbies don’t exist to push them.

I am afraid that West Bengal is not immune to the seductive theory that if only every villager had a PC, WB will magically become a developed state. PCs are neither necessary nor sufficient for development. Going down that route will not only bring financial ruin, it will also delay any hope of development which currently exists.

I will follow the development of WB with great interest as it is a test case for how development should not be done. There are very interesting lessons to be learnt from pathological cases as well.

Best wishes,

Atanu

Someone promptly responded with effusive piety:

“Enemy”, in this context, doesn’t refer to those whom one has hurt; it refers to those who would hurt one. You have no enemy only if there is no one who would hurt you. Having defined what enemies are, Jesus’ admonition was to love enemies rather than, say, cultivate a desire to break their legs.

My follow-up to that was that if enemy is defined as above, and the injunction to ‘love’ them holds for them, then we have a bit of a problem. That strategy is not evolutionarily stable. In fact, I would go so far as to say that it is immoral. Here is why.

Suppose you define the social good to be that the total amount of misery is minimized. Assume that society has two classes of people: “leg-breakers” (LB) and “enemy-lovers” (EL). A person can choose to be either a LB or an EL based on their preferences and the prevailing conditions. The probability of an EL getting his leg broken is proportional to the fraction of population who are LB. If there are no LBs in society, EL don’t have an incentive to change their class and it is an equilibrium.

However, if the LB fraction is non-zero, then because only ELs get their legs broken, and because being a LB does not expose you to any risk of broken legs (because ELs don’t go around breaking legs but love those who break legs), there is an incentive for the more sensitive ELs to switch to becoming LB. This switch raises the fraction of LBs in society and therefore the remaining ELs are at a greater risk of broken legs. This causes even more ELs to switch.

As you can imagine, all this raises the total misery in society till you reach the other equilibrium where the entire society comprises of LBs. Of course, if LBs don’t break the legs of their own kind, this equilibrium point puts an upper bound on the total misery of society. The situation becomes much worse if LBs finally turn on their own kind once the number of ELs have been driven to zero.

The above model suggests that the strategy of not imposing a cost of breaking legs on LBs actually encourages the growth of LBs in that society [1]. You end up with a socially undesirable number of LBs.

The ethical position, it seems to me, is that socially harmful behaviour must be discouraged. Leg-breaking imposes what is called a negative externality, namely pain. To properly internalize this externality, you have to credibly commit to break the legs of anyone who breaks another person’s legs [2]. Assuming that a LB is a rational being, he would find the benefit of breaking legs (joy of seeing another suffer, for example) not worth the cost of breaking legs (pain of having their own legs broken.) So it would deter that behaviour and therefore reduce the aggregate amount of leg-breaking going on in society. It would lead to a more civilized society.

The above analysis could explain the saying that in the conflict between the Greeks and the Barbarians, the Barbarians win. This situation could arise only if the Greeks are more ‘civilized’ and employ the love-thy-enemy (or some similarly brain-dead) strategy while the Barbarians are not bound by any such rules. A real instance of the ‘Greeks versus the Barbarians’ model is what happened to India over the millenia. The invading hordes repeatedly brutalized the peaceful people of India [3].

Finally, the model also explains why an intolerant and cruel religion would spread in a population. If the population initially followed a peaceful and tolerant religion, the invading religion would have an advantage and the final equilibrium would be that the entire population would switch to the invading religion. A natural experiment which is finally coming to its inevitable conclusion is what you see in Pakistan and Bangladesh. The non-Muslim population is being absorbed by the Muslim population, as the LB-EL model would predict.

NOTES:

1. A related bit of folk wisdom is contained in the statement that shielding a fool from the effects of his folly has the ultimate result of filling the world up with fools.
2. The old eye-for-an-eye thing of the Bible. Gandhi noted that that strategy would make the whole world blind. My analysis suggests that it would have the opposite effect. If you can guarantee that anyone who pokes anyone elses eyes will have both his eyes poked out, everyone would think a million times before they give in to the temptation of poking anyone’s eyes out. In a Gandhian world, people who enjoy poking people’s eyes would have a terrific old time and a good number of people will have to go through life blind or at least semi-blind. In the non-Gandhian world, no rational person will find it beneficial to poke anyone’s eyes out.
3. Not just peaceful, but evidently unspeakably stupid as well. One fellow called Prithviraj Chauhan defeated the same barbarian 16 times in battle and let the barbarian go. The 17th time the barbarian defeated Chauhan and promptly beheaded the silly bastard.

Check out a brief intro to the Panchatantra from my blog. From the introduction to the translation by Arthur Ryder:

The Panchatantra, being very wise, never falls into the vulgar error of supposing money to be important. Money must be there, in reasonable amount, because it is unimportant, and what wise man permits things unimportant to occupy his mind? … Needless to say, worldly property need not be, indeed should not be, too extensive, since it has no value in possession, but only in use…

Most people are “materialistic” because they don’t have sufficient material. If they had the required material, they would not be “materialistic.” Humans are rational creatures. They will not bother with something that is unimportant. A thing only becomes important when there is a shortage. To make a thing unimportant, see that reasonable amounts of the stuff is available.

Water is unimportant only when there is sufficient amounts available to go around. If you are stranded in a lifeboat, water becomes important. You can make the most impassioned speeches about the greatness of self-sacrifice and nobleness of sharing, but it will not amount to a hill of beans when there is only a little water left and people have to fight to survive.

The objection would be that some people can be “too materialistic.” Let me try to understand that. I suppose it means that some people spend too much of their time running after material things. So what? It is their time and it is what they evidently value. They have nothing better to do. For myself, beyond my basic material requirements (basic as defined by me, not by anyone else), I am quite happy to pursue other interests that I have. As far as I am concerned, a person who spends all his time and effort gathering stuff is more to be pitied than censured. He is being stupid and missing out on other things that life has to offer.

Running after material things at the cost of everything else is stupid, not immoral. So the proper attitude towards these people ought to be, “You are astonishingly stupid”, not “Be good or else god will punish you.” I recall one of Tolstoy’s stories called “How much land does a man need?”

Since I had read it when I was a wee laddie, the details are murky. But the essential bits are these. A man in Russia was granted a fortune in land by the tsar. He could have all the land his heart desired provided he could mark out the territory on foot between sunrise and sunset and be back where he started. So on one fine long day, he starts off at the crack of dawn and runs as fast as he can marking land for himself. He keeps up a very fast pace throughout the day and although he has to get back before sunset, he is tempted by the next field and so on. Eventually, he starts running back to the starting point. He just barely makes it as the sun is setting. He has collected a huge amount of land. He collapses on the ground through sheer exhaustion from running for land and dies.

They bury him right there — in a plot 6 feet long, 3 feet wide. That’s how much land a man needs.

Mumbai, however, is not showing any real monsoon activities. Indeed, a couple of days of dry weather was the reason that it took me about 2 hours to get from Kandivali (the northern Mumbai suburb where I live) to Lower Parel where I go to work six days a week. Most of Kandivali is in the second world while most of Lower Parel is in the third world. I had noted in this journal the distinction between upper and lower Mumbai where I wrote:

Mumbai is a fascinating place. It is place where the rich and the poor live cheek to jowl, where the so-called first world, the second world and the third world co-exist in the same geographical space. In a manner, it is a microcosm which reflects the global economic condition.

The co-existence of the first world and the third world in Mumbai is made possible by a stratification in the vertical dimension. The boundary is approximately around 20 feet off the ground level. About 20 feet above ground level, you have the first world. Below 20 feet above ground level, the second and the third world live, with the second world occupying the higher floors below the 20 feet mark.

Mumbai is what I would call the Triple Point of the World and indicate it as Zero Degrees Human. If you had been paying attention when you were being taught elementary physics in school, you would immediately get my point. For the scatter-brained, here is what I mean. The triple point of water is zero degree celcius and is so called because H2O exists in all its incarnations — solid, liquid, and vapor — at zero degrees celcius. In Mumbai, you have the fabulously rich, a middle-class, and a huge abjectly poor population all co-existing at Zero Degrees Humanity, as I will explain in a little bit.

But I digress. I was going on about how a dry spell was what led to my excellent two-hour journey from my apartment to my work place, a distance of about 16 miles. It was Friday morning when I woke up a bit too late and decided to start off at 9 am. The first bit of my journey is always an autorickshaw to the Kandivali local station about a mile and a half away. It took me an hour because of congestion. The so-called Western Express highway was crawling along. The fumes rising up from the collective exhausts of hundreds of vehicles packed bumper to bumper could have caused the upper respiratory tract infection I am suffering from now.

So we finally get off the “highway” and loop around to go underneath it. At that point, it took about a half hour to move about 100 yards. Here is why. The roads, never great exemplars of their set, had deteriorated due to the rains and sections of it are best described as torture-tracks for vehicles. Craters the size of wash-basins dot the stretch under the highway. Because it had been dry for a couple of days, they who are incharge of “maintaining” the roads decided that it would be a good time to fix the craters. What better time, they must have thought, than 9 AM on a Friday morning to do so. So they parked a truck full of baseball sized rocks right in the middle of a 20-foot wide road and were busy dumping those rocks into those craters by hand.

We are a poor country. Why? Because we don’t have stuff. Why? Because we don’t produce too much stuff and we have a large population. Why doesn’t the large population produce stuff? Because it takes forever to get things done around here. Why? Because we don’t think. We don’t think that perhaps 2 AM in the morning would be a better time to dump rocks on to a road. Silly idea to begin with, but it gets worse when it also adds thousands of hours to the already unbearable commutes. Little things like that add up and we end up being a nation with the lowest productivity in the world. (It is a silly idea to dump rocks in to those craters because after the dumping is done, traffic will rearrange the rocks so that the rocks move to the edges of the road and the craters are back to where they were and now the rocks just add to the friction on that road. But hey, who cares. The Mumbai road people have spent a few thousand rupees fixing the road and that is that.)

As I had pointed out elswhere, there is the objects gap: not having too much stuff to produce more stuff with; and there is the ideas gap: not having enough brains to make efficient use of the limited amount of stuff one has to work with. Not having expensive road-repairing machines is the objects gap. Not having the brains to fix the roads (for whatever it is worth) at a time which would be least disruptive to traffic is the ideas gap. If you have an ideas gap, it wastes resources. There is no point in trying to make the roads “electronic intelligent roads” when the people so are astoundingly dumb.

All things must pass, as the wise remark. So we too passed through that bottleneck and I ended up at platform number 2 of the renowned Kandivali station. It was 10 AM. Trains arriving on this platform originate from Borivali, the neighboring station. For most of the day (about 16 hours), the congestion is so high that the trains are bursting at the seams when they leave Borivali. Around 10 AM, getting on a train in Kandivali is an adventure, to put it mildly. I have a First Class pass. About a sixth of each train is “first class” meaning the seats have vinyl coverings instead of the uncovered wooden seats in second class. Also, first class costs about fives times as much as second class. The crowding in second class is of course several times worse than in first class.

People who write great works such as Charles Dickens or Leo Tolstoy or Salman Rushdie (never read the guy but I had to put in an Indian) could perhaps describe in words what one experiences on the Mumbai locals. I certainly cannot. I can only gasp in disbelief, and that too in retrospection because you cannot gasp when you are jammed into a compartment which is meant to accomodate 50 people has about 250 in it. Sardine cans have been put to shame when they are compared to Mumbai locals. Those trains are designed to carry about a thousand people. They routinely transport about five thousand people instead. And most of these five thousand make it to their respective destinations.

I say most of these make it home because a very small insignificant percentage don’t survive the journey. Over 10 people die during the journey on a Mumbai local every day. That is, about 330 people die very month while traveling on Mumbai locals. Every year, about 4,000 people leave home, catch a Mumbai local, and end up dead in an hour. It is like with clockwork regularity, every month a 747 crashes and kills all 330 people on board. And everyone takes that as normal and carries on with business as usual. I chose my words carefully when I wrote insignificant because 4,000 people a year in a place which has 18,000,000 to spare is not a big freaking deal. Due to the astonishing surplus, the people are disposable. There is more where they came from.

Their deaths are unremarkable events. Newspapers which routinely report the latest shenanigans of Hollywood sleaze-bags on their front page don’t even mention the passing of 4,000 humans as they struggle to survive. Once in a while a particularly gruesome death is reported in the third page of a rag such as Midday. For instance, a few weeks ago, that paper reported that a 16-year old fell off of a local and his limbs were severed. He lay there by the side of the tracks for half an hour in agony. Police finally picked him up, put the limbs in a plastic bag and took him to a hospital where he was declared dead on arrival. His mother later said that he was in so much of a hurry to get to his school that he forgot to take his lunch with him that morning.

In the half-hour that he lay bleeding on the tracks, about 10 trains must have passed the scene. Thousands must have seen the boy lying there crying for help. They did not do anything. They could not do anything. Surely the trains could not stop. Because if they did, local train transportation would come to a halt. If you delay a train by an hour everytime someone dies on the tracks, then about 11 trains would have to be stopped for an hour every day. That will cause all following trains to back up and that is that. There is no slack in the system and that is what happens when congestion is the norm. Any minor disruption and the tipping point is reached and the system collapses.

India is a crowded country and in the resulting congestion, everyday humanity is lost. Recently reported, a man gets on a train and is randomly picked on by a bunch of people and severely beaten for no rhyme or reason. People lose their humanity when the pressures reach a breaking point. India has arrived at the triple point of of the world which is zero degrees humanity.

We cannot afford the sort of luxury that I learnt about last July in Sydney Australia. My brother’s friend, JV, is a local train driver in Sydney. I stayed with him and his family for a few days. He was on “disability” and was seeing a psychiatrist. A few months ago, someone died on the tracks when he was driving. As a result of the trauma he experienced, they gave him a couple of months’ leave and was being given counseling and medication to help him sleep at night. When one person dies in a train accident, it is a tragedy; when 4,000 die every year, it is a statistic (as the man said).

At zero degrees humanity, we see children carrying babies and begging and we turn away. We are so inured to seeing the thousands of abjectly poor people we come across every day that we don’t even bother to sit and consider for a moment some way out of this horror. We don’t even want to investigate the causes of this horror, leave alone doing something about it. We are a sick and a dying civilization. A hundred million malnourished children is a statistic that does not keep us awake at nights. We are not civilized by the standards that Bertrand Russell set when he wrote that the mark of a truly civilized human being is the ability to read a column of numbers and then weep.

Russell encapsulated a lot of meaning in that one statement. If you were to be physically injured, you hurt. Direct injury every type of animal reacts to, including humans. But humans with even rudimentary degrees of empathy feel psychologically distressed when they perceive someone else in front of them in pain. Then there is the next level: where you don’t see the suffering of another sentient being but are told about it by someone else. You hear that your friend’s brother’s father-in-law is dying from cancer and you feel empathy for your friend’s brother’s father-in-law. Our ability to read gives us a very wide window to the world, and often what we learn about the world through that window causes us sorrow. I am sure that you felt some pain when you imagined what it must have been like for that 16-year old who died on the train tracks. It was words, symbols that we have learnt to derive meaning out of, and your empathy that caused you to feel that pain. Abstractions can be painful for one sufficiently trained in symbol manipulation and who have basic humanity within. Numbers are even more abstract than words. It is a far remove from actually being physically hurt to being hurt just by reading a column of numbers.

We should be weeping when we learn that so many millions lead lives of grinding poverty. We don’t because that is the first step to a very long and hard road. If we did, we would be forced to give up our cherished notions of how it will all work out. We will have to admit that, for instance, IT (information technology) may not have the answer to our persistent poverty and the root cause is somewhere else. We may have to let go of our ignorance which says that we can grow ourselves out of this trap — if we only get the right amount of subsidy to the poor, we will have solved the poverty problem. Or if we had sufficient number of job reservations, we would all be fine. Or if we were sufficiently socialistic or communistic or whatever, we would have solved the problems.

Ladies and gentlemen of the jury, we have arrived at Zero Degrees Humanity. How did we get here? By being ignorant of, or even deliberately ignoring, one simple little truth taught in Econ101: the law of supply and demand.

Goodbye, good night, and may your god go with you.

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Here is something entirely different. From The Scottish Himalayan Expedition by W.H.Murray:

Until one is committed, there is hesitancy, the chance to draw back, always ineffectiveness. Concerning all acts of initiative (and creation), there is one elementary truth, the ignorance of which kills countless ideas and splendid plans: that the moment one definitely commits oneself, then Providence moves too. All sorts of things occur to help one that would never otherwise have occurred. A whole stream of events issues from the decision, raising in one’s favor all manner of unforeseen incidents and meetings and material assistance, which no man could have dreamt would have come his way.

I have learned a deep respect for one of Goethe’s concepts:

Whatever you do, or dream you can, begin it.
Boldness has genius, power, and magic in it.

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Made the mistake of flying Indian Airlines. What amazes me is that in the past few years I have never been on an Indian Airlines flight that actually departed or arrived within a half hour of its scheduled time. They suck the chrome off of a bumper of a 1960s Chevy parked 40 yards away. Arrived in Hyderabad nearly two hours late after an hour-long flight. I got a bit tired of their tardiness when on the return, the flight was late again. I spoke to the cabin crew while waiting for doors to open. Have you, I asked, ever been on an IA flight that actually departed or arrived in time. They said sorry but they feel the same way and would I be kind enough to complain since they cannot do so. Now isn’t that precious.

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Back to the workshop at ICRISAT which stands for “International Crop Research Institute for the Semi-arid Tropics” and is located in Patancheru (I love that name) which is about 30 kms outside Hyderabad. India is mostly semi-arid tropics although there are small bits of India which are real tropics and other parts that are totally arid and yet other parts that can pass as Amazonian rain forests.

Talking of Amazon, I like that name as well. Actually, some of my favorite names are river names. For instance, consider the mighty Bramhaputra, the son of Bramha. There is power and majesty in that name. There is mystery and dread in the name Okavango. There is more than a hint of fear in the Zambezi. But Orinoco evokes a sense of playfulness and fun (remember Orinico Flow by Enya?) I like the name Oglala which is a huge aquifer in the United States. The Oglala is about 250,000 square kilometers in area and contains an estimated 2 billion acre-feet of water. Water is, of course, one of the most important natural resources and will define the limits to growth in the not too distant future.

Back to the “South Asia Regional Workshop on Good Practices in ICT4D: Their relevance in agricultural extension and communications.”

{Digression: What is with this using numbers when they should be using letters? Is ‘4′ a reasonable substitute for ‘for’? Is it laziness or is it a mix of illiteracy and innumeracy or is it cutesiness of the type that appeal to toddlers who go to “Toys-R-Us”? I am inclined to believe that it is plain old fashioned stupidity, going by the general IQ of the practitioners in the ICT for development arena.}

{I think this is continued somewhere else but I cannot figure out where right now. I will work on this one later. (Edited July 2005.)}

I believe that the model has interesting implications and is worth pondering. The DA game involves the auctioning of a dollar bill similar to an ordinary auction where the winner gets the dollar but with the special requirement that the second highest bidder has to pay the second highest bid amount to the auctioneer.

Wars resemble DAs since the losing side in a war does not get the ‘prize’ but has to pay the cost of engaging in war. In other words, in war, all costs incurred are sunk costs.

The DA suggests that to reduce, or even totally eliminate sunk costs, one side has to make a credible commitment to winning the auction at any cost before the auction starts. That sends a signal to the other players that there is little point in bidding against someone who has made a credible commitment to win regardless of costs. Of course, sending that signal itself would incur some cost and the cost of signaling has to be less than the benefit of winning the auction. There has to be some cost in signaling because otherwise the signal will be disregarded as cheap talk and competitors will enter the game and bid up the price of the dollar.

The DA is a general purpose model which is applicable in a wide range of situations we commonly face. It is a mental model worth keeping in one’s tool-bag.

In the context of economic development, I totally agree with the latter bit, but strongly disagree with the former bit. If we don’t sweat the small stuff, we don’t have much hope of managing the big stuff since the big stuff is exactly what arises from an aggregation of all those small bits of stuff.

I just went out to lunch in the neighborhood of where I work. A passerby stopped me to ask me where a certain company was. I said I don’t know but if he had an address, I could perhaps direct him. He only knew that it was close to the ‘Empire Building’. We spent some time trying to locate it and then finally gave up. I don’t know how long he spent walking around in the noon-day sun trying to get where he wanted to go. Perhaps he just wasted an hour, a lot of shoe leather, sweated in the heat, and when he arrived, he was tired. The opportunity cost of his trying to find a place is small but non-zero. He could have spent more time with his family or done some productive work. Add the cost of millions of people spending non-productive time searching, and soon you get a significant amount of loss.

That streets should have a name and locations along a street should have a number is a concept that should be evident to the meanest intelligence, one would expect considering that it is not exactly rocket science and that many parts of the world have had that innovation for generations, if not centuries. Yet it is a rare exception when you can find a place in India without an algorithmic description of how to get to it. A typical letter in a typical developed world would read:

Ramesh Singh
123 Gandhi Road
Pune, Maharashtra 44123

In India, it would be

Ramesh Singh
Networld Building
Opp: Star Cinemas
Vasant Sagar Complex near Local Station
Deccan Gymkhana
Pune, Maharashtra 44123

I have spent frustrating hours of my life searching for places in unfamiliar places such as Mumbai and Delhi, going round and round in circles in a cab asking people for a location. I assume that I am not alone and that in a country of a 1,000 million people many of whom find themselves in unfamiliar surroundings in the course of daily living and working, the story of spending time and energy needlessly is repeated a few tens of millions of times daily. Add that up for weeks, and months, and years, and decades — and soon you have a huge amount of wasted time and energy.

I have a prediction to make: that in about 10 or 20 years at most, Indians would have figured out this whole new-fangled thing called street addresses. We are bone stupid but not that abyssmally stupid that we cannot learn from others that street numbering saves time and energy. Since I am at it, I will make another prediction: that in about 10 years time we will learn the benefits of a standardized telephone numbering system and even learn that it is easier to read a long string of number when written thusly 408-083-2543 instead of thusly 4080832543. One may say that it really is a very minor matter. But it is not. Misdialled calls, numbers you cannot easily remember or copy down without errors, having to wonder if you need to add a 2 before you dial this number or should you add a city code or whatever is a needless aggravation.

Enough about phone numbers for now. The larger point is that standardization matters. It eases the friction that accompanies transactions which increase as an economy develops into a more complex web of interactions. Reducing transaction costs is what increases the pie because transaction costs are sheer losses (or dead-weight losses) that benefit no one. In a village economy, street addresses are not needed because everyone knows where everyone is and what he is up to today. In a city of a few million people and a few hundred square kilometers of buildings, one has to be more systematic.

It is all the small stuff, really, that end up making life miserable. Went to the bank yesterday. There were 20 people waiting huddled up near the teller’s counter. Surely it does not take an Einstein to figure out that handing out a number to each person waiting for a teller would ease the bother of having to keep standing in line.

I could go on and on ad nauseum about little innovations that have been around for ages and which we can adopt costlessly. I could fill volumes, honestly. There is a more important point all this is leading up to. That is, we need better technology, not necessarily ICT with its computers and cell phones and internet and world wide web. By technology I mean know-how — how to do stuff. The know-how exists. One just has to observe and learn and adopt. But observing, learning, and adopting takes thinking and effort; it is not as easy as simply buying a bunch of computers and firing off Microsoft Windows.

I am not a Luddite and I am not against hi-tech. Some of my best friends are techies and my education is in computer sciences and engineering and my salary is paid by a technology company. I just happen to believe that hi-tech needs a foundation and that foundation is made of lo-tech. Hi-tech without the lo-tech is about as useful as a car with a fancy engine but no wheels. Hey, that is a good analogy. A car with a fancy engine ain’t going anywhere in a hurry without wheels. And even if you do figure out that wheels are needed, you can’t go far if you don’t get round wheels. Square wheels just won’t do. Then even if you get round wheels, if the tires are not inflated, you get around with a lot of loss of fuel and in discomfort. That is, without air in the tires, your transaction costs are higher.

As a development economist, I have often asked myself what are the invariants that underlie development. I know for sure that high technology (computers, internet, cell phones) are neither necessary nor sufficent for development. Most of the developed economies of the world developed at a time when all those were not yet invented. I believe that one invariant is the ability to adopt innovations.

Post script: Here is a followup post The Tathagata on “It’s the Small Stuff, Stupid.”

Washington also sees India becoming a big buyer of U.S.-made arms. In the past two years, India has purchased roughly $200 million of American arms and is in negotiations to purchase P3 Orion maritime-patrol aircraft from the U.S. The deal, valued at about $1 billion, could be the biggest arms deal ever between the two nations.

There you have it. The rich sell arms to the poor and the poor pay for it through the blood, sweat, and tears of its starving millions. To be sure, it is not the starving millions who are interested in fighting the poor of the neighboring countries. These millions of poor unfortunates are merely the slave labor that supply through their toil goods that the rich buy in exchange for the arms they ship to the armies of the poor nations.

It is interesting to ask who exactly wants war. Speaking personally, I am against aggression and don’t wish to be the victim nor the perpetrator of aggression. I also believe that the vast majority of people would happily live and let live. So how does it happen that nations arm themselves to the teeth and more often than not beggar their neighbors and themselves in doing so.

I believe it is so because nations are not monolithic entities. People have different stations in a country. The generals who wage wars and the politicians who direct the ship of state do not have to pay for the wars themselves. The poor have to die on the battle fields and those who are not paid to die, starve on the streets so that their meager production can be shipped out to pay for the weapons of mass destruction that the leaders of the nation buy for their own amusement.

The leaders who make the decisions do not feel the pain that the ordinary citizen feels. The leaders are shielded from the effects of their own folly. And so it goes. Now in the Indian subcontinent we have two desperately poor heavily armed hugely overpopulated countries. In time to come it would be hard for people to imagine what was the reason behind this sort of stockpiling of nuclear weapons by such impoverished people. I think that it ceases to be a puzzle when one considers that those who do the stockpiling of nuclear weapons and those who are poor constitute entirely disjoint sets.

The unfortunate thing is that as weapons become more sophisticated and hence more expensive, the poorer the poor of the poor countries become. And at the same time, and understandably so, the rich of the rich nations and the rich of the poor nations become wealthier.

Look carefully at the military-industrial complex of a rich nation such as the US. General Dynamics GD (or some such company which makes, say, figher jets) invests a couple of billion dollars to build F15s (Note: all names are made up.) Let’s say that F15s are the last word in the world of fighter planes. So the US military buys 200 of these killing machines for $50 million a pop. So will GD now have to retire their assembly line and stop making a killing? Not really likely. so they sell a few hundred of these to the allies of the US. Now will they stop? Not bloody likely.

Here is what they do. Now that they are done with selling to the US military and to the militaries of friendly countries, they tell the US government, “Look, everyone has F15s. We need F16s if we have to maintain air superiority.” So they start working on developing the next generation. So the US now has F16s, which are better than the F15s. What about selling the F15s to those third world countries that keep fighting amongst themselves? Sweet deal.

Enter India and Pakistan. India buys F15s from the US or its equivalent from say the French; Pakistan goes for the other. So now both India and Pakistan are forced to keep up with the expensive sophisticated weapons that the US and other weapon manufacturing states create, only one generation behind. The weapons manufacturers in the rich countries systematically upgrade their technology and create even more lethal weapons which cost unimaginable amounts. Poor third world overpopulated impoverished nations around the world — who cannot afford to feed their starving millions — buy weapons of mass destruction from rich nations who can afford to replace their weapon systems as frequently as a rich man replaces his cars.

The poor overpopulated misgoverned third rate countries follow the simple policy of beggar-thy-neighbor and end up achieving destitution all round. India and Pakistan are prime example of this. Within India, Pakistan and Bangladesh, nearly a billion highly impoverished malnourished illiterate people scratch out a Hobbesian existence. Yet, these countries spend billions in acquiring ever more sophisticated arms from abroad. The sheer insanity of this is so incomprehensible that it is surreal. Consider this report from The Times of India of Jan 21st, 2004: Gorshkov is launch pad for nuke deal

… while India’s $1.5 billion purchase of the Gorshkov [an aircraft carrier] from Russia may seem like a big deal, the fact is it’s just a sweetener for the main course. On the anvil: a major beefing up of India’s nuclear delivery capability, with Russia likely to lease at least two nuclear submarines and several N-capable bombers to India.

I will spare you the rest of this front-page article. It is dismal reading for anyone who is even remotely aware of the hunger and deprivation of the people of this region of the world.

Can you imagine how much human suffering can be avoided by merely spending a few billion dollars in say bringing pure drinking water, schools for all children, food for the malnourished kids, contraceptive services for women, and so on …?

These are the weapons of mass destruction — these weapons destroy whether they are actually used in conflict or not. Merely buying them condemns hundreds of millions to lives of such misery that one wonders whether it would not be better for the weapons to be used so as to put an end to the misery.

Is there a way out? I think that the leaders of impoverished countries should be required to feel the pain that the poor routinely feel. I think that anyone who wishes to be a leader has to spend a month every year living the life of an average person in the bottom decile of the population. For instance, they should have no access to clean drinking water for that month, have no heating or airconditioning, no toilets, inadequate food, have to live in filth, and no medical services. Clearly these worthies lack imagination and so they should have to live the life for just one month every year that they wish to be leaders of poor overpopulated impoverished countries.

Perhaps then, maybe then, they would be not so gung-ho about buying nuclear aircraft carriers and submarines.

The Titanic had sealed its own fate by the cavalier disregard to those ice warnings by their Marconi operators. Particularly the last two, from the Maseba at 7.30pm and the Californian after 11pm. Had they paid attention to them they would have seen they were heading straight into an icefield.
Source

Ignoring the warnings was just one of the many things that went wrong. The design itself was flawed. It was a systemic failure.

Even though only 12 feet of the hull was gouged open by the collision, enough compartments were damaged to cause the Titanic to sink. The problem was traced back to the bulkheads; they were not fully extended to the top of the compartments. As the ship went down, the water would fill up and pour over the bulkhead into the next compartment.

Source

Then there were idiosyncratic factors. For instance, the ocean was dead calm on a moonless night. If the seas had been rough, the iceberg would have been sighted sooner due to the surf at the base of the tip of the iceberg. That was a factor beyond the control of the crew of the ship.

However, the iceberg could have been detected sooner had the two crew men assigned to lookout had binoculars. For some reason, they didn’t have binoculars. A simple precaution which would have averted the disaster. But for a pair of binoculars, the disaster may not have occurred.

The iceberg was detected too late for certain. Then there was bad luck, as well. If the ship had turned a bit more, that grazing encounter would not have happened. Perhaps if the ship had hit head on, the front would have been damaged but the ship would have survived. Attempting to miss the berg altogether presented the ship’s vulnerable side to the iceberg.

And now the final insult. The ship was doomed. But nearly all on board could have been saved had two things happened. First, if the inevitability of the demise of the ship had been fully appreciated by the captain and the crew. And most importantly, if the ship had sufficient life boats on board. The first factor was within the control of the crew; the second factor was outside their control but was within the control of those in charge of outfitting the ship before it sailed.

As it happened, there was no awareness of the seriousness of the situation.

Many of the passengers did not believe that the ship was sinking, and refused to board the lifeboats. As a result many of the boats left half full, and some of the starboard boats were filled with men. To add to the confusion and disorganization, many of the passengers were getting cold from the chilly air, and went inside to relax. They did not recognize the actual severity of the accident until the first emergency flare was released. At that time many passengers began to panic, but it was too late half the boats were released and the other half was swarmed by first–class women and children. Water began to flood the lower decks of the bow and the stern began to rise out of the water.

Some more details:

The passengers on the Titanic initially did nothing. The Titanic was believed “unsinkable” and so talk of an iceberg and lifeboats did not enter the equation. Some passengers carried on with playing cards, others sang songs especially in third class as they particularly were kept uninformed.

Whilst the first and second class passengers were required to assemble on the boat deck, the third class were confined in their sector of the boat and not given instructions for some time. They were be allowed access to the boat deck at 12.30 a.m. Orders were given to release the third class and bring them to the boats. However, most of the third class passengers were not familiar with the giant liner. Her passages, corridors and decks must have been a maze to them. Some would have inevitable got lost and spent their last few hours walking aimlessly around the ship.

There were insufficient number of lifeboats to begin with. Only about half of the 2200 people could be accommodated in the 20 lifeboats on board. Even those were not fully utilized because of what I call information failure.

There are lots of what ifs one can ask. What if they had designed the ship to better survive flooding of its water-tight compartments, what if they had sufficient life boats on board, what if they had heeded the warnings, what if they had realized the severity of the damage, what if the Californian had recognized that the Titanic was in mortal danger and sailed the six miles to its aid, what if the seas had been rougher, what if the crew had binoculars, what if the ship had hit the iceberg head on at slow speed or had turned just a degree more, …

If only, lord, if only. Fifteen hundred blameless people would not have drowned that night of Dec 14th 1912 in the icy waters of the North Atlantic.

A mighty ship like the Titanic is not easy to destroy. There have to be a confluence of a large number of factors — both natural and human created — that lead inexorably to the end. What the tragedy of the Titanic is a metaphor for let’s discuss in a bit.

… We are such stuff
As dreams are made on; and our little life
Is rounded with a sleep.

    Shakespeare’s The Tempest

Writing in the Dec 28th, 2003 edition of The Week, President Kalam says, “In the 21st century, knowledge is the primary production resource instead of capital or labour.”

I have been unable to fully comprehend that insight, fundamentally because it does not make any sense. Sounds profound but makes no sense. What is a ‘primary production resource‘? Did Kalam imply that once upon a time capital and labor were primary production resources but knowledge wasn’t? What changed so that labor and capital got displaced and now knowledge holds that position?

We need to understand that production has always required capital and labor primarily, and that knowledge (or know-how) has always been an essential ingredient. The production process ultimately uses these three elements multiplicatively. By that I mean, if even one of those are at a zero level, the product is zero. There is some substitutability among them, of course. You can use more capital and employ less labor to get the same amount produced, for instance. Or you can use more knowledge (ie, better technology or know-how) to use capital and labor more efficiently. Knowledge increases what is called the production possibilities but for that to happen you have to have production in the first place.

The last point bears repetition: you have to have production before you can use technology to increase the efficiency of production. IT (information technology) is an efficiency enhancing technology. It enters the production function multiplicatively, not additively. You have to have something going there before you can obtain gains from IT use.

All this talk of India becoming an IT Superpower is a lot of nonsense because India cannot become an IT superpower without it first becoming a Stuff Superpower. India has to produce stuff that you can lay your hands on — does not matter what it is. It could be food, or it could be manufactured stuff or whatever. But it has to be stuff. The reason is that we exist on stuff — we eat stuff, we wear stuff, we get transported on stuff. We are made of stuff. We cannot exist on ‘knowledge’. We are not dream stuff even though we are such stuff that dreams are made on.

We are poor not because of lack of information — there is tons of it in every conceivable place in the world. You can get all the information you need in a neat little tiny 100 GB harddrive. It would do little to alter the fact that most of us don’t have enough to eat. The hard part is to convert the information into knowledge, and then use the knowledge to convert some stuff (we generically label them land and labor) into more useful stuff (such as food, education, factories, etc.)

Let’s get back to basics. What is poverty? Poverty is lack of income. What is income? Your income is that share of stuff produced that you get to take home for yourself. Let’s not confuse money with income. Income is often denominated in monetary units but in real terms, income is what you get to keep from what is produced overall. Per capita income is therefore a ratio: a ratio of what is produced (the numerator) to the total number of people (the denominator). You can increase income by either producing more or by reducing the number of people. If the rate of growth of production is lower than the rate of growth of the population, you will have a falling per capita income. In time, you would have deepening of poverty.

To repeat that point: we are poor because the amount of stuff we produce is low relative to the number of people we have to distribute the stuff to. Information technology (IT) can help increase the amount of stuff produced but IT can never be a substitute for stuff. So India has to become a STUFF SUPERPOWER because we are a PEOPLE SUPERPOWER. If you divide STUFF INFERIORPOWER with PEOPLE SUPERPOWER, you get poverty-ridden India. On the other hand, if you divide STUFF SUPERPOWER with PEOPLE INFERIOR POWER, you get stuff-rich USA.

I have a little secret that would like to share with everyone tomorrow. It is a secret because no one in India seems to have a clue about this. I scanned the speeches of movers and shakers in India and realized that my secret is safe. But I think, January 1st 2004 would be a good time to get started on revealing the secret.

I wish you a very Happy New Year 2004!

Thus begins one of the most inspiring stories that I treasure. It is by Jean Giono and the story is called The Man who Planted Trees. It is a short story and there is a story about the story itself which I will go into another day. I have yet to meet someone who did not find it inspirational. The story concludes thus:

I am convinced that, in spite of everything, humanity is admirable. But when I compute the unfailing greatness of spirit and the tenacity of benevolence that it must have taken to achieve this result, I am taken with an immense respect for that old and unlearned peasant who was able to complete a work worthy of God.

Stories teach us a lot provided we take the trouble to think about what they mean. I like stories that teach a deep lesson — a lesson that has wide applicability. One such story I came across in Douglas Adam’s book Last Chance to See and the story is called Sifting Through the Embers.
From areas such environmental degradation to economic development to personal striving — that story has something important to say. I will not give the punch line away right now. For now, I hope you enjoy the two stories.