Please come to Boston for the springtime
I’m stayin’ here with some friends and they’ve got lots of room
You can sell your paintings on the sidewalk
By a café where I hope to be workin’ soon

The weather is rainy and cloudy. I am staying with friends in Acton, MA.

What else? Read the commencement address by PJ O’Rourke, “Fairness, idealism and other atrocities: Commencement advice you’re unlikely to hear elsewhere” from the LA Times of May 4th. (Hat tip: Sushant.)

PJ makes four excellent points. Of course I think they are excellent because I believe in them precisely. The short version:

1. Go out and make a bunch of money
2. Don’t be an idealist
3. Get politically uninvolved
4. Forget about fairness

The other two points I only partially agree with.

(Click on the picture to go to the Picasa album with larger images.)

I got a master’s degree in computer science from Rutgers University. Visiting Rutgers was a trip down memory lane. Mega dozes doses of nostalgia.

Someecards are funny. I like the way they put a tiny label on top of the ads. The top banner ad says “Some advertising” and the side banner ad “Some more advertising.” And at the bottom of the page:

Someecards.com is possibly to probably the best site on the Web for free, funny ecards. We have greeting cards for every occasion - from important to utterly pointless. Send greetings for apology, birthday, baby, breakup, congratulations, encouragement, farewell, flirting, friendship, get well, sympathy, thanks, thinking of you, wedding, workplace, and holidays like Mother’s Day, Father’s Day, Valentine’s Day, Thanksgiving, and Christmas. We suggest you e-mail them to friends, family, coworkers, loved ones, liked ones, and anyone else with fingers.

Yet it is easy to get outraged when you consider not the relative amount but the absolute amount. That absolute amount relative to the wealth of the average Indian is obscene. I got an email which pointed to “the extravagant and vulgar display of the wealth in a very poor country, where millions go without food and shelter.” Not the most astute of observations but certainly very accurate. The adjective “vulgar” is quite appropriate.

The outrage begins with the rhetorical question “how dare Mukeshbhai build such an expensive home for himself considering that there are people who are homeless?” Then it continues on with a reference to his recent statement in his address at the Waldorf Astoria hotel in New York reported by rediff.

Business leaders across the world must come forward to correct the ‘imbalance’ in terms of incomes of the rich and the poor, Mukesh Ambani, chairman of the Reliance Industries said.

“We cannot have islands of prosperity in the oceans of poverty and squalor, and for businesses to win respect, they have to come with new business models that balances the world.”

Building a billion dollar home in the middle of squalor and then talking about the inadvisability of “islands of prosperity” certainly exposes one to charges of unparalleled hypocrisy. But here’s the irony: most of those who point to Mukesh’s hypocrisy are pretty hypocritical themselves. Mukesh’s hypocrisy is vulgar in the sense that it pertains to a lot of people, something that is common, banal or ordinary.

The senders of outraged emails need to ask themselves how much the value of their own homes rises out of the reach of the poor they so patronizingly speak on behalf of. To the really poor, a half a million dollar home is as remote as a billion dollar home. So if they wish to throw stones at Mukesh’s fancy house, they should do so from outside the confines of their own glass houses.

This display of hypocrisy is a specific instance of a more general tendency that I have noted about do-gooders. They want others to part with their wealth for the general good — but they themselves feel that their own above average wealth is entirely deserved and they don’t have any obligation to share their wealth. I find it especially galling when rich politicians lecture rich businessmen on the merits of simplicity, frugality and generosity.

My take on this is simple. If you got ‘em, smoke ‘em. Do what you will. If you have accumulated wealth by playing by the rules of the game, you decide what you want to do with it: give it away or build yourself a Taj Mahal.

Until the day that I have given away my wealth so that I am at the level of those on whose behalf I plead, I don’t think I can honestly point a finger at Mukesh or anybody else for doing whatever they want with what they have.

Sam Pitroda, chairman of the National Knowledge Commission says that of the 90,000 MBAs that come out every year, only around 10,000 are worth employing. Kiran Karnik, former NASSCOM president, puts the blame at the door of India’s education system, saying that only 25 per cent of the country’s engineering graduates deserve jobs. No wonder companies today have to invest heavily in training fresh graduates, helping them to unlearn and pick up skills. As there are dramatic changes in politics and business as well as international scenarios, there is a need to keep updating the syllabus almost every year. Manohar Chellani, Secretary General, Education Promotion Society for India, New Delhi, points out that there is tremendous scope for improving the quality of education in India, and delay in doing it will cost us heavily.

The National Knowledge Commission has said that India will have to bring in education reforms if it has to emerge as the workforce of the world. India today needs at least 1,500 universities, but has only 370. There are more than 550 million young people in need of education but do not have educational institutes to go to. India also needs around 1,500 IITs, 1,500 management institutes, and 1,500 medical schools. A million good schools are also required. All that the present education minister, Arjun Singh, has done in his tenure is to fool around with reservations and suggest that Rahul Gandhi be made prime minister.

Though the IT industry needs 3.5 lakh engineers a year, only 1.5 lakh are available. This could lead to a shortage of over five lakh engineers in the next few years. A recent Nasscom-Crisil report says that the IT industry is expected to create about 11 million jobs by 2010. In another two years, the II sector would need half a million professionals. Presently, it employs over 350,000 but is short of around 90,000 workers. In another year, the shortfall is expected to cross 200,000. In 2007, the job market was vibrant. 2008 promises to be better as India goes on to vitalise its various sectors, which require over 1,000 CEOs across industries.

Read the whole article. Here’s the puzzle: Why is it that the writer, a documentary film maker, is alarmed by the situation that apparently the honorable education minister never seems to lose any sleep over? Actually, most dispassionate observers of the Indian economy invariably point to the disaster which is the Indian education system as the greatest obstacle to India’s development. What needs to be done to fix the education system is also fairly well-understood. The problem does not have the complexity of quantum mechanics or brain surgery. The solution to the problem is certainly as well-known as the problem itself. So what is it about the problem and its solution that evade the sainted policy makers of the Indian government? What is it that they don’t understand?

Upton Sinclair had noted that it is difficult to get a man to understand something when his job depends on not understanding it. That is a specific instance of the more general principle that economists consider to be a fundamental truth about human behavior: “Incentives matter.” The system does not provide the policy makers an incentive to improve the educational system. Conversely, they have an incentive to keep the system dysfunctional. Given the current structure of incentives, they would lose whatever advantage their gain from the existing system.

The demand for education is overwhelming and urgent. In any system in which demand outstrips supply massively, rationing of the limited supply is the only option. Those who control the rationing system gain tremendously. The Indian education system is a victim of vote bank politics. If the supply were to expand to meet the demand, those in charge of handing out quotas and reservations would suddenly find themselves without the levers that not only give them political leverage but also allow them to extract huge rents that arise from a monopolistic control of the system.

There’s a follow up puzzle. It is widely reported that India is a democracy. If democracy means anything at all, it surely means that the people are in control and are the principals, and that the political leaders and policymakers are the agents that implement the will of the people.

Does the Indian population have a definite will to have a good education system? One could cynically note that they have gone through the same educational system and therefore perhaps are not fully equipped to even understand what’s wrong with it. If we don’t take that unkind stance, then we could conclude that the will exists but that will is not communicated to the policy makers. Perhaps if the people expressed their preference for a good education system, the policy makers will deliver. But the situation could be worse. It could be that the people prefer a good system, and effectively communicate that preference, but in the end the policymakers simply ignore the will of the people. Ignoring the will of the people is something that comes rather naturally to rulers of an imperial bent of mind.

So here’s my conjecture. I think that it is an unholy mix of unfortunate factors: the people only weakly understand what the problem is; they articulate that understanding imperfectly; that articulation is imperfectly communicated to the policy makers; and, the policy makers choose to ignore what is good for the country because it helps them in their narrow interests.

Final question: will we be able to get out of this whole sorry scheme and if so how?

My feeling is that the market forces will become overwhelming and change the situation. The solution will not be bottom-up from the people but top-down from the corporations. They have an incentive to have productive workers because it adds to their bottom line. The Indian industry will drive policy change. My guess would be that within the next decade we will see a massive overhaul of the education system.

I am very optimistic.

So that’s it for now from JP’s hangout in Edison NJ. The weather is nice and sunny.

Mouse-over the picture to see the controls. Clicking on the second icon from the left at the bottom shows the picture captions. Note especially the Art Institute of Chicago building where Swami Vivekanand gave his famous talk in 1893. What looks like a huge drop of mercury is The Cloud Gate:

Cloud Gate is British artist Anish Kapoor’s first public outdoor work installed in the United States. The 110-ton elliptical sculpture is forged of a seamless series of highly polished stainless steel plates, which reflect the city’s famous skyline and the clouds above. A 12-foot-high arch provides a “gate” to the concave chamber beneath the sculpture, inviting visitors to touch its mirror-like surface and see their image reflected back from a variety of perspectives.

The current global burn rate is 12.8 TW (terawatts = 10**12 watts) which is projected to grow to something between 28 and 35 TW by 2050. That figure is from the description of a course in MIT called “Renewable Energy: Capturing the Sun” (Hat tip: JP)

Sunlight is by far the most abundant global carbon-neutral energy resource. Solar has the significant advantages of wide distribution, it is the most environmentally sound energy source, and solar has the potential to meet the large scale energy needs of the future. More solar energy strikes the surface of the earth in one hour than is provided by all of the fossil energy consumed globally in a year. Sunlight may be used to power the planet by its conversion into electricity and chemical fuel. But there is a problem. A response to the “grand challenge” of using the sun as the future’s energy source faces a daunting challenge - large expanses of fundamental science and technology await discovery for sunlight-based energy systems to be enabled and a robust energy policy must be developed that permits new solar technologies to be implemented in a competitive energy market.

The course description goes on to note that significant investment in R&D is required for solar energy to compete with other forms.

The solar opportunity represents a high payoff direction with significant reward but there is no escape that the development of this energy source faces tremendous challenges and substantial breakthroughs are needed. Any viable solar energy conversion must result in a 6 fold decrease in the cost-to-efficiency ratio for the production of electricity and a 10-20 fold decrease stored fuels and must be stable and robust for a 20-30 year period. To reduce the cost of installed solar energy conversion systems from $0.25 - 0.40/kW hr to $0.02 - 0.10/kW hr, a cost level that would make them economically very attractive in today’s energy market, will require truly revolutionary technologies that do not exist at the present time. With the current science and technology landscape for solar so wide open, and no obvious “silver bullet” solution to the problem on the horizon, a comprehensive understanding of the solar energy problem and the science that underpins its solution will be the focus of this course.

I believe that someone someday soon enough would do the R&D needed. Why not India? If not India, once again it will find itself going around begging for the technology — as it is doing in the case of nuclear power.

Talking of nuclear power, I am not at all convinced that it is a long-term solution for India’s energy needs. My guide into this issue is Amory Lovins of the Rocky Mountain Institute. Read his non-technical summary article titled “Forget Nuclear” (Hat tip: Amit) in which he compares “the cost, climate protection potential, reliability, financial risk, market success, deployment speed, and energy contribution of new nuclear power with those of its low- or no-carbon competitors.”

He argues that nuclear is uncompetitive in terms of costs and CO2 displacement, is of questionable reliability, and require high subsidies to off-set high financial risks. But even given the subsidies, he notes that investors are not interested in nuclear.

. . . the private capital market isn’t investing in new nuclear plants, and without financing, capitalist utilities aren’t buying. The few purchases, nearly all in Asia, are all made by central planners with a draw on the public purse. In the United States, even government subsidies approaching or exceeding new nuclear power’s total cost have failed to entice Wall Street.

I think India needs to rethink its energy policy and figure out where nuclear fits into the larger scheme of things. The India-US nuclear deal is not a done deal yet — and that may be a good thing. Here’s Amory Lovins’ conclusion:

So why do otherwise well-informed people still consider nuclear power a key element of a sound climate strategy? Not because that belief can withstand analytic scrutiny. Rather, it seems, because of a superficially attractive story, an immensely powerful and effective lobby, a new generation who forgot or never knew why nuclear power failed previously (almost nothing has changed), sympathetic leaders of nearly all main governments, deeply rooted habits and rules that favor giant power plants over distributed solutions and enlarged supply over efficient use, the market winners’ absence from many official databases (which often count only big plants owned by utilities), and lazy reporting by an unduly credulous press.

Isn’t it time we forgot about nuclear power? Informed capitalists have. Politicians and pundits should too. After more than half a century of devoted effort and a half-trillion dollars of public subsidies, nuclear power still can’t make its way in the market. If we accept that unequivocal verdict, we can at last get on with the best buys first: proven and ample ways to save more carbon per dollar, faster, more surely, more securely, and with wider consensus. As often before, the biggest key to a sound climate and security strategy is to take market economics seriously.

As far as I am concerned, the answer to the question–solar or nuclear–is a no-brainer. It has to be solar. Otherwise India is up the proverbial creek without a paddle.

No sooner do I arrive in Edison, NJ that the NY Times calls it a place where Indians (now New Jerseyans) thrive. [Hat tip: Maria]

Oak Tree Road [in Edison, NJ], which runs through this sprawling town of 100,000 people and into neighboring Woodbridge Township, may be America’s liveliest Little India, with 400 Indian businesses that attract Indian immigrants from across the region. But the impact is more than just commercial. Indians make up from 20 to 25 percent of the population, and they have spearheaded the transformation of Edison — an overwhelmingly blue-collar and middle-class white community a generation ago — into a town with a decidedly Asian flavor.

Edison is next door to New Brunswick where my old alma mater Rutgers is located. On Saturday afternoon I drove briefly through Rutgers. Those were the days my friend, we thought would never end . . .

The weather is cold and rainy.

So that’s the story. I am alive though not totally well. I got a bad stomach ailment and was laid up most of Sunday and today. I hope to get well enough to travel to Chicago tomorrow. More later.

Go. Profit from exile. To see, listen, walk, pause beside wisemen; question savages and madmen; and listen to stories. It is always pleasant and, sometimes, improves you.

– Jean C. Carriere in his play based on the Indian epic The Mahabharata.

The vision of the International Year of Astronomy 2009 is to help the citizens of the world rediscover their place in the Universe through the day- and night time sky, and thereby engage a personal sense of wonder and discovery. All humans should realize the impact of astronomy and basic sciences on our daily lives, and understand better how scientific knowledge can contribute to a more equitable and peaceful society.

Go watch the trailer on YouTube. Or better still, download one of the many high resolution versions from here.

Totally thrilling stuff.

The greatest technological advancement of the modern world, after the personal computer, has to be the cell phone. The power that it gives its approximately three billion users around the world arises from its participatory nature. Consider the recent protests against the Chinese repression of Tibetans. The use of mobile phones to send pictures of the protests in Lhasa and elsewhere and regular updates of rapidly unfolding stories is power that is hard to contain.

Nothing new for the regulars of this blog. So don’t even bother.

There’s a special report in BusinessWeek about the world’s 50 most innovative companies.

The email helpfully listed the nationality of the top 50 innovative firms and their country wise distribution as:

USA 31
Britain 4
Germany 4
Japan 4
India 2
Canada 1
Finland 1
Netherlands 1
Singapore 1
South Korea 1
Total: 50

The email noted:

The two Indian industrial groups, included for the first time, are the Tatas and the Mukesh Ambani-led Reliance Group. The Tata group is ranked 6th and Reliance 19th.

The Tata group ranks well above IBM, BMW, Honda Motor, General Motors, Boeing, Audi and Daimler.

Mukesh Ambani’s Reliance ranks above companies like Boeing, Exxon and BP.

The most interesting thing is that not a single Chinese company is considered innovative enough to make it to the list. [Emphasis in the original mail.]

Like I said, it was gloating over the fact that no Chinese corporations show in that list. Then I did a bit of reckoning. How innovative is India, based on the data provided in that article? To judge that, I thought that normalizing the data is important for purposes of comparison. I did the normalizing on population. For making the calculations easier, I assumed India’s population to be approximately 1 billion (a lower bound.) I consulted the CIA World Fact Book for the populations of the countries listed above. Here’s the list of countries and the normalized number of top innovative firms. Normalizing on the population I get a total of 808 firms which are distributed thus:

Singapore 215
Finland 200
USA 100
UK 68
Netherlands 60
South Korea 50
Germany 48
Canada 33
Japan 32
India 2
TOTAL: 808

Looking at those population-normalized numbers, you can see that Singapore and Finland are about one 100 times more innovative than India. The US is about 50 times, and so on. Yes, India has a score of 2 out of 808. So seen at this scale, 2 is not all that different from a score of 0, which is what China gets.

I am convinced that India fares poorly for the same reason that China does: there is no freedom in either of the two countries. Sure, India has political “freedom” — but you know what I think of India’s “Cargo Cult Democracy.” Without true economic freedom, a country is doomed to poverty. We need to learn that lesson soon.

A bit of introspection and a little bit less of gloating would serve us well.

Reservations in educational institutions for specific groups are essentially a flawed response to a problem. It is flawed for a number of reasons. The first and foremost is that it does not even begin to address or even recognize the actual problem, namely, that there is a mismatch between supply and demand. Any attempts at allocating a limited supply among the competing demanders for it is definitely not going to succeed in correcting the basic problem. This follows from a general principle that to solve a problem, one should address the cause(s) of the problem rather than merely attempting to suppress the symptoms that give evidence of the problem.

Let’s start by asking if there could be a situation in which something akin to reservations for groups can be reasonably legislated. Suppose, for example, the educational system has sufficient capacity to cater to the needs of a specific group but due to bigotry the group is denied the opportunity. I can certainly see that mandating that members of that group be given the opportunity to seek and gain entrance into the system is an appropriate response. But this is not the case currently. The system is just not able to cope with the demand.

Just to be sure, I should emphasize that we are talking only about reservations in institutions of higher learning. We are not talking about primary or secondary education, although the primary and secondary educational system has something to do with the problem of reservations in higher education which we will go into presently.

Also important to keep in mind is that the world has changed, and is changing at an accelerating pace. The old systems developed for a more staid world are outdated and inappropriate in this new world. Besides being a good thing in and of itself, higher education has an instrumental role. For purely utilitarian purposes, a significant number of people need to have higher education if the economy has to function at any level of efficiency.

The old system of government-controlled education is inadequate to meet the needs of the present world because it is not flexible and responsive enough. We need not just an increase in the capacity of the system but we also need the system to respond rapidly to changing requirements of the market.

Here’s a recent news item that illustrates how the private sector responds to market needs. The International Business News of April 17th reports that Microsoft and HCL are collaborating on selling a very low-priced laptop. That collaboration is not limited to manufacturing and selling computers, however.

In addition, the companies will also collaborate to train and certify 50,000 students on Microsoft technologies, over a period of three years, across 100 HCL Career Development Centers that would be set up by HCL. The centers would create a sustained supply of skilled and certified manpower to address the demands of the IT and ITeS industry, the official said.

The lesson is simple. It is in the commercial interests of corporations to have workers who know how to do the jobs that needed done. So as long as a person has the minimal qualification to be trained, market dynamics will ensure that private entities will do the required training.

Let’s pause here for a moment to reflect on this: there is no shortage of jobs for qualified candidates. In fact, there is a shortage of qualified people. The shortage arises from the limited supply of seats in educational institutions. That shortage of seats is mandated by the government. The government mandates the shortage and then assigns itself the power to dictate how the rationing of seats will be done. That rationing is motivated primarily by vote-bank politics.

Now artificially created shortages are good for those who control the supply – whether it is about controlling the supply of diamonds or the supply of educational seats. In India’s case, government mandated shortage for the private profit of the politicians and bureaucrats is nothing short of criminal. It is responsible for much of the existing poverty in India and unless this situation is urgently changed will perpetuate poverty for the foreseeable future.

The reasonable thing to do is simple. I have written about it elsewhere in this blog. But let me restate it. First, remove all restrictions on entry into the provision of higher education. Any institution willing to get into the business of higher education should be allowed.

Second, support what I have called “foundational education.” Foundational education is something like high school education but a bit more. Everyone must have foundational education – whether they have the means to pay for it or not. If they don’t, then public support must be provided. And once again, there should be no restrictions on who can supply foundational education (FE).

To ensure that there is no cheating by providers of FE, there has to be an institution whose only purpose is to test students and certify whether a student knows a particular subject. That is, this body just tests and evaluates students; it does not teach, it does not dictate curriculum, or anything else. Based on the aggregate results of these tests, any FE provider can be judged. This information will ensure that the FE providers actually perform. Market competition will ensure that no FE provider is able to make above normal profits.

In other words, the strict separation of teaching and testing has to be implemented so that free entry into the market for FE education is efficient

Given that everyone has the FE, it is just a matter of aptitude and interest which will sort the people into various streams, some of whom will go for higher education. Because of free entry of higher education providers, no one will have to be discriminated against based on caste or any other irrelevant criterion.

Among the usual objections to free entry of private firms in higher education is that “the poor will not be able to afford the high fees.” This objection is pointless and rather silly.

Prices in competitive market reflect underlying costs. And therefore, if the price is high in a competitive market, it just means that the costs are high. If costs are high for a private sector firm, it is not likely that the costs will be any lower for the government. In fact, what is certain is that private firms are more efficient (that is, their costs are low) than public sector firms in all known cases. The government has no particular advantage in doing anything more efficiently than private firms.

There is no reason to believe that the government will be able to provide higher education more effectively and efficiently than private firms for the simple reason that the government cannot and has not ever been more effective and efficient than the private sector.

The only thing that the government can do is to tilt the playing field in its favor so that it kills any private sector competition. It can make Anil pay for Sunil’s education. It transfers wealth between people and often does this arbitrarily. The worse thing is it uses very sticky fingers in moving wealth around and therefore it has an incentive to move as much wealth as it can.

Asking the government to take care of education is a good way to ensure that it is done in the most inefficient and shoddy manner. The statistics speak for themselves.

So anyway, what about someone who is unable to pay the market price for a particular bit of higher education? The answer is student loans. If the benefit of that bit of higher education is higher than the cost, then the cost is worth incurring. Loans will bridge the gap. If the costs exceed the benefits, then of course that higher education should not be undertaken. This hard constraint will ensure that one does not graduate an army of scholars of medieval sociology if the market is not interested in medieval sociology.

All this talk about education and reservations is fairly boring. The solution is accessible to anyone who takes care to ponder the issue for a moment. Why the solution is not tried is not because it is not a good solution but because it will kill an extremely valuable source of ill-gotten wealth for those who have political power. Rent seeking is a fact of life as much as death and taxes.

Related post: Reservations about reservations. Really worth reading, even if I say so myself.

[BEGIN TRANSCRIPT]

. . . When you come to see that you can do nothing, that the play of thought or feeling just goes on by itself as a happening, then you are in a state which we will call mediation. And slowly without being pushed, your thoughts will come to silence. That is to say, all the verbal symbolic chatter going on in the skull — don’t try and get rid of it because that will again produce the illusion that there’s a controller. It just goes on and goes on and goes on and finally gets tired of itself, gets bored and stops. And so then there’s a silence. And this is a deeper level of meditation. And in that silence you suddenly begin to see the world as it is.

If therefore we would stop blaming others, it would be very difficult to go about a war with a straight face. And you see if you know that the I — in the sense of the person, the front, the ego — it really doesn’t exist, then it won’t go to your head too badly if you wake up and discover that you’re god.

[END TRANSCRIPT]

[I know that this naming of the man is getting a bit out of hand. Previously I had been persuaded by his worshipers that the proper title for the man should be “the Supreme Commander of the Universe out of whose Nether Regions the Sun shines in all its Splendor” which for convenience one should write as SCOTUOOWNRTSSIAIS. So I say, take your pick — use HMEHSMHPGBSSSRSM or SCOTUOOWNRTSSIAIS — whichever you fancy, until of course another embellishment comes along to do proper justice to the amazing abilities of this god on earth.]

One Sri Jeffrey Ainis wrote me an email. As his email to me was in response to something that I had written in the public domain — namely, a post on this blog titled “Is Sri Sri Ravi Shankar a con man?” — I wrote back and asked if he could show cause why his email to me could not be considered to be in the public domain. He replied but did not show any cause why his email should not be part of the pubic record and why I should not respond to his email publicly. So here’s my response.

Sri Jeffery’s email is quoted and my response is interleaved:

Hi!

The note you wrote to your brother about Art of Living was done so long ago that you might have a completely new orientation.

I might. On the other hand, I might not have. You see, just because something is old does not mean that it needs revision. Not all things are in the nature of fads and fashion. There are things that are enduring because they reflect what is true and that which is true need not change.

I would have a completely “new orientation” if I had new information. From what I have learnt since my first tentative conclusions about His Most Exalted Holiness Sri Maha Param Pujaniya Gurudevji Bhagwanji Sriman Sri Sri Ravi Shankarji Mahadevji (HMEHSMHPGBSSSRSM) — mostly from emails from his worshipers such as yourself — I have not found any reason to deviate from my conclusion that HMEHSMHPGBSSSRSM is a very useful person doing very good business and thus promoting social welfare. HMEHSMHPGBSSSRSM is not any more a con man than any other business man doing legitimate business.

What you wrote then was interesting but strange. Looking over a website and claiming to able to declare not only the motives but even the state of consciousness of the founder has got to be a new level of confidence in the world. I wonder how you would evaluate yourself if you ran across your own letter. Or maybe it was some kind of satire on people who make judgments by projecting their experience on other things.

Perhaps I am satirically inclined and do jump to conclusions. But that still does not detract from the fact that HMEHSMHPGBSSSRSM promotes himself to the hilt and has legions of brainwashed morons to do his bidding. I don’t envy him his legions of brainwashed morons but I do take exception when some of them legions of brainwashed morons write to me telling me what I should or should not do. There are limits.

You also claim to know that his technique must be nothing new — even though you don’t know what it is. It reminds me of the Harvard researcher Herbert Benson, who had the theory that you didn’t need to practice TM to get the same results. But to prove his point he only cited research on TM! (And of course other researchers found that the mantra was key in creating brainwave coherence, and that the level of rest was deeper when using those mantras.)

Yes, I do know what he teaches as there are sufficient number of people who have undergone the training and have personally spoken about it to me. His technique is nothing new because it is part of the traditional methods of breath control that have been in practice for thousands of years in India. For ignorant Westerners, perhaps, HMEHSMHPGBSSSRSM’s technique may come as a shockingly amazingly new thing. But for the average well-informed Indian, it is as amazingly novel as the fact that bears shit in woods.

It is also interesting how common it is for people to elevate the consciousness of people who lived hundreds or thousands of years ago, and proclaim that no one could possibly have that level of consciousness or grace today.

Thanks for that non sequitur. I will add it to my collection and let you know if it wins the first prize in the “Annual Totally Irrelevant Comment I have Ever Received Contest.”

I would recommend taking the post down, and striving for a bit of innocence and humility. Why not support something that is doing so much good in the world? (If it is a joke, the humor isn’t that good. In my opinion. But even bad comedians seem to get work. Humor is a funny thing.)

You would recommend, would you now? Take that post down? Are you out of your friggin’ mind? I take that back. You have to be out of your mind to have the gumption to write to me asking me to remove a post that has in any way done nobody any harm. All my post did was to reason that there is nothing special about a man who is so fucking full of himself that it has started straining credulity.

Get over it, mister. Judging from the emails that I get from people such as yourself — brainwashed zombies who have lost the power of reason — I am beginning to suspect that the answer to the question “Is SSRS a con man?” to be a most definite yes.

I’m sure you are quite wonderful and like to be able to give your brother advice (and you do advise him ultimately to go with his own experience, which seems very wise), but it would probably help him more to speak about things you know more about.

Feeling a tad patronizing, are we today? Stick it where the sun don’t shine, sweetheart. Here’s what’s puzzling about your attitude. If HMEHSMHPGBSSSRSM is all that wonderful, perhaps he should have taught you some humility. What you display is naked arrogance of a person whose understanding is so little that he doesn’t even know that he is ignorant.

I am finally coming around to the conclusion that SSRS aka HMEHSMHPGBSSSRSM is overall not as harmless as I had first thought. He is turning too many average people into zombies.

In any case, good luck to you.

Mister, it is you who needs all the luck you can get. Don’t go about handing it out so generously.

In any article where the words “poor,” “cell phone,” and “development” appear, it is mandatory to mention the usual suspects: Grameen, Kerala fishermen, and microfinance. All this is news only if one has been living in a cave for the last decade without an internet connection. What bugs me was the implicit promise in the title. Can something — any single thing at all — end global poverty?

Poverty is a big word. It is multi-dimensional. It is complex in its causes, it is hugely complex in its implications, and it is perhaps the most intractable of all social challenges that humanity faces. Poverty has been the characteristic condition of humanity since its birth. It is not the existence of poverty that should surprise us but rather that some significant portion of humanity in the relatively recent history (about 100 years or so) are not living in poverty. Though it is not as inescapable as death, poverty has been much of human history’s most common condition. Ending poverty on a global scale will require a combination of technical ingenuity, enlightened political leadership, compassionate societies, and such on a global scale. Just technology alone cannot solve any problem as enduring and non-technical as the complex problem of global poverty.

You know that Monty Python skit involving a dead parrot. The character that John Cleese plays comes to the pet shop to return a parrot which he had “purchased not half an hour from this very boutique.” The problem was that the parrot was dead. The shopkeeper insists that the parrot — a Norwegian blue — is not dead. It is, he variously claims, merely resting; pining for the fjords; that it prefers to kick back. John’s character is frustrated and finally explodes:

“It’s not pining, it’s passed on. This parrot is no more. It has ceased to be. It’s expired and gone to meet its maker. This is a late parrot. It’s a stiff. Bereft of life, it rests in peace. If you hadn’t nailed it to the perch, it would be pushing up the daisies. It’s rung down the curtain and joined the bleedin’ choir invisible.

Viz-a-viz the metabolic processes, he’s had his lot. All statements to the effect that this parrot is still a going concern are from now on inoperative. This is an ex-parrot.”

I feel a bit like that guy. I repeatedly keep insisting that technology is not the answer to all of the world’s problems. Technology helps only on those aspects of a problem that are technical in nature. So here’s yet another of my attempts at explaining why I think technology cannot solve the problem of global poverty.

In its most general formulation, problems involve constraints and their solutions involve choices within those constraints. If there were no constraints in a system, there would be no problems. To the extent that any particular problem has a solution at all, the solution involves making choices. Good solutions are the consequence of correct choices. Technology often relaxes some constraints to some degree, and thus expands the choices available. This expansion of choices is good but it is not costlessly so: greater choice implies a greater burden in making the correct choices. In other words, when the choice set expands, the chances of making the wrong choices also goes up.

Specifically in the case of mobile phones, we can immediately note the constraints that it relaxes. It essentially makes long distance communication of information possible. But then so do carrier pigeons, smoke signals, semaphores, the telegraph, the pony express, and land line phones. Mobile phones have an advantage over those earlier technologies because it is better, cheaper, faster, more accessible. So the second constraint the mobile phone pushes back is financial. For a given amount of money, you get more capacity. Third, the technology is transferable and is easily adopted. You don’t need to be literate, and you don’t need expensive terminal equipment.

What economic function does the mobile phone serve? It reduces transaction costs, to put it in economics terms. When you use the phone to ask for directions perhaps, you save time that you would have otherwise wasted in going round in circles. When you call ahead to fix up a meeting, you avoid a wasted trip if the person is not available. Telecommunications is a substitute for transportation in many instances.

By reducing transaction costs, the efficiency of the process goes up. That is, increased productivity and therefore more production for the same effort. More production, in turn, means more stuff. More stuff for a given population means more stuff per person. Stuff, as you all know, is what it is all about. If a person has too little stuff, he is poor. To the extent that global poverty can be helped through increased production of stuff, and to the extent that more efficient communications helps in production, only to that limited extent can cell phones affect global poverty.

Technology is an amplifying mechanism. Another way of saying that is that technology enters the production function multiplicatively. You have to have something to amplify to be able to use an amplifier. If there is no signal, no matter how powerful the amplifier, there will be no output. The productive capacity is multiplied by technology but where there is any production going on and what is being produced is a consequence of choices that were made outside of technology. That is the bigger challenge because the ability to make the correct choices is something that cannot be as easily imported as the importing of technology.

In the end, affluence — which I define here as the absence of poverty — is a consequence of correct choices made deliberately and consciously over the long term. Affluence is the result of economic policies made by thoughtful and wise policymakers. The existence and the necessity of such people is independent of the level and sophistication of the available technology. To solve our problem of poverty, technology is definitely necessary but it is far from sufficient.

Related links:

(1) Stuff and Ideas.

(2) The Importance of Producing Stuff.

(3) The Tathagata’s Sermon on Economics.

The real driving force of the world economy is a new and incredibly powerful economic unit: the mega-region.

Extending far beyond a single core city and its surrounding suburbs, a mega-region is an area that hosts business and economic activity on a massive scale, generating a large share of the world’s economic activity and an even larger share of its scientific discoveries and technological innovations.

While there are 191 nations in the world, just 40 significant mega-regions power the global economy. Home to more than one-fifth of the world’s population, these 40 megas account for two-thirds of global economic output and more than 85% of all global innovation.

The author, Richard Florida, notes that “The problem is that much of our public policy not only ignores the rise of the mega-regions, it actually works against them. If we want to bolster economic competitiveness and ensure long-run prosperity, we must pursue policies that take mega-regions into account.”

. . . it’s time to stop transferring wealth from our most productive mega-regions to lagging places. In the U.S., the past 50 years have seen a massive transfer of tax money from innovative and prosperous mega-regions on the East and West coasts to the South. While this transfer may be a boon to local politicians and developers, such misguided policy has diverted economic resources away from the core mega-regions where they can be used most productively.

This transfer of wealth from the most productive to the least productive is seen most starkly in Mumbai’s case. Mumbai is starved for resources even though it is one of the most productive regions in India. As I have been arguing for a while, cities are the engines of growth and if one wants to help the people of rural India, India has to move them to where they will be most productive. And that means that India has to build cities that are livable and which will be the target of the inevitable rural to urban migration.

India’s development requires that the rural population is urbanized since urbanization is a cause (and also a consequence) of development.

Though the article is written in the US context but much of it applies to India also. I have been arguing about fast rail connectivity between India’s metros. The WSJ article says:

. . . our urban policy should not be aimed only at improving schools, creating affordable housing and redistributing income. Urban policy must also start to address economic competitiveness. It must strengthen mega-regions by improving fast-rail transit between their nodes, modernizing airports, and achieving greater cross-border flows of goods and people.

I think it is time that India starts to seriously re-think its fetish with villages. One of Gandhi’s fetishes (and he had a few strange ones such nude sleepovers with teenage girls) was villages, and Gandhi is an Indian fetish. So this strange fascination with villages is really fetish-squared.

Related links:

(1) I have a 10-part series which begins with this post: Ancient Cities, Modern Slums.

(2) An Integrated Rail Transportation System (IRTS). And a follow up to it: IRTS Revisited.

Thomas Jefferson (April 13, 1743 – July 4, 1826) was the third President of the United States (1801–1809), the principal author of the Declaration of Independence (1776), and one of the most influential Founding Fathers for his promotion of the ideals of republicanism in the United States. [Wikipedia]

Happy birthday, Mr Jefferson.

Here’s something that Jefferson insisted upon that the Indian government would do well to adopt. In the Virginia Statute of Religious Freedom, Jefferson wrote:

“[no citizen] shall be compelled to frequent or support any religious worship, place, or ministry whatsoever…[to] compel a man to furnish contributions of money for the propagation of [religious] opinions which he disbelieves is sinful and tyrannical.”

I think that it is immoral and wrong that the Indian government forces me to pay for the support of religious activities that I find is sinful and tyrannical.

Today is also the birthday of Christopher Hitchens. Happy birthday and many happy returns, Christopher. May you continue your good fight against the theists. I should mention that I totally disagree with Hitchens on his support for the American invasion of Iraq.

Here’s Christopher Hitchens debating his brother Peter. It is a 14-part video and the first four parts were on Iraq. This part is where they start debating the proposition that the (monotheistic) god does not exist and that god is not great.

I worked for HP in Cupertino in their Computer Systems Division. My office was in building 47.

I find it hard to comprehend very large numbers. For instance, when I consider that India has 1.12 million schools (primary and secondary), I am dumbstruck. I have to translate it down to relative numbers because the absolute numbers are beyond me. So, I would roughly estimate that out of population of approximately one billion people, about 200 million are in the school-going age. If you have one school per 200 kids, that means India must have approximately a million schools. Now the number of schools makes sense to me.

What continues to evade comprehension is how they define what constitutes a school. If you have a place which does not have even a single blackboard or a teacher, no classrooms, no toilets, no playground, and no discernible educational facilities, would you still call it a school? Is that school a state of mind, an abstraction that exists in the imagination of some government bureaucrat?

According to a study done by an education think-tank (NUEPA), “Elementary Education in India: State Report Cards 2005-06″ (PTI report, July 2007), nearly 90,000 elementary schools do not have a blackboard. Of these, around 22,000 do not have teachers.

Besides blackboards, thousands of the schools also did not have buildings, drinking water facilities, toilets, boundary walls and playgrounds. As many as 1,02,227 schools — or 9.54 per cent of the total schools imparting elementary education — had only one classroom, the report said.

If you have a bladeless knife without a handle, can you meaningfully claim to have a knife at all?

This is the most damning indictment of the Indian state controlled education system – it fails in the most elementary task of providing elementary education to tens of millions of children. Given this failure, is it any surprise that it fails in the more challenging task of managing the later stages of the process?

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What I find most disturbing is the lack of understanding among the policymakers about which problems have to be solved and in which order. In any system, there are multiple problems. Harder than solving the problems is figuring out which problem to solve first. Getting the sequence right is absolutely critical.

In any sequential process, an error earlier in the process propagates and gets magnified later in the process. Fixing a failure earlier in the sequence prevents the propagation of the failure and involves much less effort than in later stages. If a person does not have the opportunity of getting a proper elementary education, the person is forever handicapped. Regardless of how natively talented the person is, she will not be able to make much use of any other educational opportunities she is presented with later in life. Reserving seats for her in institutions of higher learning only serves to compound injury with insult. It says to her, “You are not actually capable of competing. The others are more talented than you. So we will do you a favor and reserve you a seat.”

I think thoughtful people should be more concerned about the fact that someone – anyone irrespective of which group they belong to – is denied basic education than with the matter of which group gets what sort of reservations. That individuals numbering in the millions are denied, either by design or by incompetence, basic education is what should keep us awake at night.

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A Rant about Ignoring the Individual

Let me underline one matter. I am concerned about and interested in an individual, not a group. I think that an individual is the proper unit for policy considerations, not groups. Policies that are made with reference to groups are immoral, wrong-headed, and stupid. Unfortunately, groups have always been the target of most, if not all, public policy debates.

I think it goes back to the leaders of India. They never appreciated individual freedoms and individuality. Perhaps they were merely stupid. Or perhaps they were smart enough to realize that treating people like sheep makes them easier to be herded. Gandhi was especially astute. He focused on groups and exploited them. He went so far as to rename a group as “the children of god” – which necessarily implies that the rest are the devil’s spawn.

Gandhi’s heirs are the current crop of Nehru’s spawn, and they and their handmaidens continue that policy of naming groups and pitting one group against another. The chief handmaiden of the Gandhi family, Dr Manmohan Singh, went so far as to explicitly state that Muslims have more claims than non-Muslims. He did not say that any individual who is disadvantaged due to circumstances beyond her control deserves a little help from society; no, he said that Muslims as a group have a higher claim to resources than non-Muslims. That Dr Singh said that is astonishing enough. What is truly staggering is that most people did not even notice the immorality of his stance. His statement is the most potent combination of stupidity, immorality, cynicism and insanity that could be uttered by anyone who is probably not actually stupid, immoral, cynical and insane.

End of rant.

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Foundational Education

Let’s consider a counter factual. Imagine sufficient resources (financial and institutional) were available so that every child had an opportunity to get a basic education. By basic education I mean the ability to read, write, think logically and be numerate. Unless a person is mentally handicapped, the outcome of having the opportunity is predictable—everyone becomes sufficiently educated to be at least minimally productive. Let’s refer to this as “Foundational education” to indicate that without this foundation, an individual can neither function even minimally in society nor go up the education system at all. I am assuming that everyone needs foundational education and is capable of acquiring it.

The middle-class (and above) in India can afford the cost of foundational education (FE). The children of the poor cannot. Public resources are required for them. Imagine an efficient and effective system of aiding the poor exists.

I believe that individuals vary in their abilities and their preferences. Not everyone wants to be a brain surgeon and not everyone is capable of becoming one. Besides if everyone were to become brain surgeons, we’d have an acute shortage of rocket scientists. What we need is a system which allows an individual to climb as high up any educational ladder—accountant, brain surgeon, computer programmer, dentistry, engineering, forensic medicine, tinker, tailor, soldier, spy—of her choice that she is capable of and wants to.

Moving on with our counter factual scenario, let’s now imagine that our individual is interested in becoming an engineer. So she appears for a test that evaluates her ability and preparedness for undertaking engineering studies. Happily she is found to be capable, and she gains admission into an engineering school. In this story, we imagine that there are no capacity constraints in any field of education: if someone is capable of undertaking the study, he or she has the opportunity.

What about the cost of this higher education? If she has her own means (through her parents, say), paying for education is not an issue. But if she needs financial assistance, student loans are available. In our imaginary system, the benefits of education exceed their costs. So repayment of the loan is not a problem.

In this system, there is no need for reservations. The system has the capacity to supply to the demand for any kind and any level of education.

Now back to the real world of India today. To start with, there are a huge number of people who don’t have access to the foundational education. Around six percent actually pass high school. And then this small percentage faces the incredibly hard task of scrambling for a limited number of seats in colleges.

To take one example, consider the IITs. To a first approximation, no one gets to go to the much-celebrated IITs: two out of every hundred who aspire actually get to study in one. Quite possibly, the top 10 percent of those who compete for IITs are fully qualified for it. But there are just not enough seats.

It is a dismal situation. But what is worse is the response of the policymakers. Instead of expanding capacity, they do the brain-dead thing: introduce quotas and reservations that are based on group identity.

Reservations in educational institutions based on caste and religion are bad for a number of reasons. First, it ignores the individual. It is immoral to discriminate against an individual based on any characteristic that is not only outside his control but is also immaterial in a given context.

Second, it induces inter-group rivalry and hostility. This imposes enormous social costs.

Third, it distracts attention from the real problem. The real problem is that the system is unable to meet the demand. This problem is solvable provided the political will is there. The hoopla over quotas and who is getting how much makes people lose sight of what needs to be done.

In the next bit I will go into how we can create a system which is not supply constrained and therefore has no need for reservations.

Next post: Part 3.

I’ll weave his web of rhyme
Upon the summer night
We’ll leave this worldly time
On his winged flight

Then come, and as we lay
Beside this sleepy glade
There I will sing to you
My Longfellow serenade

Weave your web of rhyme
Upon the summer night
We’ll leave this worldly time
On your winged flight

I quote those lovely lines just for the heck of it. Beautiful, isn’t it? Here’s a random link from this blog — on A Path with a Heart.

As one can expect, the place is a sort of transportation hub where you get trains, buses (both private and public), taxis, and rental cars. Walking along that stretch of the road is like running a gauntlet. A dozen people descend on you, each offering to immediately transport you to Mumbai in great comfort, quickly and cheaply. They compete for your attention and tell you why you should take their bus or their car. One over here says the new Innova (a comfortable Toyota minivan) is about to depart and will be in Mumbai before 10 AM; the other over there insists that the Neeta Volvo will charge much less and they will not even stop midway, and so on. The competition is loud and enthusiastic.

It is a delight to see the market working. On Sunday evenings and Monday mornings when demand is high, I have noticed, the private buses charge about Rs 250, which drops to about Rs 180 by mid afternoon when demand is low. Shared cabs constantly adjust their prices as well. During peak hours, prices often increase by as much as 50 percent. I sometimes hire a cab and a bit of bargaining is sufficient to discover a reasonable price. Sometimes I take the Volvo bus operated by the public sector. Surprisingly, even the state service is quite good and I am sure that competition from the private sector buses has something to do with it.

Traffic between Pune and Mumbai is increasing rapidly. I estimate that in the last ten years, it must have doubled at least. I am confident that the supply will keep pace with the demand for the service. Except for the occasional unpredictable shock, the buses and cars will neither be consistently bursting at the seams nor going empty. If there are too few seats, the prices will rise and with it the profits. The increased profits will attract the operators of more buses and cars on the route. With increased supply, the profits will once again fall back to normal.

Super-normal profits cannot persist in a competitive market for the same reason that chronic shortages cannot exist: the possibility of free entry and exit from the market. If there is one thing that one can confidently stake one’s reputation on, it is the claim that unimpeded markets adjust the supply to meet the demand. More about this in a bit.

Let me tell you a story. Many years ago, one evening around 7 PM I was rather puzzled to see a very long line of squatters around one of the main train terminuses in Mumbai. The line appeared to snake around the building for hundreds of meters. What were they waiting for, I asked one person sitting in the line. He was an office peon and his office had sent him to make a railway reservation. He, like the hundreds of others, was waiting there overnight for the ticket counters to open the next day at 6 AM. If he didn’t wait in line, his chances of getting a reservation were very slim. This was a daily occurrence.

Man-hours are cheap in India. Given the chronic shortage of train seats, waiting overnight in a queue was a rationing mechanism. I once found out about another mechanism one could use to jump ahead in the queue. You could go to the railways office and write an application addressed to the Member of Parliament in that jurisdiction stating that you had a particular emergency and that you should be given a seat from the reserved “VIP quota.” Every important long-distance train has them. The VIP quota is something that the MPs and other government officials either use personally or else hand out as rewards to those who are favored.

In the good old days, the same used to happen with flights when the only airline flying in India was the state monopoly airline. If you had connections, you could get a seat out of turn. Nowadays, unfortunately, the private sector airlines have totally killed the power that government officials had in determining whether some of us could take a flight or not. Allowing free entry does that – it eliminates chronic shortages and consequently eliminates the power that officials have in controlling people.

A brief note on basic economics is apt here. Shortages and gluts are transient phenomena in competitive markets. For chronic shortages, you have to engineer it. One has to work hard to maintain persistent shortages because left to its own devices, the market corrects shortages (and gluts) by the simple mechanism that more suppliers enter (or exit) the market. So to understand why shortages exist in some markets, one has to just follow the money: who exactly gains as a consequence of the shortage? The answer to that question would reveal who engineers the shortage.

Talking of basic economics, let’s just briefly touch on a related matter. There are three variables: supply, demand, and price. The quantity supplied and the quantity demanded are equal only when the price is discovered by the market. If the price is determined in any other way – say by diktat – then it is only by chance that the quantities supplied and demanded will be the same. In most cases, the moment you dictate the price, you will find that you either have an excess supply or an excess demand.

In other words, you can only choose two of the three variables. If you choose price and supply, you cannot also determine demand. Specifically, if you dictate the price, for any given demand, you will either be unable to meet the demand or overshoot it. Nobody – least of all some government bureaucrat – can figure out simultaneously (as the market can do) the quantities supplied and demanded, and the price at which the two are equal.

Here’s a lesson: only people who are so seriously deluded that they think they are god almighty believe that they can determine all three variable – supply, demand and the price – simultaneously. Mere mortals can only control two of the three.

Indian politicians and bureaucrats, judging from the kind of policies they try to implement, appear to be seriously deluded. They think that they know. But the truth is that they don’t for the simple reason that nobody knows. Everyone only has partial information since no one is omniscient. The fundamental problem is that no one is smart enough to aggregate all the partial information efficiently and accurately enough to reach the conclusion that the market can.

Let me underline this point. Nobody knows. Not eminent judges of whatever court, not bureaucrats, not politicians, not the leaders of industries, nobody. No single individual or committee knows. Yet what cannot be even in principle be known can be discovered by the market because the market is that one mechanism which can aggregate the dispersed local information to arrive at a solution that no individual can possibly obtain or process.

The market is the ultimate democratic institution. It discovers things.

All the above is merely a prelude to what I really want to discuss here. Recently, the Supreme Court of India ruled 4 to 1 that reservations in institutions of higher education for OBCs (other backward castes) are constitutional. I am not an authority on the constitution and so I am going to get into that question. My intention here is to ask a more fundamental question: why is there a need for reservations in the first place. The answer to that question may have some utility beyond the matter of education, important though the education question may be on its own merits.

The first thing about reservations is that it is a mechanism for rationing—for allocating a scarce resource among people when the demand exceeds the supply. Persistent shortages have to be engineered, as I have previously mentioned. So reservations have something to do with benefiting those in charge of rationing something in short supply. Therefore, those who benefit from the rationing through reservations are naturally inclined to engineer the shortage.

Pardon me for belaboring the most obvious but here goes. If there were no shortages, there would not be any reason for reservations. So shortages have to be engineered by someone because that someone stands to gain by having power over the rationing process. Shortages persist because someone gains.

My conjecture is that Indian politicians and bureaucrats gain from the persistent shortage in the supply of educational services. They deliberately engineer the shortage by controlling the supply. Monopoly control of education is the best mechanism for limiting supply. Disallowing free entry into educational services is the best way to ensure limited supply. They do this so that they can then buy patronage by rationing the limited quantities to favored groups.

I will develop this line of thought in the next post.

Next post: Part 2.

[Off to Mumbai. See you there today.]

Penn and Teller are pretty amazing. I especially like their debunking videos. They are iconoclasts and have a lot of fun letting the air out of some of the high and mighty. They have done the usual ones. YouTube has a lot of their stuff. Here’s a video of one great illusion by Teller: Shadows

They have a series where they expose bullshit. Here’s one on the Bible.

Penn and Teller use comedy in their debunking, but they are basically serious about getting people to be more rational. For real humor, Ricky Gervais is awesome. Here’s Ricky on Biblical creation. My favorite bit is around the 3:40 timestamp in the following video. (”and god saw the light and saw that it was good … even though he says so himself … there’s pride in your work and there’s arrogance…we do like to write our own reviews … And lo! Gervais was not only a handsome man but a funny f***** … maybe I’ll do me own …”)

Well that’s about it for now. Have fun.

What follows is a rough transcript of our talk.

Me: Prof Smith, the world has seen immense increase in the wealth of some nations since your time. What fundamentally explains the differences between the wealth of today’s nations?

AS: The world indeed has changed in the last couple of centuries. One word encapsulates the differing experiences of development among nations: Freedom. The human spirit’s ability to thrive in an atmosphere of freedom is enduring. Those nations that have granted themselves that freedom have developed. Lack of freedom explains the differences in development.

Me: So that raises the question why all people don’t grant themselves freedom. We must go into that a bit later. But I am puzzled by the Indian experience. India gained freedom from British colonial rule over 60 years ago in 1947. Yet, India has had only limited and qualified success in development and indeed in economic growth. What accounts for that?

AS: Political freedom, though important, is only one aspect of the much wider concept of freedom. The comprehensive freedom which allows individuals to flourish—and therefore groups to flourish—must include economic freedom. India’s lack of economic freedom undermines the potential gains that arise from political freedom. Colonialism is a package deal that denies both economic and political freedoms. Post-colonial India did not have economic freedom.

Me: Please speak a bit more on the nature of colonialism.

AS: Colonialism is motivated by the quest for wealth. Wealth is created by a process that combines natural resources with human agency. So you need not just a lot of land and its resources but also people to eventually create wealth. Compare and contrast the two distinct cases of colonialism in the 18th century: Bengal in India and Massachusetts in North America.

Massachusetts had land and other natural resources but had very few people. To translate the resources into wealth that you could later extract, you had to first get people to settle there. To attract people and for them to create wealth, the policies had to be development oriented. In other words, the policies gave settlers economic freedom, the freedom to create wealth.

Bengal, in contrast, already had people who were creating wealth. The policies for colonial Bengal were therefore designed to extract and exploit that already existing wealth. Therefore controlling economic activity through the denial of economic freedom was required. Command and control of the economy was a more direct route to exploitation. Doubtless, the consequence was similar to that of killing the goose that lays golden eggs. It is a short-term policy since by denying economic freedom, eventually wealth creation comes to a halt. When all the existing wealth is extracted, it is time to move out. Colonialism ended in India when the cost of extracting wealth became greater than the value extracted.

Me: Then why did not the post-colonial government of India immediately after political independence grant economic freedom to the population?

AS: The rulers of politically independent India inherited the entire institutional, administrative, and organizational structure of colonial India. The objectives of these did not change merely because the controls moved into the hands of people with a different skin color. The ability to command and control people is power that is hard to let go of. Private gains, however short-term, trumps long-term public gains. Human nature is hard to argue with. Self-interest is the key motivating factor in every human breast.

Me: But Dr Smith, it was you who pointed out that the self-interest of people gives rise to the public good that no one actively seeks. You wrote:

It is not from the benevolence of the butcher, the brewer, or the baker that we expect our dinner, but from their regard to their own interest. We address ourselves, not to their humanity but to their self-love, and never talk to them of our own necessities but of their advantages. … [Every individual] intends only his own security; and by directing that industry in such a manner as its produce may be of the greatest value, he intends only his own gain, and he is in this, as in many other cases, led by an invisible hand to promote an end which was no part of his intention. Nor is it always the worse for the society that it was no part of it. By pursuing his own interest he frequently promotes that of society more effectually than when he really intends to promote it.

The new rulers of politically independent India were self-interested as well. Why is that not a good thing?

AS: The distinction is between the self-interest of a few powerful people as opposed to the self-interested actions of the entire population expressed in an atmosphere of economic freedom. The former have the power to coerce others to do their will; the latter lack the power to command economic servitude from their fellow humans. The average person has to seek the economic cooperation of others in society by providing them with goods and services that they value. That is, they have to offer in trade something that others value. This impels the individual to produce something of value and which on the aggregate amounts to the wealth that society produces.

Me: Economic cooperation appears to be inconsistent with competition that is supposed to be the hallmark of a market economy. So is it cooperation or is it competition that we should be more in favor of?

AS: Both competition and cooperation are essential. People are heterogeneous in their inclinations, natural talents, and developed skills. By cooperating, a group of people becomes capable of producing more than otherwise would have been possible through solitary enterprise. Economic freedom allows a person to not only engage in an economic activity that it most suited to his or her talents but also allows the person to seek the cooperation of others with complementary skills. Any successful economy can be thought of as a large number of people voluntarily cooperating in the process of producing wealth.

The production of goods and services, which involves cooperation, is one side of the coin. The other side of the coin is trade. What an individual or a group produces is traded at the marketplace. That is where competition plays its critical role.

Me: So cooperation is critical to production. But how does competition in the marketplace help us all. Should they not be cooperating in the marketplace also?

AS: Markets are where people come to buy and sell, or in other words, exchange goods and services. They compete as sellers – selling to the highest bidder – and they compete as buyers – buying from the lowest priced seller. Through this process, the market determines how much of what is produced by the economy and by whom. This process of competition determines how society’s limited productive resources are allocated to meet the variety of wants that it has. The market is that invisible hand which guides self-interested economic actors to promote the social good without the need for a centralized command structure. The important thing to remember is that while the marketplace is impersonal, to successfully compete in the marketplace, one has to have sympathy.

Me: Sympathy? Surely, you mean selfish ruthlessness and not sympathy.

AS: No, sympathy is important for without it, a producer will not be able to put himself in the position of the buyer and thus be unable to divine what is it that the buyer will value.

Me: So for an economy to thrive, it appears that rather than command and control, what is needed is economic freedom for people to best use their skills in productive activities and a functioning market where voluntary trades can take place. From those generalities, I would like to move on to the specific case of India. What are the impediments to India’s economic development?

AS: As we have been discussing, economic freedom is central because the raw ingredients for economic development exist in India. It has a large population and considerable natural resources. Given economic freedom, people would naturally produce wealth. Liberalization—the notion that people should be economically free—is the key concept. Free people grow and realize their potential naturally.

Me: In the hunter-gatherer st