Breaking News

The news channels do not have any innovation, except while
manipulating facts. There is news breaking every hour. And if it is
so, why label them as breaking? All it would do (and has done) is to
get people ignore the breaking stuff and focus on news that did not go
broke! (pun intended)

While coming to office on my last day at Rallis, I found an
interesting article which mentioned about three events that got a lot
of media attention. To start with, what do Sania Mirza and Khushboo
have in common? The answer is very simple, both of them were condemned
by the moral police for saying things that are degrading to the 20000
year old culture and tradition.

Here comes the twist? What do the above two celebrities have in common
with the big B? that's not a question asked in any KBC, I know its
difficult. So his company ABCL also got condemned by the women
activists when Miss India celebrations were held in the garden city of
Bangalore way back in 1996.

There are more such analogies, you might say. But the most interesting
thing is that the protestors (or rather allegators!!) disappeared
after the brouhaha. Interesting, isn't it?

Now the facts: Protesting against the apparent abuse of the Indian
womanhood, the body of women was to set themselves ablaze if the event
happened in India. And as expected, security personnel including para
military forces were employed to keep the city under control. Naka
bandis every where, media went into a frenzy, and there were lots of
news breakages. At the end of it, no self immolation. The women
disappeared into the thin air. The miss world event did take place, at
the cost of creores, and this was billed to none other than ABCL.
There was no verification regarding the authenticity of the women, or
the cause they worked for.

Something similar happened in the recent Khushboo and Sania
controversy. Finally, it came out that it was a case of television
rivalry and a game of bad politics.

In sania's case, News and views apart, there was a good scope for
imagination. Disregarding the facts (read statements), someone's
imagination brought out reports that had little to do with Sania's
verdict.

What does this all lead to? Is it that we Indians are so gullible that
anyone can take us for a ride? Or is it that we worship the media, and
consider every word they utter as messages from God. And why do we
have to react on such breaking news, which have little fact behind
them?

Hide and seek

The hide and seek between SEBI and the foreign investors isnt a game, post the UBS securities scam. The FII acts as a proxy for the foreign investors, and uses the participartory note route. Participatory note, or p-note as they are called, are derivative instruments that have shares as their underlying. This makes them as volatile as the stock market.

The requirement of SEBI for the FII to disclose information on the investors has not gone well with the Know Your Client requirement, which fails to give a clear description of the requirements.

Now that the markets have a much higher penetration of foreign investors, it is a storehouse of another scam. The BSE Sensex today closed at 8861, which gives another wave of caution.

The Lahiri committee has recommended phasing out the PN route altogether in 3 years. It remains to be seen if, given the present circumstances, this is carried out.

GSM operators fail in QoS tests

As per this news on the Hindu Business Line, Airtel, Hutch and BPL mobile in Mumbai have failed in the TRAI tests for QoS. it came as a shock to me, because I had rated Airtel and Hutch high on the services. Unfortunately TRAI has higher standards then mine. There are regions were there no signal, for instance no the Chembur Vashi connector, but I had been taking it as acceptable!

I have always hated MTNL's mobile service, and I frown when anyone gives me a number beginning with 9869, because I know I would not be able to reach this person, in spite of this 10 digit numeral. No wonder that it was not considered for the QoS test!!

The world is flat

You could say this guy (Thomas Friedman) is obsessed with globalization. First, the lexus and the Olive tree, and now its sequel, The world is flat. The flatness of the world comes from Narayana Murthy’s statement that we are on leveling grounds with the developed world. Ignoring the fact that the west complements the east in terms of working times, we in India have reached the standard that the west just cannot ignore.

The book starts with ‘aim at either Microsoft or IBM’. The author was asked to target one of the two IT conglomerates’ offices lying around a golf course in Bangalore. Surrounded by American firms’ offices (includes Goldman Sachs too), and consumables (Pizza Hut), it really gets into me a feeling of awe. Is this our India?

Yes, India has changed. From the developing economy to a galloping one. it gives an image of India in the pre-Columbus era. And in fact, Friedman compares himself with Columbus, only that he is just 500 years younger. Columbus wanted to discover India and found America, and thought he was in India. Our author had little trouble finding the geographical India, but found people who looked more American than Indian.

Bangalore has a good number of 20 somethings working at call centers, catering to the American clientele. Their accents have changed, and they don’t mind getting their accents raked up for the sake of some hard cash. They yearn to be out of their middle class barriers. Some of these are earning more than their fathers earned at the time of retirement!

Having read some 20 pages with descriptions of India, I am wondering if this has been written by an Indian. But this has a world appeal, and I hope to get further insights into the development of the globalized world in the 21^st century!!

Whats your style?

While reading the book ‘Made in Japan Akio Morita and Sony’ I found something interesting. Probably it might sound clichéd, but there are vast differences between the Japanese and the American styles of management.

In Japan, working for an organization is (or at least was) supposed to be your religion, your faith, your second home. Your workplace is supposed to be your extended family where all junior and senior members live like a happy family. In times of crisis, everyone works hard for the company. There need not be any compulsion or seduction for the commitment. It comes naturally. Probably that’s the reason why Japan came out from being the most devastated country post world war to one of the richest.

They believe in hierarchies, just the way one believes in levels in the family tree. The seniors are shown respect, and class differences are done away with. Rather, there are no castes or classes in Japan, as per the Sony founder. The people share the resources (these were in short supply post world war), and come together, working up to 16-18 hours per day, only to bring their country up to its former glory. He says that executives did not have a private space, and they managed collectively.

Akio Morita says that doing business in America was quite a different scenario. There was hardly anything similar. He cites two examples to state his surprise. In the first, one person would not perform in spite of repeated trainings and incentives. He had not even thought of firing him, because it was a rarity in Japan, where lifetime employment was a commonplace. The second example is at the opposite side. A consistent performer, having received lots of perks left Sony to join a competitor, because it offered a salary he could not refuse. But he (Morita terms him as the traitor!) did have the audacity to meet him later and show him around at a fair. This was a major deviation from the Japanese style of management.

So workers are affected by market conditions in America, while the keiretsus bear the brunt in Japan. The risk has to be passed somewhere!

This observation puts me into another line of thought. What are we Indians good at? Termed as ‘basically lazy’, do we Indians measure up to the Japanese principals of camaraderie or results oriented American style? Perhaps neither. We prefer following the ‘middle path’ as advocated by Buddha.

So what is our style? Post independence, we made good friends with Russia, since our leaders were more comfortable with the socialist kind of attitude. Democracy was installed, and we made a mockery of it, with a majority of the population not even functionally literate. With the rise of America as the new superpower and the Collapse of Russia, we had to support American style, pop, pizzas (I think someone told me pizza is Italian!), colas and all commodities flooding the Indian markets. Globalization is the new keyword, and every Tom and his neighbor embrace it, for that is in vogue. Our PSUs are abodes of lethargy and inefficiency, food is a constant problem, and agriculture has taken a backseat.

So what philosophy do we follow? We follow whatever it suits our taste, our culture, our caste, our upbringing, our environment. Looking at anything outside our comfort zone is dangerous. At the end of the day, we are all happy because life mein sab chalta hai!!

Five gas stations theory

I cannot stop appreciating the same book (Lexus and the Olive Tree). Today I learnt about the five gas stations theory. This is a story about five gas stations, owned by people from five different countries.

The first one is a Japanese gas station. It charges $5 a gallon and employs 4 people. These people tank up the gas, and wash your windows with a smile. They are friendly and you drive out with a smile on your face (achha lagta hai??)

The second is the American gas station. It charges $1 per gallon and has just one person. You fill the tank yourself, wash the windows yourself, fill the tyres yourself. And while you move out 4 homeless people try to steal your hubcaps.

The next station is the western European gas station. Gas costs $5 a gallon. There is one man on duty who pumps your gas, and changes your oil. But he doesn’t wash windows. He Works only thirty-five hours a week, with ninety minutes off each day for lunch, during which time the gas station is closed. He also has six weeks' vacation every summer in the south of France. Across the street, his two brothers and uncle, who have not worked in ten years because their state unemployment insurance pays more than their last job, are playing boccie ball.

Fourth is the developing-country gas station. Fifteen people work there and they are all cousins. When you drive in, no one pays any attention to you because they are all too busy talking to each other. Gas is only 35 cents a gallon because it is subsidized by the government, but only one of the six gas pumps actually works. The others are broken and they are waiting for the replacement parts to be flown in from Europe. The gas station is rather run-down because the absentee owner lives in Zurich and takes all the profits out of the country. The owner doesn't know that half his employees actually sleep in the repair shop at night and use the car wash equipment to shower. Most of the customers at the developing-country gas station either drive the latest-model Mercedes or a motor scooter nothing in between. This place is alway busy, though because so many people stop in to use the air pump to fill their bicycle tires.

Lastly there is the communist gas station. Gas there is only 50 cents a gallon -but there is none, because the four guys working there have sold it all on the black market for $5 a gallon. Just one of the four guys who is employed at the communist gas station is actually there. The other three are working at second jobs in the underground economy and come once a week to collect their paychecks.

This story (or theory, whatever you call it) portray the state of various economies that they represent. Japanese like togetherness, and follow and tend to reward equally. Prices are high (Tokyo is the most expensive city in the world), taxing those who can afford. They tend to reduce inequalities and move towards an equitable atmosphere. They guarantee lifetime employment, and then protect their markets from external attack.

The western Europeans tend to depend a lot on social security. Developing countries have high gap between the haves and the have nots. The middle class vanishes, and there are just two classes: the rich and the miserable. The Americans are market oriented, and would do everything to reduce costs, without providing anything called the social net. Performers are rewarded, turtles are fired.

Globalization has given rise to a market driven economy. Now everyone is moving towards capitalism, because socialism has failed.

The winner takes it all

Continuing my tirade on the Lexus and the olive tree, it talks about
the widening difference between the haves and the have nots.
Undoubtedly we can see its effects in India as well. The gini index
precisely measures that. But the dangerous aspect is that with the
widening gap, it will not be long before the have nots revolt, leading
to a state of anarchy. It might just be round the corner.

The book, Freakonomics talked about why gangsters continue living with
their mothers, in spite of making a moolah on every endeavor. But the
fact remains that the distribution of the booty is far from uniform or
fair. It is highly skewed towards those at the top, leaving the bottom
in a state of despair. Their earnings are lesser than the minimum
wages stipulated by the US government. So why do they stick to such a
dangerous job? You call it greed or an aspiration, but everyone hopes
to be the leader some day and enjoy all the benefits.

The 80-20 principle is also based on the same lines. 80% of the
defects come from 20% of the materials. But the way we can improve the
bottom 20%, can we do that with people?

Thomas Friedman calls the bottom junta the turtles. This group
includes those used to all the security and predictability of life and
economy. Changes are resisted. But changes are happening, and they are
happening fast. The turtles, unlike the one in the hare and the turtle
story, lose out against the hares, who are smarter than the legendry
ones.

Golden arches theory

Thomas Friedman, in his book, Lexus and the olive tree has made an interesting theory based on capitalism, and has appropriately named it as the Golden arches theory. As per his theory, no two economies sustaining Mc Donalds franchisees will not go for war against each other. As a caveat, he excludes any civil wars in his definition. The basis of this proposition lies in the world’s constant move towards globalization. Post the cold war era, countries that have embraced globalization with open arms are the ones that are prospering, the others are moving towards embracing it. Sooner or later, all countries would become McDonald economies.

Probably that means that in order to avoid combat, open McDonald franchisees.

Did Ray Croc develop the golden arches with this in mind? Did he ever imagine that his business would someday be used as economic indicators? The Big Mac PPP exchange rate between two countries is obtained by dividing the cost of a Big Mac in one country (in its currency) by the cost of a Big Mac in another country (in its currency). This value is then compared with the actual exchange rate; if it is lower, then the first currency is under-valued (according to PPP theory) compared with the second, and conversely, if it is higher, then the first currency is over-valued.

Reminiscence of Arthur Dunkel

Pascal Lamy, director general of the WTO gave the following speech on reminiscing the director General of GATT, Sir Arthur Dunkel. It is in the link below

http://www.wto.org/english/news_e/sppl_e/sppl13_e.htm

Globalization

There are proponents of globalization and there are opponents. Love it or hate it, but one just cant ignore its presence and the way it has affected the world post the cold war era. Closed economies could not afford to stay that way, and the current resurgence of growth is primarily due to the open economy.

The next month’s WTO meet at Hong Kong would be decisive in many factors. The major issues would be the farm subsidies present in France and other EU countries, and the IPR issues.

Interestingly, India and the US will co-chair a 14-member special group on services negotiations, a move aimed at giving a boost to WTO.

Ideas from:

http://www.economist.com/displaystory.cfm?story_id=5115177

http://www.financialexpress.com/fe_full_story.php?content_id=104235

http://www.rediff.com/money/2005/feb/22wto.htm