Ashes 2010

                  England’s cricket team appears to be as determined to retain ashes as the Tory government is to reduce the budget deficit. The moot point is that whether the English Cricket team would be as ruthless as the Tories appear to be in reaching their goal.

World Cup Group Of 16

In the group of 16, we are going to see more of Argentina-Greece type of matches in which one side is going to pack its defence with 9 players leaving only one forward to score against-the-run-of play goal. Their plan would be for a goalless 90 minutes. Forwards are going to be tested for their patience and imagination to score a goal. Absorbing matches are on card.
It appears that it is only from q/f onwards we may be able to watch matches in which balanced opponents would be playing classic football.

World Cup Football

Just as the proof of a cake is in eating, the proof of a good team is in watching them scoring goals. This basic truth has come to haunt Spain, France, Germany in the first round of world cup.

IPL 3: Midway Review

Ipl 3, fantastic creation of Lalit Modi has been a great success entertainment wise. Its success is more because of the picnic like atmosphere that is consciously created by Modi team. Quality of cricket has not been very great however.For a game that is so heavily leaning in favour of batsmen, surprisingly it is the bowlers who are doing well by restricting teams to mediocre scores. Somebody has to win so somebody wins but overall the batsmen have letdown the spectators. In T-20 cricket first 6 overs should produce  between 70-85 runs (at least two 4s/a 6 and singles on other balls.) and the next 14 overs should provide 100-120 runs (one 4/occassional 6 and as many singles possible.) Thus a T-20 score should be between 170-205 runs. any score below 170 is absolutely unentertaining and that has been the case with majority of IPL 3 matches.
KKR-Punjab match of April 04 was a classic T-20 match. Mahelaa Jayavardane showed how to pace the match. Team owners/coaches/captains need to rethink strategies to make T-20 contests more entertaining and I suppose that is the aim of Mr Lalit Modi. Isn’t it?

Governance & Economy

Governance & Economy

Introduction

Man created society because unity was considered to be strength that would protect the frail human specie from hostile environment. Human intelligence, as distinct from that of rest from the animal kingdom, is to be credited for this unique achievement.

The same intelligence at individual level, however, starts scheming against fellow human beings the moment security threat recedes.

In the immediate post Lehman collapse period the bankers the world over were in a state of shock. They looked like the proverbial sheep in an abattoir waiting for the inevitable. It was a pitiable sight. It was probably the first time that they prayed. They were pleading governments the world over to bail them out of the situation. Political leaders became messiah after the bailout.

A year later with the threat of annihilation in the remote past, they are up in arms against the same messiahs for not permitting bonus payments.  That is human nature.

Human Nature & Governance

Theories of governance such as democracy and communism are the result of macro level thinking on the part of some brilliant people. They however failed to realize the effect of human nature at micro level on their theory. A government is expected to deliver welfare oriented economically efficient good governance.

Communists in Soviet Union were on the right track on welfare but failed miserably on economic front because they rejected free market economy that believed in competition at micro level for efficient human behavior.

Democracy & Communism

Democracies did very well on economic front due to their acceptance of free market economic model but have been rather skewed in their welfare orientation that is heavily tilted towards handful of wealthy people. A state that has its 80% wealth concentrated among 10% of its population cannot be called a successful welfare state.

In Soviet Union the state dictated the economy, whereas in democracies economy dictates the state. Until Soviet Union’s demise communists believed that the state would protect economic interests of the state out of self-preservation instincts. Until recently free market economic experts, on whose advice the democratic governments relied, similarly believed that their market players would not risk their existence out of self-preservation instinct. But some of the players did risk not only their own existence but also that of world economy itself.

While communism failed because of total control over economy, democratic countries were brought to their knees due lack of any control over economy.

Communist China, having learned from the mistake of Soviet Union, is trying to be flexible in its control of economy. Democracies, however, don’t seem to be inclined to control the free market forces in spite of having returned from the verge of catastrophe. Such control is very essential for spreading national wealth among wider cross-section of their population and thus fulfills the aim of democratic doctrine.

While Soviet model of total state control of economy proved fatal, total free market approach without any state intervention also proved catastrophic. In fact without state intervention free market economy would have collapsed and thus bringing chaos and misery all over.

Conclusion

Democratic governments need to prudently control their economies and not be overawed by financial markets. Democratic governments should reduce their dependence on financial wizards for generating revenues.

Taxation should be the primary instrument for revenues and with that aim in view democracies must work towards achieving a bell shaped wealth-people distribution. A fresh look at tax administration is called for increasing. But then that would be a topic for another blog.

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Globalization & Outsourcing Revisited

Introduction

Until industrial revolution came, there was no dearth of employment for mankind. In fact there was so much of work in the then new world that people (slaves) had to be imported. Industrial revolution helped to augment manpower and as a result prosperity descended on the land where the revolution had arrived.

However, both the World Wars were the direct result of industrial revolution that was used to establish hegemony over world resources. It was because of the technological advances that huge war machines could be built.  A lesson was learnt from the devastation caused by wars. Technology used for military adventure was now used for developmental projects. Cost of military research was now recovered by commercializing that technology. So far so good!

Human Resource

Some military hawks that favored sale of military weapons as easier way to become wealthy did come to power in developed world in post-World War II era that came to be known as Cold War. Many local proxy wars were fought by superpowers during that era. These wars did help to reduce population to some extent but its main purpose of improving the living standard of developed countries was served fully.

Like military power, money power also corrupts the mind of even intelligent people. Financial adventurers descended on the world stage. They now described manpower as an industrial resource.  Practice of optimizing resources, including manpower, in order to reduce operational cost prevailed in developed world. Profits soared and so did government revenues. Politicians of developed world, that was predominantly democratic, conveniently turned a blind eye to this industrial practice where humans were treated at par with ores from mines. And their democracy was supposed to be government of the people, for the people and by the people.

Globalization & Outsourcing

If that was not enough, globalization was propagated not only to sell their goods worldwide but also to gain access to cheap labor. Their globalization was not for movement of labor but only for capital flow worldwide.  Free movement of labor would mean sharing of prosperity with citizens of other countries. Intelligent that these buccaneers were they introduced a concept of outsourcing. Prospects of higher revenues again dulled the commonsense of people’s representatives. They failed to realize the consequences of such foolhardy concept on local employment prospects in the long run.

Prima-facie there is nothing wrong with globalization and outsourcing per say. What is wrong is the manner in which it is implemented by these adventurers and endorsed by gullible politicians.

Correct Way

If democratic politicians had any respect for democratic values, they would have protected interest of their fellow citizens by using surplus capital for offshore manufacturing goods and limiting their sale offshore. Part of profits so made could have then been used for subsidizing high cost of manufacturing in their own countries for giving higher wages to their own labor.

Capitalist buccaneers are self-centered people and would oppose or even ridicule manner of outsourcing proposed in previous paragraph. But politicians should, however, see the virtue of practicing such method of outsourcing.

Money Power

It is said that in olden times power flowed from the hand that wielded the sword. It is believed that it continues to flow from the barrel of gun in some part of the world even today. In modern times it is said to flow from the hand that has access to nuclear button. But that is not true. Power always flowed, and will continue to flow from the hand that had/has access to money vault. Money has always overshadowed political and administrative power. Money power is exercised adroitly but covertly in autocratic states and blatantly in democracies. Demise of free market in western democracies in the recent past is testimony to the overpowering influence that money power has over political leadership in democracies. Such foolish economic decisions could not have been taken by politicians in democratic world without the evil influence of money power. So-called economic innovations were allowed into financial markets without testing them with mathematical modeling.

Not Natural Allies

Capitalism/ Free Market as some people like to call it, and autocracy are natural allies because both theories are individual centric. Welfare of people is anathema to both.  How come it is surviving in democracies? Capitalism is like weathercock. It adapts to prevailing political climate. It follows path of least resistance. These capitalist magicians mesmerize ambitious politicians by showing them a carrot of high economic growth without resorting to high taxation.

Recent economic meltdown showed if any proof were required, that capitalism, as is practiced presently  would take mankind over a precipice if there were a slightest chance of finding profit at the bottom of the abyss.

Conclusion

Present manner of implementing globalization and outsourcing will most certainly lead to demise of democracies in the not too distant a future. Democratic leadership should realize that they alone stand to lose if economic disaster strikes. Nothing will happen to the economic buccaneers responsible for the catastrophe. They would change their loyalty to new regime and continue to prosper.

Unemployment is a sign of existence of embers of political unrest. If it is not to flare into a revolution then unemployment must be tackled by removing underlying causes. There is an urgent need to redefine globalization and outsourcing. Limit globalization to only capital. Workers are human beings and they should not be treated as manufacturing resource.

Technology should be used to augment manpower but not to replace it. Democratic values must determine how financial and industrial practices are implemented.

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Technology And Employment

Should technology be used to

1. augment the manpower?

2. replace the manpower?

There should be no argument for the first choice. However consequences of the second choice on unemployment need to be taken into account in capitalistic economy.  Technology when used for incresing industrial and agricultural production does bring prosperity. However when it is used to reduce manpower for imprving profitability it leads to bad social consequences. Unemployed become the responsibility of the general taxpayer. This is equivalent cleaning our house and throwing the garbage for others to dispose of. Such practice does not fall under responsible capitalist economic practice.

Economics And Governance

Economics And Governance

Introduction

Soviet Union collapsed about twenty years ago due erroneous interpretation of communist economic doctrine. Capitalism failed a year ago when western democracies had to intervene to prevent economic collapse that would have struck at the very root of democracy itself.

Communism, as erroneously practised in the erstwhile Soviet Union, abhorred private participation in economics. China learnt from Soviet Union’s mistakes and diluted classic communist economic doctrine. This was possible in case of China because there both, the governance and Economics, are controlled by State.

Western democracies don’t seem to have learnt from failure of the classic capitalism that abhors state intervention in private endeavour. According to classic capitalist doctrine, as practised in western democracies, governments there should have let the markets to take its own course even if it meant collapse of the social order.

There was nothing wrong per se with the capitalist/communist classic economic doctrines. Blame entirely rests with ‘schools of economics’ that apparently do not have the subject of ‘social responsibility’ in their curriculum.

Wakeup Call

Economic meltdown, from which the world has yet to recover, is a wakeup call to all democracies. It has become obvious that capitalism cannot be permitted to have unbridled run because statistics suggests that one cannot rule out the probability of having some irresponsible individuals among practitioners of capitalism. Just as China has realised that private participation is necessary for economic development, democratic governments must rein in capitalist economic activity. China has introduced controlled private participation. Democracies should also intervene only to moderate the ‘bullish’ behaviour from time to time.  It is the right time to discuss the relationship between democratic governance and capitalistic economics.

The Relationship

Unlike autocracies, government and economy are independent entities in a democracy. There is, however, a critical difference between these two entities. Capitalism is individual-centric. Left to themselves capitalists would ‘fleece their mother’ to make profit. Democracy is society-centric. Left to itself, a democratic government would go to the extent of financial insolvency in order to promote social development.

               Governance and economics are two sides of a democratic coin. Stable social order is a pre-requisite for sheer existence of capitalism. Responsibility for social stability is that of Government. Irresponsible manner in which capitalism was practised recently has threatened the very existence of democracy. Democratic governments have bailed out the capitalistic economy to save the democratic social structure. It stands to reason that economic cost of this intervention is recovered entirely from the private sector of economy. Democratic governments appear to be hesitating to take strong action against private sector for fear of flight of capital. A strong united action is called for by democracies if repeat of the current meltdown is not to be witnessed again.

Conclusion

               Just as power breeds corruption, money breeds arrogance and that is so nakedly visible in financial markets of western democracies even though their economies are limping and are yet to show any sign of recovery, leave alone that of growth.  Democratic governments need to raise their ante in controlling irresponsible among practitioners of capitalistic economic doctrine.

 

 

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