Non-Coercive or Voluntary Societies

First official audit confirms money meant for poor was diverted to NGOs and other implementing agencies.

Full Story in The Indian Express, Jan 8, 2008

Indian Express reports, "For a fisherman, nothing is perhaps more painful than to let go of a big catch with his own hands, especially if it happens to be a 30-ft whale shark that would fetch at least Rs 80,000.

But that’s exactly what fishermen of Saurashtra are doing — often cutting their expensive nets and releasing the whale shark they once butchered by the hundreds as the gentle giants came to breed in the warm waters of the Arabian Sea."

They are doing this on the instruction of a spiritual leader, who has likened whale sharks coming to give birth to their children as a daughter comes home to her family, not to be killed but to be protected. This has gone down well and had great effect. However, the financial pressure is mounting.

"Several fishermen who cut their nets that often costs up to Rs 10,000 to release trapped whale sharks have been felicitated by Morari Bapu on several occasions.

However, it’s not all faithful submission. During a bad season, tempers flare in the fishing communities. “Morari Bapu’s preachings are fine but we are becoming poorer by the day,” says Laxmansinh Ramsinh, the Veraval Boat Association leader.

He says it is just a matter of time before fishermen’s patience runs out and they start illegally killing the shark whale again. But the religious leader has his own plans to up the campaign: he is holding a public meeting in Veraval on February 17 to campaign against the killing of the whale shark."

How would we solve this with a maxim society approach? Easy. Start a fund called "Save the Whale Shark." Get an artist to photograph or paint a family of whale sharks, create a calendar and sell it to the elite in the cities. Raise enough money - targetting Rs. 1,00,000. Then, let all fishermen know that if they cut their nets to release a whale shark, the fund will bear the cost of replacing their nets immediately.

http://www.indianexpress.com/story/5813.html

Karnataka is about to pass a bill that gives the state sweeping powers over private industry. Whenever the government feels that more land than was necessary for business has been acquired by a company, the government will take the land. If this bill is to pass, Karnataka will be an unsafe and unstable environment for business. The results should be visible within a decade with industries moving out.

When I worked at Intel last summer, I noticed that Intel had lots of unused land. Part of their strategy is to wait for the right moment and build another factory. Every company tends to procure more land than they need at that moment so future options are available. Stanford University itself has a similar strategy by sitting on top of a large amount of undeveloped land, which is used as and when funding is available.

Of course, the government is doing this using the argument of "social justice," of which I am yet to see a non-coercive application. In fact, I am yet to see a good outcome. Social justice is an euphemism for forcibly taking resources from someone and giving it to another. When people do this, it's called robbery. When the government does this, it's called social justice. How funny!

The Govt. of India has decided to support reservation in the private sector. Here is the reference.

Govt to go ahead with quota in pvt sector
http://www.expressindia.com/fullstory.php?newsid=64984

I think this represents a lack of creative thinking and would take us toward disaster. Here's a piece that reflects my views.

HEADING FOR DISASTER

The goal of improving social opportunities for underserved communities is a laudable one, and we must appreciate people in society who think this is a worthy goal. The question is, are laudable goals to be implemented in a coercive manner under the power of the gun, conceding that this is really the only power a government has? We must be very careful when involving the government in solving social problems.

China is a glaring example of what happens when governments get involved in restoring social equity - an era of unprecedented brutality under the euphemism of "cultural revolution," policies that were intended to control the population that have now ended up creating a huge vacuum in the workforce, and land redistribution that was supposed to be equitable that resulted in the deaths of millions of landowners at the hands of their fellow villagers, who died later by the millions due to a nationwide famine that devastated their "commune farms," which were surprisingly owned by the state (see the Economist, May Issue). China has recognized this, given the smart and talented people this country has, and the government has recanted many of these steps, even going so far as to publicly acknowledge policy errors. At the time, they were making the best decision given the information they had. Does India have such an excuse today, seeing the effects of such government intervention?

Let's examine how India's latest move squares with the following maxim, "Peaceful, Honest People Have the Right to be Left Alone." We define "peaceful" as people who do not use force or threaten the use of force against others, except in self-defense. We define "honest" as people who have not commited fraud over an implicit or explicit contract. We assume for the rest of this essay that this maxim is the hallmark of a free society until we find a better maxim, else we have more fundamental problems.

Entrepreneurs, who are in the business of making other people happy and getting remunerated in exchange, fit the bill of "peaceful, honest people" insofar as they have not coerced anyone into buying their services or products. Then, they have the right to be left alone and not coerced into hiring people using criteria that they may not share.

If there is social inequity, then it needs to be a problem that is owned by the people. We wouldn't want to be idle critics of the government, so here is a different way of looking at this problem. Most information technology companies in India compete at the global level today. Their biggest prolem is finding talent as there is tremendous competition over the best individuals. Companies need to wake up to the fact that their battleground has to shift from capturing the best trained talent to training people to be the best with competitive contracts that secure their services.

While this has happened in the past with companies such as Tata Consultancies requiring new employees to sign bonds, with competition heating up, prospective employees have other options with companies that do not require bonds.

Then, it becomes a question of where the "bond" idea would be seen as a positive opportunity instead of a constraint. And common sense would tell us that it would be in underserved communities, whose existing options are much worse. Once this is recognized, our IT companies would look at underserved communities as a gold mine. Mind you, not all of the raw material in a gold mine yields gold. But the ones that do yield gold make it worth your while to get into the mining business.

Once this thinking sets in, companies will rush in to attract talented minds in underserved communities. Imagine a contract, "We will fund your child's high school and college education if your child agrees to sign a contract to work for in a 2-5 year period. Should the contract need to be broken, here is the amount that will have to be refunded."

In the interest of making the most money out of people in the shortest amount of time, companies would have to give the best training possible to such children, so that the work they do is of the highest value possible. Companies can also get creative. Instead of requiring a fixed number of years, they can provide training in a niche area which they alone serve, and ensure that they have a wide talent pool to pick from when the time comes.

One has to only see how corporates woo poor students by looking at them as valuable future options. For example, Microsoft provides its development platform either free or at heavy discounts at various universities so students can become experts by the time they graduate, and form a ripe pool to recruit from, thus lowering recruitment costs.

Many organizations give "freebies" with an intention to create a future market. For example, this was behind the success of Unix as an operating system with Sun Microsystems making it free for students, who would then want to use it when they started professional work, in addition to creating a pool of people who they could hire. At Stanford University, every company provides steep discounts on student software in the hope that they are creating future communities for their products. Yahoo and Apple are engaged in a battle over the music download market and students get the best deal in the process, with Yahoo providing a year's worth of free downloads, with the hope of getting loyal future paying customers.

Now, pro-reservation thinkers will argue that people have benefitted in the past from reservation. Their arguments are not without merit. Let us examine some of them. First, people who have benefitted under reservation are now doing things that they could not have done earlier due to lack of opportunity. Second, we cannot have laws that are fair to all, it is the way of the world and if someone loses out, too bad. We can only try to be most fair to the least served communities. Third, a non-coercive system will only benefit the smart, who can take care of themselves anyway. Fourth, the fact that many beneficiaries of reservation have improved economically under reservation proves that reservation was a good decision to make and we should continue it.

The first argument is valid. Some beneficiaries of reservation are indeed doing desirable things that they would not have done otherwise. We must note that the idea of reservation is not being objected to. If you believe that reservation is important to restore equity in society, then more power to you! In your organization, you can have reservation based on sex, caste, class, height, weight and whatever other criteria you wish. However, the problem arises only when you impose your criteria on someone else.

For instance, cigarette smoking is bad and you don't like it. So you can abstain, and use your free will to ensure it is not permitted in your house. You will not frequent restaurants that allow smoking. But do you really have the right to decide that this standard must be coercively imposed in every house, however laudable it might be? People making this argument routinely overlook the fact that reservation is eminently possible in private institutions on a voluntary basis. Most Catholic schools reserve seats for their community and open the rest to others. And that actually works great for everyone. Boys-only schools voluntarily commit sexual discrimination and it works great as do girls-only schools.

The second argument says that the least served people should get the most opportunities. Imagine the principal of a girls-only school deciding that enough was enough. As girls have traditionally been underserved, all schools in India must have 75% reservation for women in order to restore the equity, until the number of educated girls equals the number of educated boys (who knows how you would track that). After all, female education is a laudable goal, right? If you were to make the second argument, then you really should not have a problem with this situation. You would be within reason to point out that this is an extreme extension. The only way we can test a universal principle is by taking it to the extreme. If you take the maxim to its extreme, all peaceful and honest people will be left alone. No problem. But if you take social equity to it's extreme, we land into all kinds of difficulties. When people are quick to point out that you can't be fair to all sides in this issue, they are absolutely right. However, the conclusion that we must "live with it" is an excuse for not thinking deeper. If we can't have a "fair" law, then why must we have a law at all? What would a system without such a law look like? Are our conclusions based on scientific experiments or socio-political biases? If we truly care about underserved communities, we cannot afford to be unscientific about this. We must explore with a scientific mind.

The third argument that only smart people will benefit from a non-coercive system appears to be a convincing one. However, it is really a facade for a paternalistic and condescending view of society. It is easy to fall into this trap. The acclaimed philosopher Bertrand Russell once noted that when a piece appeared in the British press that only 10% of the population was intelligent, people agreed as everyone counted themselves in the intelligent 10%. Such self-deception is prevalent in all societies, including India. It is high time we stopped assuming stupidity of the masses. Let's take a look at our neighboring state, Bangladesh, which almost everyone agrees is worse off than India. Every year, this country either suffers drought or flood or both. Decades of aid has only devastated the country further as the agendas of donor countries trump the real needs of the country, according to Dr. Mohammed Yunus, the man who turned the field of economics on its head with his experiment in this country. Dr. Yunus believed that "poor" people were extremely creative and could solve their own problems. Their only problem was, no one trusted them. So he decided to trust them and lend them money. The result was the formation of the legendary Grameen Bank, which has by now disbursed over $1 billion of loans, and has a recovery rate of 99.1% (more conservative auditing brings this down to 85% which is still extremely high for its segment), matching some of the most astute banks in the United States. Even the most basic study of this experiment will reveal that their process involves getting people to solve their own problems. The Grameen experiment is being replicated all over the world, including India, though it was botched up initially when the Goverment got involved. It is now being tried by private enterprises like Unitus and the reports have been very positive.

The final argument that because some people have benefitted from it implies it was a good decision and should be continued is a highly fallacious one. One cannot judge a decision from the outcome but only from the process used to arrive at the decision. If we knew outcomes, we really wouldn't have a decision to make. Once this logic is understood, we will quickly realize that we cannot condemn the creators of reservation - at the time, they thought this was the best way to introduce equity, hence it was a good decision indeed as they were consistent to their preferences and the best information available. But we know better now, and it is naive for us to ignore the evidence in front of us. Affirmative action (or reservation) research in the United States has shown that reservation has not had the intended effect on the self-confidence or performance of beneficiaries.

The evidence shows that underserved communities have not been able to utilize their opportunity and do poorly, even with the best of resources at hand. If these studies were to be repeated in India, we should not be shocked with similar findings, for these have been empirically reported. One has to only wonder why it is that in Tamil Nadu, year after year, Brahmin children perform exceedingly well, while being a tiny minority (estimates put them at less than 3% of the population) and having all quotas against them? Logic would have us institute reservation for Brahmins in Tamil Nadu as they are the minority. Strangely, reality does not concur with logic and the state offers 69% reservation for underserved communities. Inspite of a much lower set of opportunities, how do Brahmin children do so well, an observable and acknowledged fact by all, especially the politicians of the state who clamor for more reservation? We need to find answers to these questions so we may replicate them for children of other communities and have them be as self-reliant.

To summarize, there is no objection against reservation of any form undertaken on a voluntary basis. However, coercive reservation is fundamentally flawed, ineffective and creates more problems than it solves. It also diverts our attention from non-coercive, voluntary approaches, that would have been tried a long time back had people not thought that the government was taking care of it. The decision makers who introduced reservation made a good decision that was consistent with the best information available to them and their preferences. Why can't we follow their footsteps and be consistent with our preferences and the vastly better information available to us today?

Sucheta Dalal writes in the Indian Express (Jan 9, 2006) about a major microfinance initiative by the ICICI bank to target rural customers and provide them economic services. This is the revolution we've been waiting for. Read more..

John Larkin has written a piece on the Wall Street Journal, Jan 04, 2006, titled, "Shrinking Indian talent pool leaves gap." Daniel Gross has produced this on his blog (search for "Not so flat").

This is actually music to my ears. Corporate India has finally realized that they cannot ignore the education crisis anymore. Of course, they can choose to claim helplessness. And they can choose to do something about it.

First, they have to recognize that the government cannot solve this problem. By the time the government finishes setting up committees to study it, other countries would have eaten India's lunch and moved on. So, for survival, corporate India has to act smart.

To be smart, one has to note that the raw material for the service sector is what we call, "knowledge workers." These are in short supply, as they've typically been the top 5% in most of the mushrooming colleges in India (excluding the IITs). Companies swoop down on a campus and try their best to get the top 5%, who know their own potential and don't stick around all that much anyway.

Then, our hope lies in the remaining 95% - if we can take at least 60% of the rest and move them up from a C- to a B+ level, there is hope for corporate India. In other words, what is the alchemist's stone that can convert base metal into gold?

In this case, it is investment in private education. Companies will now realize that it makes sense to get involved with educational institutions and make sure that students get the right psychological, physical and material help they need to make the most of their education. They will need to start funding deserving students and create assistantships, so as to incentivize high performance. Moreover, they can help introduce subjects that are of relevance. In the electronics industry, nanotechnology and semiconductor fabrication (VLSI) can be accelerated and infrastructure upgraded, so manufacturing plants in the future can be setup in India with Indian engineers. Right now, this talent just leaves for the USA. In the software industry, it would make sense to invest heavily into research on software engineering and establishing departments that teach it in a relevant manner. In the BPO industry, it would make sense to invest in domain knowledge. Finance courses would focus on international business practices so graduates would need less training once given a job.

Also, it should slowly dawn on companies that this is a great opportunity for them to invest in differentiating factors, such as intellectual property. If research is funded in India, the fruits of that research can be used by the company to gain competitive advantage. Unless there is a lot of aid money to be had, universities right now don't have the incentive to create a research infrastructure. Moreover, companies can enter into deals with universities giving them first access to graduates of labs or departments that have their funding.

At another level, corporate India can create a consortium to review technical education in India and reform it to create a parallel board to the AICTE - one that can voluntarily be adopted by an institution in order to gain a favored status during placement and funding seasons. This board would be designed with the state-of-the-art knowledge gained from research in education over the years and would encourage critical thinking in students over rote learning, a skill that guarantees that employees can make the jump when technologies become obsolete. Corporate India can also go one step further and look at high school education to ensure that graduates of our schools are equipped with the right thinking skills that help them do well in technical education.

In short, the pain that is being felt by corporate India is a happy one that needs to be looked at as an opportunity. Those companies that have a long-term vision will identify this opportunity and exploit it to its fullest potential and thus improve their chances of survival.

Editor-in-chief Shekhar Gupta writes in the Indian Express, Jan 7, 2006,

"My third cheering story of the week did not even make front-page headlines. I found it buried on one of the commodity pages of Business Standard this Thursday and from my reading at least it seemed as if the reporter had missed the point a bit. The story complained that government-owned sugar mills were struggling to get steady cane supplies because private companies in the state were offering prices higher than the state-mandated minimum support price of Rs 113 per quintal. Some private companies, the report said, were offering up to 15 rupees more than that. Some were even luring the farmer with freebies like tins of desi ghee and sacks of DAP fertiliser (needed in large amounts in this, the rabi wheat season).

NOW this is in a state that was notorious for starving sugarcane farmers by delaying payment for their supplies to its own sugar mills for years together. In fact it was in response to this that Rahul Gandhi had made his maiden intervention in the Lok Sabha to get the cane farmers' "arrears" released. If in that very state the farmers are now not merely being paid on time, but paid more than the minimum support price and also wooed with freebies by private companies, isn't that a story of reform? "

The entire article is an eye-opener on the changing environment in India.

UP police, in a distorted attempt to crack down on eve-teasers, ended up hammering couples who were enjoying the sunshine. Shocked married couples protested by explaining their marital status, only to be told, "they all say that!"

I am not clear as to why eve-teasers would be holding the hands of their victims or sitting next to them on a park bench.

Policewomen the size of WWF wrestlers let themselves loose on hapless ladies while their male counterparts caned the men. Here's the best part, the media was called in to tape the entire incident. Which of course they did, while not intervening to stop the violence.

So, the police have a black face over this incident. What about the media? There was a suggestion that the policewomen went berserk because of the cameras that accompanied them.

Here is a report with the video: http://www.ibnlive.com/article.php?id=2604§ion_id=3

The funny thing is, one still has to fund such a police force and perhaps the decision makers who were involved. If this were a private force, one could take one's business elsewhere.