Non-Coercive or Voluntary Societies

The Myth of the Scandinavian Model

2009-05-24T18:45:00.001-07:00

In most discussions on the appropriate level of coercion of government, proponents of socialism bring up Scandinavia. I recently read a hard-hitting analysis that shows how the Scandinavian economy has tanked with its welfare programs, while underdog Ireland has leaped forward in Europe with its drastic reduction of taxes. Ireland's target of taxation is also very interesting, and could serve as a model for other countries that are trying to move on from a socialist mindset.

Here's an excerpt from the analysis:

However, despite Bruegel, distorted academic studies and the European media’s praise, the efficiency of the major Scandinavian economies is a myth. The Swedish and Finnish welfare states have been going through a long period of decline. In the early 1990s they were virtually bankrupt. Between 1990 and 1995 unemployment increased five-fold. The Scandinavian countries have not been able to recover.

Read the rest of the article, The Myth of the Scandinavian Model, The Brussels Journal.

Human Rights with Sanitation

2008-12-27T16:45:00.001-08:00

Ever since independence (and from a long time before that), people in India have been appalled with the abuse of the caste system, especially the poor treatment meted out to "untouchables." As usual, well-meaning people think they can change attitudes by passing laws. And so, India has The Protection of Civil Rights Act, 1955, which punishes the preaching and practice of untouchability. Needless to say, the act made little difference on the ground in terms of changing people's attitudes.

There is no dearth of angry activism on this issue in India and outside, and as is the nature of all angry activism, the message is so loud that people close their ears and ignore it. Meanwhile, India's politicians are more interested in maintaining the status quo and milking caste divisions for votes instead of working for the welfare of the "untouchables." In this hopeless scenario, one man is running a silent revolution with a lot of success.

This is the story of Bindeshwar Pathak, whose life transformed as a young man in the 60s, when he was told by the General Secretary of a Gandhian organization that it was Gandhi's unfinished work to remove the profession of manual scavenging from India and liberate the untouchables. The General Secretary told the young Pathak that he had to finish Gandhi's mission and added, "I see light in you." The young man had no clue what this meant, but he read a few books published by the WHO on sanitation, and decided to live in a scavenger's colony for two months to understand them and their problems. People thought he was crazy. He survived, and came back with an understanding that was different from any social activist in this field.

He felt that the discrimination of the untouchables was due to technical reasons. The untouchables, or manual scavengers of toilets, were considered dirty as they dealt with human excreta while cleaning "bucket toilets." Human excreta would be pulled out of such toilets into buckets and then, scavengers would carry buckets on their heads to a location for disposal. If there could be an alternate toilet designed to be self-cleaning, then it would be cheaper for the consumer as they wouldn't need to hire people to clean it. It would also eliminate the need for the scavenging profession.

Pathak started "Sulabh" (which means "easy") to address this. He came up with the two-pit pour-flush toilet which would work in the Indian context. One pit would be in use at a time. Once the pit was full, it would would be closed and the other would be in operation. Over a year, the first pit's contents would turn into manure and could be used as fertilizer in the field. Thus, there would be no need to scavenge and clean these toilets. Sulabh's toilet product turned out to be a great hit, with over a million pieces already sold. Sulabh then channeled their profits toward retraining the untouchables to enter mainstream society - as cooks, beauticians, electricians, etc. Today, Sulabh has a whole array of toilet products to suit your budget.

Pathak also felt strongly about the problem of open defecation. Unlike those who faulted the "Indian civic sense," he recognized that the problem was that we didn't have enough public toilets. This is also a question of human dignity, especially for women, as they would suppress the call of nature the whole day and only go very early in the morning or in the night. Even so, such trips would make them a target of sexual predators, snakebites, diseases due to defecating in unhygienic environs, etc., not to speak of the health problems that come from suppressing the call of nature the entire day. Again, this was a technical problem waiting to be solved. So, he started the first public toilet in (hold your breath) Arrah, Bihar, a state where people would rather travel on top of trains than buy tickets. Pathak believed people would pay for a clean toilet experience, and he was proved right. The people of Bihar paid and sustained the public toilets. Today, Sulabh has built over 5000 public toilets all over India, including the largest toilet in the world at Shirdi for pilgrims.

Not only do these toilets generate local employment, they also collect raw material for Sulabh's energy innovation - bio-gas and electricity production. You have to see it with your own eyes - yes, your excreta can now be used to produce cooking gas and electricity.

Pathakji also understood that he needed to help the children of the scavengers get the same opportunity as others. Sulabh uses its profits to run a school where children of the scavengers get free education, books and uniforms. They also eat together with children of other communities, and learn Sanskrit, a language they were earlier denied access to. The children in this school are taught all religions so they can celebrate all of India's traditions.

And the story does not end here. Sulabh also has a toilet museum which is now on the tourist maps of New Delhi. They have expanded to eco-sanitation projects that help with pisciculture, among other things. Throughout these projects, Pathakji continued his education to go on for a Phd and a D.Litt, and has coined a new term, "Action Sociology," which he advocates as a way to solve social problems.

Behind all of these efforts is a deep-rooted spirituality. Pathakji's day begins with the entire Sulabh community praying (they sing a universal prayer) and filling their hearts with positive vibrations. When I interviewed him, not once did I sense anger against society for discrimination of the untouchables. At the same time, there was no acceptance of the injustice. Like Krishnammal and Sandhya, and in a completely unique manner, Pathakji has transcended anger and hatred to make a difference, a big difference, through social entrepreneurship. He is indeed a bright light in India who has illuminated our conscience and given us great hope for the future.

You can meet him by going to the Palam Vihar (New Delhi) office of Sulabh International Social Service Organization (although he travels often, he is generally accessible). You can also meet the other heroes of Sulabh and see their toilet museum and a demonstration of bio-gas and electricity from human excreta in the same complex. There are several volunteering and internship opportunities with this organization, if you have the time.

And if you can't visit them, here is a film I made on Sulabh in 2006. I recommend watching it in full-screen mode (press the TV icon) and using headphones. If the film does not show up for some reason, here is the direct link on Blip TV.

Errata: the film says Sulabh has built over 500 toilets, when in fact, the number is above 5000.

Saving India's Missing Girls

2008-11-24T05:13:00.000-08:00

In the second piece of the Gems of the Planet series (the first was My Friend, the Landlord), we continue with the same criteria for our gems:

Feel the suffering of others as their own and cannot rest until they've done something to alleviate it
Have compassion for all, especially those they seek to transform

I found this gem in an unexpected place - a film screening at Stanford of India's Missing Girls, a documentary made by Ashok Prasad of the BBC. The documentary portrayed a grim picture and dispelled several myths:

Several women interviewed preferred male babies and would prefer to terminate female fetuses of their own accord.
Educated women too do this, especially in business families to ensure that the fortune remains in the family
In some cases, when the woman is unwilling, the family puts a lot of pressure, and sometimes forces the mother to abort
The director presented statistics after the film screening. The highest number of female abortions are done by Jains, followed by Sikhs, followed by either Buddhists or Hindus (I forget which). I remember being shocked by this statistic, because I expected Hindus to be at the top. Nothing can prepare one to accept that Jains are the #1 offender as Jain philosophy is the pinnacle of non-violence. I guess I am too naive to believe that people follow the philosophy they were born into.
The fact that women were electing to abort foetuses confounded the pro-choice people in the audience (would they say: we want women to have choice, but not that much choice?)

However, in the middle of all these depressing facts was a shining gem. The film revolves around a remarkable woman, Sandhya Puchalapalli, who founded the Arti Home in Cuddappah, to save female foetuses from abortion. Sandhya studied the circumstances that lead people to abort their female children, and she tackled several problems. First, she has a crib outside the nursing home that allows families to anonymously place babies whom they'd otherwise kill or abandon (with the same outcome). This takes care of the fear of legal repercussions, and saves the life of the baby who is then raised in the home in a loving environment with a focus on nutrition and education. Second, she keeps a strong connection with the community around her and knows who is pregnant. She then connects with them to talk about their aspirations for their baby. When they tell her that they will abort if it is a girl, she reasons with them in a remarkably non-judgmental way. I know many who'd hit the parents if they heard something like this. Not Sandhya. She goes back on a regular basis, explaining that a girl child is not useless and deserves a lot of love, the same as a boy child. The film follows the interaction with one couple and how the mother comes around from a position of fear to one of joy where she eagerly waits for her daughter and does not abort.

What makes Sandhya stand out from all the other activists I know is that, time after time in the film, she has only compassionate words for parents who decide to abort, particularly to avoid dowry. She says, "Just imagine what the parents must be going through to have come to this decision?" Even when she is face-to-face with the parents, she has no anger or hatred, but understanding and compassion. A poignant moment of the film is when Sandhya receives a baby who is born premature. After getting the baby medical help, Sandhya goes to the local temple to pray for the child's life. When the child does not make it, she is heartbroken. Even then, she has no harsh words for the parents who abandoned the baby.

Caring for unwanted children, feeling their pain and doing something to save their lives beyond yelling and criticizing in media platforms is rare. Generating compassion for the parents who feel compelled to abort their children and not seeing them as the "other" is rarer still. While one miracle is documented in the film (the change of heart of one family), I am sure she works many such miracles with her attitude. I sincerely hope I get to meet this remarkable lady in person.

If you are in Cuddappah and meet her, do share your stories with me. Arti Home is supported by the Vijay Foundation Trust.

My Friend, The Landlord

2008-11-23T03:09:00.000-08:00

In Chapter 6 of the Bhagvad Gita, Krishna tells Arjuna, "O Arjuna, that yogi is considered the best who judges what is happiness and sorrow in all beings by the same standard as he would apply to himself. (32)" Further, in Chapter 14, Krishna expounds the qualities of those who are not deluded by their own nature. Among the many listed, here are a few, "one who is the same under honor and dishonor, who is equally disposed towards the friend and the foe; who has renounced all (selfish) enterprise - this one is said to have gone beyond nature. (25)"

While it is one thing to philosophically parse these words and ponder on its meaning, it is exhilarating to find a living example, without which such ideals would be relegated to the ivory towers of impractical high philosophy.

In this series, I will share stories of living examples, who can still be met by the interested reader with a little effort. But first, let us set up a contrast. We are all too familiar with the jholaawaala brigade that is ready for "andolan" any given time of the day. Such people take up worthy causes and often dedicate their lives to it. When they speak, they usually train their guns on an "enemy" and spew venom. No matter how noble the cause, readers are burned by the vitriol that comes out and are unable to move beyond the venom. The powers that be ridicule such activists and if they ever give in, it is usually out of frustration and irritation, without any sense of compassion or restitution.

The activists themselves have a career that looks like a bell curve. Their ego rises with their career, and after a certain point, they are so consumed by their self-importance that they cannot see beyond themselves and are blind to the good in those they oppose. And so begins their descent, as they get deluded by their own nature. Their co-workers end up parting ways, frustrated and dejected by the ego-centric leadership that manifests itself in many ways in their movement. At the end, we have a lot of angry people - angry at the "enemy," angry with each other, angry with themselves.

And then, right under our noses, we find the exact opposite - people who are terribly active for a cause, but are not consumed by it. Their intellect and intuition are synchronized, each guiding the other. They find divinity in those who others might call the "enemy." The laws of human nature as we know it collapse and we start witnessing changes in the attitude of their opponents, which the rest of us often call "miracles." Perhaps, Swami Vivekananda's observation that "what goes around comes around" is true after all.

It is time to meet Krishnammal Jagannathan, fondly referred to as Amma. Amma was born in a Harijan family was very rebellious during her childhood years. She remembers that if her brother hit her once, she would hit him back three times. As a young girl, she had the good fortune of meeting Mahatma Gandhi, and remembers being very deeply touched by that meeting. She noticed a young man who was controlling the crowds during that meeting. They met later and she learned that the young man was of Brahmin birth. Influenced by Gandhiji, he had determined that he would only marry a Harijan, and as she puts it, "In his eyes, I was that girl." She was not interested in marriage but finally acceded, and they both agreed to only get married in free India, which they did.

She completed her university education but did not wait to get her degree; she felt that the certificate was a useless piece of paper, and she would rather prefer service through Sarvodaya (which means "Welfare of All"), a movement started by Gandhiji. She and her husband walked with Vinoba Bhave in the Bhoodaan movement, a walk that should be in history textbooks all over the world. In 1968, 44 Dalit Christians were burned alive by the landlord over a land dispute. Heartbroken, she rushed to the spot and remembers that she couldn't stop crying for three days. She resolved to bring justice to these families. But not in the usual sense of litigation and punishment. Instead, she started a non-violent movement where she would plead with landlords to share their land with the less fortunate landless tillers, in the same style as the Bhoodan movement, under the banner of LAFTI (Land For Tiller's Freedom).

What is unique in her approach is that she believes there is a great light within her and in all beings. She considers the landlords who commit injustice as sick people, those who cannot see their own divine light. The language she uses to describe her encounters with the landlords is comic and tragic at the same time. She recalls, "I went to meet my friend, and he attacked me." A perplexed listener asked her, "Amma, why would a friend attack you?" And she replied, "Oh, the friend was a landlord." Another time, the moment she walked in, the landlord got so enraged that he went inside to find a stick to beat her with. Her response: instead of being angry or upset, she goes to the local temple and decides to pray for her sick friend without food and water. After three days, her friend is unable to take it anymore and comes to the temple to tell her, "Amma, please stop the fast. Let us eat together and we'll discuss this land issue." And invariably, she would get land to redistribute to the landless.

Another time, when she was on her regular morning walk, goons from her landlord friends surrounded her and poured kerosene all around. Her reaction: she sat down calmly and started singing her favorite bhajans, ready to die. This enraged the goons and they started abusing her loudly. The villagers woke up and came to her rescue. On seeing them, her attacker friends ran away.

While she walks through dangerous situations all the time, what makes the retelling so funny is the complete absence of any anger or hatred. Amma believes she lives in a world of friends and her experience confirms her belief. She also is in no hurry - she does not manage by objectives and annual performance. She says that this July (2008), a landlord involved in the massacre of 1968 told her that he was wrong and he wanted to give away his land to Amma for whatever purpose she had in mind. The indefatigable Amma is already making plans - she will start a school for Dalit children to help them come out of their condition.

Her focus has been on the empowerment of Dalit women. She claims to have an "army of women," whom she trains in non-violence. She finds that the less people have, the more they have to give. She is often invited home by the women, and she will sleep on their bed, where a pillow is made for her comfort by tying the household clothes together. Lying down in that condition, she cries for these women - how hard they work, how much they sacrifice and how much they are willing to give. And yet, our society engages in exploiting them. She identifies so much with their suffering that their pain is her own. Her material needs are so few and she will be considered penniless for tax purposes, and yet she lives, walks and talks like a queen.

I met her two weeks back at Stanford and then in the Bay Area, just before she proceeded to Seattle to receive the Opus Prize (as a finalist). She has also been awarded the 2008 Right Livelihood Award (also known as the Alternate Nobel Prize) in Stockholm. In her funny style, she told us that she tried to find Seattle on the map but was unsuccessful. When she went to the airport, they wouldn't let her board because she didn't know where she would stay in the US. She called up her daughter and finally got an address. Even after arriving, she was unsuccessful in locating Seattle on the map, but believed that she would be taken care of wherever she went, which is true for such human beings.

Here is a video made by Seattle University on her work.

You can also read about her on Wikipedia.

The interested reader should be able to meet Amma easily in Tamil Nadu.

Muhammad Yunus and Paul Farmer

2008-11-14T22:36:00.000-08:00

I had the privilege of attending two talks today by Nobel laureate Prof. Muhammad Yunus and health activist Prof. Paul Farmer.

The first talk was organized by the ASSU Speakers Bureau in Cubberley Auditorium. I landed there with my wife twenty minutes ahead of time, and already there was a queue going out of the auditorium. I remember noting that no one had told us to form an orderly queue - we just did. We got good seats in the middle of the hall. At sharp 12 noon, Dr. Yunus walked in. Upto that point, I was not thinking about anything - and so I was amazed by the emotions I felt on seeing him walk in. It seemed as though he had a presence that was magnified by the mostly permanent smile he had on his face, of a person who was enjoying himself at every moment. Indeed, I must admit that Dr. Yunus is my hero, my role model. If one professes libertarian ideals, one couldn't find a better vindication than the founder of Grameen Bank.

As soon as he was called onto the stage, I just found myself spontaneously rising with the rest of the audience to give him a standing ovation. And as I stood there clapping, something was happening in my heart - I felt connected to humanity, indeed I felt human. We sat down, and Dr. Yunus gave a talk, without any notes or powerpoint slides. He was logical, coherent, funny and deeply inspiring. He first pointed out that human beings have two sides - the selfish and the selfless. Almost all the economic theory around us has been developed around the selfish side, and almost none on the selfless side. He asked us to consider the door that led to the selfless side.

One poignant remark he made was about the creditworthy and how for years, conventional banking had not considered the poorest to be creditworthy. Today, with the financial crisis, it turns out that Grameen's borrowers are far more creditworthy than those whom traditional finance deals with. Dr. Yunus appealed for a redesign of the banking system that helps people at all levels. He appealed to the youth to consider becoming social entrepreneurs, to develop their selfless side, and put on selfless "glasses" - and then see how the world would change for us.

He told us about the success of Grameen Dannon and how they add micronutrients to tackle malnutrition in children. Grameen's latest credit adventure is to become a banker for beggars. The program has been so successful that beggars number over 100,000 of Grameen's clients, and are turning into salesmen. Some have stopped begging while others are part-time beggars, part-time salesmen. And they are paying back their zero-interest loans.

It is sad that in India, the government tried to get into microfinance and messed it up. Thereafter, we've had small pockets of success, but not much in the scale of Grameen. I want to go at some point to Bangladesh to visit the Grameen Bank and see what we can learn.

Moving to Paul Farmer, like the previous talk, there was a standing ovation in Kresge Auditorium. Organized by FaceAids and PIH, most of the audience seemed to know about Dr. Farmer. He is an inspiring doctor who turned conventional thinking upside down and showed how anti-retroviral drugs could be administered in a cost-effective manner in Haiti and Rwanda bringing much needed relief to HIV patients. Conventional thinkers thought that the poor in these countries would not use the medication properly, hence, the virus would develop resistance and render the medication ineffective. This was used as an argument to sidestep relief strategies. Farmer started a movement to remedy this, and showed that with the help of community health workers, great relief could be brought to HIV patients, who have now survived for several years and are themselves becoming caregivers to others. An interesting point he made was that the greatest need was to pay the community health workers, but somehow other experts didn't think the workers should be paid - they should all be volunteers!

Surprisingly, Dr. Farmer thought it was a good idea for the US to raise money to give to Haiti and Rwanda. He had a good argument - there was much the US had done wrong in Haiti, and it was time for restitution. However, he did not quite address the question of sustainability. So, I asked him after the talk if he had considered working with microfinance institutions to help provide an integrated economic and health offering. Strangely, he felt that microfinance institutions had not been successful as people didn't like the 11% interest rate. He preferred taxes to be used to support healthcare and education. When I mentioned Yunus and the Grameen's success, he did say he'd like to talk to Dr. Yunus. And when I mentioned Aravind Eye Hospitals' model of using the money from one paying patient to cover two who couldn't pay, he pointed out that while he had great respect for Aravind, there were many in India who can't get general healthcare, which is probably true.

I thought Dr. Farmer's work was very inspiring. However, I see taxes for universal healthcare and education as a dead-end. China and Russia have both been down that road and have scars to show for it. On the other hand, if his model of community-based health workers can be combined with Grameen's unique economic package, we wouldn't need taxes to improve the situation. People will learn to stand on their own feet, with a little bit of support in terms of credit from the rest of society. This requires investment - not charity or coercive taxation. As Dr. Yunus said today, we can make money and do good - why should we separate the two? Money is just the tool - if the goal is truly to do good, amazing things are possible with money. Dr. Yunus pointed out that charity is one-time money. However, a social venture is a better way to invest the money, because it keeps recirculating, growing and empowering the community.

I hope that these two great souls meet over a cup of tea and pick the best of each other's ideas.

Ending Coercive Land Acquisition

2008-11-09T11:06:00.001-08:00

Ending Coercive Land Acquisition

The reaction by India’s industrial titans to the Singur crisis has been unanimous. Big guns like Mukesh Ambani, Narayan Murthy, Azim Premji and others have supported the Tatas and warned that the state would become a desert for investment if the Tatas had to leave, which is now a reality. Even the Prince of Calcutta, Sourav Ganguly, has supported the Tatas. Mamta Banerjee seemed to be the lone voice in support of the farmers whose land had been acquired forcefully without adequate compensation. People have called her stupid and an enemy of the state. Her own party supporters have voiced their disagreement with her opposition. In this backdrop, I am going to take on the perilous task of finding logic in her stubborn stance and also to suggest a long term solution for the future. I ask the reader to bear with me and let me explain my position.

Not our problem alone

Land acquisition issues are by no means limited to India. In the United States, there exists a law called “Eminent Domain,” which in plain speak says that Uncle Sam can throw you out of your property if it sees a public good that requires the use of your land. Imagine this: a Civil Engineer (from a reputed university) contracted by the government to come up with the most optimal road plan figures out that such a road would need to pass through your grandmother’s house. The authorities send her a notice that she will be paid a certain amount, which would probably be a little lower than the market price. She refuses. Even after the compensation is hiked some more, she refuses. The authorities invoke Eminent Domain and send the cops to throw her out. As the cops arrive, the poor old lady holds on to whatever she can to prevent being dragged away, all the while crying out that this is where she has all her memories, this is where she lived with her husband until he passed away, and this is where she wants to die. She wants to be left alone. But that cannot be allowed, and the official tells her, “Ma’am, you don’t understand. The most optimal road goes through your house, and therefore, for public good, we must have it.” And her cries go in vain (unless civil rights groups get into the game and sue the government for doing this). This story plays out in every society in the world (see box 1, box 2).

People all over the world are generally nice and compassionate, and most people feel bad about a story like this, but they ask desperately, “What alternative do we have for building YOUR-FAVORITE-PUBLIC-GOOD?” There is an alternative that ought to be taught in high schools for its utter simplicity. It has to be understood that the only legal power of a government is the power of coercion. And every single time coercion is used for public good, it has unintended consequences. Note all the controversies of land acquisition that have come to light, from the Narmada Dam project in the West, NanoCity in the North, Singur in the East and now Reliance might make the same mistake in Maharashtra. In India, the police knows no better than to use their guns on protesting people, often killing many. The legal costs rise and big businesses get discouraged by the reaction. In the United States, as business after business got stung by the backlash to eminent domain, a path-breaking and simple alternative emerged.

Create Options

This alternative has its roots in one of the most powerful insights that the wise have shared about decision making: you can always create OPTIONS. Taking this insight literally, let us try creating options for land acquisition (not the unrealistic Black-Scholes variety that is employed by financial "experts" who wouldn’t know a financial meltdown until the train hit them but the decision analytic variety whose math is simple enough to be understood by an English major with a minor effort). Let’s say Reliance plans an oil pipeline that needs contiguous areas of land. If any one of the landowners in the path of the pipeline hold out, the project will not take off, leaving Reliance with several non-contiguous pieces of land and a large hole in their pocket. In an alternative scenario, instead of buying any plot of land, Reliance could choose to buy an option from the landowner. The option will give Reliance the right to buy the land at the prevailing market (or agreed upon) price within a period of three years (for instance). This option can be valued easily using simple decision analysis tools and would be an order of magnitude cheaper than acquiring the land itself. Reliance could then plan multiple pipeline routes and try to acquire options on each of the routes. The moment they have all the options on a particular route, they can exercise the options on that route and acquire all the contiguous pieces of land.

There are several benefits to this approach. First, as Reliance is a private party, they are not required to reveal the purpose of the acquisition. They can send out agents who don't even need to reveal that Reliance is behind the acquisition. The government, on the other hand, is required to reveal the purpose of their acquisition, resulting in landowners realizing that they can make a lot of money if they hold out. The cost of acquisition will now be based on a good deal between the private party and the landowner. Second, as exercising the option is a legal right, there is no necessity for state coercion on the individual landowner. If someone holds out even after selling an option, that will be considered contractual fraud, and we have a legal framework in place to deal with that. The government no longer needs to deal with mass protests, the police no longer needs to open fire on hostile crowds, and entrepreneurs no longer need to sink large sums of money in legal costs. Third, if some people (tribals/farmers/middle class people) have a strong connection to their land and don’t want to leave it, all they have to do is not sell the option to their land. There should be no legal authority on the part of the government or the industry to force them to do so, and any forcible or fraudulent activity on the part of the entrepreneur would be subject to our existing legal framework that prohibits fraud and coercion. Human rights organizations can shift their focus from protesting to educating the tribals/farmers, while respecting the choice of these communities to accept or reject the education.

Creating options is not a new idea, and you have likely already used it in your life. We shall define an option as "the right to a future decision." A little consideration should reveal that insurance is a very good example of an option, where you buy the right to a lower medical expense should an emergency arise. The price of the option here would be the insurance premium you need to pay each year, which is a fraction of the coverage cost that the insurance company is legally obligated to pay should the situation arise. If you have played in the stock market, then you might be familiar with "call/put options" which is the right to buy/sell a stock at a predetermined price.

Who's Doing Non-coercive Acquisitions with/without options?

If this method is so simple, why hasn’t it been tried already for land acquisition? Strange as it may sound, this has been tried – it just hasn’t been spoken about as most private firms don’t want to talk about their land acquisition strategy. I’ve heard from a reputed professor at Stanford that Disney used options to acquire most of the land they needed for their theme park at Anaheim, California, after which people got wise to the purpose behind the acquisition and hiked up the selling price. Even then, Disney saved a fortune in legal fees by using this method. (For other companies in the US, see Box 2)

The intelligent reader may point out that what works in the United States may not necessarily work in India. To which I wonder what is so special about the Indian DNA that it would not like to save lives and lower costs when it could. In any case, options have been in use in India for a long time, without us explicitly recognizing it. If you've tried buying land in India, chances are you've been asked to pay a "roka" as North Indians would call it. The "roka" is an advance that a buyer would pay a seller after which the seller would stop showing the land to others. The "roka" is an option, a right to buy the land within a specified time. "Roka" options are quite common in the real-estate market and are probably referred to with different words in different parts of the country.

Finally, I have anecdotal evidence that after Larsen & Toubro (L&T) had completed acquiring land for the third Howrah Bridge in (hold your breath) West Bengal, neighboring land owners who had been skipped were upset at missing the pie, and begged L&T to consider buying their land too. It seems that landowners in West Bengal also like good deals, like landowners anywhere else.

Challenges

There are some legitimate challenges to applying this solution, especially in places like West Bengal. The business climate in the state is highly interventionist, with entrepreneurs unable to operate without the blessings of the prevailing local political party. In such a situation, talking about free markets is a travesty. The current government needs to realize that it cannot replace coercive prevention of industry by coercive adoption of it. It needs to start with the fundamentals and shrink to a minimal form of government. But then, what will happen to the party ranks? Instead of employing cadre into what amounts to an organized land mafia, they can be encouraged to become social entrepreneurs who combine the best of capitalism (freedom) and communism (caring for the community) while leaving the worst out (greed and coercion respectively). While this might take some time, a first step for India would be people from all walks of life coming together to demand the revoking of Article 300-A so that no government has the right to take away private property through any argument of public good. In today's society, we should realize that governments claim almost any economic activity as a public good, and eminent domain laws become a vehicle for individual abuse.

While economists would welcome the strengthening of property rights, they may raise several objections to entirely scrapping Eminent Domain laws in India. First, they will point out that there are "actual public goods" that a government must provide (e.g. roads, wildlife reserves, forested lands). How is the government to do so without laws that resemble eminent domain? Second, private parties cannot freely purchase agricultural land in India. We would need laws that allowed for land use changes, and we still need to consider if such a change is in public interest. Third, individuals sitting on vast natural resources ought not to have the right to refuse their commercialization - this is an argument for eminent domain laws. Fourth, there are thousands of land holders who have title to a small amount of land. This makes it infeasible for private parties to negotiate with so many, hence, the government is a good intermediary. Finally, you would need a sophisticated buyer and seller to be able to use options.

Lets take these arguments one by one. First, it is a 20th century idea that governments are responsible for public goods. There is ample evidence of societies that did fine in the past without government intervention in every sphere of life. As evidence in our present time, look at all the public goods in India and you will find those are the services that are most lacking in creativity and innovation. In the United States as well, the government builds roads as a public good. This is one sector which has seen so little innovation that you now have cars that are built to touch 200 miles per hour and roads that can only handle 65 miles per hour. Think about all the private toll roads you've been on in India and compare them to the government maintained roads, and the difference should immediately be apparent to you. India is full of examples of social entrepreneurs who have given up on the government's ability to provide public goods and provided solutions themselves, either as a for-profit or as a non-profit. Sulabh International builds public toilets(shauchalayas) that are financially sustainable and pay for their construction cost quickly, while generating employment. See Box 3 and Box 4 for further examples. Second, I agree that private parties should be allowed to freely purchase agricultural land and the land owner should have the right to decide how the land should be used. If the current land owner feels it is important that the land use should not be changed, this can be specified in a contract at the time of sale. The argument is often made that good agricultural land should not be used for non-agricultural purposes. If we truly believe that, then we should immediately proceed to demolish all the government (and other) buildings in Kolkata, which has some of the best agricultural soil you could find being on the banks of the Ganga. Third, it is possible to grant an individual the right to their property while one could also construct rights for what lies below the property and separate the two. Once this is done, there is an incentive for entrepreneurs to find ways to drill for oil or a similar natural resource without disturbing the landowner who is at the surface. Fourth, the argument of "too many land owners" is a terrible one, as the government does no better, and arguably worse, than a private negotiator. In fact, a private negotiator would not have the advantage of guns and would have to be polite and stay within legal boundaries. Perhaps, this is an area where an entrepreneur could provide negotiation consulting services. Finally, the argument of sophisticated buyer and seller is an argument for education, although the Indian market is already using "roka" options without doing sophisticated decision analysis. Companies that need help modeling options can hire decision consultants just like they hire tax consultants. I admit that companies will have an advantage in pricing methodology over individual landowners. However, this is a good reason for the creation of a friendly social venture that offers pricing services to individual land owners. On the topic of decision education in India, there is much that needs to be done. (See Box 5)

Philosophical, Economic and Spiritual Reasons

Options should be used for both philosophical and economic reasons. Philosophically, even if everyone around me says that murder and theft is the best way to get what I want, I refuse to do it, and I will argue that India, with its deep spiritual tradition of acceptance of all religions, systems and ideas, should stand firmly behind non-coercion. Just as the tool of coercive land acquisition is the use of a police force with guns, the tool of smart non-coercive land acquisition is options. Economically, let us be clear that while using options has lowered the cost of land acquisition for many, the method itself is not going to guarantee that industrialists will get the land they want, which is no different from the case of using coercion as we have just seen the Tatas getting thwarted even with government support. If both methods cannot guarantee success, and the coercive one consistently creates more headaches, takes lives and increases costs, then we ought to throw our weight behind the non-coercive methods.

Finally, traditionalists might point out that in the Indian tradition, the individual must sacrifice for the family, the family for the community, the community for the state and the state for the world (a maxim approved by Sri Krishna). While this is a noble spiritual idea, it is not what is followed today. On the other hand, a more accurate maxim for the practice of the modern day is, "the individual must be coerced to sacrifice for the family, the family for the community, the community for the state and the state for the world." Every spiritual tradition in India recognizes a supreme internal freedom and asks its followers to acknowledge and become aware of it. It is but natural that India lead the world in giving expression to this internal freedom in our external environment. We can start by recognizing that individual sacrifice is a decision to be made only by the individual, and coercion has no place in a society that wants to call itself free

Box 1
Almost every country in the world has a legal mechanism that resembles Eminent Domain laws. In the United Kingdom, New Zealand and Ireland, these laws are referred to as "Compulsory Purchase," while Canada and South Africa call it "Expropriation." India used to consider right to property as a fundamental right under Article 19(1)(f). This meant that your land could not be taken away except under the Land Acquisition Act of 1894, or a similar state law, which allows the use of forcibly acquired land by the Government "in the interests of the general public or for the protection of the interests of any Scheduled Tribe". The Land Acquisition Act of 1894 empowered the Central and the State Governments to acquire lands that they felt was necessary for a "public purpose". Public purpose was defined so broadly that even land use by state-owned corporations was included, thus turning this law into an all-powerful mechanism for the British. While this British baggage continues to this day, in 1978, the right to property was shifted out of fundamental rights so as to make it harder to challenge land acquisitions by the government, and Article 300-A was introduced which said that "no person will be deprived of his property save by authority of law." In other words, the state/central government can take your land away if Parliament or State Legislatures make a legislation/order/rule to do so, in exchange for compensation determined under the Land Acquisition Act by the Collector. You can challenge the action of the government in a court if you think the government has acted unfairly, and in most countries (except authoritarian ones like China), this leads to protracted legal battles, civil rights headaches for the government and spiraling legal costs for the industry involved. The Land Acquisition Amendment Bill (2007) is an effort to reform the 1894 law, but how much band-aid can one put on a gaping wound? Senior Advocate Bishwajit Bhattacharyya recently outlined in the Statesman (Oct 29, 2008) how even passing a law under Article 300-A has been successfully challenged in court. How many people have the resources to take on the government when their rights are violated?

Box 2
At this time, the United States probably has the worst eminent domain laws on the planet. In 2005, a controversial Supreme Court ruling upheld (by a 5-4 vote) the government's use of eminent domain powers to take private property from one owner and transfer it to another owner under the pretext of economic development. This ruling was criticized publicly by many noted people, including Bill Clinton. Justice Sandra Day O'Connor, who voted against the law in the famed Kelo v. City of New London case, warned that this new addition would "wash out any distinction between private and public use of property." For the first time in US history, governments could use eminent domain powers to declare ordinary private use of property as a "public use." In a report by the Castle Coalition (a network of homeowners and activists in the US determined to stop the abuse of eminent domain), there have been more than 5,000 instances of abuse since the Kelo decision. This figure includes cases where private property owners have threatened the use of eminent domain on reluctant sellers to agree to their price or risk having their property taken away by force. This situation is quite comparable to India where the government acquires lands for private parties under the argument of "economic development."

The report also goes on to debunk the myth that eminent domain laws are needed for economic development by citing several projects that did not use eminent domain. Walt Disney's construction of Disney World, The Rouse Company's construction of a new city in Howard County, Maryland and Focus Property Group's creation of a 3000-acre community called Mountain's Edge are some of the examples. Disney World is particularly interesting to us as they used options quite heavily. Further Reading: http://www.castlecoalition.org

Box 3: Social Entrepreneurs in India, a powerful force for public good

Arvind Eye Hospitals in Madurai (and other cities in South India) treats patients who cannot pay; free of cost and make up their money from people who can. Exnora in Chennai (and now several other cities) has created a system of garbage cleaning where an erstwhile scavenger now collects garbage from each home and dumps it in the proper place, for a fee. LaserSoft Info Systems in Chennai employs "disabled" people and puts them to work in the field of banking software. The Sangini Mahila Seva Cooperative Society is for, of and by sex workers in Kamathipura, Mumbai's oldest red-light district, where sex workers gain access to banking services and rise out of destitution. A similar and older initiative has been quite successful in Kolkata's Sonargachi district. The popular Lijjat Papad is made by a social venture, Shri Mahila Griha Udyog, founded by Sarvodaya members. This is an organization focused on creating a dignified work environment for women in a decentralized manner, and its success should inform case studies in any serious business school. Most Indians are familiar with "utterly, butterly delicious" Amul butter. Amul stands for Anand Milk Union Limited, a social venture inspired by Sardar Vallabhai Patel, which is privately run as a cooperative to give milk farmers a good deal and provide high quality milk products to society. Anandwan is a social venture in Maharashtra founded by the late Baba Amte, and run as a self-sufficient rehabilitation center for people afflicted with leprosy. Anandwan has incorporated environment-friendly processes into the local lifestyle without your tax money.

Box 4: Environmental Social Entrepreneurship in the US
The Nature Conservancy (http://www.nature.org/) is a US charitable institution that acquires forested land using existing land acquisition laws as a private party in order to conserve it. Aimed at preserving bio-diversity, this organization has been voted as one of the most trusted national organizations in the US in online polls. Their work has led to the creation of several national parks. The Proactive Carnivore Conservation Fund is a private initiative by an organization called Defenders of Wildlife that finds innovative solutions to prevent people from killing wildlife (such as compensating farmers for the livestock they lose to wolves in return for sparing the wolf's life). The Property and Environment Research Center has an instructive article by the founder of this project, Hank Fischer, at http://www.perc.org/articles/article319.php

Box 5: Decision Education
It is a pity that most business schools in India either skip Decision Analysis or teach it as "Decision Tree Analysis," which is like stripping all the philosophy from yoga and teaching it as a bunch of stretching exercises. There is only minimal benefit in doing so. This is not just a problem in India but also in the United States (as you can see from the massive financial crisis). What is even more pitiable is that people need to wait till they get to a university (there are only a few that teach this as a philosophy) to learn good decision making. To remedy this, the Decision Education Foundation (www.decisioneducation.org) teaches high school children the basics of good decision making. Perhaps it is time to start a chapter of the foundation in India.

Here is a very brief introduction to the philosophical foundation of decision analysis (DA). DA does NOT help you predict the future or maximize the chance of the best outcome. For that, you are better off going to an Indian astrologer or a financial engineer (though I wouldn't trust the financial engineer - I recommend the book "The Black Swan" for people who call themselves statisticians or financial engineers). DA is an amoral method that helps you stay consistent with your preferences, information and alternatives. DA disabuses you of the notion of "objective decision making," making it clear that you can only judge the quality of your decision, not someone else's. Even more fundamentally, the quality of your decision must be judged before the outcome, as you cannot judge a decision from the outcome. If you knew the outcome, you wouldn't have a decision to make. Another fundamental tenet is the principle of sunk cost - the past matters only for learning, not for accounting.

Your Taxes at Work

2008-01-07T13:15:00.000-08:00

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

Saving Whale Sharks

2007-01-23T00:39:00.000-08:00

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.

Karnataka about to legalize coercive takeover of private land

2006-06-05T09:44:00.000-07:00

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!

Heading for Disaster

2006-03-26T22:41:00.000-08:00

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?

Generating Rural Wealth..

2006-01-08T21:26:00.000-08:00

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..

Shrinking Indian Talent Pool

2006-01-07T14:06:00.000-08:00

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.

Sugarcane farmers don't starve anymore

2006-01-07T09:35:00.000-08:00

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.

Moral Policing

2005-12-23T00:31:00.000-08:00

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.

Subsidies and Taxes: They can take lives

2005-11-27T16:44:00.000-08:00

Recently, an officer with the Indian Oil Corporation was murdered by unscrupulous fuel pump owners who were caught by the officer adulterating fuel with kerosene. While society is up in arms against the foul murder, very few are looking at the cause of the crime.

Kerosene is subsidised for the poor and a very small percentage actually reaches the intended audience. Most of it is used by the "fuel mafia" who adulterate petrol that costs Rs 35 a litre, with kerosene that goes for Rs 11 a litre (only for the bonafide poor).

This sounds devastatingly similar to the crisis that occurred in Communist Russia with subsidized bread. Farmers were feeding it to pigs as it was cheaper than pig fodder. So much for subsidies. In this case, it has taken a young, bright officer's life. He may not be the first if we do not understand the insidious nature of subsidies and taxes.

Here is a good analysis by Ila Patnaik that goes deep into this issue.

Coercing Women

2005-11-24T00:05:00.000-08:00

There is a strange practice in Tamil Nadu of coercing women to retract statements if it happens to hurt public sensibilities. Pooja Bhatt sums it up rather nicely in this article.

What I find so strange is the deafening silence in the media - while they normally tend to have opinions on everything, how is it that they haven't thrown up a storm at this blatant coercion? Why does this appear more like a tennis match than an attack on civil liberties?

While politics is probably at the bottom of this mess, I'm a little hesitant to dismiss civil liberties as a casualty. Saying something controversial is not a problem (though, in this case, the people involved were saying sensible things). Rebuttals or protesting statements are also not a problem. However, slapping defamation suits saying the state of Tamil Nadu has been defamed is a problem.

This tactic baffles the mind. How does one defame a state? Some suits have accused the speakers of corrupting the innocent. There are so many better ways of doing that and they are actually being done by several cable TV channels each day. I wonder why no one talks about safeguards that protect children from inappropriate material - channels run programs without any sort of standardized rating system.

What I am surprised about our legal system is that frivolous charges like this are actually allowed in for non-zero lengths of time.

Where is the soul of the people that should have revolted against such base behavior? Does it have to come out only during an election?

Innovation in Debt-Collection

2005-10-16T14:39:00.000-07:00

Tangy Tamarind is an upmarket Mumbai restaurant. A few weeks ago, its diners were taken aback when a raucous group descended on the restaurant with banners charging the proprietor to be a bank defaulter.

They were in a 'collection' effort, spearheaded by a young woman who ensured that diners were not disturbed except to inform them of the need for its action. A video camera continuously captured the entire proceedings. The restaurant staff watched helplessly while the management seemed to have vanished.

Read more in Sucheta Dalal's column, The Indian Express, Oct 17, 2005

Education Dept Audit

2005-09-13T23:15:00.000-07:00

Its funny that the very points I've been making about the Dept of Education not being accountable have now come out in the open. Here is an article from the Daily Pioneer, Sep 14, 2005 (which I would happily link to if any intelligent techie can show me how, their links never seem to work):

You paid the cess, Govt made a mess

Santanu Banerjee/ New Delhi

Out of Rs 8004.71-cr allotted for education, HRD clueless on how Rs 5,580.72 cr was spent--- The Human Resource Development Ministry seems to be clueless on the pattern of expenditure incurred on the nationwide Elementary Education (EE) and Sarva Shiksha Abhiyan (SSA) schemes. The only available expenditure records - under five heads and not all the heads - amount to Rs 2,324.99 crore of the total fund allocation of Rs 8,004.71 crore.

In the absence of an expenditure breakup, Rs 2,324.99 crore taken out of the total amount shows a huge expenditure of Rs 5,680.72 crore as spent for which no records are available.

A huge amount of taxpayers' money was collected by way of two-per cent cess by the Finance Ministry after the UPA Government was sworn in for the two schemes. The total fund of Rs 8,004.71 crore has the share of Rs 5,010 crore which was collected through the cess.

The missing expenditure figures in both the EE and SSA schemes indicate a misuse of funds. That the fund has not exactly been utilised for the purpose gets further reinforced by the poor performance of the National Literacy Mission in some States like Bihar and Uttar Pradesh.

Interestingly, the Union Government, which created a huge fund for implementing the scheme under the HRD Ministry, understandably "has no records" other than those that show the total expenditure incurred over the schemes.

HRD reports do not elaborate the money spent on all heads for the spread of EE and SSA. An expenditure of Rs 5,680.72 crore does not find heads on which the entire amount is being spent.

Figures of the fund spent are only available under five heads: Mid-day meal, district primary education, Kusturba Gandhi Balika Vidyalaya, support to NGOs, Jan Shikshan Sangathan (see box).

The HRD audit clearly shows the total expenditure, which is Rs 7,950.65 crore for the year 2004-05. It also shows the amount returned to the Union Finance Ministry and the amount that lapsed.

Under the scheme, the State Governments are spending a huge amount on recruitment of para-teachers and construction of school buildings. HRD records show that during the year 2003-05, 80,000 new school buildings were constructed for carrying forward the elementary education campaign. There are no records to show how much was spent on the buildings.

The problem and `fund's misuse' is set to magnify with the HRD having sanctioned another huge number to teachers for the schemes. According to the HRD Ministry, sanctioned posts of para-teachers for the schemes will touch a total of 7.7 lakh in one year. At present, 3.45 lakh ad hoc teachers have been employed.

The populist emphasis on job creation has created a massive financial problem for the State Governments. They are now facing agitations by the ad hoc teachers for regularisation of their jobs.

Censorship and Freedom of media

2005-08-19T22:46:00.000-07:00

The Hindustan Times reports that director Ketan Mehta could face treason charges for showing Indian Independence hero Mangal Pandey in a poor light. While this is not the first or the last time that a ruckus has been created in the media about movies made in poor taste, what has changed this time is my reaction to it.

Previously, I recall being quite upset at ventures that targeted commercialization through titillation and sensationalism. My reaction was the standard line, the censor board is not doing enough. Upon applying a non-coercive framework, I am finding my previous reaction impossible.

First, we have the freedom of choice. If the movie Mangal Pandey is that awful (I did find it mediocre), then what is stopping us from criticizing it and not taking our business to the movie. What stops us from telling our friends how bad it is. Why must we force the govt to ban the movie?

Second, I have come to the conclusion that the censor board is a redundant body. Their classification criteria often defies logic and is mysterious. It is a good idea to have a censor board. However, a censor board works on a set of values that can be different for different people. Therefore, if a group of people find a need for a different censor board, they should be allowed to exercise their freedom.

This is actually quite a big business opportunity. In India, we are deluged with hundreds of TV channels and there is very little going on in terms of censorship. Government run departments have no incentive to respond to market demand. However, private companies may sprout up that can use technology and values to cater to an individual's censorship requirements.

So, suppose I am deeply offended by pornographic channels, or by Fashion TV. Instead of banning them, I could find a lot of value in purchasing a customizable censor that takes in my preferences and only allows channels that are suited to my tastes.

This idea can be extended to movies as well. Instead of banning a third-class movie and creating more publicity for it, we can subscribe to censor companies that tell us in advance what the movie will be like. So, in my preferences, I might indicate that I like historicals that are well-researched and show signs of scholarship. I could pay the censor company to tell me if its worth my time to watch a movie based on this criteria. A smart company can have a good value proposition by charging me far less than what I would spend on a couple of terrible movies.

Further, if a movie shows ignorance of research, like Mangal Pandey is claimed to be, I can factor that in from people's opinions and keep away from it.

While our sensitivities are in common, our traditional response needs to be re-evaluated. There is a huge scope for a non-coercive response.

Private Justice Systems

2005-08-18T23:41:00.000-07:00

Here's a great example of a private justice system providing value to litigants on an entirely voluntary basis. I think that if we just mine daily events, we will find enough proof that voluntary systems do exist and make a lot of sense.

Would love to hear people's comments.

Non-coercive Education

2005-08-11T21:43:00.000-07:00

As days go by, the governmental interference in education gets more and more ridiculous. While most governments since independence have imposed what we're taught in schools, the present one is achieving new heights in turning this into a circus. Education is fundamentally important to a human's identity and self-respect. It is therefore important to understand what is going on and how to deal with it.

First, lets talk about our rights in a free society. Any one has the right to verbally abuse any one, as long as it is not physical. You reserve the right to abuse me. I reserve the right to reply in kind or stay silent. Under no circumstances can we fault Government of India for abusing Sri Ramakrishna, Hinduism or Indian deities. Government is not a concrete building, it is made of people with biases and opinions. If these individuals want to perpetuate their opinions, they should be free to do so. If anyone objects to it and starts counter-propaganda, they are equally free to do so. So where's the problem?

The problem starts when we bring coercion into the picture. Lets say I've had a field day abusing all that you hold dear. While you're shaking with anger, I calmly inform you, "Oh, by the way, I am going to teach all these children to repeat what I just said and you are going to fund this effort." Huh? So you think I am crazy? No, sir, that is exactly what you have been doing everytime you pay your taxes. We've all paid the salaries and infrastructure costs for a group of people to decide what our textbooks should teach us, regardless of whether we recognize their qualification or not.

This coercion has been around for almost sixty years. And I will fool myself if I think its an issue only with the present government. Any government that comes by in the next fifty years is going to continue to rely on coercion. And its not just in history. For, the more research that has gone on in the field, the more options and opinions there are. History is just the most visible bone of contention. What style of education do we choose for our children? Who should decide? What if I totally disagree with the decision makers. Must I be forced to pay them to continue their activities?

Most people will shy away at this point, for this is a very simple question. Simple questions are the hardest to answer. If we do call ourselves rational, maybe its time to wake up. How do we remove the coercion in the present system? Einstein said, "You cannot solve a problem at the level it was created." What is the higher level where this problem does not exist? Can Education work without Government interference or control?

To answer these questions, we must start to look at voluntary systems, where people act only out of motives of personal gain. Lets start by disbanding the Department of Education. What would such a society look like? While the blood pressure of collapse theorists will surely rise up, their first question might be - how will India provide education to the underprivileged? My answer - India will not. Education and healthcare are positive rights - for which you need to do something. (Negative rights are ones where you don't need to do anything unless the right has been violated, like, Peaceful honest people have the right to be left alone). Any country with positive rights has had a devastated economy. The erstwhile USSR is the biggest case in point where they tried to guarantee a whole bunch of good things and didnt get very far. China is another example. They wised up and withdrew all their positive rights. When asked recently what they were doing to drive their economic boom, an official remarked that they had decided to step back. Where are the collapse theorists when we need them?

The question remains, whats to happen to underprivileged children who cannot afford private education? The question is a loaded, biased one. First, there are no absolutes. There are very few people who cannot pay a single dime for education. Nothing stops a smart entrepreneur from starting a school that is targeted for such children and operates at a low-cost. In fact, this is the business a lot of NGOs are in. And when we look at children who truly come from destitute backgrounds, that does move you, right? Well, what stops you from starting a fund or an institution that caters to such children? If you publicize your message, others who share the vision can contribute. And insofar as society cares, the mission will survive. If society does not care, then it dies. There is no room for coercion.

At this point, classical economists might use their biggest argument for coercion - efficiency, and point out that it is inefficient for lots of different people to be funding lots of different missions. In an ideal society, a perfectly centralized system will run smoothly and ensure everyone gets the best possible resources. In the real world, people are diverse with differing opinions, values and interests. One size does not fit all. The argument for efficiency is tenuous, at best. Government-funded endeavors are not accountable - they will simply get more funds the next year (through our taxes). Private endeavors will go out of business if they are inefficient.

The classical economists will now argue about people not having a "long-enough vision," and so we do need government involvement to produce such a vision. First, the government is composed of people who have the same malaise of lacking a "long-enough vision." Second, this argument stands unsubstantiated by our history. There is hardly a "long-enough" vision we've had beyond the five-year terms that our governments struggle to complete. In the age of coalition politics, it is quite surprising that they get anything done at all. I haven't yet heard of a visionary coming from the Department of Education. I have, however, heard of voluntary visionaries, like Asha. Started by students at the University of California, Berkeley, Asha has gone from being a daring and naive experiment to a serious effort that focuses on bringing primary education to all children of India.

Having addressed the efficiency and vision argument, the next big one is that of standards. Standards are a good idea. The question is, who should evolve them? Why should I pay the folks whose standards I don't agree with? If we accept this line of reasoning, it is not hard to imagine private bodies that evolve standards for economic benefit. Private schools can agree that there is a demand for standardization. These schools can select bodies that design standards and pay them for their services. If children come home with learning that is inconsistent with the values of their parents, the latter can take their business out of the school and into another one that is consistent. That drives the school to care about good standards, for business reasons. They will change the standard if they don't like it. That will keep the standards bodies on their toes, trying to do their best, again for business reasons.

The effect of opening up standards is that we'll have more variety to choose from. One size, again, does not fit all. There will be competition, and with that, comes quality. Colleges, for economic reasons, would do well to accept many standards, or they will lose out on their customers. In turn, employers would do well to accept students from varied backgrounds for reasons of diversity and innovative thinking. If they don't subscribe to it, thats fine. A company that does will eat their lunch.

Finally, it's the turn of the nationalists, who will point out that our efforts on National Integration will suffer if we cannot get everyone to speak the national language. Regional boards of education can choose to do away with Hindi, and then where would we be? Well, we'd be exactly where we are today. If you think imposition of Hindi is working, it's time to visit Tamil Nadu. The whole idea that you can force people to learn a certain language, or restrict them to one of your choice, is a coercive and counter-productive one. First, Hindi may be the national language, but the reality is that it is spoken in a few states in the North. The East, West and South have different languages altogether. While having a common language is a good idea, its imposition has led to politicians jumping up and claiming danger to their regional heritage. Suddenly, education is the means of coming to power.

The same politicians have also tried to do away with English, the unofficial common language in India. If one were to do a census, one would find more people knowing English than Hindi. Why is that? It is out of economic benefit that people have voluntarily learned English. There has been a backlash in states that have tried to impose local languages alone (like in Karnataka and Tamil Nadu). We really have to start waking up to the fact that you cannot force anyone to do anything. There are sufficient intelligent people in these states that will realize the benefit of being multi-lingual. Knowing Hindi will provide access to several Northern markets and also invite people of those regions to come and trade in the South. If that is a sufficient argument, people who see it that way will be free to devise a curriculum that caters to the learning needs of non-native speakers. In fact, currently, Hindi is taught the same way to native and non-native speakers, making it difficult and resulting in regional disadvantages in competitive examinations. This is one of the main reasons of protest and will be resolved by a customized, voluntary approach. By the same token, people outside the state can (and do) voluntarily learn local languages to improve their business prospects. Through entirely voluntary means, we will find language diffusing organically.

Now comes the question that is being discussed openly. What about education that is provided by fundamentalists, be it Madrassas or those by Hindu or Christian fundamentalists. Well, what about it? We have a government right now. That hasn't stopped them from sprouting. If we talk about taking our guns and forcing people to teach a standardized syllabus, we might have a better chance finding our way home intoxicated. We must remember that societies are not violent by nature. They become violent when their identity is denigrated and repressed.

Lets look at Hindu society as a case in point. Bride-burning by greedy individuals was rampant in Bengal in the name of "Sati." This perversion was aimed at obtaining the land and property of the deceased, as in Hindu laws, women would inherit the husband's assets. The British passed laws through the activism shown by Raja Rammohan Roy and other stalwarts. However, the laws themselves didn't mean much without the work on the streets - where the people in this society stepped out, educated the masses and developed an awareness of the injustice. Ishwarchandra Vidyasagar and Rabindranath Tagore were notable in their efforts. Today, Bengal is free from this evil. It would be a shame if we don't analyze the reason for their success and apply it in other areas. The primary one was, they stood right in the middle of the society they belonged to and touched people's hearts, in a non-coercive manner. No gun or taxes had the effect of Tagore's words or Vidyasagar's actions. While some might be quick to suggest that we don't have the heart of that generation, I would suggest it is because we think the government is expected to solve our problems that we don't rise up to the occasion.

If education in madrassas is a big problem, then the reformers cannot come from an alien community that reacts with fear; no, they will be educated Muslims who feel in their heart that it is time to modernize while keeping the best of their traditions. They must stand up and take the lead, for it is they who will understand their context the best. What is more important than criticism is where you stand when you give it. We cannot hope to reform any society by looking down on them and passing judgment. It is being tried and the failed experiments are for all to see. Our only hope is a voluntary approach.

In conclusion, coercion in education has been tried for decades and has failed to meet our expectations. When something does not work, there is no point doing more of it. Why must we pay for a circus we don't like to watch. It is high time we asked ourselves - how do we stop coercion in education and act like a free society that we claim to be. Any thoughts?

Please click on the comments link below to register your reaction.

The Fence

2005-08-06T23:07:00.000-07:00

The Daily Pioneer published a report, "Fence Hits Deportation," which struck me as very funny. The fence that was meant to keep infiltrators out has now become an impediment in throwing out existing infiltrators.

When we make fences to keep others out, we lock ourselves in. On a broader note, with all this chaos around the migration from Bangladesh, it is worth going back to the basics. When people migrate from Bihar to other states and cause demographic changes, is that a problem? People would jump to point out that the problem here is economic and not one of national security, so there is no need for alarm.

I would be curious to know the profile of the infiltrators from Bangladesh. According to one report, they are poor rickshaw pullers trying to make a living. Not all that different from poor Bihari laborers trying to find a better life. Except that they have a different national identity.

In a recent discussion, my friend pointed out to me that as long as migrations don't cause economic burdens on society, they are acceptable. The Bangladeshi and Bihari migrations are therefore unacceptable. I wondered what he'd term the Indian migration to the United States. I was reminded that the US government only allows migration if it is considered beneficial to the economic interests of the nation. So does that yardstick apply to all US citizens? Are they all expected to act in the economic interests of the nation? Apparently not, going by the Chapter 11 bankruptcies and collapses that follow capture of fraud.

I am led to then wonder if the genesis of the problem is demographic modification or existing political systems? What if we didn't need to elect our representatives? Would we really care who our neighbor is, as long as the neighbor can be thought of as peaceful and honest? I am finding myself say - NO, I would not care.

Economic alarmists will jump up and down screaming about the financial consequences of uninhibited migration. Lets take a look at the United Kingdom for a moment. There was a massive drive from India to the UK until the 60s when the empire was considered a destination of choice. People migrated en masse, in search of a better life. Then, it happened. The job market got saturated. There were enough qualified people but not enough demand. Guess what, Indians don't prefer to go to the UK now. They go to the US instead. So much for the collapse theories. People don't like going to places where they are not needed or appreciated, government or no government. Now British nationals are also in the global pool, going where their services are appreciated.

We have to make an important distinction here, for the national security folks. My argument is only for peaceful, honest people. If the migrants are not peaceful or honest, then they do not have the right to be left alone. That, and that alone, should be the basis for forming our responses.

Our tendency to control everything has possibly turned us into control-freaks without realizing it. It is time we take a step back and see the human faces behind the demographics.